1PROFESSIONAL DEVELOPMENT

ASMC National Capital Region: Professional Development Institute

TRAININGEDUCATION

ASMCNational Capital Region

Professional Development Institute

10 March 2016

1

2PROFESSIONAL DEVELOPMENT

ASMC National Capital Region: Professional Development Institute

TRAININGEDUCATION

Innovation Insight Sessions: 1040 - 1150

• 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

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Innovation Insight Sessions

DELIVERING THE PROMISE …

© Chazey Partners 2016

Rapid Benefits with Alternative Shared Service Models

March 10, 2016

Agenda

Chazey Profile

Why Shared Services

Case Studies

Tactics & Insights

Why Shared Services in the Public Sector

Trends in Shared Services

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

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

Chazey Partners: Serving multiple

industries, globally, both private & public

sector

Chazey Partners Profile

WHERE HAVE WE COME FROM

OUR CLIENTS

Who We Have Worked With

Agenda

Chazey Profile

Why Shared Services

Case Studies

Tactics & Insights

Why Shared Services in the Public Sector

Trends in Shared Services

Achieve the Triple Benefits of Shared Services

Higher Quality

Lower Costs

Improved Control

• 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

Elevator Speech

• 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.

Definition

• 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.

Goal

• 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.

How-To

What Exactly is Shared Services?

Centralization/De-Centralization Cycle

Remote from business

Unresponsive and inflexible

No Business/ Operational control over costs

Viewed as central overhead

Prevalence of shadow operations

Centralized

Challenges

Disparate processes

Multiple standards

Duplication of effort

Different control environments

High cost and costs unclear across the business

Not scalable

Decentralized

Challenges

Responsive to Business and Operational needs

Business/ Operations control decisions

Customized solutions to meet Business/ Operational requirements

Benefits Shared

Highly client focused

Commercially driven

Service Partnership Agreements

Clear unit costs

Flexible delivery

Clear understanding of drivers and activities

Common systems and support

Consistent standards and controls

Tight control environment

Economies of scale

Benefits

Agenda

Chazey Profile

Why Shared Services

Case Studies

Tactics & Insights

Why Shared Services in the Public Sector

Trends in Shared Services

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)

• 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

SSON’s Global Report 2016: State of Shared Services & Outsourcing Industry

“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)

“I believe our current Shared Services strategy will deliver a dramatic and recognized value to the organization –beyond cost savings.”

General Trends in Shared Services

SSON’s Global Report 2016: State of Shared Services & Outsourcing Industry

“Moving up the value chain”

Don’t Know - 5.03%

Strongly Disagree – 2.84%

Disagree – 5.03%

Neither Agree Nor Disagree – 11.60%

Agree – 45.95%

Strongly Agree – 29.54%

Over 75% agree

General Trends in Shared Services

SSON’s Global Report 2016: State of Shared Services & Outsourcing Industry

“How does business (your customer) define value?” “How do you demonstrate/report value to your customers?”

General Trends in Shared Services

SSON’s Global Report 2016: State of Shared Services & Outsourcing Industry

Automation solutions implemented:

• Technology options continue to grow

(spend on technology is not the problem)

Agenda

Chazey Profile

Why Shared Services

Case Studies

Tactics & Insights

Why Shared Services in the Public Sector

Trends in Shared Services

Why Shared Services in the Public Sector?

ChallengesChallenges Benefits Shared Benefits

Funding Decreases

Technology Demand

Growth in Services

Workforce Demographics

Cost of Services to Public

Unified Shared Services

Management

FEELING THE “SQUEEZE”

Why Shared Services in Public Sector?

Cost savings from the “back office” can be used to fund core and front line

services.

Recent Creation of the Unified Shared Services Management Office creating more incentive and visibility to build

Shared Services.

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.Outsourcing opportunities continue to

expand and improve.

Significant funding issues today … everywhere. Shared Services can deliver

potential “triple benefit” of efficiency/effectiveness/control.

Why Shared Services in Public Sector?

Must determine what needs to be physically close to the internal

“customer” or “client” vs what can be done remotely.

Part of the solution to the new socio-economic challenges

Impact of an aging populationIncreased international competitionMore difficult economic environment

Remember that the scope across the “back office” is very significant.

Although public sector adoption of shared services has grown, the results achieved do not yet approach those in

the private sector.

Consider who your “client” is – internal and external. Also need to think about

“citizens” as key stakeholders.

Unique Challenges Facing Shared Services in Public Sector

Unique Challenges to Public

Sector

“Politics”

Across System

State and Federal Workforce:

Locations, Departments,

Leadership Shifts

Governance Issues

“Traditional Silos”

Funding Sources

Increased Costs

Transparency creates critics

“Failures” jumped on

“Culture”

Tenure

Change Management

Agenda

Chazey Profile

Why Shared Services

Case Studies

Tactics & Insights

Why Shared Services in the Public Sector

Trends in Shared Services

• 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• Payroll & Benefits, AP, IT Services, & IT Operations

• Benefits Achieved• $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• Foundation laid for future Shared Services activities

44% Return

Unlocking Efficiencies and Demonstrating ROI

• 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

Case Study – City of Houston Human Resources

Agenda

Chazey Profile

Why Shared Services

Case Studies

Tactics & Insights

Why Shared Services in the Public Sector

Trends in Shared Services

• 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 (1 of 2)

• 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!

Tactics & Insights (2 of 2)

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

Top Three Takeaways

36PROFESSIONAL DEVELOPMENT

ASMC National Capital Region: Professional Development Institute

TRAININGEDUCATION36

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

37PROFESSIONAL DEVELOPMENT

ASMC National Capital Region: Professional Development Institute

TRAININGEDUCATION37

Luncheon: Atrium Hall

ASMC National Update: Mr. Al Runnels, USA, CDFM, CGFMASMC Executive Director

38PROFESSIONAL DEVELOPMENT

ASMC National Capital Region: Professional Development Institute

TRAININGEDUCATION

Speed Mentoring

• Government only, Pre-registration

required

• Meridian DE at 1700

• 1.5 CPE Credits

ASMC 2015 Annual Survey

o Invitation Only

o Horizon at 1700 [Concourse Level]

o Host: Mr. Al Runnels, USA, CDFM, CGFMASMC Executive Director

o Mr. Mark Easton, Deputy Chief Financial Officer, Department of Defense

o Mr. Doug Bennett, Principal Deputy, Assistant Secretary of the Air Force, Department of the Air Force

o Mr. Joe Marshall, Principal Deputy, Assistant Secretary of the Navy, Department of the Navy

o Mr. Craig Bennett, Deputy Chief Financial Officer, United States Coast Guard

o VADM Louis Crenshaw, Ret, USN, Moderator

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Post NCR PDI Events

39PROFESSIONAL DEVELOPMENT

ASMC National Capital Region: Professional Development Institute

TRAININGEDUCATION

With Gratitude to our 2016 Corporate Sponsors