Shared Services Requirements: Kicking the Tires

Buying a car is a process that many of us have gone through at one point or another (more than once for a lot of us). Thinking back on that process raises the question of why some of the simple techniques we use in our personal lives aren’t being better applied in the workplace.

If we can apply four lessons from buying a car to the workplace, we can be as happy with our new systems as we are with our new cars.

1) Focus on what’s unique

2) Leave the engine to the engineers

3) Keep your priorities straight

4) Take it for a test drive

The process of buying a car can teach us a lot about how we should (and shouldn’t) approach requirements gathering for shared services migrations. Use the resources at your disposal to start with the baseline and focus on what’s unique, stay away from trying to design the system, make sure you stay realistic about your priorities, and of course take it for a test drive. This will help make sure that you don’t end up with a high-end sports car when all you can afford and all you really need is the economy model.

About the Authors

Teia Clarke, Deloitte Consulting Senior Manager in Federal Practice Shared Services

Karen Ganley, Deloitte Consulting Specialist Leader in Oracle and Technology Implementation

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Financial management providers ill-equipped to take on large customers

A metric of success for federal shared services is how many agencies are using the capability. Federal financial management shared service providers are facing an uphill battle to meet that metric.

One of the biggest challenges to making this second attempt at financial management shared services in the last decade successful is federal providers' ability to ramp up in a timely manner.

Interior, Transportation, Treasury and possibly as many as four other agencies are gearing up to accept 40,000 or more new customers at a time over the course of the next few years.

As federal financial management shared services providers, these agencies need help in the form of changes to law and policy to meet those goals.

Experts say only by letting these providers act more like private sector businesses will federal shared services find success.

In part 2 of the special report, Shared Services Revisited, Federal News Radio explores the long-standing capacity challenges that current and new financial management shared service providers will have to overcome in the coming years to meet the growing demands of agency customers.

The Office of Management and Budget requires agencies to modernize financial management systems only through federal shared service providers (SSPs). In a March 2013 memo, OMB detailed its plans to reduce costs and duplication across the government through the use of federal SSPs.

But many of the same questions limited the success of this initiative in the mid-2000s, including whether the shared service providers have the capacity to handle large cabinet level agencies.

Over the course of the last seven years, no cabinet level agency moved to a federal shared service provider. The Labor Department outsourced to a private sector provider. The Small Business Administration unsuccessfully followed suit to a different private sector company.

But over the course of the next five to 10 years and starting this year with the departments of Commerce and Housing and Urban Development, and the Coast Guard, large agencies are expected to let go of their financial management systems and take advantage of a multi-tenant set up that is widely considered an industry best practice.

OMB and Treasury's Office of Financial Innovation and Transformation (OFIT), which is managing the financial management shared services initiative, are trying to address the challenges providers face.

But it's about more than just money and people. The question is whether Interior, Transportation, Treasury or any of the new providers can handle more than one large agency every few years.

Federal and private sector experts say migrating to a shared service provider is extremely complex.

Beth Angerman , the director of OFIT, said OMB and OFIT will not mandate where agencies migrate to, but there are factors that agencies must take into account.

"We recently finished the design of the FIT Agency Modernization and Evaluation (FAME) process. What that process consists of are a series of evaluative models and artifacts that are produced by the agency with FIT's oversight and assistance to help them get through different gates of identifying if there is a federal shared service provider who will meet their needs," Angerman said.

OMB estimates agencies are spending $8 billion a year and have more than 53,000 people supporting all federal financial management systems.

There is a long history of financial management systems that have failed to meet expectations. In fact, OMB in 2010 reviewed 30 financial systems to ensure they were meeting cost, schedule and performance goals, and ended up rebaselining several after finding they were off track.

Despite this increased oversight, the Government Accountability Office found in 2012 that the reviews had little effect. Auditors said 13 projects estimated no change in their long term costs, and 16 said their schedule remained the same.

So given all of these systemic problems, Angerman said the private sector has to appreciate the changes that are happening, meaning once they were implementing large scale systems, and now they are supporting the agency providers with specific expertise.

-Jason Miller, FederalNewsRadio.com
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Familiar questions, few answers so far for OMB's latest financial systems effort

The departments of Commerce and Housing and Urban Development and the Coast Guard are planning to outsource their financial management systems in the coming year.

These three agencies have only one choice in how they modernize their financial management systems — through a federal shared services provider.

The Office of Management and Budget's March 2013 policycreated a federal first priority for agencies to modernize their financial management systems through a shared services provider.

But this second attempt by OMB to move agencies to financial management shared services is fraught with the same obstacles of a decade ago.

But OMB believes this attempt at shared services is different. The administration says budget concerns and technology advancements will help overcome these long- standing barriers.

OMB named five shared service providers under the Financial Management Line of Business initiative. With the exception of the Defense Finance and Accounting Service, the four civilian providers — the departments of Treasury, Transportation and Interior, and GSA — mostly found success with small and micro agencies.

But with agencies spending more than $8 billion a year on financial management systems and with more than 53,000 employees supporting those efforts, the opportunity to consolidate and simplify is great.

So administration officials say the time is right for a renewed push for shared services.

Three of the four current shared service providers for civilian agencies offer only Oracle's Federal Financial software.

GSA offers CGI's financial management software called Momentum. But industry and federal sources say GSA is likely to get out of the financial shared services this year.

Other agencies are using SAP, Savantage and other financial management software that meet federal standards.

Infor and Workday both offer software-as-a-service options for enterprise financial management services.

OMB and OFIT are close to naming new federal shared services providers, with at least one agency providing software that is not Oracle.

Federal News Radio's special series, Shared Services Revisited, looks at whether there still are too many unanswered questions that would doom shared services once again.

-Jason Miller, FederalNewsRadio.com
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GSA plans to stop providing HR shared services

The General Services Administration is getting out of the human resources and payroll shared service provider business.

The decision came as part of the review by administrator Dan Tangherlini. He wants GSA to focus on its core missions: acquisition, real estate and some of the technology services, said Anne Rung, GSA's associate administrator in the Office of Governmentwide Policy.

She said HR services just don't fit into their plans anymore.

GSA's HR services provides payroll and other services to 40 agencies and about 30,000 employees, 18,000 of which are its own employees. GSA services mostly small agencies, with the exception of the Office of Personnel Management.

GSA's decision comes as the Obama administration is applying more pressure on agencies to share resources.

The Office of Management and Budget issued a shared services strategy in May 2012, setting a series of deadlines. It followed in March with a memo requiring agencies to consider federal shared service providers first when it's time to upgrade their financial management systems. And OMB created Uncle Sam's List (USL) to have one place to promote the availability of shared services.

OMB is planning to launch version 1.1 of USL in a few weeks that will include a simplified user interface and an easier way to promote existing services, said Peter Warren, who is leading the effort for OMB.

Scott Bernard, OMB's chief architect, said version 2 of Uncle Sam's List is expected to be ready in 2014 and will take into account the findings of a recent survey of acquisition, technology and financial management workers.

With GSA bowing out of HR shared services, including payroll, that leaves only the Interior Business Center (IBC), the Agriculture Department's National Finance Center (NFC) and the Treasury Department's HRConnect as civilian agency providers. But only the IBC and the NFC are payroll providers.

The fifth provider, the Defense Finance and Accounting Service, serves only the Defense Department.

OMB's push for agencies to consolidate commodity IT or seriously consider a government shared services center for financial management are major reasons why there is a growing optimism and demand for shared services.

Another area where there is both a need and a desire for shared services is with geospatial information. Nearly every agency uses geospatial data and more than 30 are part of the Federal Geographic Data Committee (FGDC).

The Homeland Security Department also is looking to expand the cybersecurity line of business. With the recent award for continuous monitoring-as-a-service, Jeff Spicka, the project manager for the Information Systems Security Line of Business, said DHS is looking for more opportunities to set up cyber service providers.

Michael Casella, the chief financial officer at GSA, said agencies need policy help from OMB to solve the funding challenges.

A franchise fund lets providers charge up to four percent more than the cost of the service to pay for technology or other program upgrades. Without a franchise fund, shared service providers under law are prohibited from charging customer agencies anything more than the cost of the service.

Casella said another barrier is the cost of migrating to a shared service provider from legacy systems or switching from one to another.

OMB's deputy controller Norm Dong said the administration understands these funding and franchise fund challenges and encourages agencies to submit a budget proposal to set up a franchise fund.

At the same time, Dong said OMB is looking at policies or guidance for agencies around what recourse they have if the service provider isn't performing well.

-Jason Miller, FederalNewsRadio.com
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Board approves next phase of defense accounting system

The Defense Department received a boost in meeting its goal to have clean financial books by 2017. The Defense Acquisition Board approved the next phase of development for the Defense Enterprise Accounting and Management System or DEAMS.


The Board's approval means the Air Force, the U.S. Transportation Command and the Defense Finance and Accounting Services can develop an acquisition strategy and begin deploying the system across the Air Force in 2012.

Congress mandated DoD have balanced books by 2017. Defense Secretary Leon Panetta set a goal of 2014 for a partial audit around its Statement of Budgetary Resources, an accounting of money in and money out that could withstand the scrutiny of professional auditors.

-Jason Miller, FederalNewsRadio.com
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Recent GAO Publications

The Government Accountability Office (GAO) recently released the following publications:

"Key Challenges Facing Government Managers," by Gene L. Dodaro, acting comptroller general, before the Interagency Resources Management Conference, in Cambridge, Maryland.
GAO-09-609CG, April 21, 2009
http://www.gao.gov/cghome/d09609cg.pdf

"The Recovery Act and TARP: GAO's Oversight Role," by Gene L. Dodaro, acting comptroller general, before the National State Auditors Association annual conference, in Savannah, Georgia.
GAO-09-846CG, June 17, 2009
http://www.gao.gov/cghome/d09846cg.pdf

Military Pay: The Defense Finance and Accounting Service--Indianapolis Could Improve Control Activities over Its Processing of Active Duty Army Military Personnel Federal Payroll Taxes.
GAO-09-557R, June 18.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-557R

Troubled Asset Relief Program: June 2009 Status of Efforts to Address Transparency and Accountability Issues.
GAO-09-658, June 17.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-658
Highlights - http://www.gao.gov/highlights/d09658high.pdf

Troubled Asset Relief Program: Capital Purchase Program Transactions for October 28, 2008, through May 29, 2009, and Information on Financial Agency Agreements, Contracts, Blanket Purchase Agreements, and Interagency Agreements Awarded as of June 1, 2009 (an e-supplement to GAO-09-658).
GAO-09-707SP, June 17
http://www.gao.gov/cgi-bin/getrpt?GAO-09-707SP

American Battle Monuments Commission: Management Action Needed to Improve Internal Control Procedures.
GAO-09-714R, June 17.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-714R


CBP Could Improve Its Estimation of Funding Needed for New Border Patrol Agents.
GAO-09-542R, June 15.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-542R

Public Housing: HUD's Oversight of Housing Agencies Should Focus More on Inappropriate Use of Program Funds.
GAO-09-33, June 11.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-33
Highlights - http://www.gao.gov/highlights/d0933high.pdf

Army Working Capital Fund: Actions Needed to Improve Budgeting for Carryover at Army Ordnance Activities.
GAO-09-415, June 10.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-415
Highlights - http://www.gao.gov/highlights/d09415high.pdf

VA Real Property: VA Emphasizes Enhanced-Use Leases to Manage Its Real Property Portfolio, by David Wise, director, physical infrastructure issues, before the Senate Committee on Veterans' Affairs.
GAO-09-776T, June 10.
http://www.gao.gov/cgi-bin/getrpt?GAO-09-776T
Highlights - http://www.gao.gov/highlights/d09776thigh.pdf

Appropriations Decisions:

B-317139, Financial Crimes Enforcement Network--Obligations under a
Cost-Reimbursement, Nonseverable Services Contract, June 1, 2009
http://www.gao.gov/decisions/appro/317139.htm

Awards honor CFOs' tech achievements

The Defense Department’s Zack Gaddy was among those honored when the Washington area’s chief financial officers gathered June 5 to toast their best and brightest at the 11th Annual Greater Washington Technology CFO Awards.

Gaddy, director of DOD’s Finance and Accounting Service (DFAS), took home the first annual Phoenix Award. It recognizes the CFO from a federal agency or public or private corporation who has achieved the greatest success through finance and technology transformation.

Gaddy oversees the work of about 13,000 people at DFAS, which in 2006 doled out 145.3 million pay transactions totaling about $424 billion to 5.9 million people.

The selection committee also honored former Virginia Gov. Mark Warner with the Michael G. Devine Hall of Fame Award for career achievement. Before becoming governor in 2002, Warner co-founded the technology-based venture capital firm Columbia Capital and the company that would eventually become Nextel. As governor, he turned the $6 billion budget deficit he inherited into a surplus.

“More important than being a Democrat or a Republican, I think that there ought to be a requirement that every legislator can prove that he or she can read a balance sheet before they get elected,” Warner told the crowd as he accepted his award.

- Ben Bain, FCW.com

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DFAS Awards Financial Integrated Systems Services (DFISS III)

The contract was awarded to CSC, EDS, Lockheed Martin and Booz Allen Hamilton on April 24, 2007 for a total value of $475 million to fulfill the Defense Finance and Accounting Service (DFAS) Financial Systems Organization's (FSO) continuing requirement for services to support more than 200 automated information systems in the areas of finance, accounting, payroll, transportation, logistics, personnel and management.