Here is how Commerce is making shared services work

Over the last three years, the Commerce Department found success in an area where most other agencies have failed — shared services.

Commerce made major progress in transforming away from back-office systems that were mired in old age to a consolidated, modernized set of human resources, procurement and IT systems.

Glenn Davidson, the former executive director of enterprise services at the Commerce, who for the last three years led the department’s shared services effort, said the initiative is saving millions of dollars, providing better services and setting Commerce up for future successes.

“When I got there, Commerce had a burning need for change. Their administrative services had been substandard for years. They may have paid less, but the quality was substandard. And that poor quality and timeliness impeded the mission, which is an important point to make,” Davidson, who recently joined Deloitte as its human capital transformation executive, said on Ask the CIO. “The principle reason to move not to decrease costs, but leadership wanted these services to perform better, provide greater transparency and give employees a better experience. And over time, reducing costs was important too.”

The impact of shared services is clear particularly around IT services.

Rod Turk, the acting Commerce chief information officer, said on Dec. 5 at an ACT-IAC event in Washington, D.C. that shared services has been a vital piece to the agency’s IT modernization efforts.

“The consolidation of services and bringing them to unity is something, especially in the IT world, is what we need to do. We work closely with the strategic sourcing folks to get volume pricing under contracts and consolidate all our requirements across the department,” said Turk, who is retiring from federal service on Jan. 20. “We’ve seen a lot of success in doing this and the department has received a lot of cost avoidance in doing this.”

‘Headaches of printing were gone’

For example, something as simple as printers where many employees used to have personal ones on their desks, but now have to use a centralized and secure approach.

Davidson said the cost per page went down as did the operations and maintenance of the devices. When a printer breaks or needs toner, the vendor who was hired to service the printers took care of it. He said the “headaches associated with printing were gone.”

Now, Turk said one of Commerce’s big efforts around IT shared services is identity credentialing and access management (ICAM).

“My office and the shared services group are partnering to look at where the investments are being made within the bureaus and how we can take those investments and leverage them for the greater Commerce Department, and where there are gaps and how we can create a program to fill those gaps.”

The Trump administration and outside experts have recognized Commerce’s success as model for other agencies.

The Office of Management and Budget and the General Services Administration plan on updating the shared services goals under the President’s Management Agenda in the coming months. And the administration earlier this year decided to open up the shared services opportunities to industry reversing an Obama administration decision to limit it to only federal agency providers.

Davidson, who was replaced by Jamie Krauk, the chief of staff and program manager for enterprise services, on an acting basis, said there are several reasons why Commerce has been successful with shared services.

Three-pronged approach to shared services

The first reason is because he took a long view of the effort. Change doesn’t happen in a few months or even a year, but it takes two-to-three years.

Second, he painstakingly collected the data to create a business case. The data included setting a true baseline of the current costs for printers or for human resource services.

And third, Davidson said he knows one thing about transformation, “it takes money to save money.”

“Most people just look at labor costs. But I had to go beyond that and look at the costs of the building, electricity, the operations and maintenance of the technology platform and other things so I could determine total costs,” he said. “There is a lot of information that currently exists in the systems that we have, but you have to go find it. No one even knew exactly how many people were employed at Commerce.”

Davidson said he had to make some assumptions in creating the business case like the fact the baseline used an average of 150 square feet per employee. 

“The reason I put together a business case is I wanted to show the total cost of the capital investment we would have to make. I wanted to make sure there were no surprises about how much this would cost to stand up,” he said. “My stand up costs came from Commerce’s working capital fund that is largely made up of contributions from all the bureaus for departmental management services. We had to levy a greater fee on the bureaus in order to fund my stand up costs. So I was under a great deal of scrutiny because any dollar I received meant another organization was receiving less. So that means I also had to socialize my plans and explain the cost and quality differences that would come.”

Commerce’s success goes beyond technology. Davidson said enterprise services built a one-stop portal so employees could initiate their own actions and follow the entire process online.

The agency also set up a contact services center so employees can have one place to call or submit an online request around HR, IT or acquisition.

“We migrated everyone to one common human resources system. It was Treasury’s HRConnect system. It was not a flawless migration but it was the best one the government has ever seen,” Davidson said. “We also took over the learning management system and now enterprise services has responsibility for the operation and maintenance of those. We transitioned all personnel action requests (PAR), pay and benefits actions for most all of the bureaus to enterprise services. We know price those services on a transaction basis.”

Financial management is next

Davidson said Commerce also will deliver acquisition services for its eight smallest bureaus of the Office of Secretary, mainly around commodity products and services, and will take over the strategic sourcing initiative. He added the initiative has helped Commerce avoid spending tens of millions of dollars over the last few years.

Davidson said the next few years Commerce will consolidate and upgrade its financial management system. The department currently has four different financial management systems and three of them are more than 20 years old.

“Now is the time for this organization to have one unified financial management system and deliver better quality services to all stakeholders,” he said. “We can continue to deliver IT services in a more consolidated way. We will look at grants management services too. The list of opportunities and possibilities are endless. It just takes other champions to drive them.”

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