Shared Services Special
May 29, 2012

Simple principles: Ontario’s shared service approach

Ontario was one of the first and most successful at implementing shared services. Started in 1998, the province is realizing its mission “to drive in efficiencies and drive out costs.”

The beginning was tough – an unwillingness in some parts to embrace the model, the absence of an enterprise-wide business plan, the newness of it all, and the initial failure to consolidate staff under Ontario Shared Services (OSS). Since 2004, Ontario has revved up, reducing the administrative cost to government by 26% while realizing one-time and ongoing cost savings of $225 million per year, reducing the OSS budget share to 1.3% from 1.9%, and increasing the number of clients served per employee by 44%. Automating expense claims alone freed up 45 staff. During that time, OSS evolved from the sort of back office transactional support we most envision, to driving transformational change across the public service. Ontario now has one of the leanest and most effective public services in Canada – with the second lowest cost per citizen of any province.

The Harvard Study spoke glowingly about Ontario as an example of Horizon Four: Transforming. Their observations are two plus years old now, so we went to Lois Bain, the associate deputy minister, for an update.


What impact will the Drummond report have on Ontario Shared Services?

Drummond has recognized the value of a shared services model; it’s about how we can serve our clients better. We are excited he sees the opportunity of extending shared services into the broader public sector to help achieve the kinds of cost-savings practices the OPS has benefited from. Efficiencies are generated from running end-to-end processes and leveraging savings for your clients, in payroll, payment processing, supply chain, mail, print and distribution. You don’t need to decrease performance to decrease cost. You simply become better at what you are doing.
 
The story is about consolidating, reviewing business processes and driving for efficiencies. OSS uses a variety of tools including benchmarking to move to best-in-class services. We are currently prepping for NQI (National Quality Institute) assessment for level two.  

We’ve consolidated the ministry’s print shops and re-engineered the work, becoming the first and largest public sector organization in Canada to attain Forest Stewardship Certification and saving the government $2.5M annually and 70 million sheets of paper each year. That means we are lean and green. The same approach holds true in procurement. Our modernization initiative uses lean Six Sigma process improvement methodologies to streamline procurement (28-day reduction in the procurement cycle time) and meets the challenge of balancing appropriate controllership with value-for-money, making it faster and easier for ministries and vendors.
 
OSS also uses rigorous annual SysTrust auditing practices to provide necessary assurances to the government about the effectiveness of our controls and the integrity of our systems. For us, it is always about improving.

Some public servants complain about having to “do more with less.” Others are proud of driving costs down while improving service – of increasing innovation and productivity. Which attitude prevails here: is the glass half empty or half full?
 
We’re proud, that’s one of our hallmarks. We have service standards and service partnership agreements so we can show cost reductions while maintaining or enhancing service levels. We depend on clients for feedback, communicating their needs and how we are meeting them.

What is your governance model?

In the early days of shared services we had a customer council made up of CAOs and regional directors who helped us transition from silos to shared service. We have moved to clearly articulating service level agreements and defining service standards. We build relationships so that when things don’t go well there are open lines of communication. Resistance is less now that we are seen as a strategic business partner. We want to work with clients to understand how their business needs are evolving so that we can support them and manage our services accordingly. It’s about leadership, engaging employees and designing and adapting your business model so that you are always providing the best service possible. We consolidate to the appropriate channels.  

How do you learn?  

There was more industrial tourism in the earlier days. We have a network, we study other provinces, and they study us. We listen to our clients; we do extensive consultations. It’s about understanding our client’s needs and working with them to deliver. We learn from benchmarking what is best-in-class.  

I like listening to our staff, getting out there, talking with them about what’s working, what isn’t, what their pain points are. We learned through town hall sessions that there are still a lot of systems that cause unnecessary work for them; we’ve tackled some of those – responding to what they need to do their job and how they like to tackle their problems. For example, they identified that staff on reduced hours had to send in a cheque for 98 cents per month to keep their benefits up. But it cost us significantly more in staff resources to process their cheque. Were we ahead? The frontline asked why do we do this? We got the right people in a room and said: “can we fix this?”

What did you learn?

Simple principles. Have strong leadership, governance, a strong mandate with political support, consolidate early. Use enterprise systems, have one system to drive out your business processes. Our focus was on simplifying and automating, streamlining policies – there is some resistance so you need policies that say we will all do it the same way. We distilled our core contribution and consolidated our products and service lists.

We learned to use enterprise data for enterprise solutions. In procurement, we did a spend analysis to promote smart consumption to help ministries understand where they spend their money. Then we focused on vendors of record and looked at price and efficiency so clients could ask fundamental questions and reduce costs. We helped save over $220,000,000 per year. Today we support ministry oversight requirements by creating “dashboards” to give ministries easy access to key data. The Procurement Dashboard provides online access to procurement spend data that previously wasn’t available.

People say “we are different” and I get it. Some agencies are special and we try to accommodate their business needs. But when we are paying people, or invoices, does the process used matter? Commodify what you can and individualize where absolutely necessary. We have specialists who can help departments, from developing e-forms to stuffing envelopes. We’d like to help ministries with their non-core work and be their strategic partner to support their business transformations.
 
What’s next?

As budgets become tighter we have been approached by some municipalities and organizations in the broader public sector. Could we, for example, run the financial systems for a small city? Could we do payroll, prin

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