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FCW : January 2015
during a quarterly meeting to discuss the President’s Man- agement Agenda in a crowded conference room that featured a huge management score card in front, with Bush and his Cabinet seated in a semi-circle surrounded by briefers, Young recalled. “About 20 minutes in, we realized there was a seating chart,” he said. The president was in the middle with the heads of agencies that had achieved green scores next to him. The yellows were farther from him and the reds farthest of all. During a lessons-learned ses- sion about payroll shared ser- vices in October, Young said Bush told the agency leaders: “Those of you who are green, congratulations. That’s why I hired you. Those who are yel- low, I expect more from you. Those who are red, when we come back in one quarter, if you are still red, you won’t be here.” Young’s phone was ringing off the hook when he returned to his office after that meeting. CIOs and chief financial and human capital officers were calling to ask how to achieve yellow or green ratings lest they lose their jobs. That accountability helped galvanize the payroll-sharing initiative. Another key factor in its success was good governance by the Office of Personnel Management. The monthly meetings of OPM’s payroll advisory council created a space where pro- viders and customers could address problems and resolve disagreements before agencies began moving to the services. OPM also made a strong business case for shared services by using data to show that federal agencies were paying more than industry for payroll functions — $200 to $300 per W-2 pro- cessed, for example. After the move to shared services, costs fell to $110 to $125 per W-2. Finally, payroll shared services succeeded because agencies avoided laying off in-house payroll employees after the consolidation, although there were some buyouts. Instead, agencies elevated the strategic nature of what employees did and moved them out of purely transactional work into jobs that more directly supported agencies’ missions. Striking a deal The technology was a challenge, but again, the solution centered on peo- ple. In many cases, agencies had to convert decades-old data in legacy systems to modern software and hard- ware. And in a few cases, pay- roll systems couldn’t be moved without experts who could con- vert modern code to Cobol and Fortran when customers’ sys- tems were newer than those of providers. The people who use the systems slated for transfer are essential to a successful transition. They know all the pitfalls and tricks to using the current system, and they must be involved to ensure a smooth transfer to the provider’s equip- ment and processes. It’s also vital to redesign business processes to elimi- nate agency-unique practices and shed noncritical require- ments before moving to an out- side provider. Benefits such as reduced costs, faster upgrades, consistent and efficient adop- tion of policy changes, and bet- ter analytics for decision sup- port all depend on standardized data, processes and technology. In other words, moving to shared services means accepting what’s offered by the provider and abandon- ing your list of special requirements. In the end, striking a deal with a shared-services provider might be the easiest part of the transition. Feder- al providers generally operate under working capital or franchise funds, and their services can be acquired using an interagency agreement, which most providers have tailored for their customers. The 2013 Federal Shared Services Implementation Guide offers pointers on how agencies can make the most of those agreements: • Include a formal process and struc- ture for regular, emergency and prior- ity communications and escalation of problems. January 2015 FCW.COM 29 The people who use the systems slated for transfer are essential to a successful transition. They know all the pitfalls and tricks to using the current system, and they must be involved to ensure a smooth transfer to the provider’s equipment and processes. 0115fcw_028-030.indd 29 1/6/15 1:34 PM
November and December 2014