Scott Quehl leads Accenture Federal Services Strategic Government Efficiency offering. He formerly served as Chief Financial Officer and Assistant Secretary for Administration at the U.S. Department of Commerce.
Federal agencies spend over $120 billion a year on managing their finances, human resources, and supply chains, as well as information technology and other mission support services. These functions are more important than the term "overhead" suggests. If agencies cannot deliver the right equipment where and when needed, if security and sound controls are compromised, if communications networks or payroll falter, then the distinctions between mission support and mission delivery functions fall away quickly.In light of their importance to meeting the mission, and the scale of expense, delivering these important functions through shared services providers is a top management priority. But instead of making consolidation the goal of shared services, value to the agencies is increasingly being framed in terms of the creation of a shared services marketplace. Treasury's Office of Financial Innovation and Transformation and the Office of Management and Budget are making strides in establishing it.
The making of shared services markets has a number of interconnected components:
Governance and Regulatory Framework. In 2013, OMB issued guidance on implementing financial management shared services, followed by designating, in May 2014, four agencies as Federal Shared Services Providers (FSSPs). In September 2014, FIT worked with the federal Chief Financial Officers Council in establishing terms for financial shared services governance, drawing on views of provider and customer agencies. Governance can extend to ensuring that there is sufficient supply of providers to meet customer demand, and to market regulation with respect to customer agency input into requirements and validation of service results, provider accountability, security and resolution of disputes. GSA's Federal Risk and Authorization Management Program (FedRAMP) – which provides a government-wide approach to security assessment, authorization, and continuous monitoring for cloud products and services – contributes to confidence in the market for shared services involving the cloud.
Pricing and Service Level Transparency. FIT just issued a catalogue listing the services that shared services providers offer, annual servicing agreements, and an indicative pricing range. In principle, this important step toward transparency will offer current and prospective agency customers and providers clearer insight into performance effectiveness and price efficiency. Customers should be able to use this information to shop for best value, and providers should have to improve continuously to earn and retain their business. As the market evolves, commercial providers also can demonstrate how they meet agency customer requirements at lower cost. In practice, stronger governance should shape conditions that make migrations easier so that better market information can result in action.
Easing Migrations and Customer Ability to Change Providers to Derive Best Value. Cost is a key metric in determining value to customers. So are timeliness, reliability, customer satisfaction, security, and other indicators of quality. Once measures of success are agreed upon, customers should have at hand the means to hold providers accountable for meeting them – including switching providers. This is easier said than done. Standardized data and system interfaces can reduce "stickiness" to a single provider unable to meet performance expectations. Commercial provider options can help – including those willing to put a significant share of their own capital at risk to fund development and migration costs in return for performance based operating agreements, while preserving government ownership of data and meeting other regulatory requirements.
Effective Approaches for the People Aspect of Change Management. Policy guidance, business cases, migration plans, and other aspects of shared services depend upon people to put them into action. Communication and change management are key to successful migration. While shared services customers and providers ultimately engage in planning, validation, migration, change management, and operations, standards and resources for effective practices can be made available across the marketplace, with central support.
Financial management has been receiving most of the attention, but human resource management and payroll, information technology, loan administration, and commodity acquisitions are among other shared services that could benefit from a more robust marketplace.
Keep an eye out for two important contributions to the federal shared services discussion: one to be released by the Partnership for Public Service's Shared Services Roundtable; the other conclusions drawn from interviews with CIOs, CFOs and their deputies in 10 Federal agencies, through the Association of Government Accountants and Accenture.