Agencies need to improve service-level agreements

For the Office of Management and Budget’s Line of Business initiatives to work successfully, agencies must learn to write better, more comprehensive service-level agreements.

Federal experts said that is one of the most difficult parts of the shared-services concept.

“Writing SLAs is a weakness in the fee-for-service model,” said Danny Harris, the Education Department’s deputy chief financial officer, during a panel discussion on shared services sponsored by IBM and the Association for Federal Information Resources Managers (AFFIRM).

Harris, who also is chairman of the CFO Council’s Financial Systems – Financial Systems Integration Office (FSIO) Oversight Transformation Team committee, said too often agencies write ambiguous SLAs that results in disagreements among providers and customers.

“When the provider wants to upgrade to the latest version of the software and asks the customer for money, many times it is not in the SLA or understood from the SLA that the customer has to contribute to pay for it,” Harris said. “The better the SLAs, the smoother the move to SSPs will be.”

Mary Mitchell, the Financial Management Line of Business program manager and executive director of FSIO, said her program office has released SLA templates for agencies to use. FSIO asked providers and customers to update their agreements based on these templates, she said.

But the challenge is customer agencies have fewer disincentives with federal providers than with private-sector providers, Mitchell said.

“With a federal providers, you can’t withhold payment for poor service because there is no profit,” Mitchell said. “The Office of Management and Budget is working on this to help level the playing field.”

Mitchell added that in a recent survey of agency customers more than 80 percent said they were pleased with their provider’s service. These results are in line with private-sector findings, she said.

Dick Burk, OMB’s chief architect, said the way and ability to terminate a shared-services agreement still is a gray area in the initiative.

“What happens when a customer becomes so dependent on the service but the provider is no longer agile to meet the customer’s needs?” he asked.

Marty Wagner, a former General Services Administration Federal Acquisition Service deputy commissioner and now a senior fellow with IBM’s Center for the Business of Government, said the shared-services concept only will work if agencies do four things:

  • Set up a governance process

  • Use standards. “Standards will set you free,” Wagner said.

  • Have accountability to complete the process

  • Use metrics to define what success means

“Moving to a provider starts with governance and addressing accountability and customer satisfaction with metrics,” he said. “There is a trade-off sometimes when going to a shared-services provider between cost and efficiency.”

Harris said that trade-off is another huge challenge for agencies.

“I’m excited that the shared-services provider concept is moving away from cost savings as the main reason to do it,” he said. “The goal is to improve your financial-management practices. It may cost more in some cases, but if you are getting better service that is a trade-off maybe worth making.”

Harris added that having financial-management standards also will make it easier to migrate because vendor’s products all will be similar.

Mitchell said agencies have had standards, but there has been too much flexibility or variation in how they were applied. FSIO and the FM LOB are developing and mandating specific standards such as a governmentwide cost accounting standard.

“We want everyone to have standard business processes,” she said. “A lot of systems grew up to meet the needs of the agency, but we need a common framework that is rigorous and helps us do our business better.”


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