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The ins and outs of shared services

After three years as director of the Interior Business Center, Ward has made a mark

Mar. 10, 2014 - 06:00AM   |  
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Joseph Ward MWM 20140224
Joseph Ward Jr., Director of the Interior Business Center, is interviewed at the Department of the Interior in Washington, D.C., on Monday, February 24, 2014. (Mike Morones/Staff) (Mike Morones)

After three years on the job as director of the Interior Business Center (IBC), one of nine designated shared services providers in the federal government, Joseph Ward Jr. has already made his mark. He pared the centerís lines of business from eight to three to keep it focused on its core strengths: financial management, human resources management and acquisition services. He also established a philosophy called ACT, which stands for accurate, courteous and timely service.
Ward discussed his priorities with Federal Times editor Steve Watkins. Following are edited excerpts.

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After three years on the job as director of the Interior Business Center (IBC), one of nine designated shared services providers in the federal government, Joseph Ward Jr. has already made his mark. He pared the centerís lines of business from eight to three to keep it focused on its core strengths: financial management, human resources management and acquisition services. He also established a philosophy called ACT, which stands for accurate, courteous and timely service.

Ward discussed his priorities with Federal Times editor Steve Watkins.

Following are edited excerpts.

There are an awful lot of shared service providers out there. There is GSA, DISA and others. How does IBC fit into all of that, and what distinguishes IBC from others for the federal customer?

I think if you would ask our customers, and I think if you would ask those industry partners that we have that weíve done business with for, in some cases, many years and, in some cases, just a few years, I think generally speaking our differentiator in the marketplace is customer service. What I hear from industry, what I hear from vendors that we do business with, is that when you compare us to the others weíve got this customer-centric attitude within the business center that differentiates us from the others.

How much federal business did IBC do last year and how is that trending?

We did quite well. So we get zero appropriated funds from Congress. Let me state that up front. All of our business and all of our revenue is essentially generated from signed interagency agreements with our customers. For the fiscal year -- Iím not sure what the [fiscal year] 13 numbers were, I should know those -- for fiscal year 12, it was about $400 million, approximately.

And fiscal 2013 was above, below that?

Fiscal Ď13 will probably be below that. Not because we didnít generate more business but because of some divestitures. For example, when I got here three years ago we essentially had eight lines of business and as I [like to] remind my boss, when I interviewed for this job I said, you know, I donít know anything about the National Business Center, but why do we have an aviation management director? It doesnít seem like a good fit. Why is there an administrative operations directorate? That doesnít seem like a good fit. Why is there a federal consulting directorate? They just didnít seem like good fits for a shared service operation. Lo and behold, as a result, shortly thereafter we had a strategic assessment that was conducted by McKenzie and Company, and they made lots of recommendations to include divesting some of those -- all of those organizations actually. That is what we did. So we went from an organization that was eight lines of business -- trying to be everything to everybody Ė to three lines of business where we now focus on a core set of complementary services. Those services in McKenzieís mind and in our mind bring the most value to the department as well as the federal government.

(Page 2 of 6)

Within those core lines of business that you refer to, those three lines of business, can you discuss what that trend is looking like?

Iíve been told, and Iíve seen it personally, business has never been better. There are actually agencies that are lined up in the queue waiting for us to get to them. This is true in the human resources arena. Itís also true in the acquisition services directorate arena. Itís also true in the financial management line of business where we are getting lots of inquiries as a result of M1308 and the modernization of finance systems within the federal government.

What difference has M1308 made? What are you seeing now in the marketplace that you hadnít seen before, and how is that affecting IBC?

Itís had a tremendous affect on the business center. The affect that it has had is that we have - we literally have agencies that are coming to us more than we have ever seen, asking us to have discussions with them, to go through what we call a discovery process with them, which is a process we go through before we decide to implement an organization. Itís sort of like a dating game. You go through a discovery process, you gather requirements, you do fit-gap analysis, you have lots of meetings with the potential client. At the end of that discovery phase -- the agency and the business center -- we decide whether or not it is going to be a good marriage. And if it is, we sign an implementation agreement. If itís not, the agency is free to date one of the other providers. Thatís essentially how it works.

Since that memo can you discuss how is that doing in terms of business, particularly in the financial management front?

We are in serious discussions with a major cabinet-level agency Ė namely, the Department of Homeland Security; three sub-components within DHS that we are talking to now, namely, Coast Guard, TSA and DNDO. And so weíre going through this discovery process to determine if DHS is a good fit for us and if weíre a good fit for DHS. At the end of that discovery phase, the leadership at the Department of Homeland Security will make a decision and it will be a go/no go decision whether they will go with us or another provider.

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What would be the timeframe for that kind of decision?

That will probably happen in the June/July timeframe.

Are there other big opportunities coming up outside of DHS that you see?

The short answer is yes. What I would say to you there is that whenever you bring on what I would call a large client like Homeland Security, even those three separate components, thereís a lot of heavy lifting that has to take place as a result of that. Because of the resources you have to bring to bear and of course we have industry partners that help us do this. It is a heavy lift. We are working with the Treasury Department and OMB so we have the ability to scale up to potentially bring on more than one Cabinet-level agency at a time as we look at the future, because what happens is, it is not a two or three month process when you migrate a cabinet level agency, itís a multiyear process, depending on how large the organization is.

The scale-up issue has got to be enormous here for you. How do you do that?

We are partners with industry and so when we enter these agreements -- especially these implementation agreements with these agencies -- we scale up with contractor support. A combination of contractor and fed support. Primarily contractor support, because in our typical implementation the ratio is about 80 percent contractors and about 20 percent feds during a normal implementation for us.

Scaling up for DHS, would it be about equivalent to that?

Yes. It would be equivalent.

That could mean a pretty big expansion for IBC.

Absolutely, positively. No question about it. And weíre very excited about it, I might add.

Have you gotten into the details of what that would mean for IBC just in terms of staffing and manpower?

We have a general idea, and we have had lots of discussions on it. As we get closer to the end of the discovery phase and the May to June timeframe, weíll have a better idea of what that looks like.

So IBC is roughly 1,300 staff or so right now.

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About 1,300. About roughly 1,000 of those are feds and 300 to 400 contractors.

Do you see this potentially doubling or even more than that if you can get this work?

Doubling initially? No. I donít see us doubling initially. Over time? Absolutely, positively. We donít know what the other subcomponents in DHS are planning, are going to do. But if the other subcomponents in DHS were to follow suit, we could double very easily in a very short period of time.

In a year, two years?

Probably within a couple of years.

So this is, I imagine, by far the biggest event that is probably on your portfolio since you arrived, since the initial organization and down scaling of IBC.

This is our number one priority for the entire enterprise. To make sure that this dating game is successful and that it ends in a marriage. This is our number one priority.

Do you have a sense of what the dollar figure would be for this kind of project or contract?

At the end of the discovery, once weíve identified all the requirements, weíve identified all of the gaps, we have had numerous discussions with the leadership and the subject matter experts, weíll give them a run. At this time, itís too early to say what that might be because weíre still in the requirements-gathering phase and going through the fit-gap analysis, etcetera, so I would be premature if I gave you a number at this particular time.■

Do you see this having the potential down the road to expand to all of the DHS enterprise?

Thatís a distinct possibility. My understanding is that those other sub-components have the ability to look at other providers as well. So itís not like they would be stuck with the Business Center because DHS is so large that there is the potential that they could have more than one provider within the department. I think itís certainly a possibility that once these three sub-components migrate into the Business Center, itís a possibility that the others would follow suit. So there could be a domino effect. Too premature to say for sure at this point, but itís definitely a possibility.

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I went over your strategic plan and your long-term vision is to become the premiere shared services provider across government. Obviously, you are not the only one interested in achieving that. How do you measure success toward that? It seems to me if you want to do that -- you are already pairing down to these core lines of business -- wouldnít you need to expand into some other product lines if you want to be the premiere shared services provider?

There is a more strategic outlook now than before. Our strategic plan now is to be the best we can be in these three lines of business. Become the gold standard in human resources, financial management and acquisition. Once we become the gold standard then we can think about expanding outside of those areas and into other areas. That is part of our strategic plan.

How well do you think the federal market in general understands the shared service model? What do you face in terms of federal resistance, whether it is cultural, bureaucratic?

All of the above. A number of challenges. The reality is that whether youíre the Department of Interior or the Department of Transportation, thereís this tendency to think that you can do it better, quicker, faster, etcetera. And thereís this tendency to think that youíre unique -- we all think that. So any change is typically met with resistance, especially if the change is involving moving a function that you currently do to an external shared service provider, someone outside of your typical cabinet-level agency that you may or may not have a lot of experience with. So I think the whole cultural change, change management is a big issue because we all think weíre unique, we all think we can do it better, faster, cheaper. I think thatís a reality. Like I said before, the truth is -- and it is my ground truth -- that these agencies do have unique missions, but the way you process accounts receivable and accounts payable, etcetera, is the same regardless of what your mission is. I think thatís a challenge.

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I think couple of other challenges have to do with transparency. I think that is a major issue.

What do you mean exactly?

One is I donít think cabinet level agencies know what a shared service provider does. I donít think they have a good understanding of our value. I donít think they have a good understanding of our business model. And I donít think they have a good awareness and education of the benefits that would accrue to them for using a shared service provider.

For example, this is probably the best example I can give you. Cabinet level A wants to modernize their financial management system. Cabinet level agency A pays $1 million a year to host their financial management ERP. Nineteen other agencies want to do the same thing. If they did it in and of themselves that would be $19 million that the federal government would be spending for hosting services. If they came to a shared service provider, that $19 million could be avoided because instead of each of those 20 agencies paying a million dollars apiece, that cost would be spread across 20 agencies. That is the economy of scale that you get with a shared service provider. But agencies donít really understand that model. At least I donít think they really understand that model.■

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