Consolidated shared services for state government departments might be great in theory, but in reality require major cultural and practical change.
By Louis White
It seems the latest trend for Australian state governments is to consolidate various government departments, streamlining services such as IT, finance and human resources.
The practice promotes efficiency and ultimately saves the taxpayer money. In theory it sounds simple, but the practicalities of getting public servants to culturally change and adopt new IT systems is another matter entirely.
Some governments are not even prepared to go on the record to talk about exactly what is happening. Of those that are prepared to comment, such as the Queensland, Western Australian and ACT governments, each tells a different story.
In 2002, the Queensland state government decided to embark upon a project to provide shared services to essential government agencies.
A 12-month project involved developing a business case and an implementation date starting in 2003 was decided upon.
'We decided to focus on only the core departments, as they were fundamental to the operations of the government,' says Mike Burnheim, managing director of the Queensland government Shared Services Agency.
'The Queensland government adopted a mandated model You will do as we say as we thought that was the best way to move forward. The key strategy was to take finance (including procurement), human resources (including payroll), and the documents and record management, and put them all into one government department, CorpTech.
'One of the big problems was standardising software and getting everyone to use the same version, as was the case in payroll, where four different customised versions were being used. And even though SAP software was commonly used throughout the finance department, each department was on a different version.
'We were lucky in one sense that IT wasnt a huge problem for us as other states have had to encounter. It is nice to have IT consolidated but it isnt mission critical.'
Although Burnheim is quick to acknowledge that the implementation of shared services has been successful overall, the Queensland government is a long way from its very bold forecast of saving A$100 million a year.
In just under four years of operation, a total of A$73m has been saved through government procurement efficiencies and savings. This is about A$300m short of the original forecast.
'The savings of $100m a year are attainable, and we should be able to attain that by 201011,' Burnheim says. 'But yes, we have fallen short, and were perhaps a little ambitious at the start.'
What the Western Australian government would give to be able to get its shared services up and running, let alone start saving taxpayers money, would be in the millions money it has so far wasted.
The situation in Western Australia has become so dire that auditor-general Colin Murphy was required to submit a report to parliament examining the problems. The report showed that shared services reform is more than two years behind schedule and that only two of the three components of the integrated corporate services system have been established: finance and procurement.
'There have been both cultural and implementation issues, especially around the area of software,' Murphy says. 'There have also been management issues, such as accountability and determining who was in charge and who takes responsibility.
'Overall, [the shared services model] was pretty optimistic from the start, and the implementation plans ambitious for the size and complexity of the project.'
The Western Australian government sought to focus on the Health Corporate Network (HCN), Education and Training Shared Services Centre (ETSSC) and the Office of Shared Services (OSS), which is now part of the Department of Treasury and Finance and services 90 agencies.
The original budget was A$122m but because the project is already two years late that figure could be as high as A$200m. It is estimated that the implementation problems at the OSS alone are costing A$400,000 per month.
'We also have the problem of staff shortages and little coordination between the three shared agencies,' Murphy says. 'Also, the increasingly complex software developments are providing a stumbling block.'
There were multiple uses of different software systems in both payroll and finance. It was rumoured the former had 12 different software applications and the latter 21. Trying to mesh this together and get staff on the one system has proved difficult, both from a management and from a technical perspective. 'There has been limited cohesion getting into one agency and all working on the one system,' Murphy admits.
The reform plan called for the OSS to manage the development of the integrated system, which would eventually be used by all three shared ser-vices to drive efficiencies. So far, this hasnt happened. But Murphy sees some light at the end of the tunnel.
'If we sort out all these problems by the end of the year there is no reason why we cant see the full benefits being delivered,' he says. 'However, there is plenty of work to do until then.'
The WA government is revising its estimated savings, which wont take effect until either late 2008, or 2009 at the earliest.
While the WA government struggles to deal with the practicality of shared services, in Canberra the transition has been relatively smooth, although it is still very much in its infancy. And it should be pointed out that the ACT government has considerably fewer departments and systems to integrate.
'For nine months before we implemented our shared services agency in February this year, we worked through all the potential issues,' says Michael Vanderheide, head of shared services for the ACT government.
As with other state governments, the ACT government looked at IT, finance, human resources and procurement, and decided they were the best areas on which to concentrate.
'We also got some very good advice and help from the Queensland government, and looked at a variety of models,' Vanderheide says. 'The Shared Services Agency evolved because of an internal review conducted by the government, and we could see where significant reforms could be made.'
The ACT government is estimating savings of approximately A$20m in 200708, half of which is in the IT area and the rest of which is split between human resources, finance and procurement.
Vanderheide says the savings derive from a multitude of sources, such as purchasing IT equipment rather than leasing, extending the life of assets and the amalgamation of resources.
What all three governments are loath to discuss is the cost of human capital: pooling resources inevitably means a reduction in staff in some departments or agencies.
'In the human resources and finance side, yes, there will be cuts in staff,' Vanderheide says. 'But that is not the significant saving, and we will also be recruiting in some areas.
'The key difference between us and the Queensland and WA governments is that we had the IT systems in place, and this makes a big difference, especially in the areas of finance and payroll. This let us concentrate on change-management processes rather than the IT side of things.'
Although it remains to be seen whether the ACT government can hit its forecast of A$20m savings a year, one thing is for certain: the idea of shared services is great in theory, but actually rolling it out requires fundamental cultural and practical changes, usually among staff not used to or fond of change. So far, no Australian state government has yet to get it completely right.
