I am getting close to the end of the Gartner Symposium in Gold Coast and a few conversations with clients have been about shared services and consolidation. Australia has quite a tradition with shared services, as many states have implemented and run shared services for quite a few years.
Today many governments around the world are either mandating or pursuing or planning the establishment of shared services as a way to reduce operational costs. Be it infrastructure, applications or entire business processes, it is quite easy to build a business case for why services should be common inside a particular jurisdiction, rather than duplicated in each and every agency or department.
On the other hand, it appears that shared services are having a hard time. Queensland, Western Australia, South Australia, Victoria have all had their fair share of issues with shared services, and this is happening quite consistently in other parts of the world. More recently, many have been looking at the bold consolidation decision by the Canadian federal government, which has set a rather aggressive timeframe to consolidate over 300 data centers into 20 and over 100 email systems into one.
There is no doubt that duplication of services and spending across different government agencies makes little sense. But experience shows that there is insufficient attention to the governance aspects (agencies want to have a say in how the shared services are structured) and – more recently – to technology evolution that is making some of the technology that is being targeted through shared services more and more commoditized.
The challenge is no longer to put one organization in charge of delivering shared services, but to look at how to support agencies in efficiently buying the same service from external service providers. In this respect, I am impressed with how New Zealand is moving to support agencies in buying infrastructure-as-a-service, by selecting preferred vendors that agencies can buy from. This is not dissimilar from how GSA in the US and the UK Cabinet Office are doing, but with an important difference: while in the UK and in US there is a data center consolidation initiative funning in parallel to the cloud one (and agencies may choose either cloud or the consolidated data center), New Zealand seems to be going for cloud only, still leaving agencies free to choose within the boundaries of a framework contract
This balance between control and choice is at the basis of the success (or lack thereof) of future consolidation and shared service initiatives.