This commentary offers practical guidance to political appointees whose agencies are interested in transitioning to a Shared Service Provider (SSP), whether for financial systems, Information Technology (IT), Human Resources (HR), or acquisition. Based on our experience and meetings held with Shared Service Providers and their customer agencies, we developed a list of key areas for consideration. While there are many steps required to complete a shared services transition, this commentary highlights some key areas that agencies need to get right in order to be successful and help the organization transition smoothly to an SSP.
The Transition to Shared Services
There are four phases to a shared services transition.
Phase One: Assessment. In this phase, an agency identifies why it is moving services to a shared service provider and defines what the agency hopes to accomplish by the transition. The assessment phase provides the justification for starting the project and identifies the measures for success. Agencies often minimize the importance of this phase. Agencies should plan a sufficient amount of time for the assessment phase so that they can perform the due diligence necessary to ensure that their needs are met by the SSP that they choose.
Phase Two: Operations/End-state. In this phase, an agency performs an assessment and meets with providers. During the assessment and meetings, the agency needs to evaluate the internal organization and operations and articulate in detail the end state vision and operating model. In several cases we have seen that an HR strategy was not addressed prior to the implementation, leading to confusion among employees and resulting in inefficient execution and an organization ill-equipped to perform in the new shared services operating model. A successful shared services transition depends on the people, which is why a separate effort focused only internally is essential.
Phase Three: Transition. During this phase, the agency’s plan should drill down to the lowest level of detail to ensure there are no surprises when they go live. Due to the effort and time required to convert to an SSP, an agency should create a dedicated transition team and review in detail the governance structure and the associated financial and management reports required for performance monitoring and decision making.
Phase Four: On-going Maintenance. Once the transition is complete and the day-to-day operations are under way, it is important that the agency works with the SSP to continue to establish regular communication to discuss updates to the system, new requirements, or any other issues. The agency should also monitor and review the Service Level Agreement (SLA) to verify that the SSP is meeting the agreed upon requirements and timelines. This level of review allows for better communication and manages both parties’ expectations. We recommend that the agency be involved with the SSP’s change control process to verify that the changes that the agency desires are being considered by the SSP.
Recommendations for a Successful Assessment (Phase One)
A key lesson learned from agencies that recently converted to a Social Service Provider (SSP) was the need for an assessment phase to identify the reasons behind the conversion and the expected benefits of that conversion. While this is not a comprehensive list, we recommend the following.
Recommendation One: Talk with Current Customers. Meet with existing customers of the different SSPs to understand in detail their experience and discuss customer service requirements, SLAs, governance, and unique business processes. This will help validate that the SSP under consideration can meet service level requirements.
Recommendation Two: Secure an Advocate. Hire or engage an Agency Advocate. Agencies that have a smoother transition to an SSP have engaged an Advocate. The Advocate could be a federal employee or from private industry. The advocate’s role would be to assist the organization in focusing on key areas to gain value from the relationship with the SSP. The Advocate can provide value to all phases of the project, in the assessment phase, services provided by the advocate would include:
- Review the strategic direction and verify it is aligned with the overall agency strategy and outcomes.
- Provide input and guidance on governance and program management process.
- Identify potential areas for process and technology optimizations.
- Provide a risk mitigation strategy development and risk resolution monitoring and reporting.
- Verify that mutually beneficial SLAs exist.
- Work with the agency to match roles/responsibilities with future state.
Recommendation Three: Develop Detailed Service Level Agreements (SLAs). The agreement with the SSP will include an SLA. During the assessment phase, the agency should work with the SSP to determine the performance metrics that will align with the agency’s operational needs. SLAs can be defined around many different metrics that are important to business operations, such as system availability, timeliness of data availability, quality of data, service desk response time and communication about systems upgrades. While we encourage the review of other SLAs, it is important to get beyond the generic SLA format and discuss what is really important to each organization. This helps both organizations get to the heart of what is really going to matter from a performance perspective in the ongoing relationship. Even though in the federal space SLAs may be more challenging to enforce, it is important that each agency reviews and studies them to determine their minimum requirements. This will begin the conversation with a provider so both parties can make an informed decision whether the business partnership makes sense.
To benefit from a transition to an SSP it is important that agencies invest the time and perform research prior to selecting and transitioning to a provider. The assessment phase coupled with careful planning and additional investments will help realize greater benefits sooner.