Shared services becoming new normal in financial modernization

Monday - 4/8/2013, 7:56pm EDT

Joseph Ward and Esther Horst of the Interior Business Center speak with Francis Rose.

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By Sean McCalley
Federal News Radio

In terms of financial management modernization, the new name of the game is shared services.

The Office of Management and Budget made that clear last month when it issued a new policy mandating agencies use a federal shared-services provider when they update their financial systems.

As agencies update their financial systems, too often they build costly agency-specific systems from the ground up.

Federal shared-services providers on the other hand, such as the Interior Business Center, attempt to leverage economies of scale and efficiencies both within the Interior Department and for outside agency customers.

"Federal agencies are coming to us because they need to save money," said Joseph Ward, director of the IBC, during an interview on In Depth with Francis Rose, as part of Federal News Radio's special report Rise of the Money People. "They're also coming to us because they see the value in taking those services to a shared services provider."

Ward said this allows agencies to focus more on their core missions.

The Interior Business Center is born

Interior Business Center Director Joseph Ward (top) and Assistant Director of the Financial Management Directorate Esther Horst.

If the name Interior Business Center is unfamiliar, it's likely because it just had a name change. For the past three decades it was known as the National Business Center. It changed its name on Oct. 1, 2012.

Over the past 30 years, the National Business Center honed its own business model in order to better provide for the agencies it served. That process continues today. While interviewing to become IBC's director in February 2011, Ward identified what he called superfluous services within the center.

"There were several lines of business on [the National Business Center website] that I thought, 'Well that doesn't make a lot of sense,'" said Ward. "I mean, I'm sure it's an important operation but it just doesn't make a lot of sense for a shared service offering."

One example he cited was an aviation management program. Aviation safety and management techniques were offered via a center in Boise, Idaho. After becoming director, Ward divested the program from the IBC portfolio and it was moved under the auspices of a new deputy secretary.

He took the same actions with an executive coaching program and an administrative operations service.

"The advantages of that, for me, are very simple," said Ward. "I no longer have to focus management attention on aviation, administrative options and coaching. Which, although they're important, they don't bring as much value to the department."

It's a cost-driven approach to honing the IBC that eliminates administrative and financial distractions. Ward says those distractions normally add up to generate wasted tax dollars.

This is a philosophy the IBC tries to pass on to the Interior Department and the 150 agencies for which it provides shared services.

Some of the IBC's biggest "success stories" include:

  • Civilian housing management — IBC is the only shared services provider involved in civilian housing management. It helps agencies like the National Park Service, Bureau of Indian Affairs and U.S. Fish and Wildlife Service set rental rates, manage their housing inventory and produce tenant leasing documents. The IBC's Quarters program started in the 1980s.

  • 340 percent improved efficiency of the Interior Department's payroll system, which helps the agency save $29 million every year

  • Helped the Fish and Wildlife Service consolidate its payment processing system

The Interior Business Center also provides the IT acquisition support to streamline cloud adoption and collaboration services.

Building an interagency ecosystem of shared services

IBC's shared services include human resource management, financial management, and acquisition services. Besides the Interior Department it's available to help 150 other agencies. But many of those agencies can still be reluctant to accept the help.

"The small to medium sized federal agencies, I think, generally speaking, they're coming to us as willing participants in the party," said Ward. "When it comes to the larger federal agencies, I think cultural change with large agencies is more of an issue."

He says sometimes the agencies are blind to the benefits a shared service provider can offer. "They feel like they're losing turf and they may be giving up something. And they may not look at the long-term benefits," he said.

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