It pays to consolidate

Officials turn to shared service centers

After his election as New York City’s mayor, Michael Bloomberg ordered all 40 city call centers, representing 80 agencies, to consolidate. Now, New Yorkers dial a single number, 311, to report leaky fire hydrants, inquire about driver’s licenses or report about hearing gunshots.

The consolidation eliminated 13 call centers and combined the others into a two-center hub. After the consolidation, people’s ability to reach government offices doubled.

“Before 311, we handled 6 million calls a year,” said Larry Knafo, first deputy commissioner for New York City’s Information Technology and Telecommunications Department. “This past year, we handled 12 million calls.”

New York City’s 311 call centers are an example of a growing trend in which agency officials create shared service centers to increase efficiency and decrease spending. A recent Accenture report states that 85 percent of government executives expect that their agencies will use shared service centers.

Accenture surveyed more than 140 government officials in the United States and 12 foreign countries. Overall, the findings showed that public-sector officials have been slower to adopt the shared service center concept than their private-sector counterparts.

In New York City, officials are using Siebel Systems’ customer relationship management software to maintain high levels of service, Knafo said. When a caller waits longer than a minute for a public employee to answer a call, Siebel’s analytics software sends the first deputy commissioner an e-mail alert.

Knafo said he intends to extend this functionality to every agency in the city so that Transportation Department officials, for example, would get an alert if a pothole complaint is more than 7 days old.

New York City has not saved money using the centers, but it has improved service. “We did not look at this as a cost-savings initiative when we started,” Knafo said. “We looked at it as a customer-service operation.”

Many executives interviewed for the Accenture survey identified savings as a top shared services objective. U.S. Postal Service officials, for example, saved $71.4 million and reduced their financial operating expenses by 16 percent to 18 percent though shared services, according to the survey.

Robert Otto, USPS’ chief technology officer, said creating shared service centers for IT, finance and human resources eliminated the need for hundreds of positions and decreased the agency’s workload.

To avoid putting all their eggs into one basket, USPS officials did not create a single financial shared service center. Instead, they lumped hundreds of sites performing finance operations into three shared service centers. Based on their experience with that project, officials consolidated their human resources operations into one shared service center.

Many federal agencies besides USPS have consolidated services. The General Services Administration and Defense Department have shared service centers for accounting and payroll. Office of Management and Budget officials will include shared services in their lines of business initiative.

The Agriculture and Interior departments have shared service centers for processing payroll. NASA officials will soon decide on a location for a new shared service center for human resources, IT, procurement and financial management. The Department of Health and Human Services offers shared services for human resources, health resources, administrative services and financial management.

David Wilson, managing partner for government finance and performance management at Accenture, said public-sector officials generally adopt shared services more slowly than those in the private sector because of bureaucratic red tape and time constraints.

A board or chief executive officer can easily consolidate services with one vote, Wilson said. But government officials must consult multiple layers of officials such as lawmakers, administrators and auditors.

“In federal government, you have to get an awful lot of key stakeholders on the same page,” he said.

In addition, some elected leaders are too impatient to spend the time that such consolidations require, Wilson said. To move employees from one office to another can take up to four years. Elected officials, whose time in office is limited, are looking for quick hits, he said, not long-term projects.

The appeal of consolidation

A recent Accenture survey of 143 senior-level executives employed by local, state and federal government agencies found the following views on shared service centers:

  • Government officials have positive views on shared service centers.
  • Most government agencies rely on their employees to staff shared service centers.
  • Many public-sector agencies have components of shared service centers, but few have achieved the full benefits of the concept.

    Source: Accenture

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