WA still questioning shared services savings

The end is still not in sight for the embattled Western Australian shared services project, according to a report by the state's auditor general who continued to question whether forecast savings for the project would ever be met.

The end is still not in sight for the embattled Western Australian shared services project, according to a report by the state's auditor general who continued to question whether forecast savings for the project would ever be met.

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(Flexicover books image by Horia Varlan, CC2.0)

The intention of the project when it started in 2003 was to provide 90 agencies with shared services via shared service centres. The project had a number of teething problems that led to the completion date blowing out from 2006 to 2013, and the budget increasing from $91 million to over $400 million. The problems almost saw the project scrapped in 2008. The decision was made to continue, as long as budgets and milestones were met.

There are currently three shared services centres: the Department of Treasury and Finance Shared Services Centre (DTFSSC), the Health Corporate Network, and the Education and Training Shared Services Centre.

The Department of Treasury and Finance centre, on which the report focused, has implemented Oracle's enterprise resource planning platform as a replacement for 21 finance systems and 12 payroll systems. By last month, 50 agencies had been rolled onto the system. The number of transactions processed rose by 35 per cent over the year to 30 June, according to the Western Australian Auditor General's Annual Audit Results Report.

However, the report identified a number of issues which it considered needed to be addressed. It said that manual workarounds were in place to carry out functions that hadn't yet been implemented in the system. In addition, employees have to detect duplicate payments from the government to suppliers manually.

The workarounds endangered the accuracy and security of the processing, the report said.

"Workarounds increase the likelihood of incorrect or unauthorised transactions being processed and not detected and creates additional workload pressure on staff," it said.

The shared services centre told the auditors that it has scheduled resources to resolve the workarounds.

Another concern raised was that many supplier invoices aren't paid in the 30-day period required, which can result in the government having to pay extra on invoices. Although the audit office said it had already notified the office last year of the problem, the number of invoices paid after the 30-day period has remained at 13 per cent.

The Department of Treasury and Finance told the audit office that often the delay was not the system's fault, but that of agencies which created purchase orders retrospectively.

The auditors were also concerned about the number of changes that are still being made to the shared system. It said that the number of change requests had risen over the year from 1194 to 1756. They believed that the number of requests should have stabilised or reduced over time because of the maturity of the systems.

There were still a lot of significant upgrades being planned which were considered critical, according to the report, as it raised concerns about budget. The report stated that the capital funds planned for this shared services centre were originally expected to be $69 million, but at September this year the spend for the centre had been $180 million.

The idea of the project was to achieve savings of $55 million a year, the report said, something agencies weren't sure would happen.

"The quality and timeliness of services from DTFSSC has caused concern for agencies and gives rise to scepticism about whether the expected savings will be achieved," it said.

The department told the auditors it was aware of concerns, and realised there would be teething problems as agencies rolled in, but it remained confident of a positive outcome. The audit office said it would continue to monitor the program.