The quiet launch of the NSW State Government's ServiceFirst agency was an attempt to avoid the woes of similar 'big bang' shared services programs in Western Australia and Queensland, according to one analyst.
news analysis The quiet launch of the NSW State Government's ServiceFirst
agency was an attempt to avoid the woes of similar "big bang" shared
services programs in Western Australia and Queensland, according to one analyst.
Shared services initiatives for state governments have aimed to
cut the cost of running back office functions, through the
consolidation of multiple agencies' payroll, HR, IT and property
management into centralised units.
But while large scale shared services initiatives in government
have promised massive savings, implementation problems on large
projects have left savings elusive.
"State governments in New South Wales, Victoria and South
Australia are going down a shared services path, but they're not
doing it in a big bang way that Western Australia and Queensland
have done," Gartner government analyst, Richard Harris recently
"Some of the challenges to the big bang approach are that they
aim for very large benefits but, because they are big and complex,
they're not easy to get in place," added Harris.
Western Australia's attempts since 2002 to build its shared
services capabilities promised $50 million a year savings on its
$315 million back office budget. Two years behind schedule and $70
million over budget, the project was slammed last year by WA's
auditor general. The delays have left taxpayers facing a bill of
$400,000 per month while the hoped-for savings were deferred from
July 2007 to July 2009.
Richard Harris (Credit: Gartner)
Queensland had high hopes for its shared services initiative,
which, six years after the process was started, still promises
savings of up to $100 million per year. Facing difficulties since
2002, Queensland this year outsourced the implementation of its
shared services to IBM under a four-year deal for an undisclosed
sum. The first priority is to implement the state's SAP HR system
that the state decided to standardise upon in 2005.
Failures and delays concerning these large projects have caused
states such as NSW to opt for quieter initiatives that are created
from existing, smaller shared services initiatives, according to
"In general, there is more a desire not to make a song and
dance. Because of the high profile that comes from shared services,
there is a desire to just get on with it," he said. "Very much
the focus [in NSW] is on building on proven capabilities where
shared services are already in place already and then to amalgamate
those to get greater economies of scale."
NSW's reasoning for avoiding that song and dance was that the
chaos surrounding the ousting of then-Premier Morris Iemma several
months ago, coupled with the state's financial crisis, meant
technology projects were overshadowed.