Shared services 'leadership' effort flawed, says NZ Auditor-General

A shared services organisation supposed to be a model for the New Zealand public sector has been heavily criticised by the Auditor-General.

CASS, the New Zealand Government's Central Agencies Shared Services organisation, suffered from poor governance and failed to follow best practice during its establshment, an Auditor-General's report has found.

CASS was established in March 2012 by the Department of the Prime Minister and Cabinet, the State Services Commission and Treasury to provide ICT, human resources and financial support. The central agencies wanted to show leadership and establish CASS as a potential model for the broader public sector.

However, it appears to have delivered many lessons on what not to do.

"It is not yet clear whether CASS provides a useful model for the public sector to follow," the Auditor-General reported. "Many lessons have been learned from setting up and operating CASS. Although some improvements have been made along the way, more are still needed."

The report says the central agencies "did not follow best practice" in setting up CASS and "important and fundamental aspects of the change were not done well."

The agencies did not determine early how CASS would operate and how it would support the agencies’ strategic objectives, the report says.

The move to one support agency was not well planned, consultation was poor and fewer experienced staff transferred than anticipated, resulting in a loss of skills and knowledge.

The financial management function transfer was the most effective, while HR was least, with ICT somewhere in between and improving.

"Effective planning for ICT systems and processes and how they would work was lacking," the report says. "This contributed to increased demand for ICT services and 'help desk' requests in the months after CASS was set up.

"Soon after CASS was set up, it became clear that the central agencies had considerably underestimated the work needed to allow the central agencies to operate with common or compatible ICT systems and processes."

A review by Davanti Consulting followed, leading to the creation of the Central Agencies Development Programme, a series of projects for improving ICT maturity to support each function within CASS and for a unified and centralised ICT structure. 

Many significant ICT and finance projects were completed, including strategies, standard operating procedures, a service catalogue, and prioritisation frameworks for business transformation and consolidation. CASS adhered to good practices in project management and that reporting was sound.

However, the Auditor-General found CASS's ICT efforts were not tightly aligned to its strategic priorities.

"In some instances, the lack of an overall strategy until now has allowed less urgent projects to be prioritised over basic functional needs," the report says. "Staff are capable and committed but have been stretched with these competing priorities.

"CASS has drawn from day-to-day staff resources to complete essential work on its ICT infrastructure and install necessary systems in the Department of Prime Minister and Cabinet."

CASS had not used the most effective framework for understanding the current state of ICT maturity, the report says. It used the Information Technology Infrastructure Library, "a sound framework for managing ICT service delivery", to deliver and improve its operational services.

"A more comprehensive framework – for example, the COBIT13 standard – would ensure a
sound alignment of the ICT strategy with CASS’s objectives and goals," the Auditor-General says.

ICT service levels have improved considerably since the foundation problems, however, many service users, including some at senior levels in the central agencies, still expressed concern about whether CASS would improve enough to provide the support they required.

When CASS was announced in late 2011, secretary to the Treasury Gabriel Makhlouf said the central agencies had a unique role to play in demonstrating leadership in the public sector and in building resilience and excellence.

"The CASS project is a response to the Government's challenge to the public sector to develop new ways of doing business while maintaining and improving the level and quality of services provided.

"It also recognises the need to manage within declining baselines, and maintain and invest in the corporate services necessary to ensure long-term organisational health."