Shared services suggested for consolidation projects

CAMBRIDGE, Md.'The task forces for the financial management and human resources lines-of-business consolidation project have recommended to the Office of Management and Budget that agencies go to a shared-services environment to consolidate redundant systems.

'We are talking about IT hosting services at a minimum and the different functions across the lines of business for a fee as this concept evolves,' Tim Young, OMB's associate administrator for e-government and IT, said today at the Information Resources Management 2004 Conference. 'The E-Payroll project was the proof of concept for the lines of business and it shows we can consolidate to a shared-service environment.'

The task forces started work in March on these two lines of business and will submit their business case to OMB next week. The group working on the third line of business, back-office grants administration, will submit its business case to agencies this week for comments, and then to OMB later this year.

OMB still must approve the business cases and Young emphasized that the current design of the business cases could change. The final decision on these projects will be published in President Bush's proposed budget next February.

After Bush approves the budget, Young said, there will be a competitive process to determine the service providers.

In a shared-services environment, agencies own the data but not the technology to process it, members of a panel at the conference said.

E-Payroll and the Treasury Department's Bureau of Public Debt are examples of cross-agency shared services where, for a fee, the service providers supply payroll or financial management functions. Young said the providers could be public- or private-sector organizations.

A shared-services environment saves agencies money on hardware and software without losing the control or accountability of their financial or human resources data.

'We have teed up the lines of business and helped build the golf course, but we have not played through yet,' said John Sindelar, OMB's lines-of-business consolidation projects program manager.

Young said there are a number of human resources service providers, such as the Interior Department's National Business Center or the Agriculture Department's National Finance Center. But there are only one or two financial management service providers in the federal sector.

'Agencies will have to make the decision to ramp up to provide cross-agency services or to migrate to the service providers,' Young said.

Agencies will not be required to migrate to the service providers immediately. Sindelar said agencies will buy the services when their current systems are in need of refreshing. He added some agencies could migrate as soon as the service providers are determined.

The task forces estimated at least six service providers each would be needed for financial management and human resources. Kirk Swann, a consultant with Touchstone Consulting Group Inc. of Washington, who supports OMB's e-government office, emphasized that the number was for cost purposes only and it could be higher or lower after the administration makes the final decision.

Agencies modified their Exhibit 300 business cases to reflect these recommendations, Young said. And OMB will review the business cases over the next three months, evaluating the alternatives, cost, return on investment and proposed migration schedules.

'Agencies will not be forced into doing things they don't want to do,' Young said. 'They can stay steady-state until they are ready to refresh.'

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