13 June 2007
SHARED SERVICES REFORMS IN TROUBLE BUT STILL FEASIBLE,
FINDS AUDITOR GENERAL
Auditor General Colin Murphy’s examination of the WA government’s
troubled shared corporate services reform has revealed a number of past
and present problems that seriously threaten the viability of the project
which is two years late and looks like being millions of dollars over
its previouslyl projected budget of $122 million.
Mr Murphy’s report, tabled in Parliament today, has sought to clarify
the current situation, understand the causes of the many problems, determine
the lessons that are to be learned, and make recommendations for the way
forward.
“The potential for realising long-term benefits from the shared
services reform is still feasible, but there are risks to be managed and
significant challenges yet to be addressed – it will not be easy,”
he states in the overview to the report.
Mr Murphy finds that from the outset the WA model for shared services
was optimistic and the implementation plans ambitious for the size and
complexity of such a project – it involved using untried software
and a ‘big bang’ implementation approach.
Further, the governance arrangements were inadequate to oversee such
a high-risk project, resulting in blurred lines of responsibility and
what was essentially ‘management by committee’.
With the Department of Treasury and Finance now having been given responsibility
to move forward with implementation and ensure that benefits are realised,
it was under pressure now to meet tight timelines and budgets.
However, Mr Murphy cautions that in attempting to right the situation
the original principles and benefits of shared services reform should
be held in mind, as any temporary solutions to the implementation problems
will reduce the intended longer-term benefits of reform if they become
permanent.
If not, the reform runs the risks of failing because of the cumulative
impact of isolated decisions that did not consider the bigger picture,
he says.
Amid a raft of findings, Mr Murphy reveals that:
- Implementation of the whole of government shared services reform
is more than two years behind schedule.
- To date, only two of the three components of the integrated corporate
services system have been established – finance and procurement.
- Successful development of the third component of the integrated system
– the human resource component – is under serious threat
from a range of technical and management issues. A common integrated
system with all three components is a critical element of the shared
services reform.
- The implementation of an electronic document management system has
also failed at Health Corporate Network (HCN), but is continuing to
be implemented at the Office of Shared Services (OSS).
- The implementation problems are creating immediate inefficiencies.
One estimate is that the problems are costing $400,000 per month at
OSS alone.
- The temporary solutions to the implementation problems will reduce
the intended benefits of reform if they become permanent.
- The temporary solutions have not been based on analysis of benefits
and costs to the whole-of-government shared services reform.
- The shared services reform model was ambitious and high risk. However,
the governance arrangements were inadequate. Although they provided
across agency consultation, they did not provide active oversight and
management.
- There is still little coordination between the three shared services
centres.
- There has been little transparency in performance information and
this is likely to continue.
- Government has allocated $198 million for the shared services reform
to 2008-09. This is $20 million more than reported to Parliament last
November.
- The project budget does not include individual agency contributions,
the total of which is unknown but likely to be in the millions of dollars.
- The additional agency contributions, if received as supplementary
funding from government, will reduce returns from the shared services
project.
- The Department of Treasury and Finance (DTF) is planning to provide
a re-cast business case to the Expenditure Review Committee in October
2007. It will include a revised project budget and forecast returns.
- DTF has refunded to agencies $19 million of the $34 million harvested
savings in 2006-07.
Ends/.
Media Contact: Peter Villiers, Manager Reporting and Communications
Tel: (08) 9222 7558. Mobile: 0417 936 171 Fax: (08) 9322 5664
4th Floor Dumas House 2 Havelock Street West Perth
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