Problems Shared

In the age of the cloud, regular cost cutting and process disruption, one constant has been the desire of Management to explore the development of a shared services.

Done well shared services can take advantage of technologies such as dispersed technology; can lead to reduced and permanent cost savings and can – by the disruption that it brings – lead to greater efficiencies.

So what you don’t want to read in an audit report is this:

The central agencies did not follow best practice in setting up (the) Central Agencies Shared Services (“CASS”).

CASS was set up by the intended date, but important and fundamental aspects of the change were not done well.

For example, the central agencies did not plan effectively for setting CASS up. They did not determine early on how CASS would operate and how it would support the central agencies’ strategic objectives – the “big picture” of CASS. This “big picture” was not clear, and the move to one support agency was not well planned.

There were also weaknesses in governance and management as CASS was set up. Overall, consultation was poor and fewer experienced staff transferred than anticipated, resulting in a loss of skills and knowledge …  There was not enough focus on building a culture for CASS. The transfer of functions to CASS resulted in some avoidable initial operational difficulties.

It continued:

Most significantly, the central agencies did not effectively collect baseline data to inform change management plans and allow the performance of CASS to be measured. The time and resources needed to bring systems together and to get CASS up and running smoothly were underestimated.

The report by the Auditor General of New Zealand should be essential reading for anyone – whether from government or private enterprise – considering a move to a shared services environment.

It sets out the following lessons learnt:

  • A clearly defined operating model together with detailed change management plans are essential to an effective change.
  • Clear and effective governance and management arrangements are important for successful change.
  • An effective change management process needs to be well executed and well resourced, and should include effective communication and consultation, retention of essential skills and knowledge, and clear processes for recruitment and transfer of functions or activities.
  • It is essential to gather detailed data about the range and level of services, functional costs, and the level of maturity of the service functions, to provide accurate baselines for determining future investment and to measure progress.
  • Define clear operational objectives (matched to the strategic objectives of the businesses being served), set measurable performance targets, and report accurately and promptly against those targets to monitor progress.
  • Working to get processes and systems in line before establishment helps to speed up transition and ensure that services are delivered better.
  • For functions such as human resources, ensure that adequate attention is given to respecting and supporting the different cultures within the agencies and, where appropriate, bringing together those different cultures in a more standardised approach.
  • Use appropriate industry or government standards to work out levels of capability in each function and to prepare processes for addressing agency needs.
  • Develop an Information and Communications Technology strategy to ensure that the technology work programme is prioritised to meet strategic business needs.
  • Good information about costs is needed to provide a baseline to estimate savings accurately and set realistic future targets for further savings.
  • Agree a clear role and strategic priorities for the organisation that reflect the strategic objectives of the businesses being served, to focus on how it is set up and operates, and to guide future business planning and development.
  • For a shared service to succeed, governance arrangements need to be clear and sufficiently mandated to provide independent and effective decision-making.
  • Build the foundations for business as usual before considering enhancements, expansion, or modelling as an example to follow.
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