Defining shared services and shared outcomes in the public sector

Shared Services

Shared services IT deployments allow governments to focus their limited resources on value-added activities that are central to their missions, rather than on routine administrative and transactional functions. The end result is improved outcomes at a lower cost for public sector stakeholders, and ultimately, maximized public value.

However, the concept of shared services in the public sector is relatively new. Many governments are interested but proceeding cautiously. Simply defining "shared services" is often the first step for many governments. Often, the concepts of shared services and consolidation get mixed up and used interchangeably.

Shared services vs. consolidation

The most commonly accepted definition of shared services, based on extensive interviews with SAP government clients:

"Shared services is a collaborative strategy in which common business functions are concentrated into a semiautonomous entity that has a management structure designed to deliver the same services to different groups within an organization, promote efficiency, value generation, cost savings, and improved service for the customers of the enterprise."

Put another way, a shared services delivery model provides a framework for the public sector to leverage economies of scale through the principle of automation of various public administration ("back-office") and lines of business ("front-office") services common to multiple agencies and

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departments. These services share standard end-to-end business processes and associated enabling technology and are placed into a single governance delivery structure that is customer-focused and performance-managed across time, quality and cost, typically via contractual arrangement.

The key differences between shared services and consolidation are that consolidation focuses on the delivery of IT services by taking existing organizations, services or applications and combining them into a single operation, with cost being the main driver, and no accountability to service quality or to the customer. Services are typically standardized, versus tailored to the customer and there are no performance targets or commitments in place.

Shared services, on the other hand, are customer-driven, versus centrally imposed. Shared services put a governance structure in place, usually in the form of service-level agreements (SLA's), or memorandums of understanding (MOU's). Shared service centers value and use input from customers to continuously improve service delivery and reduce costs.

The benefits of shared services include economies of scale, uniform processes, enhanced service delivery, reduced IT complexity and reduced bureaucracy for front-line employees.

Shared outcomes

A new concept and benefit from shared services deployments is "shared outcomes". A shared outcome is an outcome that is common to two or more government agencies and a result experienced by stakeholders from this combination of government activities.

Managing for shared outcomes is a form of inter-agency, cross-organizational collaboration or joint working where the agencies involved share responsibility for, and actively collaborate, to manage towards a common outcome. An example of a shared outcome is between a tax agency and a child support enforcement agency. Take a custodial parent, who has a court order that they will receive child support payments from the non-custodial parent. If the custodial parent is not receiving these payments, they can contact the human / social services agency. This agency can then interface with the tax agency within the same government enterprise. The tax agency confirms the non-custodial parent's tax obligation, and their wages and/or tax refund is identified and electronically garnished. The system then disperses electronic payment to the custodial parent. In this scenario, the shared outcome is the child support agency fulfill payment to the custodial parent (it's core mission), and the tax agency ensures taxpayer compliance (it's core mission).

Russell LeFevre is SAP Director Public Sector, responsible for industry insights and strategy

This content is reposted from the SAP Developer Network.
Copyright 2007, SAP Developer Network

SAP Developer Network (SDN) is an active online community where ABAP, Java, .NET, and other cutting-edge technologies converge to form a resource and collaboration channel for SAP developers, consultants, integrators, and business analysts. SDN hosts a technical library, expert blogs, exclusive downloads and code samples, an extensive eLearning catalog, and active, moderated discussion forums. SDN membership is free.

Want to read more from this author? Click here to read Russell LeFevre's Weblog. Click here to read more about Governance, Risk and Compliance on the SDN.

This was first published in April 2007

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