The shared services model has been a fixture in corporations for about two decades. Today, shared services are becoming a similar fixture across many different types of government agencies. In fact, Accenture's 2005 study, Driving High Performance in Government: Maximizing the Value of Public Sector Shared Services, found that 85 percent of executives interviewed believed that shared services played a key role in supporting their organizations' goals. The study of more than 140 executives also found that the move to shared services enabled organizations to shift budgets from administrative activities to more constituent-facing areas, and thereby improving government services. The most common areas for shared services, according to the study, included IT, finance, and human resources.
John Gillispie, the chief operating officer for IT Enterprise for the State of Iowa's Department of Administrative Services, definitely believes in the merits of the shared services concept. Unlike many public-sector based shared services, the State of Iowa's shared services for IT doesn't have a mandate. Agencies can go outside the public sector and solicit the services of private sector third parties. According to the Accenture study, most government agencies use the services of their in-source shared services, going outside for expertise during planning cycles.
Enterpriseleadership.org recently said down with Gillispie who talked about the challenges he faced when he became CIO for the State of Iowa. He is the past president of the National Association of State CIOs.
EL: Can you describe the IT organization?
JG: Our responsibilities are laid out in code. We essentially have a shared services function to provide IT services, but our potential customers have the choice of using our services or going outside use services by third parties. This is a unique arrangement in a government environment. We're a shared services model without the mandate. It can be challenging during tough budget times. I have a staff of 140 people, and I report to a department director who is a governor appointee.
EL: Why don't you have a mandate and what percent of agencies are using your services?
JG: That's a difficult question is answer. The total approximate spend on IT from participating agencies is about $180 million. Since we're a shared services, we provide about $32 million of those services.
EL: Why did the state decide to go this route? Is it efficient?
JG: I'm not going to tell you it's efficient. I wasn't here when any of this was decided. The theory at the time was that agencies need the ability to make choices about how to deliver on their mission. Technology is one of the many supporting parts of the infrastructure necessary for an agency to do its business. Therefore, agencies should have the freedom to pick and to choose how they procure that technology. The consultants said putting the service provider in a position where they had to compete with the marketplace would force them to make decisions about the businesses they should be in, the businesses they should ignore, the areas where they could compete more effectively, and the areas they should avoid. They wanted to bring the tenets of entrepreneurship and business operations into a government environment. On the surface, it sounds like a really good idea.
EL: What is the reality of this arrangement?
JG: It's an interesting model. I don't know how well it will work over the long run. There are good things about this model. too.
EL: What have been some of the major projects you've worked on that have been important to the agencies you serve?
JG: The model offers some advantages. It allows the business to make decisions about investments that it believes will payoff. We made an investment in a billing service that the customers would've never supported and the legislature would've said just do it on a spreadsheet. Without this system, we wouldn't have been able to gain the efficiencies we needed in the billing cycle. We made substantial investments in upgrading our data center. We now have newer equipment and can do a better job of controlling energy and connectivity. Again, these things would've never been done had the legislature had something to say about it. The legislature wouldn't have seen this as a useful investment. On the other hand, these investments were business critical for our operations. Those were examples of some of the investments we made independent decisions on.
Because we don't have to go and convince the governor's office and the legislature that something is a good investment, our decision-making process is streamlined somewhat in this environment. It is our operating money, and we can make decisions like a business would.
EL: Can you look at business impact without political wrangling?
JG: There is also going to be some political wrangling in this environment. The opposite site of the coin is when you've had political wrangling in order to get some IT investment approved?
Historically, a few individuals had a heavy hand on the governance process here. It made the environment I walked into very difficult to get cooperation from others. We've worked very hard to build a very cooperative model among the agencies that are making all of their own IT decisions. We've been able to convince the technology people in some agencies that it's better to work together than to work alone. If we do this, we have a better chance of getting the funding we need, instead of getting the winners and losers' syndrome you often end up with in a government setting for technology.
EL: What agencies work with you directly?
JG: We have 43 participating agencies in our shared services model. These agencies include human services, health, natural resources, and public safety. The legislature has chosen to do its own thing. The judicial branch has a foot inside the door and buys a number of services from us, but it tends to make all of its decisions independently and doesn't put anything it would classify as business critical here.
El: What is your governance process?
JG: We've tried to build a unique model here. When I arrived here, I spent most of my time looking at what things we really needed to centralize and to govern versus what things we could eliminate. To drive common solutions and reduce expenses, we needed to focus our energy on applications development so that we could get rid of the duplication. Many of the agencies have similar functions. We established a technology governance board comprised of all business people. We have small, medium, and large representatives so that we get a breath of opinions on that board. Using a set of rules, they review all requests for proposals and authorize their issuance. This board also sets standards. Between the two of these functions, we have enough levers to drive common solutions. It meets once a month.
EL: How did the National Association of State CIOs help you to make the switch to the public sector?
JG: I'd say without someone there saying 'this is what's going to happen.' this job would've been more difficult to step back and to make decisions about how I wanted to approach the challenges I faced. I didn't get involved with the National Association of State CIOs until about six months after I had been on the job. When I was president of this organization, I urged new CIOs to read the transition guide because it contains much good information. You really need to be a key part of a professional organization if you want to help people take the most advantage of technology. It was a very worthwhile investment of my time and energy.
EL: Are you able to innovate within your shared services?
JG: We try very hard to be innovative, but the rules around federal funding make it very difficult to be innovative.
EL: What's happening in the State of Iowa because of the nationwide economy?
JG: The government announced a plan to save $76 million in the next year. That's just the beginning. The question is whether or not it will affect IT.
There are some things that aren't clear at this point.
EL: What methodology do you use to evaluate the effectiveness of the business impact for the investments in technology you make?
JG: ROI in a government environment is a very tough thing to do. Everyone has to count beans the same way. That makes it challenging actually to arrive at ROI. With that said, we try to do a ROI calculation. We have the challenge of taking into consideration things that are very difficult to quantify from a cost perspective. Many government IT investments, especially at the state level, have social aspects to them. For example, what is the value of information you make available online relative to fire protection during normal times? How much is the value of having that data available during a time of wild fires? You always have to consider these things in any financial calculations. The public benefit calculation is a little more work to get too. You do things in government, not because they return financial dollars, but they are a social investment.
Some of the things we invest in are so esoteric and thus hard to put your arms around. For example, we have a little program here called School Alerts. School districts can use it to post information on the Web about late starts, early dismissals, and major events at a school building. Citizens can sign up to receive a short message service or email. The press can sign up for an RSS feed. From a government perspective, this service offers no specific public value. It's difficult to do financial calculation on this investment. The social value of this investment is huge.
El: Can you describe an investment that offered real bottom line impact?
JG: Different people see the world through different lenses. We invested in an ERP system that would allow agencies to stop doing things on the side because the old financial system wouldn't do it. It had substantial pure ROI associated with it. Unfortunately, we were unable to get agencies to use the new system to replace their old investments. It's the old you can lead a horse to water, but you can't make it drink. I can put a PC on your desk, but if you like the typewriter, you may never use the PC.
Government has a strong and very self-reinforcing culture. Institutional memory lingers on and changes happens very slowly. Some people might tell you about the things you did 20 years ago. I wasn't here 20 year ago. Some people need to move on. This type of thinking has made it very hard for us to get departments to change their business practices and their financial practices to current ways of doing things.
EL: Have you been able to put things, such as the IT Infrastructure Library, or other quality practices?
JG: We've carried out problem management using ITIL methods. We're currently working on change management. We have a long way to go. When you get budget cuts, it becomes even more difficult to make those investments. We have a process where we establish objectives for each of our services and we spend much time measuring how we're doing. I'm not a big believer in formal quality programs such as Six Sigma.
El: How do you motivate your staff?
JG: Most people are in the public sector because they want to be here. They don't come here for the money.
El: Why did you leave private industry to work for the government?
JG: The company I worked for went through bankruptcy three times. I had the opportunity to leave under a good set of circumstances. I spent a lot of time thinking about what I wanted to do next. I've been in operations. I've turned companies around. I've been in corporate development and business development. I've been in IT and ran an IT shop. I had never worked in the public sector. I wanted a new challenge. I got recruited to do something different than what I ended up doing. This job has been far more fulfilling than I ever expected it to be.
Elizabeth M. Ferrarini - She is a free-lance writer and IT consultant from Boston, Massachusetts. Reach her at elizabethferrarini@yahoo.com.
