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Government-As-a-Service | 1

© 2015, HfS Research, Ltd | www.hfsresearch.com | www.horsesforsources.com

Thr iv i n g in t h e As -a- Serv ic e Eco nomy

GOVERNMENT-AS-A-SERVICE How the “Eight Ideals of As-a-Service” Help Federal Agencies

Find New Value Authors:

Barbra Sheridan McGann, Managing Director, HfS Research Phil Fersht, Founder and CEO, HfS Research

September 2015

Executive Summary In today’s Digital Revolution, where technology is increasingly at the heart of everything we do, it is time to retire legacy operating models, systems, and terminology.

Like the end of the Industrial Revolution in the nineteenth century, there are many organizations ill-equipped with the skills and tools to be effective in the new world. However, this Digital Revolution is a marathon as opposed to a sprint. This is the evolution of how we do business, and all our organizations—public and private—have tremendous opportunities, in addition to challenges, to get ahead of the curve and thrive.

In order to shed more light on the impact of new technologies and operating models on business operations, HfS Reseach surveyed, in the first half of 2015, 716 enterprise service buyers, advisors and service provider executives to understand more about how they perceive the importance of “As-a-Service.” By As-a-Service, we mean on-demand services focused on driving towards business outcomes—results that matter for your organization, and your organization’s contituents. We researched progress on achieving As-a-Service, and priorities for partnerships and investments. As described in “Beware of the Smoke: Your Platform is Burning,” while HfS sees movement along the path, the journey for many has only just begun, and there are some who have yet to realize that there is a journey to take.

In supplemental research, we then focused, with input from Accenture Federal Services, a complementary survey and interviews with leaders in U.S. federal agencies to look at how we can bridge from the private sector into the public sector with the “Ideals of the As-a-Service Economy.” HfS sees evidence that there is a tangible desire to leverage the shared services and sourcing model to drive better results for the business of government. While cost cutting is part of the discussion as an outcome, it is also about providing better services to government employees and citizens, and it is about providing an opportunity for more interesting work, too. However, to get there requires bold moves in thinking and driving new operating models and technologies, and engaging current and new talent in a journey for change.




Welcome to the As-a-Service Economy, where inefficient legacy sourcing and operating models must evolve As the saying often used in U.S. politics goes, “The definition of insanity is doing the same thing over and over and expecting different results.” In the private and public sector alike, many of the early challenges of outsourcing and staff augmentation were very much aligned with this definition, as service providers struggled to deliver any genuine added value beyond cost savings. Many promised new operational delights to close the deal, but the lack of delivering along these lines has been only too frequent and too commonly bemoaned among clients.

Much of this frustration has been caused by organizations moving the same work types around different groups of people, either in a shared service center, or with a third party service provider, and expecting vastly improved outcomes. The problem, as our research has repeatedly drawn out, is tied to the fact that traditional approaches have always centered on people-centric solutions. It is hard to really change institutional processes, procedures, and even work cultures, when you are merely moving work across locations, even if the talent and work culture is better than before. To truly transform processes effectively requires common standards and common technologies. In today’s emerging “As-a-Service Economy,” technology is increasingly at the heart of business operations, creating real opportunities to (finally) change this vicious cycle of mediocrity. However, this brings about a whole new set of challenges for organizations, as the skills we developed for the legacy world need to evolve into broader capabilities in today’s emerging era of digital technology.

Today, both public and private sector organizations have unprecedented opportunities to tap into technology and services resources in smarter ways to deliver results: namely better compliance, improved cost containment and productivity, greater flexibililty of operations, and loyalty. It’s getting increasingly harder—and more costly—to see these results with legacy systems and dispersed, autonomous operating models. These legacy processes and applications are becoming obsolete and staff have to spend a good deal of time on tedious manual interventions to keep the operations ticking. The development of software, infrastructure, applications, platforms, and business process support services As-a-Service provides unprecedented opportunities to work smarter through more simplified, intelligent operations.

To realize these benefits means first clearly defining the business outcomes required to be a successful agency or department in the U.S. Government, then prioritizing these desired outcomes and finally devising a strategy to achieve them, with specific milestones and metrics for success. This ultimately requires simplification to get to the outcomes you want, removing the bottlenecks, the obsolete processes and technology, digitizing the manual processes that require wasted effort and slow things down. It means setting priorities on what really is “inherently governmental” and “mission critical” and what is not, and finding the best resources—internal and external to an agency—that can deliver those intended results. It means paying on the end results, not on the person or the process. Globally, we are hurtling towards a new era of service delivery, where business value is delivered As-a-Service, and where enterprises—public and private—can plug into a service experience.

While cost cutting is part of the

discussion as an outcome, it is

also about providing better

services to government

employees and citizens, and it is

about providing an opportunity

for more interesting work, too.




Table of Contents What is “As-a-Service”? ................................................................................................................................................. 4

Ideals of As-a-Service and Relevance to Federal Government ...................................................................................... 6

Empowering Talent to Tackle the As-a-Service Opportunity....................................................................................... 11

Key Takeaways ............................................................................................................................................................. 14

Winging Toward the Bulls-Eye ..................................................................................................................................... 16

About the Authors ....................................................................................................................................................... 17

Exhibits

Exhibit 1: A Bird’s Eye View of the “As-a-Service Economy” ......................................................................................... 5

Exhibit 2: The HfS Eight Ideals of As-a-Service ............................................................................................................... 7

Exhibit 3: Drivers to Use Software and Services “As-a-Service” .................................................................................... 8

Exhibit 4: Hurdles to Cross for Software and Services As-a-Service ............................................................................ 10

Exhibit 5: The Role of Analytics in Achieving Results in the As-a-Service Economy for Federal Agencies .................. 12

Exhibit 6: Private and Public Sector Plans to Enable Move Towards As-a-Service ...................................................... 13




What is “As-a-Service”? There is a buzz in the air that is getting louder in the U.S. Federal Government. It’s the As-a-Service buzz. As Software-as-a-Service proves to be a stable, accessible, fast to market, and cost saving approach to replacing legacy IT, in a similar way, services are starting to transform as well, creating a Government-As-a-Service model.

In a recent RFI, the Federal Aviation Administration (FAA) asked not just for an application for recruiting, applicant tracking, and on-boarding, but specified it should be cloud based. In addition, the FAA requested help with placement services. During a three-month period in 2015, federal departments and agencies released over 300 solicitations for As-a-Service. These included requests for applications, infrastructure, and business support services.

Thanks to the growing maturity of As-a-Service, U.S. federal agencies have an increasing number of options for driving down unnecessary costs and creating more value for their constituents. There is increasing momentum towards “variations on the theme” of shared services and sourcing that take advantage of on-demand capabilities of modern software and service providers. Although there are many challenges still to overcome, our new research is seeing a timely convergence of internal and external experience, technology, and executive attention. The critical point is to not lose momentum, not to get distracted by the growing number of presidential candidates and points of view for the 2016 election, not to wait for the turnover at the country’s chief executive level. Instead, to build on what’s underway, and do so through agile, flexible models and collaborative partnerships in and between agencies, departments, and commercial providers.

Reimagining Shared Services and Sourcing This is not about stopping any current initiative for shared services or sourcing—whether it goes by staff augmentation, project-based contracting, business process outsourcing (BPO), or IT outsourcing. It is about stepping back to consider the end game—what an organization wants to achieve as the outcome or result of the way it operates. It is about looking, for example, “beyond the process” and understanding the wider context, environment, and business intent, and defining what an approach or solution should look like. One way to do this is with Design Thinking—observing and considering your constituents before architecting a solution.1

1 “The Rise of Design Thinking,” HfS Research, 2015. “Why Design Thinking can Save the Outsourcing Industry,” HfS Research Blog, 2015.

As-a-Service is about taking

advantage of the experience,

capability, and enabling

technologies now available to

“rethink” the way business is done

in government and to implement

change faster—within, instead of

across administrations.




Then, consider a bird’s eye view of what is available—operating models, enabling technologies and talent—to help architect a solution and drive toward greater efficiencies, standards, compliance, employee, and citizen satisfaction. HfS calls this view the As-a-Service Economy, because it takes into consideration the market experience from decades of shared services and outsourcing and proven and new building blocks for driving results that matter to your constituents—the bull’s eye (see Exhibit 1).

Exhibit 1: A Bird’s Eye View of the “As-a-Service Economy”

Source: HfS Research, 2015

HfS deliberately uses the word “economy” to emphasize that the next phase of shared services and sourcing is a new way of engaging and managing resources to deliver services. The key is collaboration. To be successful means partnering within and across agencies, commercial providers, and diversified workforces to tap into the best ideas and practices, unique talent, the most applicable operating model, and enabling technologies to meet the demands of citizens who want more responsive, easy-to-use services and contact with their government.




Ideals of As-a-Service and Relevance to Federal Government The public sector has more than three decades of experience in shared services and sourcing. The vast majority of federal agencies and departments are all engaged, at varying levels, with internal, external, and commercial providers. An agency, typically, participates in shared services within a department, taps into services from a Federal Shared Services Provider (FSSP), or contracts with an external third party or commercial professional services provider. Our research shows a number of federal agencies and departments are well on the path today to shared and standardized back office services. These most common shared services are payroll, benefits administration, project management, data management, IT support, and accounting. When asked whether the services have produced results, one executive we interviewed endorsed the approach: “We are a small organization and limited in terms of how much talent and resource we can bring to bear internally so definitely yes.”

What’s different now? “The most significant change is the ‘as-a-service’ concept,” said Glenn Davidson, Managing Director, Accenture, in an interview, “the ability to provide both the technology and the service on a transaction basis. Organizations no longer have to make massive upfront capital outlays for application licenses, implementations or maintenance. And, they no longer have to hire people to handle related transactions. They can specify outcomes—what they want—and have their providers deliver the services via the Cloud.” As-a-Service is about taking advantage of the experience, capability, and enabling technologies available to “rethink” the way business is done and to implement change faster—within, instead of across, administrations.

HfS has developed the Eight Ideals (see Exhibit 2) that contribute toward achieving this state of As-a-Service. The eight ideals are not intended to replace shared services or sourcing efforts, but to refresh the way of approaching them, to take advantage of the latest in technologies as well as the experience and interests of government employees’ talent. The game-changer is centered on today’s services work gradually becoming a genuine blending of people-plus-technology that helps us inch towards an ultimate destination. That destination can be increased compliance, reduced cost, the “right” recruit the first time around, more productive employees—the outcome an agency or department wants to achieve.




Exhibit 2: The HfS Eight Ideals of As-a-Service

As-a-Service Ideal Context

Design Thinking Generating creative solutions by understanding the business context

Brokers of Capability Orienting staff to manage towards business-driven outcomes

Intelligent Automation Focusing automation to enable analytics

Intelligent Data Applying real-time analytics models and insight

Proactive Intelligence Orienting staff to interpreting data to seed new ideas

Writing off Legacy Using platform-based services that render past tech investments redundant

Business Cloud Tapping into plug-and-play business services

Intelligent Engagement Ensuring relationships are contracted to drive sustained expertise and outcomes

Source: HfS Research, 2015

To reach this state, as we have found in our research, there are some pockets of progress. These successes—and attempts—need to be shared more broadly within the public sector, and between private and public sector as well. It’s worth stepping out of the swirl within to be inspired or surprised by what is going on across party lines. One federal agency executive described a visit to a private sector company that challenged his thinking on the business case for shared services and sourcing. This particular company had centralized HR and was moving to outsource services for labor arbitrage—with a purely cost driven focus. The executive wondered how much they were considering the impact on customer service and quality. He said, “If the focus is on service to the stakeholder, the cost will stabilize if not come down. If I can run a requisition for candidates to fill an open position, for example, and get the right person the first time, it saves time and money versus doing it three times because I didn’t get the right match. It also gets the right person on board, driving productivity. Cost is always important but if the focus is only on cost, you lose perspective…” In another example, an executive shared that the centralization, along with automation of targeted processes, has made it easier to implement change. When laws and regulations are revised, changes only need to be implemented in one place, versus ten. HfS has heard many examples across the public and private sectors of how focus on quality first leads to results that also includes savings, as well as satisfied customers, employees, and citizens.




The “Cost +” Value Proposition of Software and Services As-a-Service Budget cuts and mandates are most often cited as the reasons for launching a shared services or sourcing initiative. Reduced cost and standard processes, accordingly, are the highest expected results (see Exhibit 3). Although in our research we have found that once the goal for cost reduction is met, there is simply a new expectation for additional cost savings. One executive noted, however, that when he shifted the focus to quality and compliance, the shared services organization experienced increases there and also cost savings.

Exhibit 3: Drivers to Use Software and Services “As-a-Service”

What are the top 3 reasons to source applications or applications AND business process support services (whether your agency does today or not)?

Source: HfS Research, 2015 Sourcing & Services in Federal Departments and Agencies Survey, n=11

Once you acknowledge the table stakes of cost reduction and standard processes for driving results, what comes up most often—and is reflected in the statistics from one out of three of our collective government interviewees—is the ability to focus resources on the delivery of core mission work, with a commensurate reduction in time spent on back office activity. Not only does this realignment of time and energy drive better results for the organization, it provides an opportunity for the employees to shift toward the role of business partners and trusted advisors, as well as focus on what is inherently governmental in the process. “We are not competing with each other because there is more than enough work to go around,” said a government executive.

44%

44%

33%

33%

33%

33%

22%

22%

22%

11%

Reduce cost structure of operations

Standardize processes

Ability to focus resources on delivery of core mission

Reduce time, effort, and resources focused on back office work

Improve performance management

Leverage a proven third-party standardized business process

Greater scalability of operations

Access to skills and talent

Access better information for analytics and reporting

Move from capital expenditure to operational expenditure




For example, hiring in government is strictly governed, and managers get frustrated when they can’t hire quickly or hire the person they target to fill the open requisition. Centralizing a process in shared services or sourcing it to a commercial provider will not fix this problem directly. However, it will enable an HR representative in the business unit to spend more time and effort on prioritizing, setting and managing expectations, and performing analytics on data collected about candidates, recruits, hires, time to on-board, and to drive overall better results for filling open roles with the right candidates. It makes their job more interesting, more “advisory.” And, centralizing and automating as much of the process as possible helps with compliance and data integrity. This data and analytics driven activity enabled by sourcing and automation is what HfS refers to as the data-driven ideals: Intelligent Automation, Intelligent Data, and Proactive Intelligence.

Are Agencies Missing An Opportunity To Shift From Capex To Opex? A key point that appears surprisingly low on the reasons to source applications and business process support services (see Exhibit 3) is the benefit of moving from capital expenditure to operational expenditure. Many agencies have creaky old legacy applications and systems, and dwindling budgets for maintenance. “We have a constant shortage of funds and we can’t afford to modernize the infrastructure that is out there,” said an executive. Sticking with the HR example, it’s possible to source an applicant tracking tool, for instance, or recruitment related software along with services and pay for desired outcomes, such as by recruit or successful hire. Business Cloud, another of the Ideals of As-a-Service, is the collection of “plug and play options” that enable faster uptake of new capabilities, as long as an organization is willing to adopt the set processes and software. Recognizing the value of security and digital trust, many of these As-a-Service solutions have been developed according to rigorous security standards and regulations as well.

This approach puts the onus for software and application maintenance on the provider, which can be shared among agencies, and if a commercial provider, also with the private sector. “I clearly see less reliance on the technology we have in-house and more on the service provider technology stack, whatever it is they are offering,” said an executive in the private sector. That executive added that the critical change “from a governance standpoint is to stop worrying about how this tool works behind the scenes and be more focused on the outcome.”

Peering Into the Black Box Creates a Barrier to the Effectiveness of As-a-Service Many executives expressed concern about how the tool works behind the scenes, not wanting their processes to disappear into a “black box.” By focusing on the process and the tools, it is easy to lose sight of the point of tapping into software and services as a service—the business outcomes. This concern has also been labeled as one of “losing control,” one of the top two barriers to software and services As-a-Service (see Exhibit 4).




Exhibit 4: Hurdles to Cross for Software and Services As-a-Service

What are the top 3 barriers to sourcing applications, or applications and business process support services?

Source: HfS Source: HfS Research, 2015 Sourcing & Services in Federal Departments and Agencies Survey, n=11

HfS has found that greater value—and the desired business results—comes from greater collaboration through shared risk and reward. There is often an “us” and “them” approach to shared services and sourcing arrangements, which prevents real collaboration. A more successful approach involves a shared focus—aspiration—and trust. “Trust is key,” said a private sector global business services executive. “What I have seen is that trust brings a lot of empowerment. What also needs to be part of the equation is aspiration to make a difference.”

Trust, aspiration, and collaboration play a critical role, for example, in turning around the healthcare experience for consumers using HealthCare.gov. The Accountable Care Act expands coverage and offers enrollment and management of healthcare in a whole new way—online. It requires people to understand new terminology and options, and make a purchase through the government and payers; and on the back end, have agencies exchange but not keep data, and health plans submit, receive, and analyze data and make adjustments. In short, it’s a lot of moving parts. Keeping a focus on a shared aspiration, the Center for Medicaid and Medicare (CMS) in collaboration with Accenture is increasingly able to offer a consumer-oriented environment that is more stable, accessible, and navigable, enabling people to get and manage healthcare insurance.2

2 “One Jersey”: Trust and Collaboration Play Critical Role in Turning Around HealthCare.Gov, HfS Research, 2015.

56%

56%

44%

44%

22%

22%

22%

11%

11%

11%

Major change management requirement

Loss of control

Concerns about data or system security

Lack of visionary leader to drive change

Lack of a burning platform to do anything radically different

Lack of understanding from senior management on the …

Lack of ready options

Access to data

Outdated procurement and contracting processes

Few available options for applications or applications + …




There are a lot of bumps in the road of every journey, as the HealthCare.gov initiative shows. We need to share and hear more about the incremental steps and investments underway that make a difference. “We need to raise awareness, ask questions, and publicize results,” in order to drive the uptake in software and services as a service, stated an interviewee. “We need to network with other communities of interest. There is such a huge education curve.” There are a number of opportunities to do so, in both the private and public sector. These include: Shared Services Leadership Coalition, Partnership for Public Service, National Academy for Public Administration, Professional Services Council, and American Council for Technology – Industry Advisory Council.

Empowering Talent to Tackle the As-a-Service Opportunity Jobs will be different in the As-a-Service Economy. Not considering the use of technology such as automation, for example, or operating models such as shared services or sourcing in order to “protect” jobs and employees will not work in the long run, because we have to continue to change in order to continue to drive value. Employees who are not willing to change will be irrelevant in the future organization. It may be driven by advances in technology such as automation, or changes in operating models due to shared services or sourcing, or turnover in administration after elections, to name a few. This impact is global, similar to how car plants that used to employ 5,000 people now only need 300. In this case, government roles aren’t any different from the private sector.

India and the Philippines have become significant centers of skilled resources, not just because of the cost model although that is certainly a key factor. It is also because of the availability of a skilled and well-educated talent pool. As the market changes, HfS believes we need to continue to create opportunities for people to learn, grow, and network. HfS has also seen a number of organizations stepping up to offer training, education, and mentoring programs, creating networks so that people who are engaged and interested have the opportunity to take advantage of jobs being created. One example is how Accenture is hiring more veterans, including wounded warriors, disabled and visually impaired and other disabled individuals. Accenture Federal Services is creating an entry point into a network.

Software and services as a service can create new roles and opportunities for people who are interested and aware of it. We have seen examples of people taking on roles to define and manage automation, such as at one service provider where a robot has been named and assigned a number of tasks that used to be done by a team of people. The named robot’s “manager” also looks for new tasks for it to do—other manual, routine-intensive activities. Her job got more interesting, and the robot drives increased productivity and higher accuracy. The increasing use of automation is also driving the creation of new and more interesting roles to use the data, such as business analysts.

Federal Student Aid (FSA), for example, is a few months into using a new enterprise data warehouse, a platform built by Accenture Federal Services that consolidates data from multiple documents and systems. FSA, a part of the U.S. Department of Education, is the largest provider of student financial aid in the nation. FSA’s 1,200 employees help make college and career school education possible for 13 million students by providing more than $150 billion in federal grants, loans, and work-study funds each year.




The warehouse is now the one place that FSA employees can go to track borrowers and loans throughout the student aid lifecycle. Updates are automatically applied to the master record when loan holders submit changes to their loans, and data is automatically rolled up monthly for reporting and analysis. Time that employees originally spent on researching and consolidating data is now shifting to analysis of trends, much more engaging and interesting work, as well as moving FSA towards greater levels of both customer satisfaction and transparency.

The Increasing Role and Value of Analytics in Driving Results Exhibit 5 shows the value placed on the role of analytics in achieving the business outcome-oriented As-a-Service Economy. The value in analytics is widespread, from optimizing processes to drive productivity and results—the number one response—to identifying further opportunities for cost savings, to primarily managing risk.

Exhibit 5: The Role of Analytics in Achieving Results in the As-a-Service Economy for Federal Agencies

To what extent do you agree with the following statements related to your agency’s approach to analytics?

Source: Source: HfS Research, 2015 Sourcing & Services in Federal Departments and Agencies Survey, n=11

50%

38%

25%

25%

13%

13%

13%

50%

38%

63%

13%

75%

38%

25%

75%

38%

25%

13%

50%

13%

50%

38%

25%

38%

13%

25%

25%

The value derived from investments in analytics is primarily in optimizing processes

We would engage a commercial firm for shared services analytics skills

The value derived from investments in analytics is primarily in identifying opportunities for cost savings

Our agency is investing heavily in analytics

The value derived from investments in analytics is primarily in managing risk

Analytics are changing the way services and processes are managed within our agency

Our agency has the right technology to maximize opportunities with analytics

We would engage with another agency for shared services analytics capability

Our agency has the right skills to maximize opportunities with analytics

Strongly Agree

Somewhat Agree

Somewhat Disagree

Strongly Disagree




What is also clear is the gap between wanting to achieve that value, and having the skills and tools to get there. More than half of the respondents (53%) do not have the right skills or tools to maximize opportunities with analytics. However where investments are being made, it is having an impact on results, more so for some (13%), than for others (38%); and many have yet to see satisfactory results (50%). It is early days on embedding analytics into everyday work, and clearly an opportunity for leveraging As-a-Service to tap into the more experienced agencies and service providers, as many respondents seem willing to do.

Combining analytics with design thinking and technology can be a powerful way to drive results Our recent survey of private and public sector executives on progress in realizing the As-a-Service Economy shows actions gearing up particularly in analytics, investing in people to drive and enable change through use of enabling technologies, and creative problem solving (see Exhibit 6). These skills and capabilities are all inextricably tied together in realizing the As-a-Service Economy in the coming years.

Exhibit 6: Private and Public Sector Plans to Enable Move Towards As-a-Service

Do you have plans in place to execute on the following actions, over the next 24 months, to improve your “As-a-Service” environment?

Sources: HfS Research Ideals of As-a-Service Study, 2015 Sample: Total = 716; Enterprise Buyers = 178; Advisors/Consultants = 176; Service Providers = 372

32%

23%

23%

21%

22%

24%

25%

21%

13%

38%

33%

30%

31%

30%

26%

20%

23%

27%

19%

26%

21%

27%

28%

27%

16%

27%

18%

11%

18%

26%

21%

21%

23%

40%

28%

42%

Invest in effective analytics tools & skills

Retrain existing internal operations talent to redesign processes

Invest in external IT services to help us migrate away from legacy systems

Accomplish creative problem solving/"Design Thinking"

Write-off legacy IT investments; move into cloud delivery supported by As-a-Service partner(s)

Invest in internal IT talent to help us migrate away from legacy systems

Identify/hire a transformational leader/change agent

Invest in specialized external services to redesign operations

Invest in robotic process automation

Definitive Plans Considering Undecided No Plans




Particularly with creative problem solving, there is a recent rise in the use of “design thinking,” which focuses on finding and solving problems by looking “beyond the process.” The point is to set aside preconceived notions about stakeholders and existing ways of getting something done, and starting by observing the environment and the people involved, and then designing a solution. It involves a more empathetic approach but leads to better understanding of the context for business problems and designing relevant solutions. Design thinking has proven results at organizations like Kaiser Permanente, where initiatives have improved patients’ experience and increased the job satisfaction and productivity of nurses.3

Design thinking enables the realization of best practices for analytics initiatives—questioning the relevance of analytics and its impact on various business outcomes at the outset, caring enough to understand the needs and context of the end user and tailoring insights to impact decision making, connecting the dots for innovative thinking for both incremental and transformative improvements, and committing to results by embedding analytics within the enterprise.4

Key Takeaways There is an evident desire to leverage shared services and sourcing As-a-Service to drive better results for the business of government. Yes, cost cutting is part of the discussion as outcome, and it is also about providing better services to government employees and citizens, and it is about providing an opportunity for more interesting work, too. Government-As-a-Service “helps achieve a higher level of quality, accuracy, and support that was not there… not because people were not working hard, but because of a lack of focus,” observed a public sector shared services executive.

A few actions that HfS believes will help engage a broader group and gain momentum across administrations, include:

» Lead with design thinking to more clearly understand the context of business problems and design relevant solutions: Use newer techniques like design thinking and collaboration with internal, external, and commercial providers to better understand what’s at stake for each, observe the realities of their operations, and design solutions that can be flexible, taking advantage of newer technologies As-a-Service.

3 Brown, Tim, “Design Thinking,” Harvard Business Review.

4 “Design Thinking: An Imperative for Successful Analytics,” HfS Research, 2015.

Shared services and sourcing As-a-

Service “helps achieve a higher level

of quality, accuracy, and support that

was not there… not because people

were not working hard, but because

of a lack of focus.”

- Public Sector Shared Services Executive




Also a number of service providers are willing to bring current or potential clients into their innovation labs to share forward thinking ideas and innovations that even if they are not directly applicable, move the needle on “what’s possible.”

» Reimagine the role of technology in business process: The proliferation of digital and enabling technologies provides a number of options for developing a fresh picture of ideas of what and how something can get done. Making a move off a legacy platform requires a “net new” or full transformation effort, so there has to be a strong business case. But there are an increasing number of organizations already using or evaluating business process-As-a-Service, and others are saying they are not simply because they have yet to see what they need. Finding it though, provides an advantage to “buyers” in shifting to an operational expenditure model from a capital expenditure model, and focusing on delivering results versus managing the IT or software.

» Continue an unrelenting focus on business outcomes and align incentives with desired results: Most contractual arrangements and discussions refer to labor categories and rates. Getting increased value from service providers means aligning payment with performance, based on business outcomes and results achieved rather than how many people are doing the work, especially as more of the work can be automated and results are increasingly predictable.

» Build networks, explore, and share stories of success across government at all levels: The federal government has plenty of success stories that need more air time and wavelength, and can also bring more best practices in from the private sector. Share the stories among the ranks, visit private sector organizations and the delivery centers of commercial service providers, participate in coalitions that will define policies, funding, and mechanisms to keep the momentum for shared services and sourcing As-a-Service moving forward across administrations.

» Look outside the government and shared services and sourcing industry for new leaders, and define career paths for sourcing professionals: With the rise of shared services and sourcing, there is a new profession taking shape. The industry needs to recognize and provide career paths and incentives for these individuals--many of them can become change agents and “capability brokers.” These are the people who will be deep not only in their function, but on how to collaborate and work across business units, agencies, departments, and commercial providers. In our recent research on the business process services profession, we learned that less than half of the professionals in shared services and sourcing see their roles positioning them well for long-term careers. These are the people who can “hard code” the transformation that comes with As-a-Service, so “be a mentor—not only for aspiring professionals within your own organization but make an outreach… because the demands for these professionals will be continually higher,” requested an executive leader from a private sector shared services organization. The focus needs to shift from skills to capabilities so that staff can define and realize business outcomes, not just process transactions.




Winging Toward the Bulls-Eye Many, if not all, federal agencies and departments are engaged in shared services and sourcing to some extent. By some counts, there are more contractors doing government work than federal employees. Whether it is shared services for a group of agencies within a department, tapping into services from a Federal Shared Services Provider (FSSP), or contracting with commercial provider, the models are maturing, but the progress is slow. It took more than 20 years to centralize and standardize payroll into four agencies. Interviewees tell HfS that they anticipate other initiatives to take 3-4 years, at least.

But, it is harder to do “business as usual” in the federal government. And, software and services are increasingly available and proven as a service. There are sparks of leadership in the Office of Management and Budget and the Treasury Office of Financial Innovation and Transformation, as well as in agencies and departments, that are lighting a fire and can help drive change. There is a coalition of agencies and commercial service providers that is igniting the network and debate for policy changes and funding for transitions and operations. Enablers such as automation and platform-based business services are increasingly sophisticated and secure. Design thinking and analytics provide new opportunities for engaging talent. All of these elements can contribute towards achieving more simplified, intelligent operations. It is time to wind down traditional “shared services,” “outsourcing” and “staff augmentation,” and amplify As-a-Service. It’s time to re-imagine for Government-As-a-Service.




About the Authors Barbra McGann

Barbra Sheridan McGann is Managing Director for BPO at HfS. This role encapsulates her passion for research, analysis, and strategy, which has been 20 years in the making. Barbra’s scope of work covers the business process outsourcing and emerging "As-a-Service" market broadly, as well diving into industry and functional areas of Healthcare, Pharmaceuticals, and Public Service.

As the business process outsourcing and services market has matured, Barbra has tracked, analyzed, and advised on market and competitive moves and meaning for Accenture for over 7 years. She worked with Accenture leadership globally to develop organic and inorganic strategies that drove growth of new and mature offerings. Prior to that, Barbra helped launch and build the unique partnership between Accenture and

Microsoft that created Avanade, an IT services company, focusing on the Public Sector and Financial Services markets. Barbra’s career at Accenture started with reviews and events on software selection in the enterprise resource planning software market.

Barbra earned a Bachelor of Arts degree in English with Honors, and was recognized for outstanding leadership in Volunteerism with the Chet Pagni Service Award, from the University of San Diego. She’s also completed post-graduate executive leadership work at Northwestern University and Smith College.

Barbra’s home base is just outside the Windy City of Chicago, where she lives with her husband and two daughters, coaching soccer, gardening, and reading by a fire outside whenever the weather will allow it.

Barbra can be reached at [email protected] and followed on Twitter at: @sheridanmcgann.




Phil Fersht Phil Fersht is Founder and Chief Executive Officer of leading global analyst authority for the services industry, HfS Research. He is an acclaimed author, analyst and visionary in Global Business Services and Outsourcing, the Digital Transformation of enterprise operations and talent strategies. Fersht coined the term "The As-a-Service Economy" which is HfS Research's vision for the future of the global services and outsourcing industry and has become widely adopted by the global services industry.

Fersht founded HfS Research in 2010 and has masterminded the development of the HfS organization as a leading analyst for the firm, in addition to steering the business operations. He is also author and creator of the most widely-read and acclaimed blog in the global services industry, entitled “Horses for Sources” and now entering its ninth

year, attracting over a million visits per year across the globe. At HfS, he directs the firm’s research, advisory and global knowledge community, which today totals over 100,000 professionals and is served by a respected global analyst team.

Under Fersht's stewardship, HfS Research has become the leading industry analyst firm for growing influence and value, based on the results of 1093 industry participants in the 2014 Analyst Value Survey. He was named "Analyst of the Year 2011” by the Institute of Industry Analyst Relations (IIAR), winning the premier analyst award for a second successive year - the most coveted global award for industry analysts in technology and services industry. In 2012, the International Institute of Analyst Relations (IIAR) awarded HfS research as Most Innovative Analyst Firm.

Over the past 20 years, Fersht has lived and worked in Europe, North America and Asia, where he has advised on hundreds of operations strategy, outsourcing, and global business services engagements. During his career, Phil Fersht has worked at Gartner Inc. (AMR Research), directing the firm’s BPO and IT Services practices and served as market leader for Deloitte Consulting’s BPO Advisory Services, where he led numerous outsourcing and offshoring advisory engagements with Fortune 500 enterprises. He began his career with IT analyst IDC.

Fersht contributes regularly to media such as Wall St Journal, Business Week, Economist, The Times of India and CIO Magazine and is a regular keynote speaker at major industry events, such as NASSCOM, Sourcing Interests Group and the HfS Blueprint Sessions.

He received a Bachelor of Science, with Honors, in European Business & Technology from Coventry University, United Kingdom and a Diplôme Universitaire de Technologie in Business & Technology from the University of Grenoble, France. He also has a diploma from the Market Research Society in the United Kingdom.

Phil can be reached at [email protected] and followed on Twitter @pfersht




About HfS Research HfS Research serves the research, governance, and services strategy needs of business operations and IT leaders across finance, supply chain, human resources, marketing, and core industry functions. The firm provides insightful and meaningful analyst coverage of best business practices and innovations that impact successful business outcomes, such as the Digital Transformation of operations, cloud-based business platforms, services talent development strategies, process automation and outsourcing, mobility, analytics, and social collaboration. HfS applies its acclaimed Blueprint Methodology to evaluate the performance of service and technology in terms of innovating and executing against those business outcomes.

HfS educates and facilitates discussions among the world's largest knowledge community of enterprise services professionals, currently comprised of 150,000 subscribers and members. HfS Research facilitates the HfS Sourcing Executive Council, an acclaimed elite group of sourcing practitioners from leading organizations that meets bi-annually to discuss the future direction of the global services industry and the future enterprise operations framework. HfS provides Sourcing Executive Council members with the HfS Governance Academy and Certification Program to help its clients improve the governance of their global business services and vendor relationships.

In 2010 and 2011, HfS Research's founder and CEO, Phil Fersht, was named “Analyst of the Year” by the International Institute of Analyst Relations (IIAR), the premier body of analyst-facing professionals, and achieved the distinction of being voted the research analyst industry's Most Innovative Analyst Firm in 2012.

In 2013, HfS was named first in increasing influence among leading analyst firms according to the 2013 Analyst Value Survey and second out of the 44 leading industry analyst firms in the 2013 Analyst Value Index.

Now in its seventh year of publication, HfS Research’s acclaimed blog “Horses for Sources” is widely recognized as the most widely-read and revered destination for unfettered collective insight, research, and open debate about sourcing industry issues and developments. Horses for Sources now receives over a million web visits a year.

To learn more about HfS Research, please email [email protected].




About Accenture Federal Services Accenture Federal Services is a U.S. company, with offices in Arlington, Va., and is a wholly owned subsidiary of Accenture LLP. Accenture’s federal business has served every cabinet-level department and 30 of the largest federal organizations with clients at defense, intelligence, public safety, civilian and military health organizations.

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