ASMC PDI - Washington-ASMC National Capital Region PDI

ASMC National Capital Region: Professional Development Institute
ASMC
National Capital Region
Professional Development Institute
10 March 2016
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EDUCATION
TRAINING
PROFESSIONAL DEVELOPMENT 1
ASMC National Capital Region: Professional Development Institute
Innovation Insight Sessions
Innovation Insight Sessions: 1040 - 1150
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EDUCATION
Mr. Michael Allen, Beacon Global Strategies
Mr. Scott Forrest, USN
Ms. Lauren Leo, NASA
Mr. Mark Ryland, Amazon Web Services
Mr Phil Searle, Founder, Chazey Partners
Brig.Gen. Greg Touhill, USAF(Ret), DHS
Mr. Leif Ulstrup, PrimeHook Technology
TRAINING
PROFESSIONAL DEVELOPMENT 2
DELIVERING THE PROMISE …
Rapid Benefits with Alternative
Shared Service Models
March 10, 2016
© Chazey Partners 2016
Agenda
Chazey Profile
Why Shared Services
Trends in Shared Services
Why Shared Services in the Public Sector
Case Studies
Tactics & Insights
Chazey Partners Profile
Who We Are: Founded 2006 • Global offices headquartered in California • Over 50 full-time and 70 specialist resources
What We Do: Strategic advice • Project management • Technical & domain expertise • Business continuity
Chazey Partners:
Serving multiple
industries, globally,
both private & public
sector
Where We Focus: Transformation of the back office • Human resources • Finance • IT • Procurement • Facilities
The Chazey Difference: Continuity of staff • Practitioners first • Knowledge transfer • Engage client in transformation
Who We Have Worked With
OUR CLIENTS
WHERE HAVE WE COME FROM
Agenda
Chazey Profile
Why Shared Services
Trends in Shared Services
Why Shared Services in the Public Sector
Case Studies
Tactics & Insights
Achieve the Triple Benefits of Shared Services
Higher Quality
Lower Costs
Improved Control
What Exactly is Shared Services?
Elevator
Speech
Definition
Goal
How-To
• Treats its internal clients as if they were an external client. Treats them with the same level of
respect and service that external clients expect
• Provides non-core services to the “business”, employing a specialist team, geographically
unconstrained, and focusing on the requirements of the internal client. This involves a philosophy
and approach totally unlike traditional “corporate-driven” centralization.
• Has the goal of providing high quality, non-core, but mission critical services (which can include
both repetitive common processes and more specialized professional services) to the business at
lower cost and more efficiently than the business could otherwise provide for itself.
• Achieves cost savings and higher quality of service by leveraging organizational re-alignment,
economies of scale, technology, client interaction framework, standardized end-to-end
processes, and best practices.
Centralization/De-Centralization Cycle
Decentralized
Challenges

Disparate
processes

Multiple
standards

Duplication of
effort

Different
control
environments


High cost and
costs unclear
across the
business
Not scalable
Centralized
Shared
Benefits



Responsive to
Business and
Operational
needs
Business/
Operations
control
decisions
Customized
solutions to
meet
Business/
Operational
requirements

Highly client
focused

Commercially
driven

Service
Partnership
Agreements

Clear unit costs

Flexible
delivery

Clear
understanding
of drivers and
activities
Benefits

Common
systems and
support

Consistent
standards and
controls

Tight control
environment

Economies of
scale
Challenges

Remote from
business

Unresponsive
and inflexible

No Business/
Operational
control over
costs

Viewed as
central
overhead

Prevalence of
shadow
operations
Agenda
Chazey Profile
Why Shared Services
Trends in Shared Services
Why Shared Services in the Public Sector
Case Studies
Tactics & Insights
General Trends in Shared Services
•
Started in mid-1980s - driven by private sector multinationals
•
Successfully implemented Shared Services initiatives achieve “20%-45% cost reductions
from the current state” (The Shared Services Roundtable, March 2015)
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More prevalent today in midsized companies and businesses
•
Significant focus and growth in the Public Sector globally, after initially being slower to
adopt
General Trends in Shared Services
“What is your current service delivery model?”
• 100% of Hackett’s top quartile
benchmarked enterprises leverage Shared
Services (Hackett 2013)
• New adopters are moving directly to
multifunctional/Global Business Services
model as part of their implementation
strategy (Deloitte, 2015 Global Shared
Services Survey, February 2015)
SSON’s Global Report 2016: State of Shared Services & Outsourcing Industry
General Trends in Shared Services
“I believe our current Shared Services
strategy will deliver a dramatic and
recognized value to the organization –
beyond cost savings.”
Don’t Know - 5.03%
Strongly Disagree – 2.84%
Disagree – 5.03%
Neither Agree Nor Disagree – 11.60%
Agree – 45.95%
Over 75%
agree
“Moving up the value chain”
Strongly Agree – 29.54%
SSON’s Global Report 2016: State of Shared Services & Outsourcing Industry
General Trends in Shared Services
“How does business (your customer) define value?”
“How do you demonstrate/report value to your customers?”
SSON’s Global Report 2016: State of Shared Services & Outsourcing Industry
General Trends in Shared Services
Automation solutions
implemented:
• Technology
options continue
to grow
(spend on technology
is not the problem)
SSON’s Global Report 2016: State of Shared Services & Outsourcing Industry
Agenda
Chazey Profile
Why Shared Services
Trends in Shared Services
Why Shared Services in the Public Sector
Case Studies
Tactics & Insights
Why Shared Services in the Public Sector?
Growth in
Services
Challenges
Technology
Demand
Funding
Decreases
Benefits
Unified Shared
Services
SharedManagement
Benefits
Challenges
Workforce
Demographics
Cost of Services
to Public
FEELING THE “SQUEEZE”
Why Shared Services in Public Sector?
Recent Creation of the Unified Shared
Services Management Office creating
more incentive and visibility to build
Shared Services.
Significant funding issues today …
everywhere. Shared Services can deliver
potential “triple benefit” of
efficiency/effectiveness/control.
Why not? Has worked in the Private
Sector for 25+ years, and is also working
in the Public Sector today. The same
basic challenges and significant
opportunities exist around implementing
but need to be adapted and applied
differently.
Cost savings from the “back office” can
be used to fund core and front line
services.
Outsourcing opportunities continue to
expand and improve.
Why Shared Services in Public Sector?
Remember that the scope across the
“back office” is very significant.
Must determine what needs to be
physically close to the internal
“customer” or “client” vs what can be
done remotely.
Consider who your “client” is – internal
and external. Also need to think about
“citizens” as key stakeholders.
Although public sector adoption of
shared services has grown, the results
achieved do not yet approach those in
the private sector.
Part of the solution to the new
socio-economic challenges
Impact of an aging population
Increased international competition
More difficult economic
environment
Unique Challenges Facing Shared Services in Public Sector
“Culture”
Tenure
Change
Management
Transparency
creates critics
“Failures”
jumped on
“Politics”
Across System
State and
Federal
Unique
Challenges
to Public
Sector
Workforce:
Locations,
Departments,
Leadership
Shifts
Governance
Issues
“Traditional
Silos”
Funding Sources
Increased Costs
Agenda
Chazey Profile
Why Shared Services
Trends in Shared Services
Why Shared Services in the Public Sector
Case Studies
Tactics & Insights
• Scope
• Sharing HR, procurement, finance & payroll
• Potential savings of £400m to £600m per year in administration costs
• Based on moving all departments to upper quartile efficiency levels
• Currently no departments are operating in upper quartile
• History
• Part of 2004 Initiative from Office of Government Commerce
• Full review in 2008 reported annual savings exceeding £20 billion
• 2011 review found that past efforts mainly focused on technology and end-to-end process
ownership with reductions in hand-offs
• National Audit Office (NAO) identified some challenges as well as successes
• Next Generation Shared Services Strategic Plan
• Create Crown Oversight Function to work with departments to drive performance
• Eight Shared Service Centers reduced to five
• Two independent of any single customer (assigned to Arvato & Steria)
• Three standalone in terms of operations and subject to performance monitoring
• Single ERP platform, without which Government will struggle to reach targets
• Scope
• Provides services across Ministry of Defense
• Functions include HR, finance, information & vetting
• One of the largest Shared Services Centers in Europe
• History
• Created in July 2011
• Four year contract worth £36m awarded to Serco with option to extend for further
year
• Based on zero management fee, all Serco’s earnings are performance-based
• Savings of £71m expected over life of contract
• Current Status
• Contract to end in April 2016 (not exercising option to extend)
• Serco: “contract has exceeded expectations”, “Decision of MOD to end contract”
• MOD: “contract reached natural end”
• To date has achieved £64m; full anticipated savings expected over final year
• Ministry has decided to initially bring DBS back within department
• Considering options
• Passed legislation to give Internal Services Agency (ISA) power to
operate as a business
• Autonomy of operations
• Divergence from “normal”
• Transactional and Administrative services into a single model
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Payroll & Benefits, AP, IT Services, & IT Operations
• Benefits Achieved
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$8.8m in annual savings, net of investment
Government-wide strategies
Economies of scale with more consistent service delivery
Opportunities for staff development and improved retention
• The US Department of Heath and Human Services (DHHS) Shared Services
“Program Support Center” (PSC) provides support services to all
components of the U.S. Department of Health and Human Services (HHS)
and other Federal Government agencies worldwide. PSC has a broad range
of over 40 services and products.
• To clarify customer confusion around “true costs” or “full costs” in an
allocated environment, the PSC operates with funding received at the
beginning of the year, with the commitment to ensure costs are agreed
upon.
• They work throughout the year with their customers to
ensure cost discipline – and agree upon any additional
funding needs via Service Level Agreements (SLAs) or
Inter Agency Agreements (IAAs).
• Good initial work in the Business Case and Design
• However, due to time schedule, the Build cycle was compressed
• Resulted in sub-optimal services delivery and customer issues
• Fixed by having a review of services, leadership change and a
comprehensive playbook of areas to modify
• Now initial areas have been corrected and center is growing services
again
• Initial Shared Services work in Finance, Information Technology and
Human Resource started by the governing board and an external firm
• Minimal “buy-in” with the functional staff at each university
• Lack of “ownership” on the financial targets, objectives and
timeline as a result
• Supplemental exercise initiated to validate findings
•
•
Benefit in validating, and in some cases modifying findings
Larger benefit in that each functional area worked closely on the
engagement
•
Buy-in was achieved for a much larger number of areas
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Foundation laid for future Shared Services activities
Unlocking Efficiencies and Demonstrating ROI
44%
Return
Case Study – City of Houston Human Resources
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Problem: City facing $50-70M Budget Deficit
Opportunities: Centralization; reduce liabilities; improve efficiency; eliminate
redundancy
Plan: Implement Shared Services
Process:
– Step 1: People – Redefine Roles and Responsibilities
• Anyone spending over 51% of time moved to Central HR
– Step 2: Process Standardization
• Focus on quality of service and transparency
– Step 3: Technology Adds Capability
• Reduce reliance on expensive and unnecessary add-on solutions
Results
– HR Staff to Employee ratio improved from 1:38 to 1:119
– Improved quality of service
– More efficient, better placed staff
– Self-service functionality
– Improved understanding of customer issues
– Enhanced use of SAP Capital Management Module: $650k of annual savings
Agenda
Chazey Profile
Why Shared Services
Trends in Shared Services
Why Shared Services in the Public Sector
Case Studies
Tactics & Insights
Tactics & Insights (1 of 2)
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Having a Business Case is key: improved decision making & accountability mechanism
Consider functions, processes, sub-processes, locations, operating units and entities
It is really important to distinguish between “solutions” vs “quick fixes”
Multifunctional now often the chosen way to proceed
Consider how far up the value chain you want to go
Senior level executive sponsorship is key - executives must understand and support
the roll-out
• Do not underestimate the change management required
• Consider a multi-faceted communication and advisory approach
• Generate a culture of service and continuous improvement
Tactics & Insights (2 of 2)
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Remember always that the project does not end with “go-live”
Assign your best resources and people to the project
Assign end-to-end process owners
Separate transformation from ongoing activities
Offer end-to-end services by provisioning as many non-core services as possible
under one organizational umbrella
• Realignment can help remove silos and foster a strong shared service culture and
team spirit
• Enable succession planning, job rotation, new opportunities as well as targeted and
consistent training programs
• Do things differently – that’s the whole point!
Top Three Takeaways
1. Shared Services can be complex,
but it is not rocket science
2. Start with a Roadmap and
supporting business case
3. You are not alone, others
have gone before
ASMC National Capital Region: Professional Development Institute
Luncheon: Atrium Hall
Luncheon Keynote:
Lieutenant General Anthony R. Ierardi, USA
Director, Force Structure, Resources & Assessment, J8
The Joint Staff
Note: Please be seated by 12:00
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ASMC National Capital Region: Professional Development Institute
Luncheon: Atrium Hall
ASMC National Update:
Mr. Al Runnels, USA, CDFM, CGFM
ASMC Executive Director
EDUCATION
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ASMC National Capital Region: Professional Development Institute
Post NCR PDI Events
Speed Mentoring
• Government only, Pre-registration
required
• Meridian DE at 1700
ASMC 2015 Annual Survey
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Invitation Only
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Horizon at 1700 [Concourse Level]
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Host: Mr. Al Runnels, USA, CDFM, CGFM
ASMC Executive Director
Mr. Mark Easton, Deputy Chief Financial Officer,
Department of Defense
Mr. Doug Bennett, Principal Deputy, Assistant
Secretary of the Air Force, Department of the Air
Force
Mr. Joe Marshall, Principal Deputy, Assistant
Secretary of the Navy, Department of the Navy
Mr. Craig Bennett, Deputy Chief Financial Officer,
United States Coast Guard
VADM Louis Crenshaw, Ret, USN, Moderator
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• 1.5 CPE Credits
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ASMC National Capital Region: Professional Development Institute
With Gratitude to our 2016 Corporate Sponsors
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