All Commonwealth agencies perform common corporate functions, such as paying employees and preparing financial statements. Given these activities are common across government, there is scope for economies of scale to be achieved, both in the procurement of back-office technology and service delivery.
The Australian Public Service maintains a range of bespoke corporate ICT systems. Even where agencies have off the shelf systems, they often differ. For example, many agencies use the SAP enterprise resource planning software – there are more than 40 versions of the package currently in use.
The Commission considers the public service should aim to standardise corporate processes to improve purchasing power and to facilitate a move to shared services.
Shared services relates to the single provision of common functions to more than one organisation. They usually cover clearly specified elements of human resources, information management, communication, technology, procurement and financial management.
Shared services can avoid duplication of business functions, reduce costs and generate efficiencies.
Shared corporate services have been taken up to varying degrees by individual groupings of Commonwealth Government departments and agencies, but generally not at a whole of government level.
The approach to date has been relatively ad hoc and would benefit from better strategic planning. The Australian Public Service Commission’s latest State of the Service Report noted agencies have been working together and coordinating the purchase of common goods and services, with two thirds reporting they had participated to some extent in a shared service arrangement.
The most common areas of shared services activities by agencies in 2012–13 are shown in Table 10.1 below.
|Type of service||
per cent of agencies
|Employee assistance program||13|
Source: Australian Public Service Commission 2012-13 State of the Service Report.
Any approach to shared services will need to be carefully researched and appropriately implemented.
A key lesson from other jurisdictions is standardising business processes is a necessary pre-condition to successful shared services projects and provides efficiencies just as significant as those gained from economies of scale.
In designing and implementing a shared service, departments and agencies should be clear in understanding:
- the scope, quality and costs of the existing services;
- services to be included in any arrangement and those that are out of scope;
- the clarity of benefits, including standardisation of processes, reduced duplication and decreased costs;
- the expected level of return on the investment over an agreed payback period;
- opportunities available to leverage technology advancements, such as cloud solutions;
- transitional arrangement requirements, such as moving to new shared service platforms as existing contracts expire; and
- whether private sector providers should be considered.
While whole-of-government shared services have the potential to deliver cost savings and efficiencies, the Commission suggests a staged approach to implementation is prudent.
The first step is to conduct a thorough audit of existing Commonwealth public sector corporate support services to understand costs, processes and models and the extent to which these can be standardised.
As part of this exercise, the Department of Finance should also publish a register of other business systems (for example stakeholder engagement software) to prevent agencies from building new software that already exists.
Agencies should also be grouped and corporate functions standardised within the groups. Grouping could be by: portfolios; ‘like’ agencies, such as economic or national security agencies; or according to the corporate systems currently in place, for example grouping all agencies currently using SAP accounting systems and moving to a common version, potentially in the cloud.
Moving to a clustering arrangement will make it easier and more practical to benchmark corporate services performance. As well as increasing the overall performance of public sector corporate services, this would deliver the information to standardise services and improve IT purchasing power prior to moving to shared services.
Recommendation 64: Corporate services and systems
All Commonwealth agencies perform common corporate functions, such as paying their employees and preparing financial statements. The Commission recommends the Government improve the efficiency of corporate services by:
- standardising corporate business processes;
- publishing a register of other business systems;
- improving procurement of corporate information and communication technology systems; and
- adopting a staged implementation of shared corporate services for Commonwealth Government departments and agencies.