ServiceFirst a disaster avoidance strategy

news analysis The quiet launch of the NSW State Government's ServiceFirst agency was an attempt to avoid the woes of similar "big bang" shared services programs in Western Australia and Queensland, according to one analyst.

(Credit: ServiceFirst)

Shared services initiatives for state governments have aimed to cut the cost of running back office functions, through the consolidation of multiple agencies' payroll, HR, IT and property management into centralised units.

But while large scale shared services initiatives in government have promised massive savings, implementation problems on large projects have left savings elusive.

"State governments in New South Wales, Victoria and South Australia are going down a shared services path, but they're not doing it in a big bang way that Western Australia and Queensland have done," Gartner government analyst, Richard Harris recently told ZDNet.com.au.

"Some of the challenges to the big bang approach are that they aim for very large benefits but, because they are big and complex, they're not easy to get in place," added Harris.

Western Australia's attempts since 2002 to build its shared services capabilities promised $50 million a year savings on its $315 million back office budget. Two years behind schedule and $70 million over budget, the project was slammed last year by WA's auditor general. The delays have left taxpayers facing a bill of $400,000 per month while the hoped-for savings were deferred from July 2007 to July 2009.

Richard Harris
(Credit: Gartner)

Queensland had high hopes for its shared services initiative, which, six years after the process was started, still promises savings of up to $100 million per year. Facing difficulties since 2002, Queensland this year outsourced the implementation of its shared services to IBM under a four-year deal for an undisclosed sum. The first priority is to implement the state's SAP HR system that the state decided to standardise upon in 2005.

Failures and delays concerning these large projects have caused states such as NSW to opt for quieter initiatives that are created from existing, smaller shared services initiatives, according to Gartner's Harris.

"In general, there is more a desire not to make a song and dance. Because of the high profile that comes from shared services, there is a desire to just get on with it," he said. "Very much the focus [in NSW] is on building on proven capabilities where shared services are already in place already and then to amalgamate those to get greater economies of scale."

NSW's reasoning for avoiding that song and dance was that the chaos surrounding the ousting of then-Premier Morris Iemma several months ago, coupled with the state's financial crisis, meant technology projects were overshadowed.