Implementing a Shared Services Strategy is No Simple Task

July 26, 2016 | Harry Totonis
 

It should come as no surprise that the federal government, particularly those agencies that make up the security community, want to adopt a shared services strategy. Shared services consolidates duplicative business operations, eliminates redundancy, and improves effectiveness, ultimately saving taxpayer dollars. It is a winning strategy for government leaders and good governance advocates. The Department of Homeland Security (DHS), for example, has been working in earnest toward adopting a shared services approach in its management strategy.

However, despite best intentions, the government has struggled with implementation. The latest illustration of this struggle came in October when the White House announced that it is shifting oversight of its shared services strategy to the General Services Administration and away from the previous, bifurcated management between the Treasury Department and the Office of Management and Budget. It was a clear signal that the Administration recognized that their first attempts were a misstep, and that they now believe GSA is better positioned to overcome the inherent cultural and procedural hurdles that come with implementation. Similarly, despite its dedicated attempts, DHS continues to struggle with “functional silos;” with sub-agencies remaining largely independent within the department.

Setting out to break down “silos,” and make a more effective and efficient organization through a shared services approach, is a clear challenge for the government, but that is not to say that future attempts cannot go more smoothly.

A primary challenge for government is that most departments and agencies are extremely large in scope and scale, and often require many different sub-components to work together to achieve a unified objective. Homeland Security alone was created through the integration of all or part of 22 different federal departments and agencies.

A key element is to understand where a shared service approach is effective and appropriate, and where it is not. Leadership, policy making, and back-office operations, like payroll, human resources, and legal counsel, are all ideal functions that can, and should be, shared by all agencies within a organization.  The day-to-day operating functions, like training border security officers, on the other hand, should remain distinct within the agency. Sharing functions that degrade core missions will lead to a weakening of effectiveness and inevitably a decrease in morale. 

Moreover, while an implementation strategy can be tailored, there are common steps that are wise to take. The first is to coherently communicate a concept of operations that will cascade toward the broader shared services strategy and goals throughout the agency so that there is a basic level of understanding by all those affected. In a similar vein, the appointed leaders who have decision making responsibilities related to this effort must be clearly identified. The responsibilities of those individuals should be articulated and nested within the established governance structure of the host agency or department. For Homeland Security, that is from the Secretary down through the Under Secretary for Management.

Lines of responsibility should also be equally clear in other departments and agencies. In order to make sure that formal governance structures and processes work, and to support the designated lead for this effort, a shared services organization must have an equal seat at the table inside of the established government structure and within its governing bodies and committees.

Second, another critical factor in the successful implementation of a shared services strategy is to actually complete established milestones, in full or in part. There are myriad reasons why particular sub-components should have more time to implement or why timelines in general should slip, but it is much easier to assess and adjust an implemented strategy and operational approach at key milestones rather than to amend one that is perpetually “in-stride.”

Of course, even when following these two steps, implementing a shared services strategy is no simple task. The private sector has refined this approach over four decades, and while the government is late to the game, it does have the benefit of leveraging the experience, data, and best practices that have accumulated over that time. In our own experience working with government agencies, we understand how challenging it is to breakdown long-established silos. Yet, by fully implementing a shared services strategy, a large organization like DHS will be able to conserve taxpayer treasure while enhancing the core missions and functions of its components agencies.

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Harry Totonis is a member of Business Executives for National Security and an Advisory Board Member at Genstar Capital, a private equity firm investing in leading middle-market companies.

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