Ovum: Demise of shared service body warning for other governments

Ovum: Demise of shared service body warning for other governments

Suggests agencies should adopt the cloud for shared infrastructure and applications

Research firm, Ovum, says the demise of the shared service body is a warning for other governments.

It claims portfolio and agency autonomy are key drivers for the desires of central agencies and though benefits appear compelling in a spreadsheet, they might not be fruitful in practice.

According to the company, the shared services misadventures of Queensland, WA and South Australia have shown that the depth and resilience of agency autonomy should not be underestimated.

Ovum research director, Dr Steve Hodgkinson, said in order to make decisions based on local imperatives, agencies have strong incentives and drivers, supported by culture and on-the-ground operational realities.

“Whole-of-government incentives and drivers, on the other hand are weak. When push comes to shove, agency autonomy always wins because it is agency heads that carry accountability for operational service failures,” he said.

The company said that the economic theory of scale that relies on ‘one-size-fits-all’ systems fail as it compromises the resulting customised system to the extent that it fails under its own weight.

Ovum advised governments to treat consultant's shared services business cases with extreme caution.

“Shared services can work – but the risks are high that costs will be greater, and benefits smaller than expected. Success requires realistic expectations and strong leadership,” Dr Hodgkinson said.

It suggested governments constrain the scope of shared services to commodity-like infrastructure services to manage risks as it increases when providing business systems tailored for distinct agency requirements.

Ovum also proposed that with cloud computing services maturing locally, governments should turn to the cloud for shared infrastructure and applications.

“No agency can mount a credible argument that it has unique requirements for datacentre ops, application hosting and core desktop services,” Dr. Hodgkinson said.

It theorised that the key difference with the cloud is that agencies can make their own decisions with the services and apps that already exist and economies of scale come as a service attribute not contingent on all agencies grouped into one by the department of Treasury and Finance.

Dr Hodgkinson said IT strategists and procurement executives express reservations about the risks of cloud computing and ignore the even greater risks of flawed shared services strategies.

“It is time for them to wake up to the cloud,” he said.

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