Help wanted for APS shared services revolution, apply within

By Stephen Easton

December 2, 2015

How can the Australian Public Service live the shared services dream?

The Department of Finance has asked bureaucrats from other governments in Australia and overseas, and it now wants to see what innovative answers the private sector has to reduce the $3.5-$4 billion a year the APS spends on corporate services.

Mathias Cormann
Mathias Cormann

To that end, the department has produced a discussion paper and posted it on the AusTender procurement hub. Whoever responds is asked to “be innovative” with their responses to the discussion questions, and not to send generic marketing material.

“Finance is seeking market intelligence, in particular, to understand whether opportunities may exist for partnering with the private sector to deliver shared services and the risks or issues associated with this,” the paper explains.

The department hopes to hear back from experts in change management, business processes and shared services as well as system integrators, software and hardware vendors, and any other consultants who feel they have something to contribute. An information session will also be held in two weeks’ time, which will be recorded and published.

Nine open-ended questions have been crafted to guide the outsourced brainstorming session, with wide scope for a variety of out-of-the-box solutions. The Finance Shared and Common Services team is happy for submissions to address only selected questions, all of them at once, or bring in other relevant issues.

The questions are fairly exhaustive, covering everything from the overall strategy and how best to implement it, to governance and ongoing management, and even how to avoid marginalising small agencies.

Finance Minister Mathias Cormann says engagement with the private sector is a “necessary step” to finding the best way to make the elusive economies of scale in corporate services a reality.

Finance also wants to know about examples of “best practice or innovation” in shared services that are delivering results elsewhere, and what else the various vendors and consultants might need to know if they are to get involved in the eventual consolidation project.

The paper also asks for views on “the greatest challenges” the project will face, and what roles private companies can play in what follows the whole-of-government shared services revolution.

Shared and common services consolidation across the whole APS will start with relatively simple, high-volume transactions like accounts, credit card management and payroll, which account for about a third of total APS corporate services spending. Benchmarking in August found that a large chunk of the total $3.5-$4 billion cost relates to internal staff and contractors whose numbers can be reduced through consolidation.

“Value-added transactional services” like asset management, learning and development, recruitment and ICT services are being considered for the second phase. Charts included in the paper explain which functions fall under each category, including higher-level “strategic services”, and three maps show the complexity of the current state of play for financial, human resources and ICT services within and between portfolio clusters.

A map of internal ICT services in the APS.
A map of internal ICT services in the APS. Click to enlarge.

There are currently “significant disparities in efficiency” in the federal bureaucracy, according to the discussion paper. There are 85 internal service providers, some of which provide to themselves, out of 96 non-corporate agencies, and 239 separate relationships with private sector entities.

There are just eight agencies that might be involved in delivering corporate services in future, with the vast majority wishing to become consumers and focus on their core work. Enterprise resource planning systems number over 200 and have a variety of different process, data definitions and purchase arrangements because:

“Agencies typically make investment decisions in isolation, resulting in reduced purchasing power, unnecessary customisation and a ‘seller’s market’ for licensing and consulting services.”

Finance believes moves towards shared services in other governments have stalled due to “a preoccupation with short-term savings” and a failure to actually increase efficiency in the new scheme. It is also working on the assumption that “mandating the integration of large numbers of end users into rigid clusters over the short to medium term is problematic”.

The most recent push for shared services that has been progressing in recent years will continue but the new plan for a rapid, APS-wide consolidation delivering big savings over a short period of time is expected to be ready for implementation on July 1 next year.

The paper also outlines the aims of the wider three-to-five-year APS Transformation project and the Coalition’s signature “smaller government agenda” as background to the corporate services consolidation drive. It explains:

“Transformation must occur rapidly, and is the responsibility of Secretaries, Chief Executive Officers and APS members collectively and individually.”

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