Why don’t governments use shared services more?

By David Donaldson

Friday April 8, 2016

Using common systems brings scale and simplicity to corporate services, such as IT and payroll, making it easier for different parts of government to work together and often saving money. So why don’t governments use uniform or shared services more often?

Departments and agencies should be thinking about better standardised systems over the long term, argues Adam Fennessy, secretary of Victoria’s Department of Environment, Land, Water and Planning.

This would “facilitate any future machinery of government changes”, he told a parliamentary inquiry last month:

“If we have got more standardised payroll, IT and other things that are common to businesses, then that is going to help.”

As well as diminishing disruption when units change departments, standardisation may help to make processes more efficient, he said. The Department of Premier and Cabinet is leading work on the issue, Fennessy noted.

But if they present such benefits, why does government not already use common systems more?

“A lot of it is about legacy systems. Plenty of agencies and departments have specific requirements, too.”

Emergency management, he said, is one example.

“It will have very specific systems that we might run for flood or fire. Emergency Management Victoria has systems and we have made a very specific attempt to bring those together. That helps the community.”

But it can be hard to decide how much specific needs should be traded off against the desire for uniformity.

“If that broader aggregated system is a bit different to another system in, say, child protection, how far do you go for consistency for the sake of consistency?”

The way to tackle such problems, Fennessy said, is to ask: “Why can we not get more consistency?”

With so many moving parts, timing can also cause problems, explained deputy secretary, corporate services Kathryn Anderson:

“Because of those legacy systems and different products and services being used by departments they are in different cycles, so agencies and departments are not necessarily ready to move to the next iteration at the same time as each other.

“So sometimes those investment decisions do not align to support what might seem like a very logical approach.”

As Fennessy highlighted, however, this is not a new debate. At the Commonwealth level, many corporate services used to be centralised before the pendulum swung towards decentralisation. In 1996 the Howard government abolished the Department of Administrative Services. This included one of the department’s units, Australian Property Group, which centrally managed Commonwealth property services, requiring departments and agencies to take over responsibility without the experience of APG. The result, one former employee has written, was:

“… most departments fell victim to the property sharks. In the worst cases, some agencies bid against each other for the same office in the same location. Rents went up, commercial real estate made an easy fortune, and the funds available for programs, as a percentage of total portfolio expenditure, was cut.”

Now the pendulum appears to be swinging back in the other direction. The Department of Finance’s Shared and Common Services Programme will likely see a whole array of corporate services gradually being shifted out of individual departments, including human resources, IT, legal — and property management.

MOG merger benefits

The scale gained by bringing together different departments can help increase the efficacy of some aspects of their work outside corporate services, too.

The merger of the Departments of Health and Human Services in Victoria after the last election has benefited the new organisation’s capabilities in a range of areas, secretary Kym Peake told the inquiry into machinery of government changes.

The combination of a larger organisation and moving to a function-based, rather than program-focused, structure is useful for two reasons, she explained:

“It has benefits for the staff who work in data analytics or program design or regulation, whatever the activity might be, that you have a critical mass of people who have got the same sorts of skills and doing the same sort of work and so opportunities for learning and professional development are enhanced.

“The second benefit is that you get to really identify the trends and issues across the department and they are analogous. So when you come to a particular issue or challenge you can look at how is a similar sort of problem being solved in another sector, what are the learnings from that, how might they be applied in this context in relation to this problem? So having the broader suite of functions in the department helps for individual professional development but also in more creative solutions to complex policy problems.”

In the case of Health and Human Services in particular, the merger has brought together two areas that share a lot of clients, she said, whose problems it would be “inefficient and ineffective” to address separately:

“The Royal Commission into Family Violence, for example, has heard evidence that there is often a clustering of needs of both victims and perpetrators of family violence and that between 50% and 80% of clients in the drug and alcohol sector have either perpetrated or experienced family violence.

“Between 50 and 90% of female clients in acute mental health services have experienced interpersonal violence, mostly family violence. Family violence was identified as a factor for approximately 35% of people seeking help from homelessness services, and two-thirds of substantiated child protection incidents have family violence as a factor.”

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Kevin Cox
Kevin Cox
5 years ago

Before implementing shared services I suggest reading “The Collapse of Complex Societies” by the anthropologist Joseph Tainter. Government bureaucracies are complex societies and they periodically collapse when they get too large. To make them more resilient we should stop creating shared services. Rather we can find ways to reuse service systems without being shared. The complexity of shared services increases by the square of the number of agencies using a service. The complexity of services of autonomous agencies increases by the sum of the number of agencies using unshared similar services.

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