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Finance explores shared services expansion

by Pallavi Singhal •
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The Department of Finance is considering how back-office shared services at the Federal Government level could be expanded, with agencies initially being asked to report on existing service arrangements and whether they intend to become a provider or receiver of services in the future.

“The Department of Finance is coordinating a programme of work to analyse existing back-office services which are common across agencies”, a spokeswoman for Finance told Intermedium.

“This work involves better understanding the existing arrangements across government and identifying opportunities for transitioning to shared and more standardised systems and processes over time.”

Agencies can nominate to become providers of certain services and consumers of others, the spokeswoman confirmed.

“Agencies will make their decision based on their own assessment of their capabilities, priorities and risk profile,” she said.

“As part of the overall programme, Finance is providing guidance on the expectations that will be required of providers.”

The move towards a shared services environment aligns with the 2013 National Commission of Audit’s recommendation that adopting shared services for “common corporate functions, such as paying employees and providing common ICT services” could help the government achieve saving through economies of scale, eliminate duplication, and generate greater efficiencies.

Finance’s initial step of canvasing the existing operating environment across the government also follows the Audit recommendation to “standardise systems and processes before consolidation” to reduce the risks associated with shared services.

A number of shared services initiatives are already in place, including Finance’s GovSHARE platform, which is used to share information about public sector frameworks and ICT solutions currently being used by agencies, with the aim of encouraging the re-use of solutions, resource collaboration and information sharing.

“GovSHARE provides a valuable resource for all agencies, and is used frequently by them,” the Finance spokeswoman said.

“In late 2014, GovSHARE was enhanced to allow state based agencies to also utilise the platform, which has greatly increased the use of GovSHARE.”

Additionally, a Shared Service Centre was established in Canberra following the change of government in 2013. The Centre was initially set up to provide shared corporate services to the newly-created Department of Education and the Department of Employment, which had a number of common programs from their former iteration as the combined Department of Education, Employment and Workplace Relations.

The Centre has since indicated its intention of expanding its customer base to other agencies, including those outside the Education and Employment portfolios.

The Federal Government’s move towards shared services is going against the trend visible in some Australian jurisdictions. The NSW Government’s attempts at establishing broad shared services agencies is widely considered to have not met expectations, with both ServiceFirst and BusinessLink achieving significantly less savings than anticipated. A NSW Commission of Audit later concluded that under-investment in the agencies was a major factor in their failure.

This is reflected in the Federal Commission of Audit’s recommendation that shared services lead agencies “avoid overly optimistic savings expectations and unrealistic timeframes”.

Shared services also failed in Western Australia after minimum take-up, with State Premier Colin Barnett attributing much of the failure to the program’s one-size-fits-all nature that “was probably bound to fail from the beginning”.

However, these shortcomings have occurred alongside shared services successes in other parts of the country.

The ACT’s whole-of-government shared services arrangement for a range of corporate functions including ICT, procurement, financial management, HR and records management so far appears to be a success.

“The ACT Government had a consistent approach across its agencies to Financial and HR practices which significantly simplified the challenge of having a common ICT platform,” the Federal Commission of Audit said.

“This example also highlights the importance of standardisation and consolidation of processes as initial steps before the implementation of a shared services model.”

The Victorian Government also recently announced its intentions to grow shared services and keep its embattled in-house ICT shared services provider CenITex, despite long-standing reports of poor financial and performance outcomes linked to the agency.

Scrapping plans to outsource the range of services provided by CenITex, the Government noted that the majority of the shared services required a “specialist understanding” of the Victorian public sector or were “not readily available in the market”. A recent strategic review also advocated for the growth of shared services, recommending that agencies move to or establish shared services arrangements as the default approach where possible.

Similarly, the Queensland Government also recently scrapped its plans to outsource its shared ICT services provider CITEC.

The shared services approach is especially relevant in the current environment of significantly constrained budgets that are visible across the Australian public sector. The standardisation of back-office functions may also aid agencies in moving to centralised customer-facing operations in the future, as intended by emerging initiatives such as the Federal Government’s Digital Transformation Office and the NSW Government’s growing Service NSW program.

Related Articles:

In Focus #6: Why Shared Services fail

Victoria to keep CenITex and grow shared services

Unisys, Infosys sign landmark deal to outsource NSW back office

CITEC to remain in-house under Labor

Finance launches GovShare

GovCMS costing, hosting plans released

Social Services adopts govCMS

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