Ignorance is Bliss

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  • UNDERSTANDING RISKS OF

    SHARED SERVICE CENTRES

    16 APRIL 2012 | THESIS

    DELFT UNIVERSITY OF TECHNOLOGY, MASTER IT MANAGEMENT

    AMANDA VRAKKING

  • 16 April 2012 Thesis Delft University of Technology Master IT management Amanda Vrakking a.vrakking@gmail.com Attendant: dr.ir. M. Janssen Faculty Technology, policy and management Section Information and Communication Technology m.f.w.h.a.janssen@tudelft.nl

  • Management Summary

    Relevance In March 2011 an advisory report was presented to the region of Gooi en Vechtstreek, examining which areas of the municipalities were eligible to take part in a collaboration. The starting point of that advisory report was the reassessment of the cooperation among various municipalities within the region. During the mapping of the potential areas, it became apparent that there was an opportunity to create an SSC for support services. This is expect to bring benefits such as cost reduction, quality and continuity improvement. The development of the SSC has not yet started. However, the town clerks have commissioned a consultancy firm to carry out a feasibility study of establishing an SSC. Potential benefits of the SSC will not be achieved automatically, therefore, understanding and dealing with risks is crucial for achieving these benefits. At this time, there is no insight into what risks appear when setting up an SSC within the region Gooi en Vechtstreek. This research focuses on a structured and systematic way of identifying and analyzing these risks. In order to address the research questions, a review of available literature was used to collect information about SSCs and risk management. The instrumental risk management approach identifies risks, measures them and suggests way of mitigating them. Lessons learned from the organizational attention approach, takes other factors like stakeholder attention (actors), socio-political goals, and strategic rationale into account. There was no literature about risk management approaches in the area of SSC found in the literature. Purpose An SSC is an interesting option because the municipalities are too small to do everything themselves without risks in the areas of efficiency, quality, continuity and continuity (reducing vulnerability). This, however, comes with significant risk. Although most of the success stories are publicized, both practice and literature shows that benefits are not achieved automatically. In some cases, it takes years to accomplish the desired benefits. The question is, how can an SSC be established and contribute to cost reduction while maintaining quality. Properly identifying and addressing risks, will ensure a greater chance of success. The objective of the report is primarily to provide insight into the risks, with the assumption that analyzing these risks will contribute to managing change within the organizations. By identifying the risks associated with an SSC, and asking the stakeholders to address the probability and impact of these risks, estimations can be made of their importance. This should ultimately contribute to an SSCs success, thereby improving public service and internal operations and were possible cost reduction and knowledge retention. Design/methodology/approach Government SSCs differ from commercial SSCs in that they frequently include strategic goals that go beyond efficiency, quality and continuity (reducing vulnerability). These SSC include political and social objectives (public value) such as trust in government, social inclusion, community regeneration, community well-being, and sustainability. These additional criteria pose an extra challenge in designing a risk management approach that helps to meet these objectives. This thesis develops and evaluates an approach for SSC risk management, which complements existing methods. It is based upon an instrumental risk management approach and the concept of public value. The approach is founded upon a case study in the region of Gooi and Vechtstreek.

  • Four different municipalities and one municipality SSC-organization were visited during the case study. There is a large representation of interviewees in the municipality of Hilversum and municipality of Bussum. The BEL-combination is already an SSC, it delivers services for three different municipalities (Blaricum, Eemnes, Laren). In total, there were 17 people interviewed, divided into 5 groups: Mayor and Aldermen, Town clerk, IT-manager, employee and end-user. Findings The straightforward conclusion could be made that there are so many risks that the municipalities should ask themselves if these risks are manageable and worth the benefits. But this would do no justice to the willingness of the municipalities to collaborate. Summarizing the risks, the motivations and observation, the hypothesis can be made that the greatest risk is the difference in objectives between the municipalities and all the individual stakeholders. Almost every single participant is in favor of setting up an SSC. But very little thought has been put into potential risks and if this did occur so the area of public value was completely neglected. This could be due to people following current trends and thought without necessarily understanding the implications of organizational and administrative change. This hypothesis is supported by the most remarkable comment of the most important stakeholder:

    Why are you asking all those questions about risks? In that case we can quit right away!

    Apparently, ignorance is bliss. Recommendations As described the major risk is: no common objectives among the municipalities and stakeholder groups. Recommendation on behalf of this risk that strategic choices are made in a systematic, collaborative and structured way during phase 0, and phase 1 of setting up an SSC. Research all possible motives, as this can help to set the right level of objectives. Mayor and Aldermen are in the lead, they have to decide what the objectives are for setting up an SSC. These objects cannot be determined by work groups, conducting studies or hiring consultants. If the objectives are set they should ensure that the objectives are achieved. Discuss the implications of benefits and losses as a whole for all the organizations. It is also recommended to encourage communication between the stakeholder groups, and especially among the municipalities. Visit the BEL-Combination, interview all individual stakeholders. They have experience within the region Gooi en Vechtstreek. Recommendations on behalf of the other risk are not to overestimate technical abilities. Ensure that all whom are involved have sufficient knowledge. At last do not forget about the public value! Originality/value Shared Services Centres provide a solution for resource sharing among multiple users and are gaining importance in public administration, this is expected to bring benefits such as cost reduction, quality and continuity improvement. There is hardly any research in the field of shared services and risk management and no research investigating influence of stakeholders on the process in local government.

  • Index 1 Introduction ..................................................................................................................... 7

    1.1 Context .................................................................................................................................... 7 1.2 Gooi en Vechtstreek ................................................................................................................ 7 1.3 Shared Service Centre ............................................................................................................. 8 1.4 Report outline.......................................................................................................................... 9

    2 Assignment .................................................................................................................... 10 2.1 The global problem................................................................................................................ 10 2.2 The objective ......................................................................................................................... 10 2.3 Research questions................................................................................................................ 11 2.4 Scope ..................................................................................................................................... 12 2.5 Deliverables ........................................................................................................................... 12 2.6 Research methodology .......................................................................................................... 12

    3 Theoretical Background: shared services & risks .............................................................. 14 3.1 Shared Service Centers .......................................................................................................... 14 3.2 Risks management ................................................................................................................ 17 3.3 SSC risks ................................................................................................................................. 19 3.4 Stakeholders identification and analysis ............................................................................... 20 3.5 Conclusions ............................................................................................................................ 22

    4 Towards a SSC risk management approach...................................................................... 23 4.1 SSC risk management approach ............................