Shared services is an environment in which a company can absorb activities that support the principle processes of each of the company’s other business units, consolidating these activities into a principal operating unit.1
Through this strategy, multiple existing business functions are concentrated into a new and semiautonomous business unit with a management structure geared toward the promotion of efficiency, creation of value, reduction of costs and the overall improvement of services for internal company customers, as if it was a business unit competing on the open market.
Shared service centers (SSCs) are increasingly utilized in public administrations with the principle objective of increasing the efficiency of public spending. To increase efficiency, however, there needs to be an improved amount of agility, economy and service delivery quality. The SSC must, therefore, become reliant on governance requirements that enable it to operate efficiently and effectively.2
In a jointly organized study with SSC P-Direct, a key SSC belonging to the Dutch government, the governance aspects of an SSC focused on decision-making procedures for implementation purposes, for defining organizational structures and for change management were presented.3 Unique research was identified within this study focused on defining an SSC governance project by evaluating all of the SSC models currently operating in Canada, Australia, the United Kingdom, the US and other countries.4
The resulting proposed model is founded on IT governance concepts.5 The governance elements were grouped into 8 large categories similar to the pentagon (5 governance elements) of COBIT 4.1, plus further additions as supported in literature.
The proximity and linkage of the research in relation to SSCs and IT are recurring. For example, in his SSC governance study taken in the public sector, R. W. Wagennar defines which governance aspects principally refer to decision making, but also, secondarily, refer to change management with IT as a central lever.6
In this respect, the support of a proposed SSC governance model based on an IT governance COBIT 4.1 framework will be adequate. However, the COBIT framework underwent profound changes with the transition to COBIT 5. COBIT 5 is in line with the most recent advances in management and governance; it is in accordance with the latest versions of the Information Technology Infrastructure Library (ITIL), Committee of Sponsoring Organizations of the Treadway Commission COSO, Capability Maturity Model Integration (CMMI), International Organization for Standardization (ISO) International Standards, among others.
Proposed SSC Governance Model Development
The first step for the development of the model consisted of identifying the applicability of the stakeholder requirements as presented in COBIT 5 in relation to the requirements of the stakeholders interested in a public sector SSC. To analyze applicability, each of the requirements presented by COBIT 5 were evaluated based on the motives behind the implementation of an SSC into the public sector.7, 8 The result of this evaluation is the compiled set of requirements of SSC stakeholders within the public sector, ratified in literature, and presented in the first column of figure 1.
Figure 1—Stakeholder Requirements and Corporate Goals
Source: E. Mello and J. Souza Neto. Reprinted with permission.
The next step, in accordance with the steps of the COBIT 5 Goals Cascade, is to split the stakeholder requirements into corporate goals. The requirements of the stakeholders can be linked to a group of generic corporate goals. In COBIT 5, these corporate goals have been grouped together according to the dimensions of the balanced scorecard (BSC). Even though this list is incomplete, the majority of the specific organizational goals can be mapped to 1 or more of the COBIT general corporate goals.
After analysis, it was determined that all of the 17 corporate goals proposed by COBIT 5 were applicable in attending to the requirements of the stakeholders of an SSC. A large part of this compliance is due to the strong resemblance between the IT services provision characteristics and the shared services provision characteristics.
As a result, figure 1 shows the requirements of the stakeholders in conjunction with the applicable corporate goals.
This was followed by the splitting of corporate goals into SSC goals. The scope of the corporate goals is dependent on the results of the SSC represented, in turn, by the goals related to the shared services.
The governance elements for a public sector SSC9 are elements, or good practices, identified in reference literature that must be incorporated into the SSC governance structure through certain rules, terms of reference, and the roles and responsibilities of the board of directors (BoD) and the key stakeholders.
Governance elements were used as benchmarks to analyze the applicability of the IT goals for use as SSC goals. The services provision characteristics focused on meeting the requirements of the stakeholders participating in the IT and SSC goals (i.e., enable total compliance of the COBIT 5 proposals with an SSC model).
An analysis of the primary and secondary relationships between corporate and SSC goals is presented in figure 2.
Figure 2—Relationship Between Corporate and SSC Goals
Source: E. Mello and J. Souza Neto. Reprinted with permission.
The final cascade step—splitting the SSC goals into enabler goals—then takes place. This is done by taking the governance aspects of an SSC within the public sector as the basis for analysis.10, 11 Figure 3 presents the enabler dimensions for an SSC within the public sector.
Figure 3—Enabler Dimensions for an SSC
Source: E. Mello and J. Souza Neto. Reprinted with permission.
For the Processes enabler, the complete splitting of these dimensions is shown in figure 4.
Figure 4—Relationship Between SSC Goals, Governance Processes and SSC Management
Source: E. Mello and J. Souza Neto. Reprinted with permission.
Conclusion
This work demonstrates that it is possible to develop an SSC governance and management model for the public sector using the COBIT 5 governance and management model as a reference. The proposed model is aligned with good SSC governance practices within the public sector and as listed in supporting literature, having the potential to promote gains in efficiency and effectiveness in SSCs.
Edson Cezar Mello Jr., Msc
Has more than 8 years of experience in IT governance and management. He coordinated the implementation of a Shared Services Center in the Brazilian public sector, making use of COBIT 5 for its governance.
Joao Souza Neto, Ph.D., CGEIT, CRISC, PM
Has more than 10 years of experience in IT governance, applying the COBIT framework in the Brazil Post. He is also responsible for the IT governance research area at the Universidade Católica de Brasilia (Brazil). He is founder and educational director of the ISACA Brasilia Chapter.
Endnotes
1 Silva, J. A. T.; R. F. Santos; N. M. B. Santos; Criando valor com serviços compartilhados: aplicação do balanced scorecard (Creating Value Using Shared Services: Application of the Balanced Scorecard),Saraiva, Brazil, 2006
2 Engel, M.; H. Corrêa; Análise comparativa e de aplicabilidade das experiências nacionais e internacionais estudadas a um modelo de Central de Serviços para a APF (Comparative and Applicability Analysis of National and International Experiences Studied on a Services Central Model for the APF), Support Project to the European Union Sectoral Dialogs, Brazil, September 2012
3 Wagenaar, R. W.; Governance of Shared Service Centers in Public Administration: Dilemmas and Trade-offs, ICEC 2006, 14-16 August 2006
4 Grant, G.; et al.; “Designing Governance for Shared Services Organizations in the Public Service,” Government Information Quarterly, vol. 24, iss. 3, July 2007, p. 522–538
5 Ibid.
6 Op cit, Wagenaar
7 Janssen, M.; Joha, A.; “Motives for Establishing Shared Service Centers in Public Administrations,” International Journal of Information Management, vol. 26, issue 2, April 2006, p.102-115
8 Op cit, Engel and Correa
9 Op cit, Grant, et al.
10 Op cit, Wagenaar
11 Op cit, Grant, et al.