Achieving Optimal Potential in Government Shared Services / Outsourcing

With most governments of the world seeking significant efficiencies to help deal with the fall out of the global financial crisis – the placement of shared services and outsourcing arrangement within the government hierarchy has never been more important.

Whilst in most circumstances local accountability and knowledge are primary concerns – these pressing times dictate that government bodies structure their shared services or outsourcing arrangements in the most appropriate fashion to achieve efficiency savings – which after all is a requirement for all departments and areas of public service.

Whilst many bodies at a national, regional and local level have established various arrangements already – now is the time to review the situation to ensure that the optimal results are being obtained for the tax payer.

The benefits of aggregation, standardisation and simplification can yield high returns but placing services or partnership arrangements too low in the government hierarchy can lead to sub-optimisation and unnecessary duplication of effort (with the associated waste of resources) – especially in indirect areas like procurement, human resources and finance.
Whilst tax-payers are the final beneficiary of savings, the government bodies themselves can benefit from :

- A better utilisation of resources / fewer key people dependencies
- Access to a wider range of skills / pool of knowledge
- Improved management information
- Greater purchasing leverage
- Access to wider range of national / international suppliers
- Reduced Risk
- Improved leverage of investment
- Access to Best Practice processes

Also achieving optimal efficiency within an internal shared service facility means any future outsourcing arrangement with a commercial body will not unnecessarily leave the tax-payers money on the table as easy pickings.

This is not just a matter of placement of services in a hierarchy however. Arbitrage opportunities should also be considered. With appropriate skills being available across a wide range of geographies, government bodies at all levels could benefit from tapping into more cost effective resource perhaps outside their normal catchment areas for employees. One of the unfortunate side effects of the economic downturn is the shedding of highly skilled workers by commercial organisations - Such skills may have the potential to bring a higher return per employee if the pockets of talent are appropriately exploited by government bodies at the right level. With communications costs being so low and tele-presence technology being so pervasive today, geography is no longer the issue it used to be.

These are just a few suggestions, that if exploited, have the potential to deliver a much more cost effective support basis for government bodies at all levels.

I would welcome your views and experiences.

Business Process Outsourcing - Making it Work
There are many articles written on the reasons to outsource including:
- Cost reduction
- Service improvement / Internal issue resolution
- Focus improvement / Core competency execution
- Skills access / Capability release
- Risk sharing
- Investment avoidance / Funds attraction

All are potentially achievable, but how many services fail through organisations being too greedy and essentially seeking something for nothing or providers over committing to things not attainable within the constraints they are accepting?

Success in an outsourcing relationship can only be achieved with a level of openness between the parties involved.

Customers should:
- Be truthful with themselves about the objectives they are truly seeking to achieve and not use the published lists of reasons as being their shopping list of benefits - this is just being unrealistic.
- Remember the past and fully recognise the benefits being delivered by their partner and certainly not try to over-manage them when history may show that the service they handed over was failing - how can new benefits to achieved if old management styles remain
- Understand there must be something in the relationship for both parties for it to be successful - starving your partner will just lead to under-investment and eventual service failure - Why go down paths where the negative outcome is so predictable?
- Understand their role in the services being delivered and ensure their contribution (or perhaps lack of it) is not undermining the overall outcome of the arrangement

Providers should:
- Be open with their customers about the benefits that can realistically be obtained from the starting point they are presented with and the timescales to achieve them. Also be clear about the responsibilities of the customer in achieving the desired outcomes. (Outsourcing is not, and never can be, a set and forget process).
- Focus on delivering benefit to the relationship not generate internal distractions (however academically brilliant they may appear to be)
- Fully understand (and convey) the investment requirements over the life of the relationship and ensure they have sufficient risk appetite, and customer buy-in to embark upon the journey before it commences and certainly in advance of starting to commit funds.
- Understand the role people (and personal aspirations) play in the on-going development of the relationship. The retention of appropriately skilled resource to deliver the service is key as is the understanding and management of customer stakeholder viewpoints. No amount of technology investment can change these requirements.

These are just a few of the points, that if observed, would lead to a more satisfying and fruitful relationship between organisations and their outsourcing partners.

I would welcome your views and experiences.