A recent blog (read it here) shows that working capital funds are growing at a faster rate than appropriated funds and suggests this represents a government-wide trend in centralizing administrative services. But is working capital the only way for government to centralize? Certainly not. Conversations between CEB and dozens of US federal government executives over the past 12 months have suggested agencies are experimenting with a number of different ‘centralizing’ options. Here are a few:

1.       Technology Share—For a number of reasons, implementing new systems in government can be a challenge. The net result is that some agencies are simply more efficient than others at conducting the same task because they have the right tools to do so. Instead of trying to re-create those same systems in-house, some agencies are now simply asking to ‘rent space’ on those that are already up and running.

2.       Co-Located Technology Share—This looks a lot like the Technology Share option, but staff from the agency that is renting space are physically located with the provider’s team and system. The benefit here is that staff can learn from their peers, but executives do not have to make as many formal changes to their function’s organization chart.

3.       Centers of Excellence —Instead of renting space on a system, agencies fully outsource a specific transaction or administrative task to a peer organization (most commonly to a peer agency within the same Department). This enables functions, such as finance or HR, to become highly proficient at one particular task, and provide that task to a broader community in a more efficient way.

4.       Department-Led Centralization—Backed by deep analysis and likely external benchmarking, Department leadership prioritizes areas for focused efficiencies. While recommendations can support any of the three methods outlined above, Department-led centralization often migrates more services to a centralized shared service center. In order to ensure success, these centers generally operate in a matrixed management structure and measure themselves against very tangible performance objectives.

5.       Outsource within Government—Partially driven by supply and partially driven by demand, agencies are increasingly looking to outsource administrative services to other government entities. In these instances, the department might centralize services first via working capital and then outsource that service to an external provider, or agency executives may outsource directly to the provider. Some of the most common providers include the National Business Center, the National Finance Center, the Administrative Resource Center and the Program Support Center, to name a few.

Has your organization tried any of these? What do you think works best?

As federal budgets continue to face Congressional scrutiny, will government agencies respond with increased centralization? My thoughts are yes, but with a caveat.  Federal agencies will increasingly sift toward centralization of administrative services first, and fast. Programmatic services, however, will remain a challenge to centralization.

Over the past 9 months, CEB Government Practice conducted an in-depth analysis of US federal working capital, supply and franchise funds that accounted for $134 Billion in FY 2011. These funds enable a wide range of administrative services including Information Technology, Finance, Human Capital, Procurement, Security, Facilities, Printing, and Legal, among others. And, while on average these funds account for roughly 2% of a Department’s or Independent Agency’s total budgetary outlay, some make up as much as 10%.

They’re also growing faster than appropriated funds. Since 2009, the compound annual growth rate (CAGR) of a Department’s or Independent Agency’s working capital fund has outpaced that same Department’s or Independent Agency’s total budgetary outlays CAGR by 4%. This fact is probably the underlying cause of many fund customer CFO concerns that centralized services aren’t “taking their fair share of the cuts.” However, it probably also represents the centralized service provider’s response that “customers aren’t asking for less, they’re asking for more.”

Conversations with CFOs, CIOs, and CHCOs across government tell me that regardless of who is right, more—not less—will be funded via working capital moving forward.

Do you interact with your organization’s working capital, franchise or supply fund? Do you have ideas of new services that could benefit from the economies of scale working capital provides? If so, please share them below as everyone in government can benefit from another cost-savings opportunity.

A recent CEB study found that over  60% of employees believe they do not have the full set of technologies they need to be productive in their jobs.   Part of the challenge is that while IT departments have done well at delivering on foundational activities, like document storage and remote support, they have struggled with evolving mobile capabilities beyond device deployment.  Most agencies continue to struggle with “BYOD” and other security constraints that impede more rapid deployment of mobile and collaboration technologies.    The net result is that barely one half of employees are productive while outside of the primary place of work. 

One solution is for IT departments to expand the permiter of what they measure to include four important aspects of employees’ work performance:  mobility, collaboration, work efficiency, and work quality.  CEB has synthesized these attributes into the CEB Technology-Enabled Productivity Barometer – contact us to find out how to tackle this at your agency. 

At a recent networking dinner with the Government CIO and contractor community, we had a spirited discussion on how soon we would be able to ‘mainstream’ mobile devices across government agencies. While many agencies are in ‘pilot’ mode, few have been able to overcome the full gamut of security and policy related barriers.

Thorny challenges remain — how do you protect individual privacy on mobile devices (particularly in a unionized environment)? How do you ensure that you don’t pick one vendor at the expense of another? Will agencies support (and pay for) an individuals’ data plan? How effective is splitting images so that a mobile device can show personal and government related information differently? Are Federal IT departments ready for managed apps?

It was encouraging, however, to hear of success stories — the Air Force potentially
saving fuel costs because paper-based flight manuals can be delivered real time via a tablet device. Or the USACE working with FEMA to help hurricane victims via real-time GPS capability delivered on their tablet device. Or, a more personal story — an agent who lost their tablet was able to track their device to a fraudster who was stealing mobile devices and reselling them on e-bay. Could you do that with your laptop?

In addition to the anecdotes and hard business case, federal CTOs and CIOs need to understand mainstream adoption levels and develop their own emerging technology roadmap for mobile devices.  Join us on August 16th to learn more about how other agenices are mainstreaming their mobility strategies.

Across the public and private sectors alike, we’ve been struck by the commonality of concern around IT transformation. IT organizations are at a crossroads, and CIOs tell us that existing IT operating models have become less tenable in the face of two increasingly competing requirements:

• The need for agility and speed – IT is being asked to execute quickly across a more diverse project portfolio that includes fast-changing projects in information management, mobility, collaboration, and analytics
• The need for efficient, predictable, low-cost service delivery

How does this play out in the public sector? As we all know, the call for “doing more with less” is not going away any time soon. On the “doing more” side, agencies have to execute across mandates that require government to be more nimble and effective at delivering services to citizens. For example, the Digital Government Strategy is directing agencies to identify two or more priority customer-facing services to optimize for mobile use and to ensure that new IT systems follow OMB’s policy on open data, content, and web APIs. But to do more “with less,” agencies are constantly pressured to cut costs and re-use technology. Shared First and PortfolioStat come to mind here.

These demands for speed, flexibility, and efficiency are leading to near universal experimentation. In a meeting we hosted last Friday with agency CIOs, the vast majority said they were changing or planning to change their operating models and organizational designs. Overall, this change is not only affecting CIOs, but the sub-functions as well, with over 70% of infrastructure, EA, security, and PMO groups undergoing or recently completing a redesign. The overriding concern we keep hearing from government IT executives is that, despite tweaks to design and organizational models, IT has not sufficiently performed against these mandates.

Given these concerns, we shared with this same group of agency CIOs the new model for IT service delivery. What do we mean by that? It’s about getting IT and the business to come together to define services at the level of an agency’s clearly-articulated business capabilities – activities that result in specific, measurable business outcomes. We have termed this model “end-to-end IT services.” An end-to-end IT service packages together all the technology, processes, and resources needed to deliver a specific business outcome while hiding technical complexity.

While service definition is undoubtedly difficult, progressive agencies have told us that going through the exercise of defining services in terms of agency capabilities is a highly useful endeavor. Most importantly, this activity allows agencies to isolate the services that most directly support business outcomes and shift investments and accountability from one-time projects to continuous service enhancement.

If you are interested in learning more about end-to-end IT services, have a look at the CIO Executive Board’s end-to-end topic center.

A recent  White House webinar on Big Data helped launch a major campaign on big data in government.  Studies from the McKinsey Global Institute show that government has much to gain as a sector, from getting the right returns in big data, but an open question remains.  Is ‘big data’ going to stitch together disparate agencies, siloed information systems and distinctly different ways of thinking about mission? Is data, in fact, the solution, or is it actually the problem? 

This is a key conclusion of an article CEB just published in the Harvard Business Review. In previous posts we described how IT should respond to this insight deficit . For example, offering a choice of BI tools, targeting the design of dashboards and reports, and making information easier to aggregate and filter. But as the article makes clear, this is not just an IT problem. Better tools and usable data must be complemented by employees capable of “big judgment” when using information to make decisions. So what should government leaders across the rest of the organization be doing in addition to providing and linking big data?  They need to bolster training for data analysis.  In a recent cross-industry survey , we found that 82% of employees conduct at least some analysis as part of their jobs. Without adequate training, agencies need to invest not only in PhDs and those schooled in advanced analytical methods, but they need to find individuals with those skills who can also coach and teach.   Most importantly, agencies should encourage collaborative decision-making processes.  The processes must encourage critical and non-linear thinking, make biases and assumptions explicit, and acknowledge and account for unknowns. Processes that encourage collaborative (not to be confused with consensus-driven) decision making often share these traits.

As the “consumerization” of IT has propelled the buzz around workplace mobility enablement to reach a fever pitch, the “bring your own device” (BYOD) approach has become an oft-utilized solution. Faced with two emerging trends – an upward shift in employee demand expectations for what workplace technologies should accomplish, and a shift in market position between RIM’s Blackberry, Apple/iOS, and Android – IT functions have begun to question whether the provisioning of endpoint devices is wise.

Indeed, survey data indicates that even among self-described “technology skeptics,” a majority of employees are already using personally-owned tablets, smartphones, or computers for work purposes. These developments have led many IT executives to conclude that a BYOD approach is central to employee engagement, satisfaction, and productivity. Our 2011 Emerging Technology Roadmap reflects this trend, with over half of IT organizations planning to institute a “bring your own” program for mobile devices by mid-2012.

This trend is not unique to the private sector. In fact, Government Executive’s recent article outlining “5 Trends in Mobility” includes the BYOD wave front and center, a phenomenon seemingly buoyed by U.S. Chief Information Officer Steven VanRoekel’s vocal embrace of the power of mobility: “Going mobile doesn’t just increase productivity, but it’s a huge cost saver too.” Leading government analysts agree, calling BYOD the “dominant trend in many civilian agencies” and 2012 “the year that tablets become firmly embedded in the government space.”

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Executives around the world are realizing that we have entered a new era in decision making. Our ability to store, access, and analyze vast amounts of information has grown exponentially during the past decade. However, even as federal invest eight- and nine-figure sums to derive insight from information, less than 40% of employees have sufficiently mature processes and skills to do so. There is an good chance that, right now, someone in your organization is about to make a poor decision based on data that you have paid enormous amounts to gather and analyze.  As federal agencies continue to amass vast quantities of data, the concern is that their ability to discern insight from data diminishes.  Across the federal CIO and CFO community, we hear this common refrain.

To overcome this insight deficit, “big data,” no matter how comprehensive or well analyzed, needs to be complemented by “big judgment.” Big data and big analytics will dramatically amplify the effects of human decisions, sometimes to an unimaginable scale. This is great news if those decisions are timely, sound, and properly motivated—and potentially catastrophic if not.

ACTION STEP #1. TAKE OWNERSHIP OF YOUR INFORMATION

At the best agencies, leaders own the following pieces of the information value chain: the process of determining what data is necessary; what analyses they want to run; how they share that data across the agency, vendor and citizen information, and how they staff and fund the work necessary to derive insight from data.

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Federal agencies have invested heavily in finance technology for the past decade, with mixed results.  The private sector hasn’t fared much better — only 24% of the controllers recently surveyed by CEB believe they are realizing a positive return on their finance technology investments; less than half expect to break even or do better in the future.  IT vendors and consultants want to sell you the solutions to these problems; what they don’t tell you is that realizing a return on your technology investment is difficult and rare.

All the major forces that will impact Government Finance over the next five years have a technology component to them – this includes everything from continuous drive for process improvement, standardization of processes, electronic invoicing, faster decision-making and greater regulatory pressures. That said, many of the government finance executives we speak with do not feel prepared to successfully manage these large-scale IT investments.

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I just came across this report from the UK National Audit Office that examines the UK experience over the past 8 years as they tried to move many administrative activities into a shared service center.

In a nutshell, the study concludes that, despite significant cost and effort, the planned benefits of the initiative have not been achieved. By creating complex services overly tailored to individual departments, the government has increased costs and reduced flexibility. There has also been a failure to develop the benchmarks necessary for measuring performance and to date, the government has spent far more on the initiative than anticipated.

In some ways, I’m not surprised. The whole point of having a shared service center is to monitor performance continuously and optimize to common processes. If you’re customizing at every step and you aren’t tracking performance, you shouldn’t be surprised that outcomes aren’t what you expected. One government agency that has done this quite well is NASA — fifty six services consolidated across ten distinct centers with rigorous measurement and transparency in place.

So what’s the moral of the story? Shared services can work in government, but require some very deliberate steps.