The Challenges of Shared Services in Government

In the private sector, implementing shared services is a common strategy to help mid to large size companies scale service delivery.  With shared services, companies are able to lower administrative costs and improve the consistency of back office service levels.  These same advantages hold true for government organizations as well.  Large governmental organizations, particularly at the state and federal level, face the same challenges as private sector companies.  Just like large businesses, governments have to scale services to support vast geographical areas and frequently silo’d vertical business units for which IT, HR, and other back office functions are not core services.

Despite the advantages of shared services it is observed that government is frequently hesitant to embrace shared services.  The reasons for this are the same obstacles that private sector companies face, whether it be legacy thinking, fear of change, or territorial decision making.  Private companies have an easier time overcoming this resistance because employees often have a financial stake in the success of the entire organization.  For government to achieve similar results a strong emphasis needs to be placed on the culture and mission, with effective tops down leadership driving adoption of the change at the agency level.

In the Ricketts administration we are beginning to see the results of our shared services strategy thanks to an enterprise wide focus on our mission to create more efficient, effective, and customer focused state government.  A great example of Nebraska’s shared services success story has been the multi-year journey on IT consolidation.  The Office of the CIO has consolidated Desktop and Infrastructure support to save tax-payer money while improving the security and up time of the State’s IT infrastructure.  Similarly our Department of Administrative Services is in the early stages of providing centralized payroll and assisted HR support for our smaller agencies.  These efforts build on some of the legacy shared services operations including employee relations, compensation, and benefits administration support.  The early results are in: Shared services has contributed to helping us reduce the size of government, create room in the budget for tax relief, and still improve on our services our citizens.  This is another great example of how government can be run more like a business.