Govt lays groundwork for shared services, job cuts

The Department of Finance has laid out its draft vision for a streamlined and efficient government back office, in a plan that will set the ball rolling for federal government shared services and further reductions in the public sector workforce.

After securing $2.9 million for the project in the 2013 budget, Finance is investigating ways to minimise ERP duplication across the Commonwealth and to standardise the way functions like HR, payroll and finance are processed.

It has calculated that expenditure on ERP systems across government is on the increase “which poses challenges given the tightening fiscal environment".

In response, the department has set out a proposed framework (PDF) for a gradual alignment over seven years that would see:

• The adoption of common ERP business processes across government;
• The establishment of a whole-of-government procurement panel for ERP products, which agencies would be obliged to buy from in order to limit the range of systems in use;
• Centralised coordination of software updates; and
• Transparency of pricing across government.

Under the Finance roadmap, agency ERP teams would be expected to transition to the standard business process and systems once their legacy systems reach end of life or licensing deals expire.

While minimising duplication, the scheme is also likely to lay the groundwork for future job cuts, documents suggest.

“[The roadmap] affords the APS an opportunity to be proactive in determining outcomes which align with the Government’s objectives... such as the need to reduce the size of the public sector.”

It opens the way to achieve “efficiencies over time by reducing the number of staff required to complete transactional tasks and reducing ICT costs.”

- Information Paper: Investigation into Optimising ERP Capability across the Public Service

Despite this, a spokesperson for the Department of Finance has denied it received any explicit directive to identify job reductions as part of the ERP project.

"The Enterprise Resource Planning project is focussed on improving Enterprise Resource Planning capability across the public service, not on staffing reductions," the spokesperson told iTnews.

The paper says the reforms would also increase the flexibility of the public services to move staff between agencies depending on what project or program they are working on at a given time.

Implementation of the draft recommendation also prepares the government for the introduction of mandatory public sector shared services scheme, as flagged by the National Commission of Audit.

The Audit recommended the “staged implementation of shared corporate services for Commonwealth Government departments and agencies,” and while the advice is still being considered by the government, Finance describes itself as “well placed” to act on the suggestion if it is endorsed.

“Once most entities use standard processes it will be easier for multiple entities to share a system under a shared service arrangement, which may be through a government mandated cluster-based shared service arrangement.”

However, it has also acknowledged the chequered history of shared services, and has vowed to avoid the pitfalls that have undermined similar arrangements in the states.

“Lessons must be learnt from past domestic and international case studies where simple rhetoric often overrode the complex reality and caused change attempts to fail.”