Westminster system challenges IT shared services

Australia's Westminster system of government could contribute to poor governance -- and eventually failures -- of shared services projects, Gartner's government sector analyst John Kost has said.

Shared services figures in global positions.

According to Kost, the shared services IT delivery model is worth aspiring to but could be intractable for many Australian agencies.

Kost said successful shared services implementations needed users to buy into the model, as well as strong leadership from management.

But many Australian implementations to date have lacked an accountable person who controls the purse strings and can force directors and secretaries to participate, he said.

Kost attributed the lack of leadership to politicians with a poor understanding and, in some cases fear, of IT.

“So they don’t really want to engage in the issues. That’s when it begins to break down," he said.

He speculated that the Westminster system of government, which characterises state and federal administrations, could add to the complexity.

In the past year, the State Governments of Queensland and Western Australia have been forced to overhaul their shared services models.

Western Australia dumped the model in July after a report found shared services was costing it tens of millions of dollars and could jeopardise agencies' operational efficiency.

“Most shared systems that failed in Australia arose out of a failure in governance,” Kost said.

“If I had to point to one vital thing for shared services - I have lived it and seen it all over the world - it is the engagement of leadership at a senior enough level to get compliance.”

Canada had high hopes for its shared services agency, Shared Services Canada, but according to Kost, the agency was misnamed.

Although the Canadian project involved consolidation, consolidation was “top down and very authoritarian”.

“Despite its name Shared Services Canada is not shared services,” he said, insisting that a shared services scheme should incorporate governance by the customers.

On a more positive note, Kost said South Australia and NSW were heading in the right direction toward secure and flexible shared services schemes.

He said South Australia’s eProcurement deployment across all agencies was going well, noting that the Government had "really moved to a much more simplified standardised approach to procurement".

Meanwhile, in NSW, shared services form part of the Government's move towards process standardisation, since it could only go so far by simply putting equipment in the same room.

“Some of the stuff the new government in NSW is [doing is] very clever,” he said.

Kost said shared services could support user requests for diversity and flexibility and ultimately enable a move towards cloud computing, which could be an outcome of NSW's budding ICT Strategy.

He said the ultimate goal of shared services was to move to smaller, more agile infrastructure.

“By going to shared services or consolidation, or outsourcing, we are telling departments that you will spend less time worrying about infrastructure," he said.

"Regardless of where you go you are going to spend less time worrying about it.”

"We have to get away from those heavy data centres that constrain an agency from being more flexible and rolling out more responsive services."

Gartner’s three essentials of a shared services scheme

Kost said a true shared service required three things to be present:

1. Governance by the customer: A true shared service model doesn't use a “take it or leave it” approach; rather, true shared service customers are smart consumers who are very much engaged in the governance process of the organisation.
2. Payment by the customer: Shared services are paid for by the users as opposed to direct funding by the Government., so all customers have "skin in the game".
3. Service level agreements are set through the governance process, following negotiations between the provider and the customer and not through a top-down authoritarian approach.