Blueprint 100715 Blue Print For Corporate and Shared Services in The NSW Government

Department of Premier and Cabinet
Blueprint for Corporate and Shared Services in the NSW Government
15 July 2010
State of New South Wales through the Department of Premier and Cabinet, 2010. Department of Premier and Cabinet engaged Third Horizon and The Hackett Group to assist with the development of this Blueprint for Corporate and Shared Services in the NSW Government. You may copy, distribute, display, download and otherwise freely deal with this work for any purpose, provided that you attribute the Department of Premier and Cabinet as the owner. However, you must obtain permission if you wish to (1) charge others for access to the work (other than at cost) or (2) include the work in advertising or a product for sale. This document has been prepared by the Department of Premier and Cabinet of NSW for general information purposes. While every care has been taken in relation to its accuracy, no warranty is given or implied. Recipients should obtain their own independent advice before making any decisions that rely on this information.
Published May 2010
CONTENT
1. Executive Summary 2. Introduction 3. Design Principles i. Objectives and Design Principles ii. Operating model iii. Ownership and governance iv. Service Delivery Management v. Funding and Pricing vi. Benchmarking vii. Implementation Strategy 4. Functional Scope i. Guiding Principles ii. Corporate and Shared Services Functional Scope iii. Accountabilities of Corporate and Shared Services by Function iv. Exceptions where agencies remain accountable for certain Corporate and Shared Service functions 5. Operating Model i. Guiding Principles ii. Functional Delivery Models - Corporate and Shared Services iii. Corporate Services Operating Model iv. Shared Services Operating Model 6. Service Delivery Model i. Guiding Principles ii. Governance and Ownership iii. Customer Engagement Model iv. Funding and Pricing v. Service Management
7.
Implementation Strategy i. Guiding Principles ii. Whole of Government governance iii. Implementation planning iv. Benefits Realisation Framework v. Implementation Management Structure vi. Critical Success Factors
8. Benchmarking and Best Practice i. Principles and Framework ii. Taxonomy/Functional Decomposition iii. Metrics, Targets and Best Practices iv. Ongoing Benchmark Program a. Methodology & approach b. Roles & responsibilities c. Location structure d. Question sets e. Tools and data sources f. Definitions g. Assumptions h. Validation i. Reporting v. Implementation Consideration 9 Risk Assessment i. Staff Change Management ii. Corporate Structure Complications iii. Capability of Workforce iv. Investment and Standardisation of Technology v. Department and agency Expectations of Service vi. Branding of Departments vii. Non Standard Approach viii.Rate of Change ix. Effects on Current Department and agency Initiatives 10 Appendix - Definition of Common Terms
1. EXECUTIVE SUMMARY
INTRODUCTION AND BACKGROUND

In mid 2009, the NSW Government announced major improvements to the structure of Government, through amalgamating agencies into 13 clusters. Clusters contain a Principal Department1 and usually also include agencies2 and a range of other bodies, such as tribunals or statutory bodies. The broader amalgamation reform program is designed so that NSW Government can deliver: More integrated services Stronger customer focus More efficient provision of Corporate and Shared Services Fundamental to this reform is the need to consolidate the Corporate and Shared Services activities across the sector. Key outcomes sought in this reform include: A more streamlined and standardised Corporate and Shared Services framework and service delivery More efficient, low cost service and redirection of effort to front line services A focus on customer service and improving the Corporate and Shared Service experience Corporate and Shared Services functions are currently provided in a fragmented way across the sector, with some provided internally and some externally to departments. There is a significant variation across the clusters in the maturity of expectations, understanding, delivery and usage of these types of services. A key part of this reform requires the building of a whole of sector Blueprint, plans and independent benchmarking as part of the Corporate and Shared Services Reform Implementation Project.
The functions included within the scope3 of the Corporate and Shared Services Blueprint are: 1. Finance 2. Human Resources Management 7. Governance and Risk 3. Industrial Relations 8. Executive Services 4. Occupational Health and Safety 9. Records and Knowledge Management 5. Information Technology and Communications 10. Property, Facilities and Fleet Management 6. Contracts and Procurement 11. Asset Management
1. Note: Principal Departments are those listed in schedule 1 part 1 of the Public Sector Employment and Management Act 2002 2. Note: Agencies are generally headed by a Chief Executive who reports to a Minister, and may be a part of a Principal Department or a stand alone body. The Police and Emergency Services cluster does not have a Principal Department, given the unique nature of the uniformed services 3. Note: Functions within scope will be addressed within the Blueprint but are not necessarily considered purely Corporate and Shared Services. Accountability may remain with the Department where appropriate see details in Section 4: Functional Scope
KEY MESSAGES
There is significant opportunity to achieve benefits through the consolidation of Corporate and Shared Services in the NSW Government. There are numerous examples of public and private sector Shared Service operations delivering services to over 20,000 employees and achieving tangible benefits. The Corporate and Shared Services Blueprint provides a framework to facilitate the achievement of these benefits across all Departments while acknowledging the complexities of such a reform. Design Principles, developed in collaboration with representatives from each of the Principal Departments, guide all design decisions through the Blueprint and must be achieved by the final solution. The Blueprint contains an operating model where corporate functions are consolidated to the cluster level through a Principal Department and Shared Services are provided either through an in-house or multi-tenanted provider, depending on the clusters scale. The future state Corporate and Shared Service model includes five in-house Shared Services providers and one multi-tenanted provider, all supported by a single ICT Wholesale operator. To ensure the operating model is effective, a range of fundamental service delivery considerations including benchmarking will be implemented. Implementation of such a reform will be complex, with clustered Principal Departments at various levels of maturity in relation to Corporate and Shared Services. Accordingly, an implementation strategy has been developed including a centralised reform team and tiered approach to facilitate a sustainable reform program.
There is significant opportunity to achieve benefits through the consolidation of Corporate and Shared Services in the NSW Government but investment will be required. CASE FOR CHANGE
Planned Savings
>60% 10% 1-10% 5%
11-20% 24%
Industry studies suggest Shared Service reform delivers over 20%1 reduction in cost with improved levels of service and quality. 71% of Shared Services Operation plan to achieve over 20% reduction in costs 61% of Shared Services Operations have achieved over 20% in savings
41-60% 19%
Reform of Corporate and Shared Services within the NSW Government offers a significant opportunity for improvements in consistency of customer service and efficiency benefits. Achieving these benefits requires significant change and the bringing together of similar capabilities and reengineering processes to leverage scale including: Consolidating ICT platforms (fixed cost spread across greater user base, higher utilisation of infrastructure, reduced maintenance/support per user) Amalgamation of workforce to service multiple clients (increased depth of skills, increased supervisor/agent ratio, increased utilisation, greater flexibility of workforce) Knowledge exchange (learn it once - not twice, supports standardisation and maintains vision)
21-40% 42%
Achieved Savings
>60% 10%
No change 4%
1-10% 8%
41-60% 22% 11-20% 27%
Location and facility alignment (e.g. consolidated office space, location based on skills availability)
21-40% 29%
1. Source: Review completed in 2009 as part of the Hackett Group Shared Services Performance Study including a mixture of 193 public and private organisations from US, EU and Asia pacific regions
There are numerous examples of public and private sector Shared Service operations delivering services to over 20,000 customer employees and achieving tangible benefits. SHARED SERVICE EXAMPLES Public Sector
Queensland Government (State)1 Nearly 200,000 full time equivalent (FTE) supported by three Shared Services operations Single technology wholesale provider supporting the three operations $100m in benefits achieved Australian Defence Force (Federal)2 Single service provider including Finance, HR, procurement and base and facilities management services to 100,000 FTE Multi-billion dollar forecast cumulative savings over a ten year period
Private Sector
Carrefour (France)4 Consumer staples in France with 490,000 employees Shared Services Provider delivering finance, procurement and ICT services Three year payback on initial $170m investment
General Electric (US)5 240,000 payroll employees, $80bn AP, 80,000 AR, two million calls/month Single Shared service organisation $480m in savings ($17/employee hour)
UK Government (International)3 Six Shared Service providers servicing target of >20,000 and in excess of 100,000 FTE Department for Work and Pensions year one 15% savings and continuing to deliver efficiencies National Health Service delivered ~$500m in savings
Barclays (UK)6 Established a Finance and Reporting Shared Service Centre 148,000 FTE 16% service level improvement 12% headcount reduction
It is realistic to expect the NSW Government could target three Shared Service providers servicing up to 100,000 FTE each. However, a preliminary target of 20,000 FTE has been determined to be a practical, implementable target to achieve initial critical mass/scale.
1. Source QLD Government - QLD record_of_achievements_02-08 2. Source Australian Defence Force Third Horizon Study 3. Source UK Government UK Cabinet Office 3. Source Carrefour Accenture Study 4. General Electric CBI Study 5. Barclays SAP Study
The Corporate and Shared Services Blueprint provides a framework to facilitate the achievement of benefits across all Departments while acknowledging the complexities of such a reform. BLUEPRINT OBJECTIVES AND APPROACH Objectives
The primary purpose of the Corporate and Shared Services Blueprint is to provide a whole of government framework that will enable Principal Departments to achieve benefits from the consolidation of Corporate and Shared Services. In addition, the objectives of the Blueprint are to: Provide sector wide consistency and standardisation within the areas of Corporate and Shared Services while acknowledging the uniqueness and complexity of individual departments and the services they provide Establish parameters for departments to make decisions that are aligned to whole of government objectives Hardwire key decisions to minimise or prevent loss of potential benefits across Departments The Blueprint is also intended to recognise the complexity of implementing such a large scale reform including: Provision of guidance for the Principal Departments planning, implementation and transition Reinforcement of the significant up front investment required to achieve benefits and levels of services The development of the Blueprint was not intended to be a detailed diagnostic or assessment of each Principal Department. The Blueprint does not specify specific solutions or implementation plans for each Principal Department.
Approach
The Corporate and Shared Services Blueprint, has been developed using a collaborative approach combining consultation, with lessons learnt from the implementation of effective Corporate and Shared Services in other jurisdictions and industries. Understanding of the complexity of each Department and solicitation of views on Corporate and Shared Services solutions were achieved through high-level consultation with each Principal Department including: A series of one on one meetings with key individuals and groups from each of the Principal Departments A series of one on one meetings with key individuals from the current Shared Services Providers A number of sector level meetings with DPC, DSTA and NSW Treasury Initial findings and recommendations were then tested and validated via a series of workshops with a cross sector Senior Officers Group: Design and Guiding Principles Workshop Functional Scope and Operating Model Options Workshop Shared Services Delivery Management Workshop A Blueprint Interim Report was then distributed to the Senior Officers Group and detailed feedback was received. A last workshop was conducted to review feedback and finalise outcomes for the Blueprint report. The Blueprint has been approved by the Directors General Executive Committee by the Government.
Design Principles
The design and implementation of Corporate and Shared Services across NSW Government should . . .
Align to NSW Government Objectives & Department Strategy
Be aligned to, the nature of, and medium/long term trends within, each Departments frontline services and operations. Align to the strategic direction, current initiatives and critical whole government trends including: approved budget and financial targets affordability and budget /funding direction for the next 4 years Shared Services providing services to no fewer than 20,000 full time equivalent staff the amalgamation and integration of departments and other bodies into 13 clusters Address sector wide mobility, development and career management of staff and balance the support of regional employment, taking into account overall sector efficiencies. Enable performance comparison based upon transparent and consistent metrics across Corporate and Shared Service operations. Design in capability to drive efficiency and industry best practice, continuous innovation and renewal and transition from the present mode of operation (PMO) to the future mode of operation (FMO) returning cost savings, service and investment benefits to users and clients. Provide transparency and visibility of the services delivered and their cost relationship (including both operating and investment costs). As a starting position, assume that all non front line and operational services are candidates for inclusion into Corporate and Shared Services. Eliminate replicate shadow operations and duplicated functions outside of Corporate and Shared Services, once service levels have become satisfactory. Once an operating model has been selected, be mandated for an agreed term. Take into account differences, between departments, yet encourage a consistency of approach across the NSW Government in the delivery and levels of service. In the end state: provide improved levels of service (based against the current baseline service), whilst not degrading current service during transition align user expectations of service (tangible and intangible) with agreed levels of service have services delivered centrally from the point that maximises customer service outcomes perform standardised delivery of service that also achieves balance with customer responsiveness and intimacy needs (standardised back office and a customised front office) rectify current areas of poor service
Provide Benefits Provide Appropriate Levels of Service
The Blueprint contains an operating model where corporate functions are consolidated to the Principal Department level and Shared Services are provided either through an in-house or a multi-tenanted provider. OPERATING MODEL Corporate and Shared Service Scope
Eleven functions1 have been defined as in scope for this Corporate and Shared Services Blueprint. Within each in scope function, the Blueprint specifies where primary accountabilities lie for activities across Corporate and Shared Services and the departments2. Transactional activities (e.g. Accounts Payable) and basic advisory activities (e.g. advice on Management Accounts) will be provided through Shared Services. Policy and control and strategic activities are provided through Corporate Services. Accountability within a function may remain with a department, rather than be provided as a Corporate or Shared Services, where it: Is unique and critical to department and agency; and Provides no benefit in aggregation. Corporate Services will sit as a group reporting to the Director General and while some structural suggestions3 have been provided, the ultimate organisational design decisions for Corporate Services will sit with the Director General.
Shared Service Operating Models3

The fundamental decision point for the Shared Services operating model is the decision between a Departmental in-house or multi-tenanted provider (i.e. services provided to more than one Principal Department). To achieve benefits from Shared Services, critical mass/scale is required. To support an in-house model, a Principal Department must exceed 20,000 FTE. For those Principal Departments with less than 20,000 FTE, a multitenanted model will best achieve critical mass. Given the organisational separation of the provider and customer, a multitenanted model will have some additional requirements for effective operations when compared to an in-house model including: More formal governance arrangements (e.g. skills based board) Stronger customer engagement capabilities More sophisticated pricing model (e.g. unit based prices vs. full cost allocation) Despite these additional requirements, achieving critical mass is fundamental to achieving benefits in Shared Services, implemented in a balanced and practical manner. Where the benefits outweigh the increased costs. The approved operating model for an in-house operation is the Service Centre4 model for a multi-tenanted operation, the approved model is the Single Full Suite Provider4. Over time, both should move to the Wholesale ICT4 option.
1. Note: In scope functions are Finance, HR, IR, OH&S, ICT, Contracts & Procurement, Governance & Risk, Executive Services, Records & Knowledge Management, Property, Facilities and Fleet Management and Asset Management
2. Note: For detailed allocation, see Section 4 Functional Scope 3. Note: For detailed Operating Model, see Section 5 Operating Model 4. Note: For detailed explanation of the models, see Section 5, Part iii
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Future State Operating Model
Frontline Service Delivery
NSW Public
Clusters
Planning
2,400 FTE
Premier & Cabinet

1,400 FTE Corporate
Communities
3,200 FTE Corporate
Treasury
2,800 FTE Corporate
Industry & Investment

4,000 FTE Corporate
Environment Climate Change & Water 5,700 FTE Corporate
Services Technology& Admin.

3,400 FTE Corporate
Justice & Attorney General

12,600 FTE Corporate
Transport NSW
Police & Emergency Services

Human Services
Education & Training

Health NSW
Principal Department Corporate
Corporate
Shared Service Provider
Multi-tenanted Shared Services Provider
In-house Provider
In-house Provider
Business Link
In-house Provider
Health Support Services
ICT infrastructure Whole of Government Services Fleet Property Procurement GCIO
ICT Infrastructure
1. Note: These whole of government services are provided by central departments such as the Department of Services, Technology and Administration 2. Note: FTE numbers are approximate. Source: Work Force Profile collection June 2009.
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To ensure the operating model is effective, it is critical that a range of fundamental service delivery considerations be implemented, including benchmarking. SERVICE DELIVERY COMPONENTS
Governance provides the control framework for how the Shared Service will operate within existing Departmental and whole of government committees and groups. The five tier model clearly articulates the mandate, structure and roles required in each of the tiers and leverages the Directors General Executive Committee and as the top two tiers of control. The remaining three tiers provide control, customer engagement and operational management functions in both the in-house and multi-tenant operating models. Common structures have been used across both operating models for customer engagement and operational management, ensuring that both benefit from a robust governance structure regardless of size. Customer engagement provides the flexible front end delivery of Shared Services, meeting expectations and providing accountability for demand planning, account management and customer engagement and delivery of supporting systems. All interfaces between purchaser and customer have been described, including key activities and timeframes. The engagement model is consistent across both in-house and multi-tenant operating models. Sustainable delivery of Shared Services requires effective funding that includes activity running costs, refresh costs and investment required to align to the customers' future need. Funding provides a control point to manage the quality and volume of service being delivered or used and has been considered as a critical behaviour driver. The funding and pricing strategy differs between in-house and multi-tenant models due to the inherent nature of Principal Departments' governance. In-house: o Business unit structure with recovery of costs through high level allocation of costs to service delivery functions within the Department Multi-tenant: o Sophisticated price model based on unit cost per service with commitment to achieve future cost savings o Investment funding consolidated from all customer Departments via the demand planning function based on a positive business case Effective service management is composed of a number of key functions that include a detailed description of the service being delivered, methods to measure and evaluate performance, detailed demand management processes and measures to ensure any disputes are managed consistently. Service management guidelines have been provided for each of the key functions and should be considered a vital part in establishing trust and collaboration between the purchaser and customer. Achieving best practice is of particular focus and is addressed in the whole of government benchmarking framework.
Governance
Customer Engagement
Funding and Pricing
Service Management Framework
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Implementation of such a reform will be complex, so an implementation strategy has been developed including a centralised reform team and tiered approach, to facilitate a sustainable reform program. IMPLEMENTATION STRATEGY
The NSW Government is committed to the reform of Corporate and Shared Services to deliver enhanced customer service and efficiencies to the NSW public. Creation of the Principal Departments has provided the opportunity for all 13 clusters to achieve significant benefit and reform through a well executed whole of government initiative. Implementation timeframes, resourcing and funding profiles, will vary between clustered Departments based on their characteristics, maturity of Corporate and Shared Service functions and their ability to deliver efficiencies. All clusters reform programs will be coordinated through a central reform program office that will be responsible for consolidating program plans, continuous monitoring of improvements and supporting the Departments through the program. Three implementation phases have been used to ensure that the reform is sustainable and addresses short term tactical objectives as well as maintaining focus on longer term large scale transformation: Horizon 1: short term tactical realisation of benefits as well as business as usual Horizon 2: medium term planning and benefits realisation within the financial year Horizon 3: longer term and transformational, sees the transition to end state Corporate and Shared Service Centres Perceived barriers to change (uniqueness of department and agency functions, audit and risk responsibilities etc) are important considerations to be addressed during the implementation planning process, but should not deter or prevent the future mode of operation being achieved. 2010 Horizon 1 Short term (tactical realisation)
Implementation Horizons
2011 Immediate benefits business as usual 2012 onwards
Horizon 2 Medium term (results within 12 months)
Benefits to achieve further enhancement
Horizon 3 Longer term (transformational)
Whole of Government (benchmarking, DGEC and DPC reform management)
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2. INTRODUCTION
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The overall task is to develop a whole of government Blueprint that can be practically implemented by Principal Departments to support their Corporate and Shared Services Reforms.
In mid 2009, the NSW Government announced major improvements to the structure of Government, through amalgamating agencies into 13 clusters. Clusters contain a Principal Department1 and usually also include agencies2 and a range of other bodies, such as tribunals or statutory bodies. The broader amalgamation reform program is designed so that NSW Government can deliver: More integrated services Stronger customer focus More efficient provision of Corporate and Shared Services Fundamental to this reform is the need to consolidate the Corporate and Shared Services activities across the sector. Key outcomes sought in this reform include: A more streamlined and standardised Corporate and Shared Services framework and service delivery More efficient, low cost service and redirection of effort to front line services A focus on customer service and improving the Corporate and Shared Service experience Corporate and Shared Services functions are currently provided in a fragmented way across the sector, with some provided internally and some externally to departments. There is a significant variation across the clusters in the maturity of expectations, understanding, delivery and usage of these types of services. A key part of this reform requires the building of a whole of sector Blueprint, plans and independent benchmarking as part of the Corporate and Shared Services Reform Implementation Project. The outputs from this project provide guidance and a framework within which the Principal Departments can more efficiently build their Corporate and Shared Services solutions with considerable sector wide consistency and standardisation. This report provides the framework for the Principal Departments planning and transition.
1. Note: Principal Departments are those listed in schedule 1 part 1 of the Public Sector Employment and Management Act 2002 2. Note: Agencies are generally headed by a Chief Executive who reports to a Minister, and may be a part of a Principal Department or a stand alone body. The Police and Emergency Services cluster does not have a Principal Department, given the unique nature of the uniformed services 3. Note: Functions within scope will be addressed within the Blueprint but are not necessarily considered purely Corporate and Shared Services. Accountability may remain with the Department where appropriate see details in Section 4: Functional Scope
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2
A collaborative approach was taken to the development of the Blueprint, including consultation with all Principal Departments and workshops on all significant components of the Blueprint.
APPROACH
The Department of Premier and Cabinet engaged Third Horizon and Hackett to provide expert advice in the development of this Corporate and Shared Services Blueprint. It established a cross-Government Reference Group of the leaders, of Corporate and Shared Services of the Principal Departments, to advise and make recommendation to Government. A collaborative has been adopted in approach the development of the Corporate and Shared Services Blueprint, combining consultation with lessons learnt from the implementation of effective Corporate and Shared Services in other jurisdictions and industries. Understanding of the complexity of each Department, and solicitation of views on Corporate and Shared Services solutions were achieved through high-level consultation with each Principal Department including: A series of one on one meetings with key individuals and groups from each of the Principal Departments A series of one on one meetings with key individuals from current Shared Services Providers A number of sector level meetings with DPC, DSTA and NSW Treasury Initial findings and recommendations were tested and validated via a series of workshops with Senior Officers Group (representing their respective Principal Departments) covering: Design and Guiding Principles Functional Scope and Operating Model Options Shared Services Delivery Management A Blueprint Interim Report was then distributed to the Senior Officers Group and detailed feedback was received. A final workshop was conducted to review feedback and finalise outcomes for the Blueprint report. Final Report
Final Report
Blueprint Approach
Principal Department Interviews Shared Service Provider Interviews DPC, DSTA and Treasury Interviews Lesson Learnt (from previous implementations)
Key Inputs
Primary Workshops
Design and Guiding Principles
Functional Scope and Operating Model Options
Services Delivery Management
Interim Report
Interim Report
Feedback and Review
Principal Department Formal Written Feedback
Senior Officers Group Feedback Workshop
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DEPARTMENT CONSULTATION AND ENGAGEMENT

One on One consultations All Department sessions completed - December 2009 3 Primary Workshops Design and Guiding Principles - 25th November 2009 Functional Scope and Operating Models 8th December 2009 Service Delivery Management - 16th December 2009 Interim Report Distributed to all Departments for feedback 23rd December 2009 Feedback and Review Individual feedback sessions with some departments January 2010 Senior Officers Group Workshop 20th January 2010 Final Report Final Review completed - 28th January 2009
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3. Design Principles
Content:
i. Objective and Design Principles
ii. Operating Model iii. Ownership and Governance iv. Service Delivery Management v. Customer Engagement vi. Funding and Pricing vii. Benchmarking viii. Implementation Strategy
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3(i) DESIGN PRINCIPLES - OVERVIEW

Introduction:
This section outlines the overall principles for the Blueprint for Corporate and Shared Services across all of the NSW Government. To a certain extent, the principles are intended to be option and solution agnostic i.e. regardless of which model and option is selected it must adhere to these principles. This section reflects critical success factors and takes into account both: Lessons learnt from the implementation of effective Corporate and Shared Services in other jurisdictions and industries The major issues and comments raised by Departments in their current delivering and/or receiving of Shared Services
Broad Definitions:1
The definition of Corporate Services is considered to broadly include functions that are: Strategic, policy and governance in nature and; Unrelated to frontline and operational functions (e.g. HR, Finance or IT). Shared Services are considered to broadly include functions that can be leveraged across multiple agencies or Departments and can be divided into two categories: Business Shared Services (relating to operating or frontline Shared Services) and; Corporate Shared Services (relating to Shared Services within corporate functions). The scope of this Corporate and Shared Service Blueprint covers only Corporate Shared Services.
Objectives:
The overall objective of the NSW Government and DPC is to move towards sector wide Corporate and Shared Services. These objectives were followed by the need to build a sector wide Blueprint for Corporate and Shared Services that would further build synergies, improve efficiencies and drive as much standardisation as possible. DPC and its consultants Third Horizon and the Hackett group have worked closely with the Seniors Officers Group to develop and agree: The Critical Design Principles that must be delivered and optimised in the design and implementation of Corporate and Shared Services across NSW Government The Guiding Principles that should assist in governing and developing a consistent approach to Corporate and Shared Services for each critical element of the Blueprint Principal Departments will need to demonstrate that their proposed solutions adhere to the agreed principles.
1. Note: See the Functional Decomposition slides in the Operating Model section of this report showing the functions split across Corporate Services, Shared Services and departments
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3(i) The development of Design and Guiding Principles is set in the context of the overall objectives for the sector CORPORATE AND SHARED SERVICES OBJECTIVES
NSW Government Objectives Across Whole of NSW Government deliver: More integrated services Stronger customer focus More efficient delivery of Corporate and Shared Services
Blueprint Objectives
Consolidation of Corporate and Shared Services to deliver: A more streamlined and standardised Corporate and Shared Services framework and service delivery More efficient, low cost service and redirection of effort to front line services A focus on customer service and improving the Corporate and Shared Service experience
The overall objectives have been endorsed by the Directors General Executive Committee and the Government. These have been further articulated and enhanced through the Senior Officers Group and are captured in the Design Principles.
Blueprint Design Principles
Critical Design Principles that must be delivered and optimised in the design and implementation of Corporate and Shared Services across NSW Government.
Blueprint Guiding Principles
Guiding Principles that should assist in governing and developing a consistent approach to Corporate and Shared Services for each critical element of the Blueprint: Operating Model Ownership and Governance Service Delivery Management (including Customer Engagement) Funding and Pricing Benchmarking and Best Practices Implementation Strategy
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3(i) The design and implementation of Corporate and Shared Services across NSW Government should . . . CORPORATE AND SHARED SERVICES DESIGN PRINCIPLES
Be in the context of and aligned to, the nature and medium/long term trends of Departments' frontline services and operations. Align to the strategic direction, current initiatives and critical trends of the Department and whole of government endorsing central direction already set including: Budget and financial targets Affordability and budget/funding direction for the next four years Shared Services providing services to no fewer than 20,000 FTE The amalgamation and integration of agencies and bodies into clustered Principal Departments As a starting position, assume that all non front line and operational services are candidates for inclusion into Corporate and Shared Services. Eliminate replicate shadow operations and duplicated functions outside of Corporate and Shared Services once service levels have become satisfactory. Once an operating model has been selected, be mandated for an agreed term. Take into account differences between departments, yet encourage a consistency of approach across NSW Government in delivery and levels of service. Provide transparency and visibility of the services delivered and their cost relationship (including both operating and investment costs). Enable performance comparison based upon transparent and consistent metrics across Corporate and Shared Service operations. Design in capability to drive efficiency, industry best practice, continuous innovation and renewal and transition from the present mode of operation (PMO) to the future mode of operation (FMO), returning cost savings, service and investment benefits to users and clients. Address sector wide mobility, development and career management of staff and balance the support of regional employment, taking into account overall sector efficiencies. In the end state: Provide improved levels of service (benchmarked against the current baseline service), whilst not degrading current service during transition Align user expectations of service (tangible and intangible) with agreed levels of service Have services delivered centrally from the point that maximises customer service outcomes Perform standardised delivery of service that also achieves balance with customer responsiveness and intimacy needs (standardised back office and a customised front office) Rectify current areas of poor service
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3(ii) The design and implementation of the end state Corporate and Shared Services operating model should . . . OPERATING MODEL GUIDING PRINCIPLES
Ensure each Corporate and Shared Services function is considered individually from an end to end operating model perspective as well as its interfaces with other functions. (e.g. Finance and HR in areas such as Payroll and establishments). Premise the design of optimal Corporate Services operating models on all Corporate Services provided at Principal Department level, except where the function: Is unique and critical to department and agency; and Provides no benefit in aggregation. Ensure Shared Services operating models consider the impact of: Scalability and leverage: the economy and potential dis-economy Affordability of the integrated IT systems, processes and operations Client business: compatibility of client base and client requirements Service features: the specific nature of the service/function The economic, capability or strategic benefit Allow resources providing Corporate and Shared Services to be physically located based upon: The nature of the service provided and its ability to be leveraged Client proximity requirements A more remote model where services can be delivered to anybody, in any location from anywhere and still achieve direct customer service and service intimacy outcomes (includes self service and automation) Availability of local skilled labour Ability to provide career paths Ensure Corporate and Shared Services are standardised as much as possible with a tailored front end and comprise: Standardisation and consolidation of common functions and tasks Clear service engagement model and contact points Transparent service, performance and billing/pricing systems Client facing relationship, planning and subject matter expert capability Enable multi-skilling of resources to assist in the front-line as required
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3(ii) The design and implementation of the end state Corporate and Shared Service operating model should . . . OPERATING MODEL - GUIDING PRINCIPLES (CONTINUED)
Drive end to end client and provider accountability with: Single point end to end process accountability Client fulfilment driven success measures Business line managers having clear information about patterns of usage and expenditure and the ability to use it to reduce costs Proactive and continuous end to end process and service optimisation Support no conflict of interest or competition for resources: Ensure roles and responsibilities do not contain inherent conflicts of interest Ensure structural separation of resources and primary functions and accountabilities to ensure that they are not diverted to other parts of the business as conditions change Ensure that roles and responsibilities for provider and client staff are clearly articulated including points of hand off and decision making.
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3(iii) The ownership and governance model for the delivery of effective Corporate and Shared Services should . . . OWNERSHIP AND GOVERNANCE - GUIDING PRINCIPLES
Enable effective client representation and accountability in strategic decision making, service delivery influence and major issue management/resolution (in both the transition and end state periods). Enable Departments/agencies to access and interrogate their own data (data collected at back of house is critical for front of house operations). Enable effective commercially sound management of the Shared Service operations (e.g. capital and people management). Provide a level of independent representation in formal governance forums (whether formal Boards or Steering Committees). Enable seamless and effective integration of strategic planning of client Departments/agencies and the strategic planning of the Corporate and Shared Service operations. Provide the correct balance of transparency, accountability and responsiveness between purchaser, provider and central agency function. Support the objective of the corporate and Shared Service being commercially orientated and independent from the customers it serves. Align to the operating model option implemented. Where there is a greater degree of physical separation of Corporate and Shared Services from the business, a greater degree of formality in structure and engagement would be required. Include all layers of the organisational providing decision and issue resolution capabilities as close to the service as possible.
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3(iv) The management of service delivery for effective Corporate and Shared Services should . . . SERVICE DELIVERY MANAGEMENT - GUIDING PRINCIPLES
Incorporate the discipline of a purchaser/provider model yet embrace a partnership culture and approach. Provide clear and effective services management for clients (departments and public) into the Corporate and Shared Service operations including clear contact channels and a focus on getting it right the first time by: Having the right location, person and process first time Standard proven technology model and support End to end standard product choices and roadmap Dynamic product and service development which is efficient and low cost Be steeped in a service excellence culture of client intimacy, understanding of client business, quality services and responsiveness to client need. Drive standardisation of processes, systems and service levels yet temper this with the impacts on clients. Explore where standardisation can be rolled up further to sector or across Principal Department levels. Ensure absolute clarity of roles for all parties with clear functional and service decomposition. Have clear mechanisms for recourse and consequence for underperformance by all parties. Ensure services are supported by skilled and capable resources with sector wide mobility and ongoing development and career paths. Enable Departments/agencies to manage their own businesses effectively through: Transparency of underlying demand and cost drivers and the ability of Departments/agencies to influence and manage these Direct access to timely, accurate and insightful data and information with the ability to interrogate information directly Running a multi-year program Enable and support continual transformation and improvement of Corporate and Shared Services, through: Aligning users with the agreed level of service Achieving standard delivery of service balanced with customer intimacy Enable and support continuous improvement in the business through the contribution of the Corporate and Shared Services. Ensure the existence of a robust customer engagement model that includes capability development, account management and service management infrastructure.
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3(v) The funding and pricing model for the effective delivery of Corporate and Shared Services should . . . FUNDING AND PRICING - GUIDING PRINCIPLES
Be tailored to the operating model option implemented with a greater degree of separation of Shared Services requiring a greater degree of formality in the funding and pricing model. Create a healthy tension between demand and supply that will drive continuous improvement. Provide, through visibility and value added service, an understanding to the client of the cost for services and the relationship to the services provided. Encompass a level of independent validation and open book transparency in the setting of recovery rates and disclosed pricing. Provide confidence to the client of the comparison to fair market value for the services provided (e.g. independent development and conduct of client satisfaction measures and benchmarking). Directly reflect the type and amount of service received with no considerable cross subsidisation between customers and services. Support medium to long term planning, capital funding and ability to continue to positively transform the service operation. Enable the alignment of department and agency funding operations to meet whole of government and Department specific long term efficiency targets (e.g. cost and budget reductions). Be transparent (open book) to enable a confidence and trust between centres and clients to be attained. Include flexibility that considers the implications of cost at different phases of maturity (consolidate, standardise, transform, steady state etc).
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3(vi) The benchmarking methodology for Corporate and Shared Services should . . . BENCHMARKING AND BEST PRACTICES GUIDING PRINCIPLES
Be based upon a precise common language to define activity consistently across the NSW Government. Ensure data captured is consistent and comparable across all government entities. Facilitate a consistent Central Agency data collection approach to avoid duplication and rework, whilst supporting the needs of all information users. Encompass metrics that are aligned with the objectives of the NSW Government and the departments within it. Be underpinned by a bottom up approach for data collection in order to enable early identification of improvement initiatives and greater visibility of performance. Recognise that challenges exist for many departments around data collection and enable a transitional approach to embedding performance measurement capability. Ensure that external targets selected are: Relevant and achievable for the NSW Government and focused on the vital few for each in-scope function Defined based on a whole of government perspective and are re-based/adjusted for application to individual Departments/agencies according to their own context and drivers Adjusted over time as the external environment changes and the NSW Governments performance progresses Enable the departments to gain visibility of performance and service levels against the agreed metrics and understand how to use them to better educate end users and lower Corporate and Shared Services costs. Provide the central agencies with the ability to gauge relative performance between the departments against the agreed metrics. Embrace benchmarking so provider and clients can leverage data and drive continuous improvement across the business and centres. Ensure captured data is protected and compliant with the Privacy Act and other legislative regulations.
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3(vii) The implementation strategy for the rollout of Corporate and Shared Services should . . . IMPLEMENTATION STRATEGY GUIDING PRINCIPLES
Ensure the speed of transition is aligned to the Departments readiness for change and that greater effort is focussed on mature departments. Transitions should be faster in departments that already have mature Corporate and Shared Services operations. Be premised on earned credibility by delivering the promise (value for money) and growing the scope of services organically. Be dependent upon the state of and requirement for, the underlying people, process and technology to effectively deliver the services. Contain substantial change management planning, including: Workforce planning for uplifting skill sets Communication plans explaining to staff where and when the impacts will occur Handling all aspects of anticipated Industrial Relation issues through consultative arrangements with relevant stakeholders Allocating accountabilities across the stages of implementation, transition and end state Training for clients to understanding how best to use Corporate and Shared Services Include transition modes of operation with careful staging and sequencing, rather than a big bang approach. Take advantage of opportunities during the transition period to further drive standardisation and simplification to reduce cost and complexity in the end state. Be underpinned by a strong implementation governance framework with clear central agency and Department roles and responsibilities. Incorporate a clear benefits realisation framework aligned to the ultimate objectives and guiding principles of the reform. Set expectations at department and agency levels that: The full benefits from the end state may not be available during the transition period The transition will not be easy but it is achievable There is a sector wide sense of urgency in moving to Corporate and Shared Services Ensure the planning phase addresses funding and resourcing issues during the transition phase.
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4. FUNCTIONAL SCOPE
Content
i Guiding Principles ii Corporate and Shared Services Functional Scope iii Accountabilities of Corporate and Shared Services by Function iv Exceptions where Departments/agencies remain accountable for certain Corporate and Shared Services functions
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4 FUNCTIONAL SCOPE - OVERVIEW

Introduction: The Functional Scope section defines which functions are considered within the scope of Corporate and Shared Services. It then broadly outlines for each function in scope, where primary accountabilities lie across Corporate and Shared Services and Departments/agencies.
Objectives: Define the functions considered within the scope of Corporate and Shared Services. Allocate accountabilities within each function across Corporate or Shared Services. Identify grey areas where accountabilities could sit with either Corporate or Shared Services and provide recommendations for these. Identify the circumstances under which accountability for Corporate or Shared functions would be required to remain within the department and agency.
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4(i) The design and implementation of the end state Corporate and Shared Service operating model should . . . FUNCTIONAL SCOPE - GUIDING PRINCIPLES
Ensure each Corporate and Shared Service function is considered individually from an end to end operating model perspective as well as their interfaces with other functions (e.g. Finance and HR in areas such as Payroll and establishments). Premise the design of optimal Corporate Services operating models on all Corporate Services provided at Principal Department level, except where the function: Is unique and critical to a particular department and agency within the Principal Department Provides no benefit in aggregation Be consistent with the definitions for Corporate and Shared Services: The definition of Corporate Services is considered to broadly include functions that are: Strategic, policy and governance in nature and; Not related to frontline and operational functions (e.g. HR, Finance or IT). Shared Services are considered to broadly include functions that can be leveraged across multiple agencies or Departments and can be divided into two categories: Business Shared Services (relating to operating or frontline Shared Services) and; Corporate Shared Services (relating to Shared Services within corporate functions). The scope of this Corporate and Shared Service Blueprint covers only Corporate Shared Services
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4(ii)
There are 11 functional areas in scope for the Corporate and Shared Services Reform and Government Blueprint. The functions of IR, OH&S, Governance & Risk and Asset Management will in most cases structurally sit outside of Corporate Services and be placed direct to the Director General.
BLUEPRINT FUNCTIONAL SCOPE Blueprint Scope

Through the consultation process, the functional scope was refined and determined as in scope for the Corporate and Shared Services blueprint and reform. The functions agreed as in scope are: 1. Finance 2. Human Resources Management 3. Industrial Relations 4. Occupational Health and Safety 5. Information Technology and Communications 6. Contracts and Procurement 7. Governance and Risk 8. Executive Services 9. Records and Knowledge Management 10.Property, Facilities and Fleet Management 11.Asset Management (Operational Assets)1 Note: Legal Services was taken out of scope of the Government Blueprint, as it was determined that the individual requirements of each department were sufficiently different that a Blueprint approach was not appropriate.
Business Functions
Doing the business
Corporate Functions
Running the business
Separation of Functions
Corporate Services
e.g. Front line service delivery Nurses and Policemen
e.g. Finance and Human Resource Management
Policy and Control e.g. Accounting standards Strategy e.g. Strategic Workforce Planning
Shared Services
Business Shared Services e.g. Grant Process Corporate Shared Services e.g. Accounts Payable
Advisory & Value Add e.g. recruitment Transaction e.g. payroll, accounts management
Note: Departments will consider, as part their own reform programs, business functions, particularly the middle office, and determine any collaboration or efficiencies at a Department level.
1. Note: It is acknowledged that Asset Management (of operational assets) is not a Corporate function but can in some instances be aggregated to the Principal Department level and so is included for the purposes of the Blueprint.
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4(ii) As a starting position, transactional and basic advisory activities should be provided through Shared Services; policy, control and strategic activities should be provided through Corporate Services. ACTIVITY CATEGORIES
Description
Relatively simple and repeatable High volumes Leverage economies of scale Advisory services Applying professional judgement Interpretation of policy Issue management
Examples
Accounts Payable Payroll Procurement Processing
1. Transactional
Shared Services
Leverage economies of scale Leverage economies of skill Enable Corporate Services to focus on strategy and governance
2. Advisory & Value Add
Tendering advice and support (contract expertise) Recruitment profiling and screening
3. Policy & Control
Policy and standards setting Development of controls Measurement of compliance
Corporate Services
Critical functions for managing risk and driving the business
Enterprise risk management Expense policy and delegations Contract risk assurance
4. Strategy
Development of overall strategic objectives High-level, long term planning
Strategic workforce planning Financial and investment strategy (financing, capital management)
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4(ii) High-level mapping allocates Finance accountabilities across Corporate and Shared Services and the department/agency although all three would be involved in some aspect of the detailed end-to-end process. FINANCE
Process Accounts Payable Accounts Receivable Accounts Receivable Collections Customer billing General Accounting External report generation Management Accounting & Analysis Management report generation Tax Management Treasury Management Banking and cash management Planning & Performance Management Upload and maintenance of budgets Management & Administration
Shared Service Advisory & Transactional Value Add
Accounts and Program Payables Travel and expense management Tracking and resolution of supplier queries
Tax processing
General ledger accounting Cost and asset accounting Expense policy and delegations Debtors policy External reporting responsibility
Interpretation and advice on management reports1 Tax policy and management Treasury policy and management2
Budget processing
Corporate Service
Budget approval Financial and investment strategy (financing, capital management) Planning and performance management
Financial policy and controls framework Financial compliance and management
Department/ Agency
External reporting responsibility where required (e.g. PTE or Statutory Authority)
IPART and ICAC pricing determination applications
Financial and investment strategy for PTEs and semiself funded agencies3 Sponsorship and external funding management
1. Note: Delivered through out-posted model within the department/agency but owned by either the Corporate or Shared Services 2. Note: This is assuming an end state where all funding comes through the Principal Department 3. Note: Any ratio of government to revenue funding could exist and a case-by-case approach is needed to determine the extent of finance capability required in the department/agency to manage the revenue streams
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4(ii) High-level mapping allocates HR, IR and OH&S accountabilities across Corporate and Shared Services and the Department/agency although all three would be involved in some aspect of the detailed end-to-end process. HUMAN RESOURCES MANAGEMENT
Process Recruitment & Sourcing Training & Development Benefits & Rewards Management Total rewards administration Payroll & Employee Services Payroll processing Personnel administration services Data management, reporting and compliance Employee Relations Case and personnel issue administration Management & Administration Industrial Relations1 OH&S & Operational Safety2
Shared Services Advisory & Transactional Value Add
Recruitment processing Position administration eRecruitment
Generic and management training and development services
Selection Screening
Case and personnel issue advice3
Corporate Service
Strategic workforce planning Position and salary analysis
Training and development strategy and planning
Benefits policy and strategy Rewards analysis and planning
Personnel data Case and personnel HR lifecycle security and privacy issue strategy and strategy and policy policy management (including culture)
IR strategy and OHS planning and planning policy Discipline and protected disclosures Statutory and mandatory reporting PSW and reform management Industrial relations management, advice and support Policy for statutory requirements Policy where selfinsurer Operational Safety
Department/ agency
Specialist recruitment (e.g. volunteers, magistrates, senior executives)
Operational training and development
1. Note: Industrial Relations is a significant function within NSW Government Departments and may sit outside of the typical Human Resources function 2. Note: OH&S and Operational Safety are not typically considered Human Resource functions in NSW Government Departments but have been included here for ease of demonstration 3. Note: Human Resources advice will sit with the Corporate function in a multi-tenanted model
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4(ii) High-level mapping allocates ICT accountabilities across Corporate and Shared Services and the department /agency although all three would be involved in some aspect of the detailed end-to-end process. INFORMATION TECHNOLOGY AND COMMUNICATIONS
Process Planning & Strategy Technology Infrastructure Service support (end to end) Infrastructure management Application Management Service support (end to end) Application maintenance Project Delivery IT Risk Management Management & Administration
Enterprise architecture planning1 Emerging technologies research and advice
Project Management Requirements gathering Application development and implementation Infrastructure development
Disaster recovery planning and execution
Corporate Service
ICT Strategy2 ICT investment prioritisation
Quality assurance and risk management
ICT standards and policy Membership of sector wide CIO forum
Department/ agency
Specialist operational applications (development, maintenance and support)
1. Note: In a multi-tenanted model Enterprise Architecture will initially be owned by Corporate Services of the customer Principal Department and may transition to the Shared Services provider over time 2. Note: The CIOG is responsible for the broader NSW Government ICT strategy
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4(ii)
High-level mapping allocates Contracts and Procurements accountabilities across Corporate and Shared Services and the department/agency although all three would be involved in some aspect of the end-to-end process.
CONTRACTS AND PROCUREMENT1

Process Demand Identification & Sourcing Strategy Selection & Order Processing PO processing Supplier Relationship Management Supplier data management Contract Management Management & Administration Catalogue maintenance and management
Sourcing advice and support
Tendering advice and support contract expertise
Performance management and reporting
Corporate Service
Strategic sourcing (Department wide, market analysis and sourcing strategy)
Contract risk assurance
Procurement and contracting policy and conditions
Department/ agency
Department/agency specific sourcing strategy
Requisitioning Goods receipting
Tendering
1. Note: The State Contracts Control Board is the provider of contracts and procurement services to NSW Government
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4(ii) Broad high-level mapping allocates accountabilities across Corporate and Shared Services and the department/agency. GOVERNANCE AND RISK, EXECUTIVE SERVICES AND RECORDS AND KNOWLEDGE MANAGEMENT
Process Governance & Risk Executive Services Records & Knowledge Management Library Records and document management services
Shared Services Advisory & Transactional Value Add Corporate governance Quality management Enterprise risk management Environmental health and safety Internal Audit
Corporate Service
Government affairs and ministerial correspondence Media and public relations Internal communications Corporate and business planning GIPA Act management and response
Knowledge and information management strategy
Department/ agency
Risk management and internal audit Business planning for PTE and as required by statutory obligations brands or concentration of risk Ministerial correspondence where reporting directly to minister
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4(ii) Broad high-level mapping allocates accountabilities across Corporate and Shared Services and the department/agency although all three would be involved in some aspect of the detailed end-to-end process. PROPERTY AND FACILITIES AND FLEET MANAGEMENT1
Process Planning & Demand Management Acquisition & Replacement Project Delivery Maintenance & Monitoring Building maintenance and cleaning Security Cafeteria and catering services Mail service Fleet management Management & Administration
Property fit-outs and relocations
Strategic sourcing and purchase
Corporate Service
Property portfolio strategy (e.g. buy vs. lease)
Property, facilities and fleet policy
Department/ agency
Usage analysis and administration
1. Note: NSW State Fleet and the State Property Authority are the Shared Services Providers to NSW Government
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4(ii) Broad high-level mapping allocates Asset Management accountabilities across the Principal Department, Shared Services and the department/agency. ASSET MANAGEMENT1 - OPERATIONAL ASSETS
Process Asset Planning Acquisition & Build Maintenance & Monitoring Management & Administration
Shared Services Principal Department Advisory & Transactional Value Add
Project Planning (including business cases) Project Management
Strategic asset management Capital Investment prioritisation
Asset standards and policy
Department/ agency
Engineering Authority Design
Asset operations and maintenance
1. Note: It is acknowledged that Asset Management (of operational assets) is not a Corporate function but can in some instances be aggregated to the Principal Department level and so is included for the purposes of the Blueprint
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5. OPERATING MODEL - OVERVIEW
Content:
i. Guiding Principles ii. Corporate and Shared Services Functional Delivery Models iii. Corporate Services Operating Models iv. Shared Services Operating Models
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5 OPERATING MODEL - OVERVIEW

Introduction:
The Operating Model is the overall business schematic consisting of operational constructs that make up the major operating units for Corporate and Shared Services. It also defines the relationship between these units and their customers. The Corporate and Shared Services operating models are highly related but have been addressed as separate components to facilitate a building block approach to the final detailed design considering the possibilities of either in-house or multi-tenanted Shared Services designs.
Objectives:
Define a set of operating models for both Corporate and Shared Services. Articulate benefits and considerations of each model and make recommendations incorporating feedback from consultations. Identify in what situations each model would be most appropriate given the differing characteristics of each Principal Department. Define the functional delivery models to be used within Corporate and Shared Services and articulate benefits and considerations of each.
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5(i) The design and implementation of the end state Corporate and Shared Services operating model should . . . OPERATING MODEL - GUIDING PRINCIPLES
Ensure optimal Shared Services operating models by considering the impact of: Scalability and leverage: the economy and potential dis-economy Affordability of the integrated IT systems for HR and Finance Client business: the compatibility of client base and client requirement Service features: the specific nature of the service/function The economic, capability or strategic benefit Physically locate resources providing Corporate and Shared Services based upon: The nature of the service provided and its ability to be leveraged The local proximity requirements of the client A more remote model where services can be delivered to anybody, in any location from anywhere and still achieve direct customer service and service intimacy outcomes (includes self service and automation) Availability of local skilled labour Ability to provide career paths Ensure Corporate and Shared Services are standardised as much as possible with a tailored front end and comprise: Standardisation and consolidation of common functions and tasks Clear service engagement model and contact points Transparent service, performance and billing/pricing systems Client facing relationship, planning and subject matter expert capability Enable multi-skilling of resources to assist in the front-line as required
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5(i) The design and implementation of the end state Corporate and Shared Services operating model should . . . OPERATING MODEL - GUIDING PRINCIPLES
Drive end to end client and provider accountability with: Single point end to end process accountability Client fulfilment driven success measures Business line managers having clear information about patterns of usage and expenditure and the ability to use it to reduce costs Proactive and continuous end to end process and service optimisation Prevent conflict of interest and competition for resources by: Ensuring roles and responsibilities do not contain inherent conflicts of interest Facilitating structural separation of resources, primary functions and accountabilities to ensure that they are not diverted to other parts of the business as conditions change Ensure that roles and responsibilities for provider and client staff are clearly articulated including points of hand off and decision making.
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There are a number of different Corporate and Shared Services functional delivery models which can be applied. FUNCTIONAL DELIVERY MODELS
There are four main delivery models ranging from fully centralised (which offers the greatest efficiency opportunities) to fully decentralised (which comes with a cost premium).
5(ii)
Single
OUTPOSTED
CENTRALISED
Reporting Structure Aggregation
Centres of Excellence and Communities of Practice may apply to geographically disaggregated models
The four models are each represented in one of the quadrants of the two by two matrix to the left, with axis's of: Reporting Structure Aggregation Geographical Aggregation Reporting Structure Aggregation describes the number of reporting lines a particular function is divided into, for example: Where all of finance reports through to the CFO, the reporting structure aggregation is single Where finance roles report directly into a department or agency the reporting structure aggregation would be multiple Geographical Aggregation describes the number of physical locations a function is positioned in. Increasing both Reporting Structure Aggregation and Geographical Aggregation enables increased of economies of scale. There are two sub models that are geographically dispersed and have a matrix reporting structure where the primary reporting line is not related to the specific function: Centres of Excellence Communities of Practice
Multiple
DECENTRALISED Multiple
CO-LOCATED Single
Geographical Aggregation
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5(ii) A combination of the Out posted, Centralised and Centre of Excellence models enables greatest benefits for economies of scale whilst balancing customer needs. APPLICATION OF MODELS
Model Definition Report to single central point Geographically/organisationally devolved Advantages and Considerations Maintains high levels of customer intimacy Leverages skill base synergies across geographically dispersed functions Enables greatest benefit from economies of scale When to use Typically this model is used for advisory type services including management accountants/business advisory and HR personnel issues advice
Outposted
Centralised
Report to single central point Geographically and organisationally centralised
Appropriate for corporate functions that provide: - Direction, guidance and strategic focus - Overarching, group level activities - Enterprise wide applicable strategies This model is also appropriate for transactional functions such as Accounts Payable and Payroll Project based functions such as IT project delivery
Co-located
No single central reporting point Geographically and organisationally centralised
Enables some benefit from economies of scale (e.g. office space)
Decentralised
No single central reporting point Geographically/organisationally devolved
Limited/no opportunities to leverage economies of scale Premium cost option
This model is not aligned to the core design principles of cost and should be avoided unless: - The function is entirely unique to an agency, or; - There is no opportunity for synergy. For high expertise functions where synergy is available but needs to be retained by the organisation e.g. Knowledge Management
Centre of Excellence
Cross-functional groups that focus on specialist areas without a specific organisational structure Managed in a formal manner (e.g. performance metrics, training)
Captures skill rather than scale synergy Drives standardisation and competency without formal reporting line structure
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The functional building blocks and accountabilities have been defined, and structural options provided, to facilitate the design of a Principal Department's Corporate Services. CORPORATE SERVICES OPERATING MODEL
The scope of functions and the relevant accountabilities within each function where defined within the Functional Scope section of the Blueprint (with options around a number of grey areas such as advice/interpretation of management reports). A range of structural/reporting options have been defined for each Corporate function and while these options are primarily mutually exclusive, some options have implications for other functions. Three sample Corporate structures have been developed as a starting point for detailed design for each Principal Department: Typical Principal Department Corporate Structure Finance, HR or ICT Heavy Corporate Structure Asset Heavy Corporate Structure
5(iii)
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5(iii) Principal Department Corporate Services will have the following accountabilities within each of the defined Corporate functions. CORPORATE ACCOUNTABILITIES
Principal Department Corporate Services Contracts & Procurement Strategic sourcing (Department wide, market analysis and sourcing strategy) Procurement and contracting policy and conditions Contract risk assurance
Finance Financial policy and controls framework Financial and investment strategy (financing, capital management) Planning and performance management Budgeting process Financial compliance and management Treasury and tax policy and management External reporting responsibility
HR HR lifecycle strategy and policy (including culture) Strategic workforce planning Case and personnel issue strategy and management Personnel data security and privacy policy Total rewards planning Training and development strategy and planning Strategic workforce planning
IR Industrial Relations strategy and planning Discipline and protected disclosures Statutory and mandatory reporting PSW and reform management
ICT ICT strategy ICT investment prioritisation ICT standards and policy Quality assurance and risk management
OH&S OH&S planning and policy
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5(iii) Principal Department Corporate Services will have the following accountabilities within each of the defined Corporate functions. CORPORATE ACCOUNTABILITIES
Principal Department Corporate Services Governance & Control Corporate governance Quality management Enterprise risk management Environmental health and safety Internal Audit Executive Services Government affairs and ministerial correspondence Media and public relations Internal communications Corporate and business planning GIPA Act management and response Records & Knowledge Knowledge and information management strategy Property & Facilities Mgmt Property portfolio strategy (e.g. buy vs lease) Property, facilities and fleet policy Operational Asset Management Strategic asset management Capital Investment prioritisation Asset standards and policy
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A range of reporting options have been defined for each Corporate function and while primarily mutually exclusive some options have implications for others. CORPORATE FUNCTIONS AND STRUCTURE
Function Corporate Services Organisational Structural Options and Rationale 1. Reports to DG: role exists based on the spans of control of the DG and typically oversees most of the Corporate Services (and Shared Services in an in-house service centre or functionally aligned model) 1. Reports direct to DG: where the Corporate finance function is of particular importance to the Principal Department or DG 2. Reports to Corporate Services: a critical function requiring leadership at this level (at a minimum)
5(iii)
Finance
Human Resources Management
1. Reports direct to DG: where the HR management function is of particular importance to the Principal Department or DG 2. Reports to Corporate Services: a critical function requiring leadership at this level
Industrial Relations
1. Reports direct to DG: in large Principal Departments 2. Reports to Corporate Services: in smaller Principal Departments the Industrial Relations function would report to Corporate Services, potentially operating as a single function with HR
1. Reports to Governance and Risk: aligned with the role and accountabilities of the Governance and Risk function OH&S 1. Reports direct to DG: where the ICT function is of particular importance to the Principal Department or DG 2. Reports to Corporate Services: a critical function requiring leadership at this level
ICT
Governance and Risk
1. Reports to DG: mandated for some areas of Governance and Risk e.g. Internal Audit, Reporting and Compliance
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5(iii) A range of reporting options have been defined for each Corporate function and while primarily mutually exclusive some options have implications for others. CORPORATE FUNCTIONS AND STRUCTURE
Function Organisational Structural Options and Rationale 1. Reports to DG: enables direct access and responsiveness of function to DG 2. Reports to Corporate Services: provides an option to reduce direct reports to the DG managing spans of control 3. Reports to Service Delivery/Strategy: large proportion of effort (e.g. ministerial communications and media) relates to the front line services rather than Corporate so this option fosters that relationship 1. Reports to Finance: skill set synergies around the financial skills for contract and procurement analysis. May be required from a spans and layers perspective for Corporate Services 2. Reports to Corporate Services: as part of Corporate Services
Executive Services
Contracts and Procurement
Records and Knowledge Management
1. Reports to CIO group: to facilitate alignment with overall information and technology roadmap but risks tending to a IT only focus 2. Reports to Corporate Services: as part of Corporate Services 3. Reports to Executive Services: an option to facilitate greater alignment with Departments/agencies where Executive Services reports to Service Delivery/Strategy 1. Reports to Asset Management: significant skill set synergies and potential overlap of responsibilities 2. Reports to Corporate Services: as part of Corporate Services
Property and Facilities Management
Asset Management
1. Reports to DG: where a Principal Department has a substantial asset base or requires particular focus on asset management 2. Remains with the department or agency (individually or centre of excellence): enables leverage of existing skills set
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5(iii) For a typical Principal Department, this sample structure is a starting point for the development of a Corporate structure. SAMPLE STRUCTURE TYPICAL PRINCIPAL DEPARTMENT
DG
Corporate Services
Executive Services
Governance & Risk
IR
Asset Management
Service Delivery 11
Service Delivery 2
Service Delivery 3
Finance
HR
ICT
Property & Facilities
OH&S
Asset Management
Asset Management
Asset Management
Contracts & Procurement
Records & Knowledge
Principal Department/agency Corporate Service Aggregated Non-Corporate
1. Note: Front-line Service Delivery is out of scope for this Blueprint and the structure represented here is for demonstration purposes only these functions could be structured in any number of ways e.g. by service line or region
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In the case that a Principal Department has a particular requirement for either Finance, HR or ICT to be elevated from the Corporate Services group, this sample structure provides a starting point. SAMPLE STRUCTURE STRONG FUNCTIONAL REQUIREMENT
5(iii)
DG
Finance
Corporate Services
Executive Services
Governance & Risk
IR
Asset Management
Service Delivery 11
Service Delivery 2
Service Delivery 3
HR
ICT
Contracts & Procurement
OH&S
Asset Management
Asset Management
Asset Management
Records & Knowledge
In cases where either Finance, HR or ICT are of particular importance to the Principal Department or Director General there are two structural options to address this need: 1. Elevate the function to report directly to the DG and sit separately from Corporate Services 2. Elevate the function lead into a shared role as Head of Corporate Services and Head of the function (e.g. the CFO is also the Head of Corporate Services)
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5(iii) Where a Principal Department has a large asset base or asset management is of particular importance, this sample structure is a starting point for the development of the Corporate structure. SAMPLE STRUCTURE LARGE ASSET BASE
DG
Corporate Services
Executive Services
Governance & Risk
IR
Asset Management
Service Delivery 11
Service Delivery 2
Service Delivery 3
Finance
HR
ICT
OH&S
Records & Knowledge
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5(iv) A range of Shared Services operating models have been identified and then narrowed down through the consultation period to a number of preferred models. SHARED SERVICES OPERATING MODEL
A decision tree has been developed to assist Principal Departments identify the most appropriate Shared Services operating model. The decision tree covers all the main options in relation to a Shared Services operating model (however many variations or combinations are possible). Through the consultation process with each of the Principal Departments, the full list of options has been narrowed to two preferred approaches. The preferred model for an in-house Shared Services operation is: Model 1: Service Centre model1 supported by a move to Model 6: Wholesale ICT Model1 The preferred model for the multi-tenanted2 Shared Services Provider are: Model 5: Single Full Suite Service Provider1 supported by a move to Model 6: Wholesale ICT Model1 The fundamental decision point for the operating model is the choice between Principal Department in-house or multi-tenanted and is driven by scale/critical mass and considering uniqueness and risk. In the case of an in-house model, the next key decision point revolves around separation of duties between strategy/policy and service delivery (of Corporate and Shared Services). In the case of a multi-tenanted model, the key decision relates to the operating structure of the external Shared Services operation(s) i.e. single full suite service provider with the option of a wholesale ICT extension through to specialised provider per service.
1. Note: Models defined later within this section 2. Note: A multi-tenanted Shared Services provider is one that provides services to more than one Principal Department
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5(iv) The decision tree, covering all the main options in relation to a Shared Services operating model, has been developed to assist Principal Departments identify the most appropriate operating model.
Model
SHARED SERVICES DECISION TREE

Yes
DG
1
Agency 1 Agency 2 Agency 3
Service Centre Model

Service Centre ICT
CS Finance HR
Should all Shared Services be delivered by a single entity?
No
DG
2
In-house
Should Shared Services delivery be separated from policy and strategy?
Considerations: Seamless engagement with function (Corporate Services (CS) and Shared Services (SS) as one) Separation of duties Conflict of interests Scale and overheads Yes
Considerations: Resource balancing and optimisation Functional expertise overlap (advisory vs. CS) Yes
No
Functional Alignment Model
CS ICT ICT Finance Finance HR HR
DG
Yes
Stand-alone Operation Model
3
Shared Services ICT
CS Finance HR
Should a Principal Department have an in house Shared Services operation?

Considerations: Scale/critical mass Skill sets Uniqueness Risk No
No
Should all Shared Services be delivered centrally?

Considerations: Core expertise of agencies
DG
Best in Class Delivery Model

ICT
4
CS Finance HR Agency 1 SS 1 Agency 2 SS 2 Agency 3 SS 3
DG
Multi-Tenanted
Consider a group of departments
Principal Department
Corporate Services primary relationship manager
CS Service Centre ICT Finance HR
Agency 1
Agency 2
Agency 3
Department
Department
Department
Department
Single Full Suite Service Provider
Multi-tenanted Full Suite Shared Service Operation
Department
Department
Department
Department
Shared Services Provider

Business Corporate Services Shared Services
Wholesale ICT Model
In-house Service Delivery 1
Multi-tenanted Service Delivery
Wholesale ICT Inf rastructure
Best in Class Delivery Model
Department Department Department Department
7
Best In Class Service 4
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5(iv) The fundamental decision point for the operating model is the decision between Departmental in-house and multi-tenanted services and is driven by a range of factors such as scale/critical mass and uniqueness. IN-HOUSE OR MULTI-TENANTED
Key Considerations
1. Does the Principal Department have the scale/critical mass to achieve benefits from a Single Shared Services operation? 2. Does the Principal Department have the skill sets to achieve benefits from a single shared service operation? 3. Are the identified Shared Service functions performed within the Principal Department fundamentally different to those performed by other Principal Departments? 4. Will an externally provided Shared Services present an unacceptable increase to risk associated with delivering front line services within the Principal Department?
In-house
>20,000 FTE
Multi-tenanted
<20,000 FTE
Yes
No
Yes
No
Yes
No
For a Principal Department to select an in-house Shared Service model, it must meet the primary scale/critical mass criteria as a minimum.
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5(iv) It is widely accepted within industry that economies of scale can be leveraged for Shared Services and the benefits increase where critical mass is achieved. SCALE/CRITICAL MASS
UK Shared Services Experience1
UK Government is in the process of deploying a broad shared and Corporate Services reform following the Gershon Review in 2004. The efficiency review highlighted the need for large scale change with up to 20bn of savings available across 1,300 Departments grouped into nine sectors. Smaller agencies are required to receive service from larger agencies to reduce duplication of functionality and associated cost to maintain and run services. 20,000 has been set as the minimum FTE requirement to deploy an independent Shared Service with 50,000 being the optimum. The Ministry of Defences Shared Service reform is expected to save 300m over 10 years.
Deployment Fixed and Variable Costs

Typical common cost components of an ERP implementation; software, consulting, hardware, people, training. Leveraging the same platforms, people and processes will: Reduce overall implementation cost (software, hardware and consulting) Increase the adoption of standard process and supporting training materials Reduce ongoing infrastructure operation costs Simplify future improvement initiatives Department specific configuration/customisation requirements are critical to project success but should be considered in balance with efficiency objectives.
Shared Service Economies of Scale3

Research across a range of industries clearly demonstrates a correlation between support costs and company size. The analysis included 18 companies from the Australian and US Gas Distribution industry and 22 UK Water Companies. The analysis used a number of proxies for scale including revenue, total operating costs and number of customers. All demonstrated the correlation between support costs and company size.
Support Costs vs. Operating Costs3
Support Cost per $1m Operating Cost ($m)
60 0.7 R = 0.635 0.6 0.5 0.4 30 0.3 20 10 200 400 600 800 1,000 Total Operating Costs ($m) 1,200 1,400 R = 0.5483 0.2 0.1 -
Support Costs ($m)
50 40
Support Costs
Support Costs per $m Operating Cost
A decision has been made to set the guideline in relation to scale/critical mass based on a Principal Department's number of FTEs being more than 20,000.2
1. UK Cabinet Office http://www.cabinetoffice.gov.uk/ 2. Note: It is acknowledged that FTE as a proxy for scale relates most accurately to functions such as HR or ICT desktop support and may not be the most relevant scale metric in all cases. However as the Shared Services operations will not be split by functional type, number of FTE will be used as the overall guiding metric for scale 3. Source: Macquarie Group led consortium for Wales and West Gas business UK
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5(iv) The preferred option for in-house Shared Services is the Service Centre model, balancing single accountability for Shared and Corporate Services with the partial separation of control and service delivery. MODEL 1: SERVICE CENTRE Model Structure
Advantages:
DG
Provides single point of accountability for all Corporate and Shared Services, while maintaining some separation between policy and delivery. Facilitates the creation of a seamless interface for business/agencies into functions rather then a two way relationship with both Corporate and Shared Services. Enables ability to leverage resources and Shared Service management skills within the service centre across multiple functions.
CS Service Centre ICT Finance HR
Agency 1
Agency 2
Agency 3
Challenges: Description/features: Head of Corporate Services oversees both Corporate and Shared Services Service Centres. Shared Services are provided through a service centre which sits separately from the Corporate Services. Typically the head of each Corporate Service will have dotted line responsibility to the relevant function within the service centre while the head of the service centre has these functions as direct reports. Corporate Services dual hatted relationship to the business as a controller and service provider. Difficult to remove cost across the Shared Service functions.
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The primary benefit of the functional alignment model is the seamless interface into each Corporate/Shared function however it limits the Department's ability to leverage economies of scale across the Shared Services. 5(iv) MODEL 2: FUNCTIONAL ALIGNMENT Model Structure
DG
Advantages: Provides single point of accountability for all Corporate and Shared Services. Provides a seamless interface for business/agencies into functions rather then a two way relationship with both Corporate and Shared Services. Generates functional depth of experience in resources. Leverages functional expertise and management knowledge.
CS ICT Finance HR
Agency 1
Agency 2
Agency 3
ICT
Finance
HR
Challenges: Description/features: Head of Corporate Services oversees both Corporate and Shared Services. Corporate and Shared Service are functionally aligned, e.g. financial policy and strategy as well as transactional service delivery will sit under the Head of Finance. This model may also be considered as a transitional step before further consolidation of Shared Services. Functional heads wear two hats, being responsibly for policy as well as service delivery which can lead to conflicts of interests. Provides limited ability to leverage resources and management skills across functions for transactional and basic advisory functions. Tendency for urgent operational issues to take priority over less urgent but important strategic work.
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5(iv)
Stand-alone Shared Services provides a clear separation of duties between policy and service delivery but a major drawback is the three-way relationship created between Corporate, Shared Services and Department/agency.
MODEL 3: STAND-ALONE OPERATION MODEL Model Structure

DG Shared Services ICT
Advantages: Provides a clear and distinct differentiation and separation of duties between the policy and delivery aspects of each function. Enables ability to leverage resources and Shared Service management skills within the Shared Service operation across multiple functions.
CS Finance HR
Agency 1
Agency 2
Agency 3
Challenges: Decreases the ability of Corporate Services to ensure strategy and policy is implemented, as the main formal relationship exists between the customer and the Shared Services Provider, independent of Corporate Services. Potential to create ambiguity around accountability for end-to-end functions and outcomes across Corporate and Shared Services business. Agencies/business are required to maintain two relationships and may lack clarity of who is responsible between Shared and Corporate Centres. Creates an additional report for the DG. Creates greater potential for escalation of issues between Shared and Corporate Service centres to DG.
Description/features: Shared Services group exists separately from Corporate Services and the heads of each report directly to the DG.
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5(iv) The Best in Class Delivery Model is not used in isolation for all Shared Services but provides an option for specific functions that could be provided most efficiently and effectively through Department/agency. MODEL 4: BEST IN CLASS DELIVERY MODEL Model Structure
DG
Advantages: Leverages existing skills and resources.
CS ICT Finance HR
Agency 1
Agency 2
Agency 3
Challenges:
Agencies wear two hats, being responsibly for front line services as well as service delivery which can lead to conflicts of interests (e.g. quality of Shared Service provision will deteriorate if front line services need additional attention). Creates additional overheads in relation to service delivery management (e.g. pricing and costing, service agreements etc need to be created in each case). Provides limited ability to leverage resources and management skills across functions for transactional and basic advisory functions. Agencies have multiple relationships to manage with multiple Shared Service providers.
SS 1
SS 2
SS 3
Description/features: Head of Corporate Services reports directly to the DG. Shared Services are delivered from within the Department or agency that is best suited to deliver the service. That is the Department/agency has: The right/best skill sets and resources Invested in and developed the infrastructure Appropriate geographical location
Typically this model is not used in isolation but in combination with any of the other in-house models. This model may also be used as a transitional step before further consolidation of Shared Services.
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5(iv) For a Principal Department that receives its services from an external service provider, the primary relationship with the provider will be managed through Corporate Services. MULTI-TENANTED1 SHARED SERVICE MODEL Model Structure Corporate Interface

DG
Services provided by external Department
In a multi-tenanted model, Shared Services are provided to agencies in more than one Principal Department. The multi-tenanted option enables the aggregation of Principal Departments to create large enough volumes that economies of scale can be leveraged within the Shared Services provided. It is essential that the Pricing/Funding of such a model channels these benefits back to the Principal Departments through reductions in pricing/costing. Where a multi-tenanted model is implemented, the key decision options relate to the structure of the external Shared Service operation. The options for the Shared Service provider in the multi-tenanted model are: Model 5: Single Full Suite Service Provider Model 6: Wholesale ICT Model Model 7: Best in Class Delivery Model From a Principal Department's point of view the primary consideration between the models is the number of relationships to be maintained, with multiple relationships and service delivery frameworks required for the Best in Class Delivery Model. The preferred models for the multi-tenanted Shared Services Provider are: Model 5: Single Full Suite Service Provider Model 6: Wholesale ICT Model (as an extension of Model 5)
CS Finance HR Agency 1 Agency 2 Agency 3
Service Centre
ICT
Description/features: Corporate Services manages the primary relationship with the external service provider. Corporate functional heads (e.g. CFO, CIO) maintain service specific relationships with service leads in the Shared Service operation. The Shared Services centre provides service directly to end users within the Department/agency.
1. Note: A multi-tenanted Shared Service provider is one that provides services to more than one Principal Department
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5(iv) The Single Full Service Suite option enables the leveraging of resources and Shared Service management skills within the Shared Service operation across multiple functions and customers. MODEL 5: SINGLE PROVIDER Model Structure
Department Department Department Department Advantages: Multi-tenanted Full Suite Shared Service Operation Maximises economies of scale and resource fluidity. Enables ability to leverages resources and Shared Service management skills across multiple functions and customers. Provides ability to address demand fluctuations through resource levelling across customers and cross skilling across functions. Infrastructure investments are reduced on a per customer basis enabling improved refresh rates and better quality. Cross cultivation of best practice and lessons learned across customers.
Challenges: Description/features: Multi-tenanted Shared Services are provided by a single, full suite service provider to a range of Principal Departments. Ability to maintain an intimate, responsive relationship between provider and customer. Requirement of more formal Service Delivery Framework and associated recourses to manage relationship including: Service catalogue and detailed end to end process accountability Service level agreements Transparent and agreed pricing and funding model Meaningful best practices and reporting Demand planning to ensure alignment with customers Issue management
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5(iv) The Wholesale ICT Infrastructure model enables use of a single ICT infrastructure across the multi-tenanted and in-house Shared Service providers, leveraging the large capital investment. MODEL 6: WHOLESALE ICT INFRASTRUCTURE Model Structure
Department Department Department Department In-house Service Delivery 1 In-house Service Delivery 2 Multi-tenanted Service Delivery Advantages: Creates greater leverage of ICT infrastructure (which is a significant proportion of Shared Services costs) across multiple Principal Departments and Shared Services delivery operations. Infrastructure investments are reduced on a per customer basis enabling improved refresh rates and better quality. Enables ability to leverage resources and Shared Service management skills within the Shared Service operation across multiple functions and clients. Can be developed over time as an extension of Model 5: Single Full Service Suite Provider.
Wholesale ICT Infrastructure
Description/features: Wholesale ICT infrastructure is provided to a number of Shared Service delivery operations (either in-house or multi-tenanted) by a single provider. Services are then delivered by the respective providers either inhouse or to multiple customers. The Wholesale ICT provider may or may not be the same operation as the multi-tenanted service delivery operation.
Challenges: Management of additional hand-offs and relationships between wholesale ICT provider, service delivery and final customer. Similar set of challenges as experienced in the Multi-tenanted provider model including intimacy of the relationship and need for a formal Service Delivery Framework.
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5(iv) A Best in Class Delivery Model while potentially providing better service through specialisation, adds significant complexity and overhead in the management of customer/provider relationships. MODEL 7: SPECIALIST PROVIDER Model Structure
Department Department Department Department Best in Class Service 1 Best in Class Service 2 Best in Class Service 3 Best in Class Service 4 Advantages: Leverages existing skills and resources (where delivered through a Principal Department).
Challenges: Fragments accountability for Shared Services and management of additional hand-offs and relationships for Principal Departments. Not typically aligned to Principal Department core business. Similar set of challenges as experienced in the Multi-tenanted provider model including intimacy of the relationship and Service Delivery Framework on multiple fronts.
Description/features: Shared Services are delivered by specialist providers, either by a specific Shared Service operation or a Principal Department with the appropriate skills and resources. Model is relevant at a Departmental level (e.g. different business units/agencies providing services to other groups within their Principal Department) and at a Government level (e.g. different Principal Departments providing services that are aligned to their core business to all other Principal Departments).
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5(iv) The preferred operating model for an in-house operation is the Service Centre model and for a multi-tenanted operation is the Single Full Suite Provider, both transitioning to the Wholesale ICT option. SUMMARY
Set Up Preferred approach
Model 1: Service Centre
DG
Description The preferred approach for in-house Shared Services is the Service Centre model. This model could be combined with a Wholesale ICT model over time.
In-House
Service Centre ICT
CS Finance HR
Agency 1
Agency 2
Agency 3
Model 6: Wholesale ICT Infrastructure

Model 5: Single Full Service Suite Provider

Multi-tenanted Service Delivery
Wholesale ICT Inf rastructure
Multi-tenanted
Multi-tenanted Full Suite Shared Service Operation
The preferred approach for multi-tenanted is the Single Full Service Suite provider with the option of transitioning to a Wholesale ICT Infrastructure model.
Model 2: Functional Alignment
Exceptions (Where service not offered by Shared Service provider)

CS ICT Finance HR
DG Agency 1 Agency 2 Agency 3
Where a particular service is not offered by the Shared Service provider, the Functional Alignment model is preferred.
ICT
Finance
HR
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6. SERVICE DELIVERY MODEL CONTENT

i. ii. Guiding Principles Governance and Ownership within the different operating model constructs.
iii. Funding and Pricing for the delivery of value adding sustainable service. iv. Customer Engagement Model to ensure that the customers needs are met and the providers strategy remains aligned to the business it is supporting. v. Service Management critical success factors for: a. Service definition b. Performance and reporting c. Demand management
d. Issue and dispute management
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6 The Corporate and Shared Services Service Delivery Model is a set of specialised delivery capabilities that are used to define, measure, control and maintain the most appropriate level of service. SERVICE DELIVERY MODEL - OVERVIEW
Introduction:
The Corporate and Shared Services Service Delivery Model provides the framework for the effective delivery of service and maintaining constant state of improvement. The structure defines the different engagement points and responsibilities between provider and client from defining business strategy through to providing online payroll services to front line staff.
Objectives:
Define the governance structure that should be used in relation to the operating model. Highlight the need for effective customer engagement and the functions that need to exist for successful Shared Service operations. Select a pricing and funding structure that supports the need for accuracy and transparency when balanced against administrative overhead. Consider critical success factors for the delivery of service management functions within the future mode of operation.
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6(i) The ownership and governance model for the delivery of effective Corporate and Shared Services should GOVERNANCE AND OWNERSHIP MODEL GUIDING PRINCIPLES
Enable effective client representation and accountability in strategic decision making, service delivery influence and major issue management/resolution (in both the transition and end state periods). Enable Department/agency to access and interrogate their own data (data collected at back of house is critical for operations of front of house). Enable effective, commercially sound management of the Shared Service operations (e.g. capital and people management). Provide a level of independent representation in formal governance forums (whether formal Boards or Steering Committees). Enable seamless and effective integration of strategic planning of client Department/agency and the strategic planning of the Corporate and Shared Service operations. Provide the correct balance of transparency, accountability and responsiveness between purchaser, provider and central agency function. Support the objective of the Corporate and Shared Service being commercially orientated and independent from the customers it serves. Aligned to the operating model option implemented, where there is a greater degree of physical separation of Corporate and Shared Services from the business, a greater degree of formality in structure and engagement would be required. Include all levels of the organisational layers, providing decision and issue resolution capabilities as close to the service as possible. Provide rotating attendance of members to maintain varied perspectives and maintain a healthy level of tension between provider and purchaser.
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6(ii) The choice of legal structure for the Shared Service provider will affect the operational capability components and the providers ability to deliver a sustainable service for the customer. GOVERNANCE AND OWNERSHIP
Shared Service Provider Operational Considerations Customer relationship Service Delivery Cost/funding Legal Structure Considerations Workforce flexibility Capital funds management (investment) Regulatory Governance
The legal structure of the Shared Service provider will fundamentally affect many of the operational aspects of the Shared Service operation with a significant impact to financial management and risk. The different models should be fully investigated and decisions made based on the structures: Ability to meet customers needs Affordability of service delivery Flexibility to accommodate machinery of Government changes Support for workforce requirements Governance and control mechanisms The legal structure section is intended to: Provide a high-level overview of the corporate structures available Make recommendations for the Shared Services provider within the different operating model structures
Customer
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6(ii) Clear governance is critical to managing relationships effectively whilst maintaining service alignment to the customer need.

Governance
Governance Board Customer Board Service Committee
The governance body will direct and monitor the delivery of Shared Services within NSW Government. The governance function is intended to: Provide an effective framework for making decisions and issue management. Establish an effective level of oversight across the end to end processes and maintain their alignment to agreed strategy Review, approve, prioritise and monitor ongoing operational improvements. Effectively manage risks associated with the delivery of service and provider operation. Actively affirm, communicate and manage process standards at all levels. Maintain effective relationships through well informed, evidence based, communication between purchaser and provider. Encourage accountability and responsibility at all levels of the operation. The framework provides stakeholders with confidence that there are processes in place to ensure business functions are aligned to customers needs and have the appropriate balance between efficiency, effectiveness and customer satisfaction. Each governance body should be designed to operate within the scope of an agreed terms of reference that will include the following: members/composition, rationale, responsibilities, objectives, schedule, standard agenda, quorum and communication requirements.
Shared Service Provider

Customer Engagement Operations Service 1
Customers
DG / CE
Funding & Pricing
Capability Development Customer Service & Account Management Service Management Platf orm
Service Delivery
Executives Service Def inition Perf ormance Management & Reporting Demand management Issue & Dispute management.
Service 2
Staf f / Users
Service 3
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6(ii) Different governance structures were considered for each operating model to balance the need for control and the administrative overhead requirements. GOVERNANCE STRUCTURE OPTIONS
Model Function Option Line management Mixed provider, customer and independent skills board Control and Direction Independent skills based board (no customers) Full commercial board (no customers) 1:1 relationship Customer and Operational Alignment Features and Considerations Single point of control and decision making Management by committee Delayed decision making and responsiveness Commercial like arrangement allowing provider to operate with balanced control and action Large overhead with a focus on efficiency targets only applicable if company formed Intimate relationship Efficiency targets hard to achieve due to increased likelihood of drift from standardisation Encouraged as it drives a collaborative agenda, wide view of objectives Effective way of managing large customer base Customer are engaged and part of the process Establishes accountability of all parties for effective demand planning Drives function improvement discussions and standardisation Overlap of functionality with customer board Lack ability to discuss functional detail leading to standard variations Maybe applicable for remote customer Applicable during transition stages Preferred Preferred Preferred Preferred (if required) Preferred (if required) In-house Preferred Multi-Tenant
Limited seats with rotating membership (+ independents) Full membership with hierarchy of groups Functional aligned (multiple customers) Customer aligned (multiple functions) Customer and functionally aligned
Operational Performance Management and Improvement
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6(ii) The governance functions have specific roles and responsibilities in establishing the strategic direction, maintaining a responsive customer relationship and resolving service issues. GOVERNANCE MODEL MANDATE AND SCHEDULE
Level Terms of Reference Setting the long term direction of the Shared Service operation including: Core customer values, Strategic plan, Investment (infrastructure, people and systems) Approves new and updated business plans Approves prioritisation of initiatives Reviews operational performance metrics Maintains and aligns governance structure to customer need Formally representing the collective customer view on standardisation of requirements, service catalogue and service levels, investment program and business improvement Maintaining an effective prioritisation of all business plans and functions for board approval Resolution of major performance issues and disputes (whole function and multi-customer effecting) Review operational performance metrics Review significant root cause analysis investigations Provide forum for knowledge exchange (content related presentations) Agree, deliver and maintain business plans for each function to the customer committee Review and assess business cases/need for change Operational performance review and target maintenance Resolution of issues and disputes Meets Quarterly Success Factors Active and effective attendance from all nominated members Only critical multi-customer issues discussed in this forum Stability in the prioritisation and implementation agenda Rotation of members on a 18 month basis On time completion of actions Issues resolved without need for escalation
Control and Direction
Monthly
Customer Engagement and Collaboration
Monthly
Service Committee
Remove the need for customers to want nonstandard solutions Understand the customers needs and their drivers that affect demand
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6(ii) The mandate, structure and composition of the governance model will establish a sustainable framework that will ensure the provider delivers the services required and remains aligned to customers future need. GOVERNANCE MODEL OVERVIEW STEADY STATE
Control and Direction1
Mandate Setting the long term direction of the Shared Service operation including: Core customer values, Strategic plan, Investment (infrastructure, people and systems) Approves new and updated business plans Approves prioritisation of initiatives Reviews operational performance metrics Maintains and aligns governance structure to customer need
This governance model refers to the governance of the ongoing Shared Service operation, not the governance of the implementation program. The approach has three governance groups each with a specific mandate ensuring the customer and provider objectives remain aligned, decisions are made at an appropriate level and issues resolved in a timely manner. The governance structure between the in-house and multi-tenant operating models will be the same for all but the top tier of Governance. This will ensure that regardless of Department, or operating model, the roles and functions at the non-executive layer will be consistent. The specific compositions of each group (roles, skills, experience etc) have been provided in the following pages for guidance and should be considered during the governance design stage. The formality of the governance arrangement will vary for each Department, however, documentation drafted to clearly articulate the mandate of each governance group, roles, escalation paths etc will be an important reference point to monitor future improvements and provide guidance during the planning and funding discussions1. During design of the final governance structure, there should be a clear mandate to prevent the over use of committee structures and leverage structures that already exist. The two areas where this may occur are within the: Top tier of governance, where the suggested composition would be a sub-set of the Departments Chief Executive Group/Committee. Operational management groups, as many of the functions will be part of the customer engagement function discussed in the next section.
Customer and Operation Alignment

Mandate Formally representing the collective customer view on standardisation of requirements, service catalogue and service levels, investment program and business improvement Maintaining an effective prioritisation of all business plans and functions for board approval Resolution of major performance issues and disputes (whole function and multicustomer effecting) Review operational performance metrics Review significant root cause analysis investigations Provide forum for knowledge exchange (content related presentations)
Operational Management
Mandate Agree, deliver and maintain business plans for each function to the customer committee Review and assess business cases/need for change Operational performance review and target maintenance Resolution of issues and disputes
1. Note: Audit and risk functionality has not been included. If a corporate risk and audit is required for regulatory reasons this group should be established independently with a skills based composition
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6(ii) The governance model provides a consistent set of responsibilities within the in-house and multi-tenant model structures. GOVERNANCE STRUCTURE
Cabinet Committee Leverages established governance structures. Establishes common structures and responsibilities across whole of government. The only variation between operating models (in-house/multi-tenant) is the use of a provider board, compared to a business unit head, in the multitenant model. Directors General Executive Committee is responsible for evaluating whole of government benchmarking and identifying areas of improvement.
Directors General Executive Committee In-House Control & Direction
Multi-Tenant
Head of SSO Report to the Departments Executive Group
Provider Board Skills based composition Independent
Customer & Operation alignment
Customer Committee CE representation from Agencies and Service Provider
Customer Committee Head of Corporate Services for customer Departments
Operational Committee(s) Aligned to functional service delivery functions e.g. finance
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6(ii) Governance within the in-house operating model does not require a formal skills based board and is run as a business unit within the Principal Departments existing governance structure. MODEL 1: IN-HOUSE MODEL
Description: Cabinet Committee The Shared Service operation functions within customer Department as a business unit.
Features: The in-house governance structure leverages the Departments existing control and management systems. The Shared Service operation will be run as a business unit with a single person responsible for meeting customers needs and efficiency targets. The role of the governing body within this construct has the opportunity to be less formal, reducing management overhead and streamlining the determination of decisions. A more formal construct (see multi-tenant) should be considered if there are multiple agencies within the cluster that operate as SOCs or do not have direct line responsibility to the Director General. A customer committee should be established, including service delivery Chief Executives and the Head of the Shared Service: The primary role of the customer committee is to formally represent the collective customer view on standardisation of requirements, service catalogue and service levels, investment program and business improvement. Differences of opinion need to be resolved in this forum or escalated to the Executive Committee for decision. Where more than 10 Chief Executives require (or request) participation in the governing board structure, sub-customer committee structures should be created. Determination of members of the sub-customer committee should not be based on their size, rather their similarity in service delivery. Operational committee memberships should be aligned to functional services and be led by the functional leads within the Shared Service operations with representation from all of the customers.
Directors General Executive Committee
Control & Direction
Head of SSO Reports to the Departments Executive Group
Customer Committee CE representation from Agencies
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6(ii) Governance within the multi-tenant operating model establishes a more formal structure with a skills based provider board. MODEL 2: MULTI-TENANT MODEL
Description: Cabinet Committee The Shared Service function is run independently from the customer Department.
Features: Directors General Executive Committee Control & Direction The multi-tenant governance model provides an effective governance structure for any of the Shared Services to be delivered by a host Principal Department. The provider board will be skilled based with independent members who have capabilities and skills in the effective delivery of complex Shared Service operations. The customer committee, as with the in-house model, is responsible for establishing, maintaining and reprioritising business plans that can are reviewed and approved by the Governing Board. This group will have representation from the multi-tenant customers director of Corporate Services: The primary role of the customer committee is to formally represent the collective customer view on standardisation of requirements, service catalogue and service levels, investment program and business improvement. Differences of opinion need to be resolved in this forum or escalated to the Director General of the Shared Services operation for discussion with the customer Director Generals. The Director of Corporate Services for the Customer Department is responsible for aggregating all feedback and information from their Department. During specific periods, with the approval of the committee members, occasional members can join the customer committee to provide different perspectives. Operational committee functions should be aligned to functional groups enabling them to have focus groups investigating and optimising the efficiencies of particular sub-functions. This will ensure that a broad range of viewpoints can be considered as part of the business planning function.
Provider Board Skills based composition Independent
Customer Committee CE representation from Agencies
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6(ii) The governance structure is underpinned by agreements that first establish the principles of the engagement and complemented with detailed service specification. TWO TIER AGREEMENT STRUCTURE
Type Purpose Establishes the objectives, principles and benefits of service delivery. Heads of Agreement Contains Terms and conditions for the engagement and governance structure for the provision of service between the 2 parties Defines the framework for the delivery of the service, including the timeframe of commencement and duration Establishes principles as a basis for engagement between provider and purchaser that are non service specific Defines the roles and responsibilities of all parties during the delivery of service and functions that should be provided in both organisations Creates the framework for best practices and reporting, including the definition of critical service levels and dispute resolution processes Pricing and funding of services, their steady state cost and process for recovery of transition and enhancement costs Terms for termination or expiry of service Terms and conditions for the delivery of each service including the obligations of the provider and purchaser The structure and charging for each of the functions being provided Metrics and measures that will be used to evaluate the service (efficiency, effectiveness, quality, timeliness) Establishes principles for service delivery processes including demand planning, detailed service definition and business request Categorisation and escalation processes for issue and dispute management Reporting and measurement requirements, including format and structure of reports, frequency, availability and process to access data Aligned to Customer Committee Comment Single agreement for government
Service Partnership Agreement
Provides detailed, functional service specific objectives, controls and measures.
Specific per provider
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6(ii) There are different entity structures that can be used in the delivery of effective Corporate and Shared Services. BENEFITS AND RISKS
Orientation Description Single organisation structure that consolidates Shared Service functions within the same Department Example Education Benefits Risks Guidance Best option for in-house operating model Departments and all Corporate Services Best option for multitenant solutions Existing line of command Limited external control to whole Reduce administrative burden for of government strategy extensive pricing and charging Rate of change may not deliver requirements required benefits Ability for smaller Departments to Transitioned workforce can achieve leveraged scale maintain existing award Transition of workforce is within structures sector and should drive Failure in delivery effects all immediate change in behaviour customers of service (multiple Services are provided based on Departments) a business case basis Dysfunctional behaviour of Consolidated area of expertise Departments who do not provides extended career paths transition services for existing workforce Arms length governance structure provides some degree of autonomy to operate Defined scope and responsibility enforces accountability for outcomes Balance of consideration is towards financial outcomes Additional administrative central Government overhead required
Internal
Internal Specialist Department or Government Trading Entity
Service provided by a DSTA specialist Department, or group, within Government that provides the functions as a service
State Owned Corporation (SOC)
Creation of a statutory body State Water (e.g. trust) to operate as an Corporation independent commercial entity and provide services to Government Departments
Commercial
Supplier takes responsibility for the provision of service. (this includes the involvement of Government with an external corporation e.g. AC3)
United facility Private sector best practice Requirement for new contract and management expertise can be used to deliver service management type skills within Police services Loss of control for provision of Comprehensive contractual service arrangements will provide clearer guidance on estimated budget requirements
Considered as part of the service delivery function within a specialised Department following market testing and evaluation
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6(ii) The legal structure has impact on the governance, financing and workforce management considerations in the provision of Shared Services. LEGAL STRUCTURES
Legal Structure Organisation Head Department (Principal Department) DG or Secretary Method of Control Line management Line Management/ skills based board Skills based board Funding Public Workforce Central Government and Yes other sources (e.g. use of asset, revenue etc.) Guidance Branch within a Principal Department is the recommended structure for in-house models Multi-tenant provider could be established as a specialised Department
Specialised Department (Principal Department)
DG or Secretary
Central Government and Yes other sources (e.g. use of asset, revenue etc.) Central Government and Yes other sources (e.g. use of asset, revenue etc.) Central Government and Yes other sources (e.g. use of asset, revenue etc.) Market Market Typically charity No No No
Government Trading Entity (Trust, Commission, Declared Authority, Board, Institute, Regulator) State Owned Corporation (Trust, Institute, Board, Regulator, Authority, Corporation, Commission) Corporation Co-operative Association
CEO, Commissioner, DG CEO, Commissioner, Administrator, DG CEO Committee Management Committee
Adoption of a declared trading structure would provide a level of independence from the host Department and is recommended for the multi-tenant provider Not recommended for the delivery of Shared Services
Skills based board
Skills based board Committee Management Committee
Outsourcing or establishing a Government commercial structure would require further market evaluation and testing
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6(iii) The design of the customer engagement model for Corporate and Shared Services should . . . CUSTOMER ENGAGEMENT MODEL PRINCIPLES
Incorporate the discipline of a purchaser/provider model, yet embrace a partnership culture and approach. Be steeped in a service excellence culture of client intimacy, understanding of their business, quality services and responsiveness to their needs. Explore where standardisation can be rolled up further to sector or across Principal Department levels. Ensure the services are supported by skilled and capable resources with sector wide mobility and ongoing development and career paths. Enable and support continuous improvement in the business through the contribution of the Corporate and Shared Services. Provide clear and effective services management for clients (Department/agency and public) into the Corporate and Shared Service operations. In doing so, clients will know who and how to contact within the Corporate and Shared Services operations to follow through and complete their enquiry, by: Getting it right the first time Having the right location, person and process first time Standard proven technology model and support End to end standard product choices and roadmap Dynamic product and service development which is efficient and low cost Drive standardisation of processes, systems and service levels yet temper this with the impacts on clients. Ensure absolute clarity of roles for all parties with clear functional and service decomposition. Have clear mechanisms for recourse and consequence for underperformance by all parties. Enable Departments/agencies to manage their own businesses effectively through: Transparency of underlying demand and cost drivers and the ability of Departments/agencies to influence and manage these Direct access to timely, accurate and insightful data and information with the ability to interrogate information directly Running a multi-year program Enable and support continual transformation and improvement of Corporate and Shared Services through: Aligning users with the agreed level of service Achieving standard delivery of service balanced with customer intimacy
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6(iii) The customer engagement model defines how the Corporate and Shared Service functions interface throughout the customers organisation. CUSTOMER ENGAGEMENT MODEL
Service Delivery Agency
Capability Development
Corporate and Shared Service
The customer engagement model defines the key interface between the customer and the Shared Service operation. It is the customisable front end interfacing with the leveraged and standardised back end operation. The customer engagement model should provide: Customer intimacy and knowledge of the customers business through development of long term relationships Transparency and access to both customer and performance/cost data Responsibility and ownership of key customer issues Responsiveness to urgent issues and queries The customer engagement functions should provide an objective, fact based perspective on service relationships and be clearly differentiated from service line responsibilities for operational service delivery. The engagement model recommendations are consistent for both in-house and multi-tenant, with greater efficiencies within the multi-tenant options as the customer service and service management platforms can be leveraged more effectively. There are three key functions within the customer engagement model, all of which need to be addressed in the design of a Shared Services Provider (however these do not necessarily relate directly to a organisational structure): Capability Development Customer Service and Account Management Service Management Systems and Platforms
Demand Planning and Management Strategy and business alignment Critical performance evaluation
Customer Service and Account Management
Service Delivery and Definition Performance Management Issue and Dispute Management
Service Management Platform
Automated service delivery and workflow Self service portals and platforms
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6(iii) The customer engagement model contains three key functions covering Capability Development, Customer Service and Account Management and Systems/Platforms. PRIMARY FUNCTIONS
Function Capability Developmen t Description Builds and manages long term relationship with senior customers facilitating joint strategy development Key Responsibilities Demand Planning, Strategic Planning and Transition Strategy including: - Developing understanding of customers business (medium term need) - Integration with existing business planning processes - Facilitating customer strategic discussions and joint planning - Gaining agreement on FMO with customer and engaging Operations to roadmap and drive change from PMO to FMO - Involvement in governance forums as appropriate Evolving the service catalogue Solution development: - Solutioning and transitioning new clients - Re-solutioning and expansion of service for existing clients - Investment and project planning Investment, funding and pricing strategy Research and development and identification of innovations for long term improvement and performance Account management: - Per customer account management - Strategic account management including proactive performance management, demand management, etc - Operational account management including ownership of escalated service enquiries Service Centre: - Contact centre for enquiry and issue management - Resolution of day-to-day service requests and queries - Escalation and appropriate routing of complex requests or issues - Communication of updates or status on logged requests Provide entire service management infrastructure required to deliver the right information to the right person and the right time for their business tasks to be performed effectively Transparent view of all important customer information, history, transactions, reports and trends Logging and tracking of service requests or issues Enables customer self service including: - Access to customer data and reporting tools - Status updates for logged service requests or issues - Access to service performance reporting
Customer Service and Account Management
Focuses on customer satisfaction and service compliance over the medium term
Service Management
Technology enablers for customer interactions
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6(iii) Customer engagement within the in-house model has three main service delivery points with the Departments Corporate and Service Delivery functions. CUSTOMER ENGAGEMENT MODEL - IN-HOUSE
Customer Department Shared Service Provider
Department Corporate 1 Service Delivery 2 Service Delivery 2 Service Delivery 2 Service Delivery 2 Service Delivery 2 Service Delivery 2 Service Delivery 1 Description: Customer Service & Account Management
1. Capability Development Chief Executives and Heads of Corporate Services within the Principal Department are responsible for consolidating demand for their areas, understanding the broader goals established by the Department and working with the Shared Service providers executive to align future capability and cost targets. The service provider facilitates and drives this activity through its Capability Development function. 2. Customer Service and Account Management Account management functions will be provided to the service delivery functions within the Department with senior functional leads from the Shared Service operations and corporate heads from the service delivery functions (agencies). Customer service is an everyday service channel providing the end customer (employees in the case of payroll) access to the Shared Service operation to manage a variation or exception to their normal requirements (e.g. long service arrangements). 3. Service Management Platform Delivered by the Shared Service provider to empower the business through provision of comprehensive service management infrastructure. Automated platforms and services to complement the customer service function. Online services (payroll queries, training delivery), automated approval processes (AP, AR) and proactive incident management through ICT monitoring will reduce the time for end users to complete activities, reduce manual handling steps and deliver the service more efficiently.
Shared Service Operations 3 Service Management Platform
Customer engagement platforms and relationships established across the Principal Department
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6(iii) Customer Engagement within the multi-tenant model has a single account management interface per customer Department to the Head of Corporate Services. CUSTOMER ENGAGEMENT MODEL - MULTI-TENANT
Customer Department Shared Service Provider
Department Corporate 1 2 3 Customer Service & Account Management Service Delivery 2 Service Delivery 2 Service Delivery 2 Service Delivery 2 Service Delivery 2 Service Delivery 2 Service Delivery 1 Description:
1. Capability Development: Heads of Corporate Services within the Principal Department are responsible for consolidating demand of their areas, understanding the broader goals established by the Department and working with the Head of the Shared Service Provider to align future capability and cost targets. The Service Provider facilitates and drives this activity through its Capability Development function. 2. Account Management: Account management functions should be provided to Corporate Services function within the Principal Departments with functional lead and Shared Service provider leadership. Ensure transparency of operations is available (provider and customer) to identify further areas of service improvement. 3. Customer Service: Aligned to the service delivery functions and end customers day a to day service enragement and escalation processes. Provide transparency of business costs and operations. 4. Service Management Platform: Delivered by the Shared Service provider to empower the business through provision of comprehensive service management infrastructure. Automated platforms and services to complement the customer service function. Online services (payroll queries, training delivery), automated approval processes (AP, AR) and proactive incident management through ICT monitoring will reduce the time for end users to complete activities, reduce manual handling steps and deliver the service more efficiently.
Shared Service Operations 4 Service Management Platform
Customer engagement platforms and relationships between provider and purchaser.
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6(iv) The funding and pricing model for the effective delivery of Corporate and Shared Services should . . . FUNDING AND PRICING MODEL - PRINCIPLES
Be tailored to the operating model option implemented with the greater degree of separation of Shared Services requiring a greater degree of formality in the funding and pricing model. Create a healthy tension between demand and supply that will drive continuous improvement. Provide, through visibility and value added service, an understanding to the client of the cost for services and the relationship to the services provided. Encompass a level of independent validation and open book transparency, in the setting of recovery rates and disclosed pricing. Provide confidence to the client of the comparison to fair market value for the services provided (e.g. independent development and conduct of client satisfaction measures and benchmarking). Directly reflect the type and amount of service received with no considerable cross subsidisation between customers and services. Support medium to long term planning, capital funding and ability to continue to positively transform the service operation. Enable the alignment of the funding of agencies operations to meet Department and whole of government specific long term efficiency targets (e.g. cost and budget reductions). Be transparent (open book) to enable a confidence and trust between centres and clients to be attained. Include flexibility that considers the implications of cost at different phases of maturity (consolidate, standardise, transform, steady state etc).
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6(iv) The funding model will address each of the cost structures to ensure the Shared Services operation is sustainable. FUNDING AND PRICING INTRODUCTION Components of Cost
The funding and pricing model is traditionally the most contentious aspect in the delivery of services as the purchaser does not have direct organisation control of the service being provided. The pricing and funding model should provide a balance between the need to provide highly detailed accurate pricing (large admin overhead) versus high level metrics for outcomes (low admin overhead). The pricing and funding model is intended to: provide a realistic degree of transparency to the customer to support an intimate and trustworthy relationship prove that the customer is receiving value for money and that the actual cost to serve is reducing describe how the flow of funds will occur for each of the cost components of service identify areas where the administrative burden could be reduced whilst still maintaining pressure on the supply side There are three components of funding and pricing that should be considered when designing the charging and cost capabilities: Pricing and Recovery of Shared Services Costs options Pricing and recovery options Model features and methods of implementation
Investment
The growth investment required to transform the Shared Service operations and drive significant, sustainable benefits through the operation. The investment required to maintain service levels and performance Including ICT upgrades and minor enhancements. Those recurrent running costs involved in delivering the Shared Service operation. Including resources, work activities, management overhead, servicing costs.
Refresh Capital
Operating Costs
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6(iv) The range of pricing models available within a Government construct should be used to achieve the financial discipline and minimise overhead requirement. CHARGEBACK AND PRICING MODELS
1 Zero Recovery No charging. SSO directly funded with no recovery Funding Direct to SSO (RECOVERY) 2 Cost Recovery SSO directly funded and charges out costs (direct and overhead) based on agreed drivers Model Options 3 Fixed Price Agreed fixed amount paid for term period based on bundle of services Funding direct to Customer (PRICING) Usage Pricing Agree price/unit and pay based on actual consumption
The decision tree should be used to select the most appropriate model for each component of cost: investment, refresh and operating costs.
It is possible to have multiple pricing methods depending upon the nature of the service being provided. For example, fixed price for project management and usage based pricing for business as usual activity such as payroll transactions.
4 Transaction Based
5 Resource Based (Time and Material)
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6(iv) The charging and pricing model features should be considered on a per service and function basis as the maturity of service delivery and need for financial pressure will vary. CHARGEBACK AND PRICING MODEL - DETAIL
Price Structure1 Zero Recovery
1
Typical Example Benefits Corporate Services No administration requirements within most agencies Removes price and associated barriers from operational discussions Shared Services within Department Provides some granularity for comparison of service cost to be delivered Relatively low administrative burden as costs tend to be associated with high level metrics Customer has more stable budget requirements Simplified structure for customers Provides opportunity for affordability based costing (subsidised for small agencies)
Challenges No discipline for driving efficiency in line with customer needs Poor control levers to control demand Customers do not control the spend and creates a sense of risk Does not enforce discipline with requests and demand for service Accuracy of agreed price can lead to profit in provider or additional recoup to customers within a Government context. Requires the provider to have a stable catalogue, effective demand planning and historical data to support price Large deviations from agreed cost can impact relationship and partnering ethos
Cost Recovery
2
Guidance Recommended for all Corporate Service functions and large scale technology investment requirements Preferred option for transactional services within the in-house model
Fixed Price
Shared Services within Cluster
Should only be considered if the service being provided is well understood and demand is known
Transaction Based
4
Shared Service customer contact points
Resource Based
5
Shared Service advisory services
More accurate true costing Demand and supply drivers reflected in the cost More credible with customers if costs are in line with market prices Provides flexibility to support the delivery of advisory, policy and control and strategic work pages for the customers
Can create dysfunctional usage behaviour Recommended within the that affects sector business performance multi-tenant model
Reduces the emphasis on the need for Preferred option for advisory, system and tool investment policy and control and Supplier remains a FTE based Strategy related functions organisation Resource scheduling systems required to flatten demand requirements
1. Note: Regardless of price structure or corporate entity structure selected, the cost of the service should be shared with the customer in an open book arrangement to ensure transparency and the development of trust
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6(iv) The costs associated within running the business will be funded via unit pricing in the case of multi-tenant and through an allocated recovery model for in-house operating models. RUNNING COST CONSIDERATIONS Cost and Pricing
Investment Operational costs are estimated as part of the standard budget process with detailed specification of: Service description Quality Cost Demand Multi-Tenant $/unit price is established for the first period with agreed reductions over the following periods based on planned operational and transformational improvements e.g. 5% reduction in price for the following period(s). A comprehensive price book should be established and shared at whole of government level and it should be transparent to the customer and independently benchmarked against industry. The provider is at risk of having to provide these services at or below the agreed price. In-House The cost of the service being delivered can be apportioned based on higher level metrics than those in the multi-tenant model, e.g. FTE, number of desktop PCs etc. The provider is not under the same financial pressure compared to the multi-tenant model and relies on the inherent governance of a single Department/Principal Department and DG structure to ensure the right outcomes are achieved.
Refresh Capital
1 Operating Costs
$/unit
$/cust.
y1
y2
y1
y2
Multi-tenant
In-House
1. Provider risk as price is fixed returning agreed efficiencies to the customers. 2. Operating costs reduced and savings returned to the customer.
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6(iv) Different charging and pricing models will be used to fund the costs associated with running the business and investment to fund transformational change. INVESTMENT CONSIDERATIONS
Added to service cost Investment Refresh Capital The total cost of operating a successful and sustainable Shared Service operation relies on effective flow of funding to support the current customer demand effectively and on-going investment to ensure that future needs are met. The required large scale investment in people and infrastructure to support transformational change is inconsistent throughout a given year, adding complexity to estimating the price and recoup mechanism over the medium term. Within both the in-house and multi-tenant operating models, the required investment cycle is unlikely to perfectly align with all customers priorities and timetables. Decisions will need to be made in the best interests of the whole not individual clients. The efficiency returns from the investment program will be returned to the customers through committed reductions in operational price and recoups. Option 2 is the preferred model for both in-house and multi-tenant operating models as: Accountability for delivering improvements is included in the business case and held by the provider. Migration to the new systems and functions can be scheduled without the first client being responsible for all of the fixed investment costs. Transparency of costs shared with clients during the business case process with a commitment for price/unit reduction.
Operating Costs Independent business case for capital funding Option 2: Option 1: Business Case Price Option 1: Recovery through pricing Unit price to include a component of investment costs. Self funding option can apply the investment cost unevenly across the customers due to the breadth and depth of service catalogue varying. Option 2: Business Case Separation from pricing structure allows for clearer demarcation between funds used to improve the service and those to run the service. Balanced tension between the customers obligations to construct a collective customer view on the investment plan and the service providers obligation to own the investment funding and deliver the benefits.
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6(iv) Investment costs for Departments with in-house Shared Service providers will be funded via the existing Departmental business case process to receive capital funds. INVESTMENT CONSIDERATIONS BUSINESS CASE IN-HOUSE
Government All investment decisions should be based on a detailed business case that clearly identifies the benefits, how they will be realised and achieved. Within the in-house model the Shared Service provider functions as a business unit and raises business cases as part of the standard Departmental capital allocation processes. The Departmental Executive (including the CFO) reviews and assesses the business case against customer demand and efficiency targets. Benefits are realised through reduction in cost to serve, therefore, reducing the recoup with the service delivery functions. The progress of benefit delivery should be tracked as part of the account management and governance control function to ensure that efficiency returns are identified and achieved.
3 2 Department 1 Shared Service Operator 6 Flow of Funds 5
Service Delivery Service Delivery Service Delivery Service Delivery Service Deliveryn Service Delivery5 34 12
1. Shared Service provider follows Department business case process for large scale reform or transformation. 2. Department assesses business justification and evaluates benefits in balance with other capital requests. 3. Department bids for funds or reprioritises existing capital allocation Funds received with commitment to meet benefits. 4. Funds distributed with appropriate benefits realisation tracking and monitoring. 5. Reduced recovery to service delivery business units.
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6(iv) The multi-tenant provider is responsible for consolidating the demand and refresh needs from customers and creating a single business case to be submitted for Government consideration. INVESTMENT CONSIDERATIONS BUSINESS CASE MULTI-TENANT
Government 3 4 Department (Host) 2 Shared Service Operator 1 1. Demand for service and efficiency targets are captured from customer groups through capability and the customer committee. 2. Shared Service provider consolidates demand and investment requirement, establishes single business case for approval. 3. Capital allocation requested from Government. 4. Funds received with commitment to meet benefits. 5. Transformational and large scale reform commences with comprehensive benefit tracking. 6. Reduced $/unit following transformation to return efficiency savings to Department. 5 6 All investment decisions should be based on a detailed business case that clearly identifies the benefits, how they will be realised and achieved. The demand for transformational change, or reform, will be driven through the customer committees who are responsible for establishing the demand planning and performance expectations of the Shared Service provider. The Shared Service provider is responsible for the consolidation of demand and the creation of a single business case for capital funding. This approach provides the following advantages: Reduces duplication of business case creation, maintenance and tracking. Ensures that costs/savings are based on a single source of truth. Reduces administrative overhead within customer Departments. Creates pressure on the provider side to deliver savings through price reduction.
Department Department Department (customer)
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6(v) The management of service delivery for effective Corporate and Shared Services should . . . SERVICE MANAGEMENT - PRINCIPLES
Provide clear and effective services management for clients (Department/agency and public) into the Corporate and Shared Service providers by: Getting it right the first time Having the right location, person and process first time Standard proven technology model and support End to end standard product choices and roadmap Dynamic product and service development which is efficient and low cost Drive standardisation of processes, systems and service levels yet temper this with the impacts on clients. Ensure absolute clarity of roles for all parties with clear functional and service decomposition. Have clear mechanisms for recourse and consequence for underperformance by all parties. Enable the Departments/agencies to manage their own businesses effectively through: Transparency of underlying demand and cost drivers and the ability of Departments/agencies to influence and manage these Direct access to timely, accurate and insightful data and information with the ability to interrogate information directly Running a multi-year program Enable and support continual transformation and improvement of Corporate and Shared Services through: Aligning users with the agreed level of service Achieving standard delivery of service balanced with customer intimacy
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6(v) Service managements primary objective is to ensure that the services being delivered are aligned to the customer's needs.
Governance Shared Service Provider Customers

DG / CE
Service managements primary objective is to ensure that the services being delivered are aligned to the customers needs and actively support them. The service management framework summarises the processes and capabilities that are required to specify, monitor, manage and maintain the service offering. The service management framework is intended to: Support the customer engagement and governance structures with rigorous and consistent delivery of service Establish clear accountabilities of the customer and provider in the delivery of service Describe the various service and cost drivers that can be used to increase the performance of the service Enforce the need for effective medium and long term demand planning functions Define the issue and dispute management process Service management should incorporate the need for continuous change from the outset with appropriate controls to ensure that the delivery remains aligned to customer needs and does not drift to provider based objectives.
Customer Engagement Operations Service 1
Funding & Pricing
Capability Development Customer Service & Account Management Service Management Platf orm
Service 2
Service Delivery
Executives
Staf f / Users
Service Management Framework
Service 3
Service Definition Performance Management and Reporting Demand Management Issue and Dispute Management.
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6(v) Service definition is used to specify the desired outcomes that the customer needs and how the provider will achieve those objectives. SERVICE DEFINITION
Aspect Definition Accountabilities Consideration Standardised Define a comprehensive description of the service being provided including: name; description; input requirements; outputs requirements; criticality to business; performance measures; target; critical threshold and functional owner. Define the end to end process for each individual service, clarifying the role and accountabilities of both the purchaser and provider, including the obligations of each. Design the right balance between complete standardisation and required customisation of service provided: The primary objective is to drive variation out of the process and services to ensure comparable service levels and optimise the economy of scale. It is recognised that there will be genuine unique needs that differ from the standard service that must be considered. There must be a clear process for the identification and evaluation of these to ensure they are genuine. The financial model should reflect the impact of customised services. Ensure that the service being offered addresses the business requirement and need. Customer experience measurements should be identified to provide a feedback loop from the users of the service. Define possible sources of error that exist within the service. Communicate all of the cost levers that are available to the purchaser to control the cost associated with the delivery of the service. Validate that the service is sustainable (effectiveness and cost) and will continue to meet customers needs over an extended period.
Quality Cost Sustainability
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6(v) Performance reporting is used to project the future performance of the service by establishing a fact base that can be used to make evidence based decisions. PERFORMANCE REPORTING
Aspect Performance Reporting Consideration Benchmarking Customer Surveying Effective and agreed reporting framework should cascade from high level balanced scorecard through to deeper transaction reporting. Performance reports should be formalised and routine with a combination of statistical data and valuable/insightful commentary provided on a monthly, quarterly and yearly basis. The reporting should cover all aspects of performance including cost and service. Regular benchmarking should be undertaken and articulated of the Shared Service performance against industry and best practice peer groups, including an agreed mix of transaction cost and service level metrics. This would include independent validation. Customer satisfaction surveying should be completed on a routine basis.
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6(v) Demand management is used to balance the allocation of resourcing and funding to support and meet customers needs in a timely manner at the right quality. DEMAND MANAGEMENT
Aspect Consideration Establish regular business planning functions between the provider and customer base. Typically these sessions will occur on a quarterly basis to validate the alignment of the service to the business need and feed into the Corporate and Business planning processes within the relevant Departments. Enforce a disciplined demand management process (identify, business case, respond, implement, monitor) that can be tailored to meet the needs of the customer as part of the provider customer engagement model. Create a teaming partnership with the affected customer, ensuring they are well informed and part of the decision and approval process. Create an understanding with the customer that the service cannot be provided in a timely manner without the necessary data, inputs, time and authority from the customer. DG is responsible for the effective completion of these activities and should hold the direct reports (CES) responsible for ensuring the demand planning process is successful. Capability to profile accurately the demand for services across the customer portfolio. Capacity for Shared Service provider to handle demand surges. Provide clear education and levers for customers to manage their demand optimally. Articulate clearly the relationship between demand management and pricing. Responsibility for effective workforce planning, career management, skills development and work placement strategies and centres of excellence.
Strategic Demand Management
Operational Demand Management
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6(v) Issue and dispute management is necessary when other processes and capabilities have failed to meet the required outcome. ISSUE AND DISPUTE MANAGEMENT
Aspect Consideration Process Collaborative Approach Implement an effective communication plan as many issues and disputes can be prevented or mitigated. Design a clear end to end issue and dispute management process including: Profiling of categories Triage and escalation points Decision making and resolution framework Clearly identify roles and accountabilities across the customer engagement and governance models. Manage issues and disputes with an evidence based approach and avoid personal opinions. Where there is no or inconclusive evidence, a diagnostic phase should be established to better understand the issue prior to further discussion. Responsibility of issue resolution is not solely that of the provider. The customer should play an active role, engaged through the customer engagement model, in ensuring that data, insight and their perspective is provided in a timely manner throughout the process. Leverage all of the delivery channels and controls in the customer engagement model to identify and categorise issues early. Tight linkage should be made between the provider and customer, as part of the customer engagement model, to work collaboratively in the issue management process. Plan for the issue to be resolved as close to occurrence as possible. Many of the issues encountered will be repetitive in nature. Issues can occur in a number of areas but are usually allocated to one of the following categories: commercial; irregular process; fulfilment; or operational. As such, standard processes should be developed for handling these issues effectively at lower levels of the governance structure. Analyse issues and disputes thoroughly and complete root cause analysis (trend analysis) as a matter of cause. Inclusion of outcomes from root cause analysis should be included within the standard provider service reports. Implementation of remedial actions to ensure no reoccurrence of problems, resolution of root causes and active tracking and management of known causes.
Identification
Decision
Root Cause Analysis
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7. IMPLEMENTATION STRATEGY
Contents
i. Guiding Principles ii. Whole of Government Governance iii. Implementation Planning iv. Benefits Realisation Framework v. Implementation Management Structure vi. Critical Success Factors
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7(i) There are many competing initiatives that Principal Departments need to take into account as they prepare their Corporate and Shared Services transition plans. IMPLEMENTATION STRATEGY - OVERVIEW
Introduction:
NSW Government is committed to the reform of Corporate and Shared Services for all departments. The Blueprint has outlined the future mode of operation for all departments Corporate and Shared Service functions. The reform will be implemented as one of the concurrent customer service and efficiency programs that include: Better Services and Value Taskforce reviews (including ICT Review) savings targets (resulting in multiple Department/agency level initiatives)
Objectives:
Describe the implementation phases for all departments. Identify how the funding and investment of the reform program will be structured and outline expectations that will be placed on the Department. Design how the team responsible for the reform will be structured, their mandate and capability requirements. Identify perceived barriers of change and provide guidance on how to address them. Provide a toolkit to support implementation teams in the effective delivery of the reform.
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The implementation strategy for the rollout of Corporate and Shared Services should . . . GUIDING PRINCIPLES IMPLEMENTATION STRATEGY
Ensure the speed of transition is aligned to the readiness of change and greater effort focussed on the mature Departments transitions should be faster in Departments that already have mature Corporate and Shared Services operations. Be premised on earning credibility by delivering the promise (value for money) and growing the scope of services organically. Be dependent upon the state of and requirement for, the underlying people, process and technology to effectively deliver the services. Contain substantial change management planning, including: Workforce planning for uplifting skill sets Communication plans explaining to staff where and when the impacts will occur Consultative arrangements with relevant stakeholders Allocating accountabilities across the stages of implementation, transition and end state Training for clients to understanding how best to use Corporate and Shared Services Include transition modes of operation with careful staging and sequencing, rather than a big bang approach. Take advantage of opportunities during the transition period to further drive standardisation and simplification to reduce cost and complexity in the end state. Be underpinned by a strong implementation governance framework with clear central Agency and Department roles and responsibilities. Incorporate a clear benefits realisation framework aligned to the ultimate objectives and guiding principles of the reform. Set expectations at Department/agency levels that: The full benefits from the end state may not be available during the transition period The transition will not be easy but it is achievable There is a sector wide sense of urgency in moving to Corporate and Shared Services Ensure the planning phase addresses funding and resourcing issues during the transition phase.
7(i)
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7(ii)
Corporate and Shared Services Reform Program Governance
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Governance Arrangements for Reform Program Cabinet Committee to approve and oversee the implementation of the Reform Program. Expenditure Review to oversee (in conjunction with the Cabinet Committee the implementation of the Reform Program with particular focus on related expenditure and tracking benefits realisation.
7(ii)
Directors General Executive Committee (DGEC) to: provide advice and manage the delivery of the Reform Program on departments and across the sector; set sector wide benchmark targets based on industry standard measures for Corporate and Shared Services; provide periodic reports to the Cabinet Committee on the result of benchmarks and benefits realisation. Better Services and Value Taskforce to: consider the outcomes of the Reform Program; ensure alignment between the Corporate and Shared Services Reform and other Taskforce programs, particularly the whole of government Information and Communication Technology (ICT) Expenditure Review; oversee the tracking of benefits realisation across all savings areas to ensure that savings are achieved and are not double counted. Corporate and Shared Services Steering Committee to: provide advice and direction for the overall co-ordination of Departmental reform programs across the sector; directly govern the delivery of central reform programs, managed through the DPC Corporate and Shared Service Government Reform Office.
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The DPC Corporate and Shared Services Government Reform Office (DPC GRO) will:
7(ii)
manage the implementation of the Whole of Government Corporate and Shared Services Reform Program; oversight benefits realisation across the sector; implement the four sector wide core reform programs (see below); report on risk mitigation strategies.
The DPC GRO Project Management Office will: provide central coordination of Departments corporate and shared services reforms; undertake sector wide monitoring; report Departments program delivery against schedule, costs and benefits realisation; undertake program management for the four core reform programs (see below). Each Principal Department will establish its own project office, supported by local governance arrangements that will be overseen by the relevant Director General, agency CEs and other C-Level officers (Chief Information Officer, Chief Financial Officer, Corporate Services Head, etc). DPC/Central Agency Led Reform Programs DPC (in conjunction with NSW Treasury and DGEC) will deliver the following sector wide core reform programs: 1. Whole of Government program implementation: including central coordination; co-ordinated communication and change management; and common reform implementation management strategies, governance, programming and budget management (including budget management of centrally controlled reform funding; and provision of guidelines, frameworks and requirements for reform related budget management across the sector). 2. Sector wide benchmarking and best practices program: including implementation of a whole of government framework; delivery of sector wide benchmarking; and integration of central agency data collection and benchmarking programs including workforce profile, overheads review and ICT review benchmarking and metrics. 3. Sector wide standards and capability development program: to deliver a gold standards and certification program to ensure implementation of standard processes, technologies and best practices across Government; establish a learning and development centre to raise capability, skills and knowledge of government employees on best practices and standards. 4. Implementation support for clusters: to govern, manage and deploy corporate and shared services related resources and expertise to support Departments in implementing the Blueprint in the clusters; including sourcing and coordinating specialist resources such as process reengineering and black belt specialists, technology architecture and engineering specialists, infrastructure and commercial specialists etc.
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There are three horizons of implementation activity required for the transition to Corporate and Shared Services across the sector based on timing and ease of implementation. IMPLEMENTATION PHASING
2010 Horizon 1 Short Term (tactical realisation) 2011 Immediate benefits business as usual Horizon 2 is more medium term and fits into the coming financial year with planning for and realising benefits within the financial year Identify, design and implement programs that have a return within the 12 month period 2012 onwards Horizon 1 is short term tactical realisation of benefits as well as business as usual Quick wins identified during initial diagnostic phases Departments should address as many short term efficiency wins as possible and establish these activities as business as usual
7(iii)
Horizon 2 Medium Term (results within 12 months)
Benefits to achieve further enhancement
Horizon 3 Longer Term (Transformational)
Whole of Government (Benchmarking, DGEC and DPC reform management)
Horizon 3 is longer term and transformational which sees the transition to end state Corporate and Shared Services centres Commence detailed business cases and transition plans to move to the future mode of operation, including: Readiness assessment with stakeholder analysis Current state and future state analysis Communication and change management plans Timescales and costs Cost benefit analysis Benchmark measures to be affected
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7(iv) Monitoring benefit realisation is important due to the considerable degree of change and investment involved in the transition. BENEFITS REALISATION FRAMEWORK
A benefits realisation framework needs to be adopted to ensure: The as is metrics are captured and a baseline established to correctly measure progress and establish a factual basis for assessing the effectiveness of any changes. The cost/benefits in the business case are being achieved in the timeframes anticipated. Comprehensive visibility at Principal Department and sector levels providing a quantifiable basis to determine priorities, modify objectives or redefine desired outcomes should the need arise. State funds are being used wisely. Accountability for actions are assigned and monitored. End users are receiving services as promised and there is ongoing measurement of customer service. Principal Departments funds are being freed up from Corporate and Shared Service activities for better use in frontline services. The identification of performance improvement levers from the provider side to identify how to drive down costs. The establishment of an ongoing continuous improvement culture post arriving at the end state. More specifically the framework needs to: Capture the total benefits as a result of people, processes and system changes (ensure no double counting). Define the key drivers for cost savings and avoidance and monitor progress against these. Provide goals for Principal Department corporate and transition teams to meet, measure progress against and take corrective action if required. Capture the aggregate benefits by time period as a result of people, processes and system changes at Principal Department and sector level.
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Scorecards similar to the examples below, should be constructed to measure how the transition has progressed against the key reform expectations built into the initial Principal Department business cases. SAMPLE REPORT CARDS
Inter-Agency Dashboard Content Tier 1 Metrics combined Corporate Services view (no external targets) showing distribution Tier 1 Metrics per Function (no external targets) showing distribution and median Functional baseline Costs and FTEs showing composition
7(iv)
Indicative format
Principal Department Report Content Indicative format Functional baseline Costs and FTEs Tier 1 Metrics per Function (no external targets)
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7(v) The implementation of the Corporate and Shared Services reform across NSW Government will require focussed investment in people and capability during the implementation and transition phases. IMPLEMENTATION MANAGEMENT STRUCTURE
Departmental responsibilities: Establishment of effective implementation structure and team composition Accountable for monitoring and achieving the reform benefits Liaising with central government agencies for business case approval processes and performance reporting Corporate Services Office responsibilities: Provide ultimate input into the business case and transition plans to determine what is either corporate, shared or front-line (business) services Continue with business as usual accountabilities across the Principal Department Ensure sector coordination and membership of sector forums Ensure ongoing funding and resourcing issues during transition and end state operations Accountable to reach agreement on SLAs, timing and funding priorities for the smooth transition to Corporate and Shared Services (in-house or multi-tenanted) Ensure transition shadowing resources are kept to a minimum and phased out as early as possible in the end state operation Reform Program Office responsibilities: Working with Corporate Executives ensure the smooth transition from as is to Corporate and Shared Services Realise cost benefits in a timely manner Build an ongoing continuous improvement culture In multi-tenanted model ensure smooth cut-over to the provider
Department
Corporate Services Office Corporate Services Director CIO CFO HR Director Integration - Chief Operating Officer1
Reform Program Office Reform Director Change and Communications Manager1 People, Process and Technical Transition Team1 Project Management Office1 Project Administration Program/Schedule Manager Program Financial Controller (manage cost and benefits realisation) Risks/Issues Manager
1. Implementation phase roles
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7(v) The implementation of the Corporate and Shared Services reform across NSW Government will require focussed investment in people and capability during the implementation and transition phases. IMPLEMENTATION MANAGEMENT
Corporate Services Director CIO
Ultimate responsibility for transition to and steady state running of Corporate Services Corporate governance Ensure Technology standardisation and policies across Principal Department ICT Strategy and investment prioritisation During transition period work with technology team to ensure all legacy activities are accommodated Strategy (financial and investment) Financial Controls and Framework, Reporting (DG and Ministerial, Treasury, Tax, Audit and Budget) Principal Department wide communications (working closely with Reform Change Manager) Strategy (Workforce planning, training and development, OH&S planning, IR and total rewards planning) Reporting (Statutory, DG and Ministerial) Planning organisational size and structure for transition and end state operations Ensure that corporate direction is reflected in transition planning Work with CFO and Corporate Services Director to ensure funding and resources issues are addressed in transition period Own the building and approval of the business case Head up team deciding on split of functions between Corporate, Shared and Business services Communicate clear roles and responsibilities across Principal Department, agencies and transition teams Work with Departments/agencies to ensure other current initiatives can be recognised and not compromised Liaise with sector team and Executive Communities
Department
CFO
Corporate Services Office Corporate Services Director CIO CFO HR Director Integration COO1
Reform Program Office Reform Director Change and Communications Manager1 People, Process and Technical Transition Team1 Project Management Office1 Project Administration Program/Schedule Manager Program Financial Controller (manage Cost and Benefits Realisation) Risks/Issues Manager
HR Director
Integration COO
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7(v) The implementation of the Corporate and Shared Services reform across NSW Government will require focussed investment in people and capability during the implementation and transition phases. IMPLEMENTATION MANAGEMENT
Reform Director
Own the transition process Have dotted line accountability to the sector Reform Director Focus downwards on delivery by the transition team Ensure Department/agency business cases align with other initiatives and there is no double counting of savings Ensure a service delivery and continuous improvement focus is achieved in end state Work with HR Director to provide smooth deployment of staff into new roles Ensure sufficient communication, change and training planning and delivery for transition Leverage experience to provide the necessary reengineering, planning and implementation skills to enable a smooth transition Work with Corporate and sector teams to drive efficiencies and identify further potential areas of improvement Provide Program Management services including: Project management/right sizing of team Reporting Cost benefits realisation measurement Risk identification and mitigation
Department
Change and Communications Manager
Corporate Services Office Corporate Services Director CIO CFO HR Director Integration COO1
Reform Program Office Reform Director Change and Communications Manager1 People, Process and Technical Transition Team1 Project Management Office1 Project Administration Program/Schedule Manager Program Financial Controller (manage Cost and Benefits Realisation) Risks/Issues Manager
People, Process and Technology Team
Project Management Office
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7(vi) There are a number of critical success factors to support a smoother transition to Corporate and Shared Services. CRITICAL SUCCESS FACTORS
1. Strong Business Case Upfront
Enable an informed decision based on: Baseline of current operations Preferred operating model structure Where benefits will be realised Performance goals, metrics and method for tracking Supporting technology systems required Manage delivery against the business case Manage the complexity of a staged rollout project Ensure consistency of management approach, tools and reporting Keep stakeholders informed and engaged Alignment with other Departmental initiatives Executives need to be: Seen to lead the decision to adopt and implement the Corporate and Shared Services Solution Able to articulate what their Super Departments are trying to achieve from the program Providing governance to lead, direct and keep program on track Maximum efficiencies are driven through as much standardisation as possible Technology & process standards are required to underpin the efficient function of the Corporate and Shared Services Maintaining support for change and encouraging their teams to persevere through transition Allocating sufficient resources and funding to manage the change Quickly addressing any resistance directly Own the outcomes People and skill set requirements How the governance will operate during and after transition Program costing including upfront implementation and funding options for transition and ongoing operation
2. Strong Project management Skills
Effective transition plans, timings, costs and risks (mitigation strategies) Manage anticipated staff issues associated with change management, training and communication plans
3. Executive Support
4. Logical Standardisation of Processes and Technology
Critical fact based review of functional/process decomposition to determine and maximise the number of processes to move into the Shared Service Centre
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7(vi) There are a number of critical success factors to support a smoother transition to Corporate and Shared Services. CRITICAL SUCCESS FACTORS
5. Strong Change Management
Client patience and cooperation during transition based on methodical initial and ongoing communications Employees need to know personal impact and what will be expected from them (individual and union consultation) Education in how Corporate and Shared Services work is essential Optimise use of Centres and what SLAs are in place How to handle the additional automation (self service) that will exist Who are and how to engage, the points of contacts into the Centres Understand how all old critical functions occur in the new centres and specific changes
6. Phased Implementation
Global experience indicates that a big bang approach introduces more risk than a phased approach A phased approach is more manageable and better accepted by clients (e.g. rollout may be by function, geography, Agency etc) Clear milestones and dependencies must be defined and
communicated throughout the program Corporate and Shared Services rollouts can take approximately 18 months to complete, requiring a disciplined, consistent approach to managing progress throughout
7. Build trust with Stakeholders
Engage key client stakeholders early in the transition Set up SLAs providing clear direction and value in service delivery early with a regular review process Measure as is support performance and be able to demonstrate how it has improved Build upon process improvements
Continuously review and report on performance against targets
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8. Benchmarking and Best Practices Content

i. ii. Principles and Framework Taxonomy/Functional Decomposition
iii. Metrics, Targets and Best Practices iv. Ongoing Benchmark Program a. Methodology & approach b. Roles & responsibilities c. Location structure d. Question sets e. Tools and data sources f. Definitions g. Assumptions h. Validation i. Reporting v. Implementation Considerations
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8(i) The benchmarking methodology for Corporate and Shared Services should . . . GUIDING PRINCIPLES BENCHMARKING AND BEST PRACTICES
Be based upon a precise common language to define activity consistently across the NSW Government Ensure data captured is consistent and comparable across all government entities Facilitate a consistent central agency data collection approach to avoid duplication and rework, whilst supporting the needs of all users of information Encompass metrics that are aligned with the objectives of the NSW Government and the departments within it Be underpinned by a bottom up approach for data collection in order to enable early identification of improvement initiatives and greater visibility of performance Recognise that challenges exist for many Departments/agencies around data collection, and enable a transitional approach to embedding performance measurement capability Ensure that external targets selected are: relevant and achievable for the NSW Government, and focused on the vital few for each in-scope function defined based on a whole of government perspective and are re-based/adjusted for application to individual agencies according to their own context and drivers adjusted over time as the external environment changes and the NSW Governments performance progresses Enable the Departments/agencies to gain visibility of performance and service levels against the agreed metrics and understand how to use them to better educate end users and lower Corporate and Shared Services costs Provide the central agencies with the ability to gauge relative performance between Departments/agencies against the agreed metrics
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8(i) The NSW Government has adopted a four tier Benchmarking and Reporting Framework
Who has visibility? What does this enable? Total Cost & FTE Metrics Whole of Government comparison Top level performance information External targets (relevant peer group) Internal comparison between Principal Departments Rate of best practice adoption
The framework enables the NSW Government to perform:
Whole of Government
External comparison to pre-define targets TIER 1 based on an industry peer group and tailored for applicability to NSW Government Whole of Government Internal comparison between the Principal Departments Principal Departments of NSW Central Agencies Government Ongoing best practices at Principal TIER 2 Department level to track improvement initiatives and monitor performance levels Principal Departments Agencies
Key efficiency & effectiveness metrics and targets
The Benchmarking program will:

define best practice enablers to assist in closing performance gaps aid Departments to identify where and how practices can be improved provide feedback on where improvements are being realised
Process level performance information (cost, productivity, practice)
TIER 3
Principal Departments Agencies Operational Tracking and Reporting Department Corporate Dashboard Shared Services Customer Dashboard Shared Services Operational Dashboard Operational Tracking and Reporting Consistent activity and data definition
Baseline development Identify initiatives Ongoing performance management Benefits realisation Ongoing performance management Benefits realisation Target setting and tracking Common language Comparable data Deeper level of definition
TIER 4
The intention is to improve the practices and capacity of the sector as a whole and the visibility of process and operational data for operational improvements and management oversight. The tier 1-3 formula has been developed with Hackett, as part of its methodology.
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8(i) Benchmarking and best practices framework.

The benchmarking and best practices framework defines the metrics and targets which will form part of the Blueprint for Shared and Corporate Services, and the ongoing operational requirements for measuring performance against those metrics and targets The framework enables the NSW Government to perform: External comparison to pre-define targets based on an industry peer group and tailored for applicability to NSW Government Internal comparison between the Principal Departments of the NSW Government Ongoing performance measurement at Principal Department level to track improvement initiatives and monitor performance levels Metrics and data collection question sets have been identified at three levels:
Purpose Tier 1 Provide visibility of overall Shared and Corporate Services cost and FTEs, and establish a baseline for current Principal Department performance As for Tier 1, plus: Drive achievement of primary objectives for Corporate and Shared Services Reform As for Tier 2, plus: Enable deeper visibility of performance to track improvement initiatives and monitor ongoing performance/service levels
Description Cost per operating budget and FTE per total organisational FTE for each in-scope function, plus at an aggregated Corporate Services level Baseline data for each Principal Department by in-scope function As for Tier 1, plus: Vital few metrics based on key efficiency and effectiveness drivers, volume metrics and limited practice adoption assessment As for Tier 2, plus: Expanded set of metrics and practice indicators comprising a much deeper level of granularity
Tier 2
Tier 3
This framework is founded upon the following elements: A consistent taxonomy to define Corporate Services activity across all NSW Government entities Data collection definitions and guidance that are consistently applied and linked to a consistent process taxonomy Data collection tools that enable roll up of metric performance from a Principal Department level to a whole of government level Data validation processes defined to ensure the viability and relevance of data submitted, and minimise data discrepancies The data collection process leverages existing sources to the extent possible
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8(i) Benchmarking and best practices framework metrics and targets.

Dimension Inter-agency metrics and targets Purpose Top level performance information External comparison Internal interagency comparison Rate of best practice adoption Driven by/Used by Driven by Central Agencies Used by Central Agencies and Principal Departments Blueprint Tools Headline metrics (Tier 1) Driver-based metrics and associated best practices (Tier 2) External targets defined (Tier 2) Inter-agency dashboard design Detailed process taxonomy Question sets Headline metrics (Tier 1) Driver-based metrics and associated best practices (Tier 2 and 3, but see transitional considerations) External targets defined (Tier 2) Detailed process taxonomy Question sets Level Corporate Services, Function and Process Frequency 18-24 months (external comparison) 6 months (interagency comparison) Transitional Considerations Initial population of dashboard contingent upon Principal Department baselining exercises Tier 2 metrics subject to consultative review at end of transitional period
Dependency
Principal Department baseline, best practices and tracking
Baseline development Initiative identification Ongoing measurement and tracking of benefits Define the minimum standard for data collection
Driven by Principal Departments based on Central Agency guidelines and negotiated arrangements Used by Principal Departments predominantly
Function, Process and Sub-Process (but see transitional considerations)
Initial baseline within 6 months Ongoing frequency determined by Principal Departments
Minimum standard for data collection (Tier 1) with all Principal Departments to aim for Tier 2 completion Definition of broader metrics and associated data requirements (Tier 3), with early adoption where achievable
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8(i) Benchmarking and best practices framework metrics and targets. IMPLICATIONS FOR DATA COLLECTION AND VISIBILITY
The data collections undertaken by the Principal Departments will achieve two primary objectives: 1. The production of a baseline for current cost and activity for in-scope functions 2. Visibility of current performance against the agreed metrics and associated world-class and peer group targets Principal Departments will collect data and other information utilising a tailored question set. A tiered approach has been taken to the development of metrics and their associated question sets, in order to recognise that some Principal Departments may wish to collect data at a deeper level of granularity than others. As a consequence these Principal Departments will gain greater visibility of, and insight into current performance. See below:
Data collection level
Visibility of baseline data
Visibility of performance results
Tier 1
Corporate Services and function*
Principal Department DPC Principal Department DPC
Principal Department DPC Principal Department DPC Principal Department DPC
Tier 2
Function and process*
Tier 3
For metrics see section 8(iii)
Function, process and subprocess*
* FTE and Labour Cost data is collected at a sub-process level for all Tiers
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8(i) Benchmarking and best practices framework operational and commercial model.
Transitional (next 6 months approx) Dimension DPC role Build competency and data collection tools (supported by benchmarking partners) Review dashboard Review Principal Department reports Benchmarking Partner role Transfer knowledge Support DPC in building competency and data collection tools Populate dashboard Support Principal Departments and their consultants around data collection Run validation process Input data to benchmarking partner portal Produce report assessing performance against agreed metrics Provide data extract to DPC Department/ Agency role DPC role
End State Benchmarking Partner role Department/ Agency role
Inter-agency metrics and targets
Receive tailored output (showing own Principal Department versus others)
Own the process Provide tool for data collection, analysis and reporting Produce dashboard
Re-baseline at agreed milestones (optional) Re-set targets at agreed milestones
Provide data Receive tailored output
Principal Department baseline, best practices and tracking
Drive the process Engage consultancies
Collect data (supported by consultancies) Internal validation of data Provide context and insight to performance results Build competency and data collection tools (supported by consultancies)
Provide guidance to Departments around process Establish commercial terms for accessing the benchmarking partners benchmark products
Provide range of benchmark services to Departments on an optional basis per agreed whole of government commercial terms
Own the process (in line with DPC guidance) Collect data Provide tool for data collection and analysis Internal validation of data Reporting
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8(i) Benchmarking and best practices framework indicative timeframes.

Transition Check point to review metric/target composition DPC Blueprint Inter-agency dashboard Competency building and tool design/development
Collaboration Collaboration
Moving to End State

Rebenchmark (optional) Reset external comparisons Rebenchmark (optional) Reset external comparisons
Inter-agency dashboard
Provide data
Provide data
Provide data
Provide data
Provide data
Departments
Competency building and tool design/development Department and agency data collection and reporting
Ongoing performance measurement and benefits tracking
Jan 2010
Aug 2010 Ongoing 6 monthly intervals
Provide data
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8(ii) The summary process taxonomy demonstrates the scope of the functional decomposition. SUMMARY TAXONOMY
HR IT Finance Cash disbursements Revenue cycle General accounting and external reporting Tax management Treasury management Compliance management Planning and performance management Fiscal analysis (aka business analysis) Management and administration Procurement Supply data management Requisition and PO processing Supplier scheduling Receipt processing Sourcing execution Compliance management Supplier management and development Customer management Planning and analysis Function management E&CS (Other) Administrative services Travel and transportation Real estate and facilities management Government affairs (N/a) Legal Quality management Risk and security management Executive Miscellaneous Library services Freedom of Information (FOI) requests
Total rewards administration Technology infrastructure Payroll services Application management
Data management, reporting IT risk management and compliance Staffing services Workforce development services Labour relations Organisational effectiveness services Total rewards planning Strategic workforce planning Management and administration Planning and strategy Management and administration
The full detailed taxonomy can be made available on request from DPC
2009 The Hackett Group. All rights reserved. Reproduction of this document or any portion thereof without prior written consent is prohibited.
Baseline data collection only, no metrics defined.
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8(ii) Mapping of the existing DPC taxonomy* to the Hackett taxonomy shows overall consistency. PROCESS TAXONOMY MAPPING
Finance Process Cash disbursements Sub-process Accounts and program payables Travel and expense Revenue cycle Cash application Credit Collections Customer billing Dispute management General accounting and external reporting General ledger Inter-agency accounting Cost accounting Fixed assets External reporting Tax management Treasury management Tax management Cash management Capital and risk management Compliance management Compliance management Mapping
4
Process Planning and performance management Fiscal analysis (aka business analysis) Management and administration IT Technology infrastructure
Sub-process Planning and performance management Fiscal analysis (aka business analysis) Function management
Mapping
4
4
4 4
Infrastructure management End user support Infrastructure development
Application management
Application maintenance Application development and implementation
IT risk management
Quality assurance Risk management
Planning and Strategy
IT business planning Enterprise architecture planning Emerging technologies
= Hackett taxonomy covers and expands upon DPC

4
taxonomy = DPC taxonomy does not include any processes in this area
Management and administration
Function management
* Per the Activity Dictionary included within DPCs Corporate Overhead Costing Guide
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Human Resources Process Total rewards administration Sub-process Health and welfare administration Pension and savings administration Compensation administration Payroll services Payroll administration Time and attendance Data management, reporting and compliance Employee data management and HR reporting Compliance management Staffing services Recruiting and staffing Exit process Workforce development services Labour relations Organisational effectiveness Transferable skills Non-transferable skills Labour relations Organisation design and development Employee relations Mapping
4
Process Total rewards planning Strategic workforce planning Management & administration Procurement Supply data management Requisition and PO Processing Supplier scheduling Receipt processing Sourcing execution
4
Sub-process Total rewards planning Strategic workforce planning Function management
Mapping
4
Supply data management Requisition and PO Processing Supplier scheduling Receipt processing Requirements definition and supplier bidding Negotiation and supplier contract creation

4 4
Supplier management and development Customer management
Supplier management Supplier partnering External customer management Internal customer management Product development and design support

4
taxonomy = DPC taxonomy does not include any processes in this area
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Procurement (continued) Process Compliance management Planning and analysis Function management Sub-process Compliance management Sourcing and supply base strategy Function strategy and performance management Function management Other (Executive & Corporate Services) Administrative services Administration support Cafeteria and catering services Mail services and record retention Travel and transportation Transportation services Travel services Real estate and facilities management Government affairs Facilities management Real estate management Government affairs
4
Process Mapping
4 4
Sub-process Corporate governance Intellectual property Legal advice - internal Litigation and dispute management Merger and acquisition
Mapping
4 4
Legal
4 4
4 4 4
Regulatory compliance Legal management and administration Quality management Risk and security management Quality management Risk management Environmental health and safety Security Executive Corporate communications Planning and strategy Executive office
4 4

4 4 4

4 4
taxonomy = DPC taxonomy does not include any processes in this area = Not appropriate for use within Government clients
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8(ii) Some Corporate Service activities performed in NSW Government fall outside the taxonomy. TAXONOMY EXCEPTIONS
DPC Activity* Library Services Activities which fall outside the process taxonomy Some activity is captured within the Procurement area (e.g. obtaining library materials) and the IT area (e.g. supporting library management system), but more operational activities such as indexing, cataloguing, inter-library loans are not captured within the process taxonomy Activities include answering simple and complex information requests are not explicitly covered within the process taxonomy. Managing information content in portals could be captured within Application Maintenance or Development. Comparability Workers Compensation is a significant liability for the NSW Government, and as such generates high levels of activity in relation to the management and administration of claims. Activity will be captured and performance shown via HR metrics in the main, and there is a risk that metrics may not truly be comparable to external targets as a consequence of the Workers Compensation driver. Visibility activity relating to Workers Compensation will be captured within the process taxonomy (primarily in HR/Data management reporting and compliance), but it will not be easily apparent the extent to which Workers Compensation drives activity versus standard absence and special leave management Proposed solution Activity relating to Library Services and Information Requests will be captured using two of the miscellaneous processes which can be built into a benchmarking project. The key process activities relating to Library Services and Information Requests will be defined and incorporated in the question sets and supporting guidance. Data collected will therefore form part of the overall Corporate Services cost and activity baseline, however this will be backed out in order to enable comparison to external targets for whole of Corporate Services cost and activity metrics. This risk is mitigated through the selection of a target based on a peer group which comprises organisations of a similar driver profile to NSW Government.
Information Access and Reference Services
Workers Compensation
Within the existing Workforce Profile Data set, it is possible to isolate individuals coded 45 OH&S. This position code reflects both OH&S and Workers Compensation related activity, so will provide some recourse for drill-down analysis into this area for the Principal Departments. During data collection, coordinators will be requested to add a comment regarding the distribution of individuals coded 45 OH&S.
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8(ii) The NSW Governments investments in assets and office accommodation are considerable, and hence Asset Management is a significant area of activity and cost within the sector. ASSET MANAGEMENT
The NSW Governments investments in assets and office accommodation are considerable, and hence Asset Management is a significant area of activity and cost within the sector. The process taxonomy as defined does not categorise asset management activities within one function or process area. Rather these activities are distributed across the taxonomies as shown:
Asset management activity area IT Assets acquire, develop, maintain, manage, dispose Property acquire, develop, maintain, manage, dispose Fleet source, contract, manage, administer, dispose Accounting for fixed assets acquisition, valuation, impairment, depreciation, disposal Covered within process taxonomy IT all areas Other Facilities & Real Estate Management Other Travel & Transportation Transportation Services Finance General Accounting & External Reporting Fixed Assets Finance General Accounting & External Reporting Cost Accounting
Further visibility of Asset Management activity will be enabled by reference to the existing Workforce Profile Data for position code 24 Asset Management General. In the event that Principal Departments have dedicated Asset Management teams supporting core service delivery assets (e.g. rail infrastructure, roads, housing, schools) a Miscellaneous Process should be utilised to maintain comparability of overall results yet also provide visibility of current costs and activity.
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8(iii) Overall objective: build a framework in which tailored and achievable target metrics can be set. METRICS, TARGETS AND BEST PRACTICES
The operational deliverables of the Blueprint are to: Define the drivers for effectiveness and efficiency that will enable the NSW Government to understand the framework for achievement of the key objectives for Corporate Services reform Identify the key metrics that align to those drivers Select a meaningful peer group by reference to which external targets will be initially established Set tailored and achievable target metrics against peer group performance Define the best practice enablers for achievement of target performance
The underlying deliverable of the Shared Services Blueprint is to enhance the capability of DPC and the Principal Departments to monitor and improve performance: Improving performance is a dynamic process that focuses on the key drivers and metrics that enable performance Tracking individual metrics is risky as their movements are unpredictable tracking drivers described by numerous metrics reduces volatility The drivers and metrics identified in this Blueprint are not static. These should be re-focused and evolved by DPC and the Principal Departments as understanding of current performance improves, and corporate services reform progresses.
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8(iii) Top level metrics will be employed to enable a single dimensional assessment of Corporate Services provision from a cost and FTE perspective across and within Principal Departments. TIER 1 METRICS
The collection of baseline data via the ongoing benchmarking program will enable Principal Departments and DPC to report upon high level functional metrics (Tier 1). For all of the in-scope functions (Finance, IT, HR, Procurement, Real Estate & Facilities Management and others) functional cost and FTE data will enable definition of current performance against the baseline metrics: Function cost as a % of operating budget Function FTEs as a % of total workforce FTEs Overall Corporate Services cost as a % of operating budget Overall Corporate Services FTE as a % of total workforce FTEs External targets will not be established for these baseline metrics, as the ability to define meaningful external targets for overall functions is limited in the absence of detailed driver information for each Principal Department. External targets will however be set for the Tier 2 metrics, and the methodology for establishing these targets is set out on the following pages.
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8(iii) The process we worked through builds the driver set and aligns to metrics, sets the targets and identifies the best practices to close the gaps. OVERALL APPROACH TIER 2 METRICS
Metric Identification Target Setting Best Practices
Identify all drivers
Identify all the metrics for the drivers
Categorise
Define the key set of drivers and metrics

Category criteria: Relevance Achievability
Set targets against Peer Group
Align the best practice processes
Definitions and drivers Category criteria: Effectiveness Efficiency
Category criteria: Binary Lead Binary Lag Analogue Lead Analogue Lag
Category criteria: Select appropriate Peer Group based on complexity and size Set tailored and achievable target
Summary descriptions of practices that enable the Principal Departments to close the gaps
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8(iii)
METRIC IDENTIFICATION
Metric Identification
Target Setting
Best Practices
The Tier 2 metrics contained within the Blueprint aim to be simple and relatively easy to measure. They do not seek to cover all aspects of performance, but provide an indicator as to progress and direction, motivate changes in behaviour, and support improvement efforts. The indicator set captures key aspects of EFFECTIVENESS (defined as ability to deliver optimal value) as well as EFFICIENCY (defined as organisational cost and productivity). Taking this balanced approach to assessment of measures will assist the sector to understand the extent to which they are doing the right things and doing things right For each functional area, the drivers for future achievement of efficiency and effectiveness were identified and utilised to focus down on the key metric indicators for each function. These are shown on the next page.
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8(iii) A driver influences a future outcome METRIC IDENTIFICATION - DRIVERS

EFFICIENCY Procurement Total Cost Cycle time Total Cost Finance Transaction Processing Cost FTEs & Productivity Total Cost HR FTEs and Productivity Transaction Processing Cost Total Cost FTEs and Productivity Cycle Time IT Information Access Complexity Productivity Staffing Cycle Time Technology Leverage
EFFECTIVENESS Procurement Supply Base Performance Stakeholder Alignment Internal Quality Economic Value
Finance
Role of Finance Talent Management Value of Analysis Role of HR Talent Management Role of IT Quality Running IT
Quality of Output Economic Return Information Access Value of Analysis Quality Automation Talent Management
Technology Leverage
IT
HR
Cycle Time
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8(iii) and will be described by one or more metrics: lead or lag; binary; or analogue METRIC IDENTIFICATION - CATEGORISATION
Categorisation of Metrics
Definitions Binary: Either the metric definition is met or is not met e.g. Use of a Project Management Office: yes or no Analogue: Metrics can take any value in a given range e.g. % projects meeting specification (range 0-100%) Lead indicators: Depict an intent/decision to influence a result e.g. to have a Service Catalogue - binary e.g. Reduction in # of applications - analogue Lag indicators: Depict an outcome and encourage action/decision to change the result Working together Performance Lead Indicators Take Action Lag indicators
Lead
Enables Progress
Influences Progress
Lag
Qualifies Progress
Confirms Progress
Binary
Analogue
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8(iii) Targets are defined based on a relevant peer group TARGETS PEER GROUP SELECTION
Peer Group Methodology description Participants differ from function to function, which leads to different Peer Group for each function Peer companies are of various size and complexity, with the focus on Government agencies and multinationals with an Australian footprint in the database Measurement is made against Median (50% breakpoint) of the database The pool of companies in the Hackett data cut is regularly updated and changes on a yearly basis The database contains only companies that have completed the Benchmark within the last 24 months Peer Group Characteristics Operating Budget/Revenue Employees Locations Countries % of Government agencies Sample Size - total number of companies Finance $ 10.9 Billion 23k 107 1 79% 39 HR $ 6.3 Billion 21k 166 1 80% 25 IT $ 15.3 Billion 26k 135 3 50% 18 PR Spend: $ 1.5 Billion 12k 40 1 83% 24 Other $ 9.9 Billion 32k 277 24 14% 14
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8(iii) and normalised for structural factors within the sector TARGETS
The Blueprint includes external targets for the Tier 2 metrics. These are based upon : a World-Class comparator group, and a comparative Peer Group for NSW Government selected as per the methodology outlined previously. The NSW Government targets have been defined based on an assessment of the Peer Group median targets, to adjust these for specific structural factors present in the sector. See following page.
Illustration of the Blueprint target model
WorldClass Peer Group
Top quartile for Efficiency and Effectiveness Based on a comparative peer group. Comparisons are normalised against a functional driver, e.g. Finance = Op Budget/Revenue, HR = Employees Target normalised to take account of specific structural factors (e.g. average labour rate)
NSW Govt target
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8(iii) Peer Group indicators have been flexed to take account of specific structural factors within the NSW Government environment. SETTING THE NSW GOVERNMENT TARGETS
NSW Government targets have been derived based on the median point for each metric of the comparative Peer Group. Each target has been subject to a two layered adjustment process to take account of specific structural factors within the NSW Government environment and ensure the relevance and achievability of the targets. The two layers of adjustment are: 1. An exchange rate adjustment to reflect that the peer group data was expressed in US Dollars. The exchange rate adopted represents the average for the financial year ending 30 June 2009. 2. Where labour cost is the primary driver for metric attainment, an average NSW Government labour cost* has been substituted into the Peer Group data to recognise the limited ability of the sector to address this.
* Average NSW Government Labour Cost is $72,964 based on the 2008 Workforce Profile snapshot and uplifted by 24% to determine a fully loaded labour rate. Specific functional average labour rates have been adopted and applied to each relevant functional metric.
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8(iii) The Blueprint defines the best practice enablers which underscore the target levels of performance. BEST PRACTICES
In isolation, comparison to a target can only demonstrate a current performance gap. In order to begin to build insight into the key changes required to close that gap, one must look at the practices adopted internally (i.e. process, technology, people etc) and by the comparator group to identify the key enablers for an enhanced level of performance. For each of the metrics identified within the Blueprint, the key Best Practice enablers have been defined based on Hacketts Certified Best Practices. Hackett Certified Best Practices are based on the empirical data from over 4,000 Hackett benchmark studies and have been proven to correlate to higher levels of performance. There are over 400 best practices in the Finance area alone. These practices define how the world-class companies perform and the common characteristics they share, which can assist the NSW Government and its Departments/agencies in validating the future process model design, and also identifying future improvement initiatives.
Hackett Best Practices Repository
Best Practices
Performance metrics
Process Flows
Implementation Guides
Requirements Matrices
Configuration Guide
Best practices defined: Aligns with strategy Reduces costs Improves productivity Promotes timely execution Enables better decision making Leverages/exploits existing/emerging technologies Ensures acceptable levels of control and risk management Optimizes the skills and capabilities of the organization Promotes collaboration across the extended enterprise
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8(iii)
CLOSING THE GAP

Once the Principal Departments have determined their performance gaps to the peer group target and world-class performance, the roadmap to narrowing that gap will need to be locally defined based on particular priorities and ability to invest. The organisation model design and service delivery model design toolsets included within this Blueprint will be of particular importance in identifying the critical close the gap activities required. The diagram below indicates some examples of the various strategies that organisations can take in order to move closer to their desired target level of performance. Those organisations that attain World-Class performance (as defined by Hacketts empirically based methodology) make appropriate tradeoffs and decisions regarding the practices they follow, and execute on those decisions extremely well. Hackett Value Grid High investment, value-driven Examples of Possible Roadmaps to Closing the Gap Master data definitions & standards Data warehouse design and deployment Strategic planning process design 2 Balanced approach Shared service and ERP deployment Data warehouse design and deployment Identify labour arbitrage opportunities 3 Save to invest, costdriven Six sigma process design Eliminate duplicate processing Implement shared services Budget and forecasting process reengineering Decision support organization design Dashboard deployment Strategic planning process design Budget and forecasting process reengineering Balanced scorecard deployment Deploy ERP application environment Deploy self-service, workflow and imaging capabilities
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8(iv) Guidance has been developed for Principal Departments as they progress through the benchmark program. ONGOING BENCHMARK PROGRAM
A Program Guidance has been developed to support the benchmarking program. This provides an introduction to the program, outlines the key planning and project management activities required, provides detailed guidance on the data collection and validation approach, and suggestions for communications. The major components are summarised in the following pages.
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8(iv) ONGOING BENCHMARK PROGRAM
COMPONENTS
a. Methodology & approach b. Roles & responsibilities c. Location structure d. Question sets e. Tools and data sources f. Definitions
g. Assumptions h. Validation i. Reporting
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8(iv)a The benchmark program will be delivered through the following key work steps during the transitional phase.
PHASE
Planning
Internal Kickoff
x x x x
Activities: Review Workforce Profile (WFP) data extract and pre-populate FTE worksheet Time-line Agree data collection plan and training requirements Resources Roles & Responsibility Data location Stakeholder interviews Executive Interviews
Training
Data Collection
Data Validation (Cleansing)
Analysis & Draft Results
Final Results Presentation

x
INVOLVEMENT
DPC Benchmarking Partner Principal Department Consultancy
x x x x
Planning Meeting: Project overview Location structure Collection timeframe Identify project resources/team Discuss documentation Agree data sources Set up web collection tool Establish weekly status meeting Roles and responsibilities
x x x
Activities: Provide training on the following to all data collectors: Benchmark methodology & timeline Roles and Responsibilities Review planning assumptions Definitions and question set Web based portal demo
x x x
Activities: Complete FTE worksheet and process questions Gather directionally correct data Enter data into online portal Raise questions and issues to benchmarking partner
x x x
Activities: Internally validate collected data Externally validate collected data Preliminary review of benchmark results Review selected peer group data Investigate and finalize data submission Sign off on final data
x x
x x
ACTIVITIES
Activities: Perform analysis on final data Obtain context and insight from Principal Departments Conduct Executive preview with Principal Department
Executive Presentation: Principal Department: Review of benchmark results with comparison to peer and WorldClass Improvement recommendations (Tier 2 only) Next steps DPC: Incorporation of metric results into inter-agency dashboard
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8(iv)a DPC will take ownership of the benchmark program following the transition phase.
The future model will be refined during the transition phase, but the table below indicates how the program could be delivered: PHASE
Planning Internal Kickoff
x
Training
Data Collection
Data Validation (Cleansing)

x x optional
Analysis & Draft Results

x x optional x
Final Results Presentation

x x optional x
INVOLVEMENT
DPC Benchmarking Partner Principal Department Consultancy
x x optional
Planning Meeting: Project overview Location structure Collection timeframe Identify project resources/team Discuss documentation Agree data sources Set up web collection tool Establish weekly status meeting Roles and responsibilities
Activities: Review Workforce Profile (WFP) data extract and pre-populate FTE worksheet Time-line Agree data collection plan and training requirements Resources Roles & Responsibility Data location Stakeholder interviews Executive Interviews
Activities: Provide training on the following to all data collectors: Benchmark methodology & timeline Roles and Responsibilities Review planning assumptions Definitions and question set
Activities: Complete FTE worksheet and process questions Gather directionally correct data Enter data into online portal Raise questions and issues to benchmarking partner
Activities: Internally validate collected data Externally validate collected data Preliminary review of benchmark results Review selected peer group data Investigate and finalize data submission Sign off on final data
ACTIVITIES
Activities: Perform analysis on final data Obtain context and insight from Principal Departments Conduct Executive preview with Principal Department
Executive Presentation: Principal Department: Review of benchmark results with comparison to peer and WorldClass Improvement recommendations (Tier 2 only) Next steps DPC: Incorporation of metric results into inter-agency dashboard
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8(iv)b Roles and responsibilities. BENCHMARK PROJECT DELIVERY TEAM

DPC Sponsor Provide project oversight; remove barriers as needed Overall Project Manager (DPC) Coordinate the entire benchmark across all Principal Departments (full time commitment) Principal Department Functional Coordinator One per function per Principal Department Support overall Project Manager in the resolution of specific queries Assume responsibility for the accuracy of functional Principal Department data Agency Functional Location Coordinators (Agency Function Lead) Various, depended on location structure for the Principal Department Collect and submit data Provide status updates as to collection progress Follow up and correct validation issues Project Team Consists of Project Manager, Benchmark Competency Centre and Subject Matter Experts to support during all Project phases
DPC Sponsor
Overall Project Manager
Agency Finance Lead
Agency Human Resources Lead
Principal Dept Functional Coordinators Project Team
Agency Other Processes Lead
Agency Procurement Lead
Agency IT Lead
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8(iv)b Roles and responsibilities. NSW GOVERNMENT ROLES AND RESPONSIBILITIES TRANSITION PHASE
Role
Project Sponsor
Resource(s)
TBD
Indicative Effort
Available throughout the project (as needed)

Responsibilities
Responsible for project communication and organisational mobilisation Responsible for issue resolution Participate in status meetings Responsible for coordinating benchmark across all functions and Principal Departments Manage project according to the agreed upon timeline Develop an internal communication strategy for questions and concerns regarding the program by answering general questions and coordinating responses from the benchmarking partners Communicate directionally correct approach for data collection Responsible for results presentation review/coordination Provide subject matter and organisational expertise during pre-planning and training phase Support overall Project Manager in the resolution of specific queries Assume responsibility for the accuracy of functional Principal Department data Conduct internal validation of submitted data Follow up on internal and external validation items of submitted data Participate in a training session on the benchmarking partners methodology and tools Initiate data collection of costs, FTEs, and volume questions Upload FTE spreadsheet and necessary information into portal Provide status updates as to collection progress Follow up and correct validation issues
Overall Project Manager
TBD
1 resource involved for full project life cycle
Principal Department Functional Coordinators
Various, one per function per Principal Department
Preplanning: 15-20% Training: 3 hours Data collection: 10-20%* Data validation: 20-40%*
Agency Functional Location Coordinators
Various, depended on location structure for the Principal Department
Training: 3 hours + review Data collection: 10-40%* Data validation: 10-30%*
*Level of effort is impacted by consistency and accessibility of data, organisational structure and volumes of sites with Corporate Services resources
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8(iv)b Roles and responsibilities. NSW GOVERNMENT ROLES AND RESPONSIBILITIES TRANSITION PHASE
Role
Data Collection Tools Design & Build

Responsibilities
Enable current WFP data to pre-populate tailored FTE spreadsheet during the transitional phase Wok collaboratively with benchmarking experts to develop in-house capability and enhance/refine existing tool set Identify and agree any commercial arrangements required to provide the optimum delivery model for the ongoing benchmarking program Manage relationship with NSW Government Project Sponsor Support the NSW Project Manger with project coordination and oversight Finalise project assumptions (e.g. location structure, collection period etc) Overall coordination of the benchmark process Support training sessions/web-cast Participate in weekly status cells Answer day-to-day questions on taxonomy, definitions and data collection that the NSW Project Manager cannot answer Identify data validation issues Ensure adherence of data to definitions and taxonomy Enable knowledge transfer to Principal Departments and to DPC Support the development of DPC in-house capability and tool design support on function relevant question
Benchmark Support & Management
Subject Matter Experts*
Ad-hoc
* Performed by experts during the transition phase
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8(iv)c Location structure DEFINITION

The Data Collection Location Structure refers to a framework which is developed in order to make Departments/agencies data tangible and accessible. It is a template to layer on top of the organisation structure in order to efficiently gather data but also to facilitate detailed insights and internal comparisons, if required.
Locations may or may not be physical locations (e.g. organisational unit vs. geographic functional location) Locations should be at the lowest level of granularity so that data can be aggregated appropriately to enable internal comparisons (e.g. department, agency, region, ownership type, etc.) Locations should make transparent the diverse ways of executing processes (e.g. different systems, practices, performance profiles, productivities, etc.) Shared service centers or corporate locations performing centralised processes should be highlighted separately. They can be designated as source which can then be allocated to the entities they support There are two key tests to assist in the determination of the location structure and question set assignment: Visibility - which is the level at which data should be collected to provide insight related to functional and process performance Variability - which is the degree to which differences exist related to process execution It is important to evaluate the desired level of visibility required prior to finalising the Location Structure. The level of detail desired has a direct impact on the Location Structure design and thus the effort required on behalf of the Principal Department teams to undertake the required Data Collection activity.
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8(iv)c Some options for location structure are outlined below, but in all cases this structure must be defined and agreed at a Principal Department level prior to undertaking any data collection activity. OPTION A HIGH LEVEL
OPTION B MID LEVEL

OPTION C DEEP DIVE

SSC*
Corporate/ Functional
SSC*
Corporate Centre
SSC
Departments, statutory bodies etc
Corporate Centre Y* Z*
* If applicable to Department environment
X*
Y*
Z*
Benefits: Aggregated data collection shorter time frame for collection, fewer collectors required, less Department/agency resistance Some high level visibility of shadow structures Drawbacks: Heavy reliance on assumption and allocation in data Risks around comparability of data Very limited ability to generate insights or perform internal comparisons
Benefits: Visibility of shadow structures Ability to perform high level internal comparisons Insight generation at an organisational model level Drawbacks: Still a level of reliance on assumption and allocation in data No visibility of physical location of functional activity
* Identification of different physical locations as appropriate
Benefits: Identification of regional consolidation opportunities, centres of excellence etc Visibility of shadow structures Ability to perform detailed internal comparisons Data collection occurs down to lowest levels, hence minimal use of assumption and allocation Drawbacks: Large number of data collectors to manage and train
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8(iv)c As data will be collected for multiple functions at the same time, this must be taken into account when determining the location structure. LOCATION STRUCTURE FUNCTIONAL OVERLAY
OPTION A HIGH LEVEL OPTION C DEEP DIVE
SSC*
Corporate/ Functional
SSC
Corporate Centre
* If applicable to Department environment
OPTION B MID LEVEL
Y*
Z*
X**
Y*
Z*
* Identification of different physical locations as appropriate ** Some locations may not be large enough to require more than one data location
SSC*
Corporate Centre
A*
C = Additional location required for each Function (IT, HR etc)
* Some agencies/units may not be large enough to require more than one data location
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8(iv)c The location structure is utilised to allocate data collection questions to the most appropriate location. ILLUSTRATIVE LOCATION STRUCTURE
Question guides are allocated based on the location structure which is determined, in order to ensure that the appropriate questions are asked at the appropriate level.
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8(iv)c
KEY QUESTIONS TO CONSIDER

In determining the appropriate location structure, Principal Departments should consider the following key questions: What are your key organisational units? How are these geographically dispersed? What are the main centralised functions which fall within scope of the benchmark? Is a Shared Service Centre utilised? If so, what services does it provide and to whom? To what extent are processes executed consistently across your organisational units? How many FTEs approximately are involved in in-scope activities within each organisational unit?
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8(iv)d Assignment of question sets.
Once the Location Structure has been determined and configured in the on-line portal, assignment of the appropriate question sections to each location is required. Every location may not be assigned every process and associated question sets within a function. By reviewing the following table along with assessing the Visibility and Variability of process and best practice execution within each organisation, Principal Departments can ensure that processes are only assigned to the relevant locations, helping to ensure that Location Coordinators only answer questions relating to processes that are relevant to their location.
Structure of Question Set

Principal Department Level Questions
Demand Driver Questions Legal Structure Questions Environment Questions Revenue Questions
Question Details
Questions answered only by the Principal Department Project Manager. Seeks to understand the demand or environmental factors that influence overall business complexity
Organizational Unit /Regional / Functional Level Questions

Technology and Other Cost Questions Business Unit Volume Questions Application Architecture Questions
Questions answered at either one location representing the entire function (e.g. Finance) or by each location individually. Need to determine whether these function questions are answered once at the enterprise level or for each organizational unit.
Location Level Questions

FTE Questions Process Questions Cost Questions Transaction Volume Questions
Each location will complete one FTE worksheet. Each location will select and answer only those process-level question sets that apply. If there are more than two FTEs in any process, complete the FTE worksheet. Be cognisant of double counting volumes.
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8(iv)d Question sets. DETAILED QUESTION SETS EXIST FOR ALL PROCESS AREAS
A detailed question set will be developed for this benchmarking program and will be tailored to support each of the reporting Tiers The questions will be cumulative, and the Tier 1 related data requirement represents the minimum data collection standard for participation in the program.
DATA COMPONENTS
Tier 1
Labour cost and FTEs; Outsourcing Cost; Technology Cost; Other Costs (facilities, overhead, travel, training etc)
Tier 2
Labour cost and FTEs; Outsourcing Cost; Technology Cost; Other Costs (facilities, overhead, travel, training etc) Limited volume data; Limited practice data (i.e. system integration, self-service adoption) Labour cost and FTEs; Outsourcing Cost; Technology Cost; Other Costs (facilities, overhead, travel, training etc) Full volume data (i.e. all transactional processes, all functions); Full practice data (i.e. system integration, self-service adoption)
Tier 3
NB For all Tiers, organisational baseline data will be collected, e.g. operating budget, number of FTEs, number of end users
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8(iv)e Tools and data sources. TOOLS FOR DATA COLLECTION

The primary tools for data collection are the FTE spreadsheet, the detailed Question Sets, and an On-line Portal which enables collation, validation and analysis of the data collected. This is shown below:
On-line Portal
FTE Spreadsheet - FTE - Labour Cost - Functional allocation
Question Sets - Volumes - Practices - Additional costs - Profiling
Tier 1 = Limited set of questions defined so as to enable reporting against the minimum Tier 1 metrics and targets Tier 2 = Expanded set of questions to provide greater visibility to the Principal Departments around current performance against a broader metric set and high level best practice adoption Tier 3 = Full set of questions to provide enhanced visibility to the Principal Departments around current performance against a comprehensive metric set and best practice adoption indicators
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8(iv)e Tools and data sources. DATA COLLECTION - SOURCES

Principal Departments are regularly subject to data requests from central agencies and other bodies. As a consequence, the ongoing benchmarking program should seek where possible to achieve alignment with, and leverage of, other data collections. The primary source of FTE data (the largest data component) for the ongoing benchmarking program will be the existing Workforce Profile (WFP) data, which is collected quarterly by DPC. This data is utilised for a variety of purposes, including workforce management and planning, corporate overhead analysis, etc. Mapping of the Blueprint taxonomy to the position codes embedded within the WFP data indicates a good degree of overlap and consistency, sufficient for this data to provide a solid starting point for the benchmarking data collection without significant alteration of the current model. Ultimately, the processes for collecting FTE data for the ongoing benchmarking program will lead seamlessly from the WFP collections, and can also be utilised to cover off on many other potential usages for the data. In the transitional model however, the Principal Departments will need to perform additional work on the FTE data provided by the WFP collection in order to populate the FTE spreadsheet for upload into the data collection portal. In both the transitional model and the future state, Principal Departments will be required to provide responses to the broader question sets for each function. In completing these question sets, the Principal Departments will be able to draw data from their ERP or finance systems, Human Resources Information Systems etc, and central agencies will be able to provide prepopulated data from systems such as e-recruitment and the NSW Treasury ICT benchmarking project. This is illustrated diagrammatically on the following page.
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8(iv)e Tools & data sources. DATA COLLECTION - FLOW OF DATA IN TRANSITION PHASE
Other data sources e.g. e-recruitment
WFP data set
WFP extract
FTE spread sheet
Question sets
Upload to benchmarking partner portal
Data validation
See further details on validation approach section 8(iv)h
FTE data
Comments
Leverage existing WFP data
Extract FTE data incl. position codes Pre-populate FTE spreadsheet
Further effort required to complete FTE allocation across subprocesses
Complete utilising cost, volume and current practice information
Aggregate totals uploaded to benchmarking partner portal
Role Prepare FTE extract & prepopulate spreadsheet Review for reasonableness Complete FTE allocation Complete assigned question sets
DPC/Core team Principal Department Location
Coordinate WFP collection
Ongoing support and query management
Perform upload to portal
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8(iv)e Tools and data sources. DATA PROTECTION, OWNERSHIP AND VISIBILITY
The approach to collecting, analysing and reporting on data during the transition phase has been designed to ensure the protection of all data provided and to clearly define ownership of data.
Ownership Visibility Prepared by benchmarking partner, used by DPC, available to other Departments/agencies via DPC
Inter-Departmental Dashboard - targets and high level analysis
DPC own and manage use of dashboard
Baseline and Performance Report detailed targets, metrics, analysis and baseline for each Principal Department
Each Principal Department owns and manages use of their own benchmark report The benchmarking partner own this aggregate data to conduct the analysis and to use in future engagements. Data is not identifiable or used in such a way as to disclose the source. Principal Departments own all detailed data collected. No detailed data leaves the Principal Departments own source systems or network environment.
Prepared by benchmarking partner, used by Principal Department, available to DPC
Aggregated Factual Data FTE and cost data at a subprocess level, plus volume and practice data provided
Principal Departments retain a perpetual, non-exclusive right to use the data for their own analysis and future use
Detailed data from all locations cost, FTE, volumes, practices, IT environment etc
Principal Departments have sole visibility of this data
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8(iv)f The new approach builds on and enhances DPCs approach to Corporate Overhead Analysis. THERE ARE SIMILARITIES IN APPROACH BUT ASSUMPTIONS AND TYPES OF DATA COLLECTED DIFFER
DPC BU Structure and Cost Centre Analysis Ongoing Benchmark Program Location structure Demand, structure, market, revenue Workforce FTE and Cost Corporate Overhead only (excludes Ancillary and Core Services) Uses Workforce Profile (WFP) codes, assigned where employee spends >30% of time on related functions Includes contractors only where fees represent >10% of total employee related expenses Working expenses FTEs and Fully Loaded Labour Cost Outsourcing cost (labour, technology) Other non-labour costs
Includes: Advertising & promotion Audit fees Contractors/ Consultants Insurance Operating leases Rent & utilities Travel Maintenance Depreciation Grants Borrowing Other
BU and process volumes
Application Architecture
Process (best practices)
Capture FTE and cost data across end to end process, regardless of where activity resides FTE data captured where individual spends >4 hrs per week per sub-process FTEs can be designated as Manager, Professional or Clerical Other costs include: Related IT support costs per function (labour and nonlabour) Related facilities and overhead costs per function Related Travel and Expense costs per function Related training costs per function 158 Related other costs per function
8(iv)f DPCs approach to Corporate Overhead Analysis compared to the standard Hackett approach. THE NEW BENCHMARKING APPROACH BRINGS SOME ENHANCEMENTS AND CHANGES
DPC Corporate Overhead Analysis
DPC currently exclude support services that provide specific support to business units delivering core services, defined as Ancillary Services
New Benchmarking Approach

A number of activities defined by DPC as Ancillary Services will be required to be captured as Corporate Service activities under the new benchmarking approach, to ensure comparability: Occupation-specific training captured within HR/Workforce Development Services IT support for core systems captured within IT/Application Maintenance Canteen services captured within Other/Administrative Services Project accounting captured within Finance/General Accounting & External Reporting/Cost Accounting Yes, but data can also be captured against a physical/geographic location The new approach includes an assumption that proportions of individuals time are allocated at a sub-process level in increments of 10%, i.e. if an individual spends greater than 4 hours a week on a sub-process activity then that proportion will be captured against that subprocess. During the transitional period we recognise that some Departments/agencies may not find it possible to capture data at this level of granularity, and so allocations may occur at a process level. The new approach will capture Corporate Services activity wherever it is delivered within the organisation structure, in line with the activity definitions included in the taxonomy The new approach includes all contractors and any outsourced FTEs who are under direct control of management (i.e. not managed via a service level agreement) Going forward the approach will capture IT support costs attributable to each function includes hardware and software maintenance, and telecommunications (i.e. data and voice) spend The new approach will collect other expenses according to the Hackett definitions.
Costs are captured against a cost centre structure Workforce Profile (WFP) codes are assigned based on individuals spending greater than 30% of their time engaged in a particular process area
Excludes positions delivering corporate services to those outside that department Includes contractors where fees represent >10% of total employee costs IT support costs for functions are not attributed
Working expenses are collected based on 16 categories and adjusted for centrally recorded expense items
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8(iv)g A number of key scope assumptions will be agreed at a Principal Department level during planning ASSUMPTIONS - SCOPE
During the planning phase for the benchmarking program, a number of key scope assumptions will be reviewed and determined for each Principal Department participating. These are shown below: Definition of the benchmark data collection time period What is the 12 month period for which data will be collected? Determine the organisational scope - What, if any, business units / agencies / regions are out of scope? Determine the machinery of government change scope - What machinery of government changes occurred during the data collection period? Will the entities in question be included or excluded as part of the scope of the engagement? Determine the process scope Upon review of the process taxonomy defined within the Shared Services Blueprint which, if any, of the processes are to be excluded from the scope of the engagement? Consider the impact of major initiatives - Are there any major initiatives during the data collection period that could significantly impact the benchmark results? Do these initiatives have significant one-time costs? If yes, then visibility of the activity and estimates of the financial and personnel impact should be provided to the DPC Project Manager.
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8(iv)h The main objective of data validation is to identify and correct data errors to achieve a clean set of data. VALIDATION APPROACH
A rigorous validation process is essential in any data-driven measurement program. The quality of the data submitted into the analysis tool is directly proportional to the quality of the insight and analysis that results. The validation approach taken for this benchmarking program incorporates local validation, external validation (both automatic and manual), and a formal data sign-off point to ensure that Principal Departments can be confident that the data provided is a directionally correct reflection of the current environment.
Validation is concentrated around completeness and a sense check of the data provided The data is validated at a location level, to ensure the underlying factors are exposed For the completeness check existence of FTEs, cost, and functional performance data (volumes, cycle times and error rates) are reviewed. For example, to identify instances where a location reported FTEs but no cost, or a location reported volumes but no FTEs A sensitivity analysis is run against external comparisons, overall NSW and Principal Department comparisons to highlight data anomalies A data validation log is created to track all data discrepancies Data collectors review action items in the data validation log, adjust the data where necessary and return the data validation log with comments All comments on data validation log action items are then reviewed Data rework concludes with data sign-off by the Principal Department
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8(iv)h High level process flow for Data Validation.
Location
Local validation
Adjust data if necessary
Review issue log
Comment on issue log action items
Core Team
Conduct completeness and sense check
Create issue log
Review issue log comments and data changes
Review collected data
Final review and sign off on data
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8(iv)i
REPORTING PROCESS, APPROVALS ETC

Following sign-off of the data at a Principal Department level, the benchmarking reports will be produced. The following pages outline the form and content of the reports that will be generated at each Tier. The content and extent of analysis for each Tier of report will be reliant upon the breadth and depth of data which is provided. In all instances, Principal Departments will see an executive preview of their own results and be provided with an opportunity to add relevant context or insight as a cover report to the document prior to finalisation. The outline reporting process is shown below:
Benchmarking Partner Principal Department Performance Improvement & Review Branch
Generate reports
Adjust if necessary
Produce final reports
Produce/update Inter-Department dashboard
Review reports
Provide comments/ changes
Produce context & insight
Review Principal Department report
Receive dashboard report
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8(iv)i Tier 1 reports will provide high level Corporate Services and Functional Cost & FTE indicators, but will not utilise external comparisons or practice indicators. FORM AND CONTENT OF REPORTS TIER 1
Inter-Agency Dashboard Content Tier 1 Metrics combined Corporate Services view (no external targets) showing distribution Tier 1 Metrics per Function (no external targets) showing distribution and median Functional baseline Costs and FTEs showing composition
Indicative format
Principal Department Report Content Indicative format Functional baseline Costs and FTEs Tier 1 Metrics per Function (no external targets)
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8(iv)i Tier 2 reports will build on Tier 1, and provide external comparisons, a balanced indicator of Efficiency and Effectiveness, and results for all Tier 2 metrics and associated processes. FORM AND CONTENT OF REPORTS TIER 2
Inter-Agency Dashboard (includes Tier 1 content plus) Content Indicative format Value Grid per Function* Tier 2 Metrics per Function, comparison to external target and showing distribution
Principal Department Report (includes Tier 1 content plus) Content Indicative format Value Grid per Function* Tier 2 Metrics per Function, comparison to external target, shows practice adoption
* Value Grid can be produced for the four main Functions only Finance, IT, HR, Procurement
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8(v) Implementing this benchmarking program will represent a step-change in the best practices culture of the NSW Government. TRANSITIONAL IMPLEMENTATION
The ultimate objective for the ongoing benchmark program is to support the NSW Government in driving corporate services consolidation and improvement throughout the sector. DPCs vision is that through a transitional approach to implementing this program, appropriate skills, tools and competencies can be built at a Principal Department and whole of government level to ultimately take forward the program without undue reliance on external providers. The ultimate goal is for there to be one primary data collection mechanism for the sector, managed and delivered by DPC, which will support ongoing benchmarking and best practices. In order to deliver on this vision and objective, a number of implementation considerations must be observed and addressed: Significant communication and change management requirements Recognition of data collection challenges driving a prioritised approach to data collection and measurement The need to develop in-house data collection, validation and analysis tools and competencies Integration with and leverage of other central agency data collection mechanisms
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8(v) A detailed transition plan will need to be developed in order to implement the Blueprint, with broad coverage of the key implementation considerations. TRANSITIONAL IMPLEMENTATION HIGH LEVEL ACTIVITIES
Delivery of Initial Benchmark
Benchmark Planning & Execution
Determine location structures Identify data collectors and strategy Tailor question guide help text Comprehensive training program On-line portal and tool set up
Support data collection and field/ resolve queries Ongoing refinement of help text and guidance Ongoing knowledge transfer
Validation process Analysis and reporting Explanation of results
Integration/ Leverage
Consultation sessions with relevant agencies/units Mapping exercises
Feedback loop back to other agencies /WFP team for enhancements/changes to data
Feedback loop regarding validation issues impacting on other data sources Integration of other department reporting needs into reporting profiles
Competency & Tool Development
Tool Development
Develop mapping codes for WFP data to FTE spreadsheet Determine forward strategy for WFP Construct mapping from other data sources
Feedback loop regarding completeness/accuracy of prepopulation process Ongoing knowledge transfer Build/test data collection repository
Feedback loop regarding validation issues impacting on data collection process Knowledge transfer on validation, analysis and report generation
Communication & Change Management
Principal Department Executive Briefings Ministerial briefings Multi-level communication plan design and rollout explain the project, process and benefits
Program Success
Program status communications Ongoing communications plan delivery process and benefits
Executive briefings to support validation process Ongoing communications plan delivery benefits, learnings, next steps
Planning Phase
Data collection
Validation, Analysis & Reporting
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8(v) Currently, sources of data within the NSW Government are largely embedded in Departments/agencies and there is scope for misrepresentation of data prior to collation in various central repositories. IMPLEMENTATION RISKS DATA SOURCES
Issue No integrated data environment cannot get a whole of government view at the push of a button As a consequence, data is provided to central agencies via ad-hoc or routine data requests (e.g. Workforce Profile data provided quarterly via completion of a web based question set with an underlying validation engine) The above drives significant activity at a Department/agency level around validation and approval of data submitted, which can cause long lead times in data collection The legacy system environment at a Principal Department and agency level often makes identifying and collating data time consuming and complex The opportunity exists for review and misrepresentation of data at a Department/agency level prior to submission, and there is a tendency for gaming; particularly in relation to defining staff as front vs. back office
Mitigation Lack of an integrated data environment is typical for both private and public sector organizations. A benchmarking process uncovers data visibility issues and visibility can often be leveraged as a key driver for change. If the location structure (i.e. levels of data collection) is defined properly, this will allow data to be rolled up to provide a consolidated government view.
The taxonomy and data collection toolset included in the Blueprint is activity based and provides a way for the client to map to the right processes consistently across all Departments/agencies. Principal Departments and their constituent agencies will be supported through the first data collection process in order to ensure that sustainable data collection processes and department and agency-level competency are built in to ensure future data collection exercises are less resource-intensive. The provision of a clear and unambiguous definition of activity and cost data required through the taxonomy and question sets mitigates this risk. While there is no way to prevent data misrepresentations if the department is determined to mislead, a number of checks and balances are built into the model to challenge the Principal Departments during the data validation process. The key driver information normally assists with determining reasonable values for cost, volumes, staff, etc. This is used to challenge data submitted and normally the process results in adjustments to the data during data validation
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8(v) Failure to build local capability and effectively sell the benefits of the benchmarking program will comprise the sustainability of the program. IMPLEMENTATION RISKS CHANGE MANAGEMENT
Issue Risk of lack of cooperation at a sub-agency level. If the program is not properly socialized, milestone dates will be drastically pushed out due to cooperation issues Mitigation Planning is key to mitigating the tendency of Departments/agencies to refuse participation. The implementation plan includes a strong focus on engagement at an department level to explain the project, process and benefits. Given the state of change at NSW, this approach is viewed as essential A clearly defined communication plan which targets multiple layers of management within the Principal Department framework needs to be defined and implemented consistently throughout the transitional phase Need to ensure a tie up between various initiatives from central government, e.g. NSW Treasury efficiency reviews, WFP collection The program will not be sustainable if there is a lack of capability and capacity at a Principal Department and department level once the transitional phase is complete Consultation sessions with other interested departments e.g. NSW Treasury, DPC performance units, policy units etc, should be held in the early stages of the planning phase A comprehensive training program on the data collection approach and tools will be delivered as part of the transitional phase Involvement of Principal Department and department staff in the training sessions, as well as supporting consultancies, will be required to ensure knowledge transfer to permanent staff and encourage ownership of the program at a local level The ongoing program includes a tightly blended benchmarking partner and DPC team to deliver on the first round of benchmarking during the transitional phase. This will provide a framework for knowledge transfer and skills development. A specific component is also included in the ongoing program for investment by DPC in developing in-house data collection, analysis and reporting tools, with support and input to be provided by benchmarking partner professionals.
The program will not be sustainable if appropriate tools and competency are not developed within DPC in order to take over the program once the transitional phase is complete
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9. RISK ASSESMENT There are a number of key issues/barriers that need to be taken into account as Principal Departments prepare their Corporate and Shared Services transition plans. PERCEIVED BARRIERS
i. ii. iii. iv. v. vi. vii. viii. ix. Staff Change Management Corporate Structure Complications Capability of Workforce Investment and Standardisation of Technology Department/agency Expectations of Service Branding of Departments Non Standard Approach Rate of Change Effects on Current Departmental Initiatives
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9(i) Staff Change Management will need thorough consideration and planning to ensure clear communication regarding changes across a broad range of employees. STAFF CHANGE MANAGEMENT
What Changes implemented will require consultation, communication and impact analysis with both staff and unions. Staff roles and the nature of operations of a Shared Services organisation will need to considered to meet the business requirements of clients and their services. Thorough understanding of what a Corporate and Shared Services is and how it may impact people will need to be fully understood by Departments as they implement their reforms.
Mitigation Approach A well thought out change management strategy will need to be constructed upfront. Executive, management and HR staff as well as the implementation team will need to be well versed in its contents and issue avoidance/minimisation during the rollout. Build a well documented change management framework including: Assessing the Departments willingness, readiness and ability to change A strategy for change Implement the change management plan and track progress Evaluate experiences and address lessons learnt Create good communication plans, addressing: The audience (provider and client) and their communication needs The most effective means of communicating with this audience Who should deliver the message Write detailed job description and KPIs. Build appropriate training plans.
Why Staff in Shared Services centres need to be multi-skilled and work towards a strong service and performance culture. This move needs to be underpinned by a well executed change management, communication and training regime for both client and provider personnel.
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9(ii) Varying regulatory requirements may impact the ability to combine specific functions due to assumed limitations on changes to internal structures and responsibilities. CORPORATE STRUCTURE COMPLICATIONS
What There are many smaller entities and statutory bodies across the sector that are considered to be independent. Decomposition of what they need to deliver is important to determine which of their activities can be provided by improved Corporate and Shared Services via the Principal Department .
Mitigation Approach Build a strong understanding of all statutory/legislative requirements across the Departments and agencies. Within these, decompose what functions the Departments and agencies need to retain and where any purely transactional functions can be included in the centralised services. Begin with the approach that all functions are to be included in Corporate and Shared Services and determine by exception those functions to be retained at Department/agency levels. All functions proposed to remain at a Department/agency level should be justified for specific retention.
Why Some entities operate within prescriptive regulatory environments that will need to be assessed prior to reform. These must still be met in the new Principal Department and centralised Corporate and Shared Services environments.
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9(iii) Individual and aggregated workforce capabilities require assessment to ensure the correct mix of skills is available to deliver the required customer service levels. CAPABILITY OF WORKFORCE
What To maximise the customer service and efficiency business as usual will need to change, moving away from legacy developed processes to a more dynamic model of continuous improvement. Up-skilling and expectation setting is required within the Department to provide effective project management, reengineering, analytical assessment and vendor management skills.
Mitigation Approach Business cases need to be developed outlining the benefits for the Corporate and Shared Services reforms. Robust implementation plans need to be carefully built that demonstrate how the transitions will occur. Transitions plans need to include the resourcing skills mix required for the Corporate and Shared Services centres as well as their job descriptions, KPIs and training needs. Deliver effective training courses (particularly in process improvement) to address capability gap. Given that the Departments/agencies are at different stages of planning and maturity, there will be a number of different transitions and timeframes. Phasing the functions transition into the Corporate and Shared Services centres will aid the timing of the up-skilling process.
Why To achieve the efficiencies and effectiveness outcomes the appropriate number of skilled and trained resources are needed at the right place. People are required with experience and skills sets to effectively challenge the business as usual processes and technology.
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9(iv) Significant investment to upgrade and standardise technology is required to enable longer term benefits due to economies of scale. INVESTMENT AND STANDARDISATION OF TECHNOLOGY
What Significant investment in upgrading and standardisation of systems are required to underpin new Corporate and Shared Services environments.
Mitigation Approach Business cases need to clearly demonstrate benefits expected from technology standardisations. Leverage scale by looking across multiple Principal Departments. For example larger, possibly outsourced, data centres, virtualisation of servers, upgrades etc. Look for a funding model that, is fair, preserves a health dynamic in Corporate and Shared Services centres to continually improve and become more financially self sustaining. Build in a benefits realisation framework to monitor performance.
Why Significant economies of scale will be achieved from standardising the technology applications, platforms and data centres. The degree to which this is undertaken will need to be reviewed on a case by case basis. A minimum of 20,000 users is considered the first reasonable scale of FTE to deliver benefits in Shared Services. Ongoing self funding arrangements to ensure Corporate and Shared Services continually improve and become more self sustaining.
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9(v) Expectations associated with Shared Services need to be clearly and thoroughly defined for delivery and ongoing monitoring by both service provider and the client Department/agency. DEPARMENT AND AGENCY EXPECTATIONS OF SERVICE
What Individual Departments/agencies have expectations of service being improved from Corporate and Shared Services at a lower cost. In the majority of cases where Departments/agencies now use some form of external Shared Services, there is lack of trust and belief that they are not getting value for money (performance metrics not in place and/or not understood).
Mitigation Approach Build an expectation framework that: Outlines and sets realistic expectations for all stakeholders, including base-lining of current service levels Demonstrates to users what SLAs will be in place which include Description of services to be provided Roles and responsibilities of clients and provider Pricing models and recovery method Transition date and contract duration Methods for initiating change Performance metrics for both client and provider Communication between clients and providers Dispute resolution between the parties Disaster recovery process and procedures for client and provider Audit requirements Shows what levers there are for users to optimise the use of the Corporate and Shared Services Explains the performance measurement process and how this will be used to underpin continuous improvement. Continually educate users to more effectively use Shared Services and in doing so lower the overall Shared Services costs Take a phased approach during transition stages. Acknowledge that there will be some pain during transition and that all parties need to stay maintain commitment.
Why Where Shared Services are used by Departments/agencies now there is a lack of understanding of performance service levels, levers to optimise Shared Services costs and poor communications leading to a very mixed idea of department and agency service expectations. This has led to inefficient use of Shared Services and a mistrust between providers and Department/agency staff in some cases. Over servicing has arisen in some cases. Current Department/agency experience with Shared Services has set certain performance expectations for the new Corporate and Shared Services regime.
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9(vi) Existing Department/agency brand presence needs to be understood with respect to staff and customers as part of the change management process. BRANDING OF DEPARTMENTS
What The brands associated with Principal Departments and their associated agencies are very strong part of the employee culture.
Mitigation Approach A strong change management process needs to be undertaken that explains to the would be Corporate and Shared Services users and staff: What the Principal Department is all about, how their section fits in and its direction forward What a Corporate and Shared Services does and the services that will be available to them, How to use the Corporate and Shared Services What will be expected of them as individuals Transition steps setting expectations and the training that will be required Visible senior level support and communications will be essential.
Why The ongoing amalgamation and service delivery improvements as part of the Principal Department reform will establish new cultures under new brands. Much of this is through a lack of understanding of how Corporate and Shared Services can enhance, rather than inhibit, front line services.
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9(vii) Varying degrees of progress and a lack of standardised approach to date may adversely impact overall progress. NON STANDARD APPROACH
What The reform program needs to be broadly communicated throughout every organisation. Planning for Corporate and Shared Services has commenced in some Principal Departments, beginning the detailed diagnostic phases in order to understand the baseline positions. Mitigation Approach Why Without taking a sector view and having numerous forced interventions, individual Principal Departments will not achieve the leveraged economies of scale available. Some decisions may also adversely affect the ability of other Departments/agencies to realise the full benefits. Some suppliers may use this lack of clarity to their own financial advantage. Have a centralised sector view of all Principal Department plans. Encourage across Principal Department dialogue and debate during the building of Corporate and Shared Services plans. All business cases should be presented and signed off at sector level. From a sector level Principal Departments need to be challenged on why certain functions or technologies are not rolled up across Principal Departments. Depending on financial funding models chosen, Principal Departments need to show to the sector how they will monitor performance and tracking benefits against their business plans. Lessons learnt need to be actively shared across all Principal Departments.
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9(viii) Individual Departments/agencies currently have varying forms of Shared Services and the rate of change to the desired end state will similarly vary across Departments. RATE OF CHANGE
What There is a different level of Corporate and Shared Services maturity across the Departments/agencies. Progress across the sector will be extremely varied. Potential providers are still in a state of flux. Mitigation Approach Acknowledge that multiple Corporate and Shared Services Operating Models will emerge across the sector as the Principal Departments continue their rollout planning. Engage Principal Department Executives to own and drive the initiative to move to Corporate and Shared Services. Ensure good communication is maintained to allay concerns and build an understanding of what will be delivered in the new Corporate and Shared Service Centres. Ensure a sector level review of all plans to ensure optimal decisions/planning are made and better leverage the economies of scale available. Leverage this sector level visibility of planning to assist Principal Departments to further improve the efficiencies of their planning and implementation rollouts. Build a mechanism to share lessons learnt so that mistakes are not replicated. Instigate sector level communications to monitor/aid progress. Build a sector level rollout plan and dashboard against which to monitor progress. Providers need to fast track improvements and build business cases that demonstrate the phased transition by Principal Department to their services.
Why Setting expectations for all stakeholders together with appropriate levels of change management/communication is essential for a successful rollout of Corporate and Shared Services. There is a fear in some Departments/agencies that control may be lost and service levels go backwards. There needs to be an acceptance that there is not one generic solution or a single transition path available to achieve the sector wide Corporate and Shared Services reforms. Any impact to frontline services during the transition period must be carefully managed and minimised.
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9(ix) Establishing the overall Corporate and Shared Services program will have significant inter-dependencies with a range of other initiatives being conducted across all of NSW Government. EFFECTS ON CURRENT DEPARTMENT AND AGENCY INITIATIVES
What All Departments/agencies have multiple internal and Government initiatives underway. Concerns exist for how this Corporate and Shared Services reform will coexist with these programs and be included within budget and saving expectations.
Mitigation Approach Ensure all current major initiatives are well understood. Leverage the value add/positive aspects of these into the planning of Corporate and Shared Services. Undertake impact assessments of these initiatives as part of the business cases proposed. To avoid financial/costing surprises at a later stage ensure that there is no double counting of benefits for overlapping initiatives. Leverage the benefit of sector wide visibility of these initiatives as lessons learnt to share across the Principal Departments. Ensure good communications with stakeholders so that they can understand where and how their initiatives fit into the Corporate and Shared Services planning process.
Why All Departments/agencies have multiple initiatives underway and many of these have been factored into their current budgets, significant expectations set and some associated planning underway. To achieve the anticipated economies of scale, these initiatives need to be challenged and factored into the planning of Corporate and Shared Services.
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10. Document Appendix

DEFINITION OF COMMON TERMS
AP AR Best Practice CE CES CFO CIO COO CRM CS DG DGEC EPM ERP FMO FTE FTE Spreadsheet Functional Decomposition GL GIPA Act HR HRIS/HRMS/H CM ICT IPART IR Accounts Payable Accounts Receivable Best practices are proven, repeatable, documented techniques that deliver measurable performance improvements. Chief Executive Chief Executives Chief Finance Officer Chief Information Officer Chief Operating Officer Customer Relationship Management Corporate Services Director General Director General Executive Committee Enterprise Performance Management Enterprise Resource Planning Future Mode of Operation Full Time Equivalents Data collection tool which is utilised to provide FTE and related Labour Cost data, and perform the allocation of FTEs time across the functional processes See process taxonomy General Ledger Government Information (Public Access) Act Human Resources Human Resource Information System - a database system that lets you keep track of all types of information related to the organisation and its people Information and Communication Technologies Independent Pricing and Regulatory Tribunal Industrial Relations IT Metric MSS OH&S OLA OLAP P2P Peer Group PMO PMO PO Process taxonomy SDCC Information Technology A measurement used to gauge some quantifiable component of an organisation's performance Manager Self Service Occupational Health and Safety Operating Level Agreement Online Analytical Processing - a data structure that allows fast analysis of data Procure to Pay A comparator group for benchmarking purposes of organisations similar in size and complexity Present Mode of Operation Project Management Office Purchase Order A means to establish a common language for the 'back office' processes within an organisation. Service Delivery Cabinet Committee
Question set Data collection tool to provide all non-FTE and Labour Cost benchmarking data Service Level An SLA is an agreement between a provider and a customer that specifies, usually Agreement in measurable terms, what services the provider will furnish. SLA SOC SS SSO Target A Validation Value grid WFT Service Level Agreement State Owned Corporation Shared Services Shared Services Operation performance goal established with reference to an external comparator Process of automated and manual checks to ensure that data submitted into the on-line portal is directionally correct A two dimensional graph illustrating the position of a function in terms efficiency and effectiveness Workforce Profile, data not collected by DPC
World Class Comparison against the median of the World-Class companies in the Hackett database. World-Class is determined based on first quartile performance in both efficiency and effectiveness on a function level
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Blueprint 100715 Blue Print For Corporate and Shared Services in The NSW Government

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Blueprint 100715 Blue Print For Corporate and Shared Services in The NSW Government

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Department of Premier and Cabinet

Blueprint for Corporate and Shared Services in the NSW Government

Published May 2010

INTRODUCTION AND BACKGROUND

41-60% 22% 11-20% 27%

Align to NSW Government Objectives & Department Strategy

Provide Benefits Provide Appropriate Levels of Service

Shared Service Operating Models3

Future State Operating Model

Frontline Service Delivery

Premier & Cabinet

Industry & Investment

Environment Climate Change & Water 5,700 FTE Corporate

Services Technology& Admin.

Justice & Attorney General

Police & Emergency Services

Education & Training

Principal Department Corporate

Shared Service Provider

Multi-tenanted Shared Services Provider

Health Support Services

ICT infrastructure Whole of Government Services Fleet Property Procurement GCIO

Funding and Pricing

Service Management Framework

Horizon 2 Medium term (results within 12 months)

Benefits to achieve further enhancement

Horizon 3 Longer term (transformational)

Whole of Government (benchmarking, DGEC and DPC reform management)

Design and Guiding Principles

Functional Scope and Operating Model Options

Services Delivery Management

Feedback and Review

Principal Department Formal Written Feedback

Senior Officers Group Feedback Workshop

DEPARTMENT CONSULTATION AND ENGAGEMENT

3(i) DESIGN PRINCIPLES - OVERVIEW

Blueprint Design Principles

Blueprint Guiding Principles

4 FUNCTIONAL SCOPE - OVERVIEW

BLUEPRINT FUNCTIONAL SCOPE Blueprint Scope

e.g. Front line service delivery Nurses and Policemen

e.g. Finance and Human Resource Management

2. Advisory & Value Add

3. Policy & Control

Policy and standards setting Development of controls Measurement of compliance

Development of overall strategic objectives High-level, long term planning

Shared Service Advisory & Transactional Value Add

Financial policy and controls framework Financial compliance and management

External reporting responsibility where required (e.g. PTE or Statutory Authority)

IPART and ICAC pricing determination applications

Shared Services Advisory & Transactional Value Add

Recruitment processing Position administration eRecruitment

Generic and management training and development services

Case and personnel issue advice3

Strategic workforce planning Position and salary analysis

Training and development strategy and planning

Benefits policy and strategy Rewards analysis and planning

Specialist recruitment (e.g. volunteers, magistrates, senior executives)

Operational training and development

Shared Services Advisory & Transactional Value Add

Enterprise architecture planning1 Emerging technologies research and advice

Disaster recovery planning and execution