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Analysis

From shared services to service delivery transformation

The next generation of mission support in federal government

​Federal government agencies can overcome the traditional hurdles associated with shared services by pivoting to a more responsive and agile service delivery model for sourcing mission support services.

The promise of federal shared services

For decades, the promise of consolidating common support functions—such as human capital, financial management, acquisition, and other mission support services—across multiple agencies has attracted great interest. Policy makers have long argued that federal shared services could relieve agencies of the considerable expense of acquisition overhead, technology upgrades, and maintenance associated with supporting duplicative mission support functions.

Consequently, the notion of sharing support services across agencies has been steadily promoted through numerous policies and programs over the years, ranging from franchise funds and E-Gov initiatives to Lines of Business and more. For the last decade and a half, federal shared services, in many cases, has come to mean that agencies will source their mission support needs from a handful of other agencies approved as service providers in particular areas, such as financial management, human capital, and acquisition. In certain functional areas, such as human capital, the sources have also included commercial providers.

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The path ahead: Service delivery transformation

At the heart of service delivery transformation is the goal of not simply migrating services into a single provider, but rather finding the best option for each service, regardless of where that option resides—government, commercial, or a mix of both. This broader perspective opens the door to new approaches to the critical problem of government funding.

 

Employing a service delivery transformation view not only enables agencies to optimize their sourcing options for service delivery, it also encourages them to examine how to integrate support services across the agency enterprise where possible to achieve maximum economies of scale and other efficiencies.

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Addressing the challenges of services delivery transformation

While service delivery transformation may solve some challenges, many traditional challenges that have stymied federal shared services and IT modernization efforts still prevail. Many agencies are hard-pressed to find capital expenditures with which to invest in service consolidation and modernization. IT projects often evolve into overly complex endeavors that exceed their budgets and schedules and underperform. Moreover, many projects, once completed, fail to deliver their anticipated value.

  • The funding challenge: The federal government plans to spend more than 80 percent of its IT budget on operations and maintenance in Fiscal 2019, according to the President's Fiscal 2019 Budget. That means agencies have only 20 percent of their budgets—and, in many cases, much less—for capital expenditures (CapEx) to spend on new projects. As a result, most agencies have few opportunities to modernize and may feel stuck with their many legacy systems.
  • The complexity challenge: Many federal shared services projects have evolved into overly ambitious endeavors that aim to address the specific service needs of everyone affected. This is especially so with enterprise resource planning (ERP) projects that integrate the management of an agency's core business processes for tracking and managing resources. The result is that many projects get overloaded with requirements and technical challenges, leading to increased costs, delays, and underperformance.
  • The value challenge: Many federal shared services and IT modernization projects are managed by the most relevant line executive within the agency hierarchy, such as a chief information officer (CIO), a chief financial officer (CFO), or chief human capital officer (CHCO). Employing a department-wide strategy and roadmap can more effectively realize maximum value from an investment in service delivery transformation across all functions.

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