Shared Services – Government and Education Break the Status Quo

How government and higher education institutions can realize greater efficiencies, improve customer service, enhance compliance and boost worker experience.

US states are grappling with a $125 billion combined deficit. Tax revenues languish below pre-2008 levels, and the citizenry is feeling the pain that comes from the cuts in aid at the federal, state and local levels. Higher education has also been hit hard—some state university systems are facing cuts totaling hundreds of millions of dollars.

How can government and higher education organizations see their way through these incredibly tough times? Over the last five years, public service consulting organizations have found that forward-looking governments and education institutions have been implementing a somewhat radical approach to realize greater efficiencies, improve customer service, enhance compliance and boost the overall worker experience. That approach is called shared services.

Shared services programs have provided a bright spot in the past and have laid the foundation for a new wave of successes in the future. And even those initial efforts that failed to live up to their expectations brought enough incremental savings and improved consistency and productivity for governments and education to see the realm of possibilities. There are great examples of shared services excellence across the map—from Ohio (finance) to Yale University (human resources) to Georgia and Utah (procurement) to New York’s Metropolitan Transportation Authority (multi-function).

During the next wave of shared services, there will be a broadening of the functional areas within the shared services scope, a wider view of the types of government and education entities that can benefit from an enhanced vision of success metrics that span across both process efficiency and service quality.

There are many success stories not only about the traditional back office functions, but about business-facing functions:

• In Massachusetts, state officials are proposing to allow agencies to contract with one another through the sharing of licensing administration.
  
  
• In New York City, successful citizen-facing shared services are taking flight, such as the 311 contact center.
  
  
• The U.S. Department of Health and Human Services (HHS) provides administrative operations, information technology support, financial management, occupational health and strategic acquisitions not only to HHS, but to many other federal agencies.
  
  

Recently, there has been forceful and decisive action toward instituting shared services. Oklahoma, for example, is moving toward legislation to consolidate the shared services of several of its central state agencies. Ohio is requiring shared services compliance. These trends will undoubtedly continue as shared services expand beyond state governmental entities to cities, counties and universities. New Jersey, for example, is looking at legislation that could push local government units to share services or risk losing some state aid.

There will also be a new dual focus on improving both efficiency and service as a way to avoid past failed centralization efforts. Shared services can provide new specialized services geared toward a particular government industry (such as records management in human services), for example. What’s more, as operating shared services organizations across government and education, they will be given access to a broader set of financial and operational data. That will allow shared services organizations to begin providing valuable data analytics services.

To support improvements in both efficiency and service, shared services’ structure will change. There will be a combination of “global/local” (“glocal”) delivery models. Large broad-based shared services centers will continue to provide standard services for small agencies and truly routine functions. At the same time, smaller, more focused regional models will arise to take on specialized services for large institutional agencies. This is a trend already making considerable headway in the private sector to capture the best of both worlds—the cost savings of scale and the value-added service that comes from closeness to the customer.

The real value of shared services has always been in helping get more out of what organizations are already spending. An increased focus across functions, government entities and success metrics, coupled with new delivery models and top-down incentives will redefine the status quo. Government and education leaders of the future will think more broadly and creatively on how the new vision of shared services will enable them to continue and improve upon the successes of the past.

Find out more about shared services:

• Cross-Jurisdiction Collaboration
• Shared Services in the Public Sector
• Trends in Shared Services: Unlocking the Full Potential