Shared services: Learning the lessons from Queensland and WA

Talk of shared services abounds in the government IT sector, but failures in Queensland and Western Australia have highlighted the dangers of IT migration across departments

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First Assistant Secretary of the Australian Government Information Management Office (AGIMO), John Sheridan.

Co-ordinated not centralised

Like Cloud, shared services can easily become a semantic battleground; a mire of varying definitions, visions and confusion about the benefits shared services can deliver. While expected cost savings of between 20 and 30 per cent, and some reaching savings of up to 35 per cent, have been stated as goals across varied shared services projects, the business case only holds up when the project is clearly defined.

For Fujitsu’s Mayo, the important distinction is between ‘centralised’ and ‘genuine’ shared services. Under Mayo’s definition, a centralised model involves small agencies or departments tacking or migrating their services into the wider infrastructure of a larger hub. Similar setups are already in effect in Australia, with the federal Department of Human Services on-loading some of the infrastructure, IT staff and Web hosting services from smaller agencies such as the Department of Veterans’ Affairs. In such a case, there seems little benefit for Human Services itself; a goodwill gesture more than anything toward a fellow department.

In contrast, Mayo sees ‘genuine’ shared services as those requiring agencies of similar sizes or those unable to reach economies of scale themselves migrating their services together in order to reach the critical mass required for cost savings. The gulf between the two, he argues, is vast.

“The economies of scale are already there in the larger organisations, meaning a business case doesn’t necessarily stack up [for shared services],” he says. “If a small organisation does come along, then they are the small partner. The savings aren’t necessarily there in the big organisations to need to pass on the aggregated pricing, because they’re big enough themselves.”

For AGIMO, distinctions are made between ‘centralised’ and ‘co-ordinated’ procurement. “One of the things we don’t want to create, and we’ve gone out of our way not to create, is some sort of centralised procurement,” Sheridan says. “Our work is about co-ordinated procurement aggregating the government’s demand, getting the sorts of advantages that it gets but being conscious of the need to make sure agencies’ requirements are met.”

Mayo and Sheridan’s semantic arguments both indicate a need for those involved in shared services to decide on how the concept works in practice, whether anchored to a large department already capable of reaching economies of scale, or aggregating similar capacities into a larger pool of demand for resources and equipment. Mayo points to UK examples where co-ordinated approaches between similar councils have achieved greater benefits than the centralised approaches currently being trialled at higher levels of government there.

What’s common in both approaches, though, is tightly structured oversight of the shared services arrangement and an equal footing for all departments, regardless of size.

“True collegiate behaviour clearly comes to the fore,” Mayo says. “I think you can see that in the benefits that come — the more collegiate the organisations, the more those savings can be realised or indeed overstretched in terms of what innovation can be brought and the learnings from each of the implementations.”

At least at the Federal Government level, that’s already underway. As part of his recommendations, Dr Reinecke suggested AGIMO explore additional methodologies for risk assessment, benefits realisation and project planning and management in implementing shared services.