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The short answer to the first question is: Yes. The answer to the second is a bit more involved.
Over the next two posts, we will discuss some key success factors in realizing savings in the Federal Government from Process Improvement and how Public Sector Leaders can take action to set Shared Services savings into motion.
Achieving 20-30 percent savings by moving to shared services model
While rare is the occasion where a single, major transformative opportunity presents itself for the taking, IBM’s recent Global CFO Study revealed that Shared Services is a critical component of successful finance transformation. The survey results found that efficient finance organizations are 69 percent more likely to use alternative delivery models – such as shared services, centers of excellence, and outsourcing – than lower performing finance organizations. These results are consistent with four government case studies from the British government that suggest 20 - 30 percent savings are achievable by moving to a shared services platform.
Air Force – Modernizing the financial management organization via Shared Service Center
Several years ago and closer to home, the Assistant Secretary of the U.S. Air Force for Financial Management and Comptroller (the Air Force CFO), drafted a Strategic Plan that set in motion, via a methodical, structured, and disciplined manner, initiatives designed to streamline and modernize the financial management organization. Among these initiatives was the establishment of a Cost and Economics Center of Expertise (CoE); a Shared Services Center; the elimination of costly, but no longer necessary Information Technology systems; and a nearly 75 percent revision of the financial management curriculum to focus on decision-support methodologies as opposed to purely transactional processing techniques.
The Air Force Financial Service Center (AFFSC) was established to consolidate back-office support functions from approximately 90 globally dispersed locations to one. Its mission was twofold: 1) to process travel-related claims, and 2) by leveraging advances in technology, telephony, and the internet, to also serve as the single point of contact for all pay-related inquiries, accessible 24/7, by Airmen deployed the world over. It is estimated that establishment of the AFFSC will have saved – not “cost avoided” – the taxpayer over $200 million and will have left the financial management community stronger, more agile, and more responsive to today’s challenging environment. The total time from plan approval to the ribbon-cutting ceremony was seventeen months; a rather impressive accomplishment by most any standard.
It is not hyperbole to suggest that every organization can benefit from continuous improvement, if for nothing else, to keep pace with the modern world it is operating in. Shared Services centers, Continuous Process Improvement / Lean Six Signma, Cost take-out, etc., are but some arrows in the quiver. While certainly not all methods, approaches, or recommendations will be applicable, comparable, or transferable, with enough exchange and dialogue, ideas begin to emerge – and ideas, through leadership, turn into action.
Coming up Next
Join us tomorrow as discuss how Public Sector Leaders can begin to take action and turn Shared Services savings into motion.
Let us hear from you
What are your thoughts about the Air Force’s transformation? Can you see where your organization could reap the benefits from moving to a shared services model? Share your thoughts here.
John G. Vonglis provides advisory services to the Global Business Services practice of IBM and its clients focusing on operational effectiveness through the implementation of sound business strategies. From July 2004 until April 2009 he served as both the Deputy Chief Financial Officer and Chief Financial Officer (CFO) of the United States Air Force Simultaneous to this, from 2008 until his departure, he served as the first Chief Management Officer (CMO) of the Air Force.
His diverse industry experience includes service as a Chief Financial Officer for The Thomson Financial Corporation, Director of Global Finance for PricewaterhouseCoopers, LLP, as well as similar positions in high technology, defense and aerospace, and financial services firms. John is the recipient of both the Air Force Award for Exceptional and Meritorious Civilian Service, as well as the Association of Government Accountants Award for “Distinguished Leadership in Federal Government.” .
John has Bachelor of Science and Master of Business Administration degrees from Fordham University and a Master of International Public Policy degree from The Johns Hopkins University.
John Vonglis (John.G.Vonglis@us.ibm.com)