Part 4: Priorities yet to be addressed

Setting up Central Agencies Shared Services.

In this Part, we discuss factors critical to the success of CASS that need to be addressed. We consider:

Forming a clearer strategic direction

Lesson 10
Agree a clear role and strategic priorities for the organisation that reflect the strategic objectives of the businesses being served, to focus on how it is set up and operates, and to guide future business planning and development.

With the pressure to set up CASS quickly, not enough priority was given to setting a clear strategic direction. CASS built its structure, culture, and services without being clear enough about its role and strategic priorities, and how these reflect the strategic objectives of the central agencies.

As a result, there has been confusion about the role of CASS and whether it is a "servant" – providing transactional and operational services to support the strategic objectives of the central agencies – or a "strategic partner" – providing advisory services to the agencies, to help guide strategic decision-making.

CASS service-level agreements include both operational services and strategic advice. CASS is described in some documents as a "strategic partner". Some service users felt that CASS could not be both "servant" and "partner", and commented that there is a mismatch of perceptions between CASS staff and senior leadership about the roles CASS is expected to perform. The service users' observation was that CASS team leaders focus their activities on CASS's transactional, operational role, but that the central agencies' leadership teams look to CASS for its strategic role.

We reviewed a range of reviews, evaluations, and planning documents for CASS that highlighted the need for a clear vision and sound business planning. The EY review noted that the top priority for CASS to address was setting its "ambition" (a clear view of its role, structure, and culture of the organisation) because this is critical to working out its strategic direction and priorities, and the capability needed to achieve these. The 2012 "lessons learned" review also noted the need for senior leadership agreement and commitment to a clear vision.

CASS has now drafted a document laying out its "ambition" and a clear description of the future of CASS, which the Partnership Board agreed to in principle in May 2014. This sets out the role and strategic priorities for CASS. Options for CASS include expansion in due course to provide services to other small entities in a "small agency hub". CASS is currently considering whether this role will include adding functions as well as supporting more entities.

Governance needs to be stronger in practice

Lesson 11
For a shared service to succeed, governance arrangements need to be clear and sufficiently mandated to provide independent and effective decision-making.

There is a clear and appropriate governance structure for CASS. The chief executives of the central agencies have delegated responsibilities to the CASS Partnership Board for strategic decision-making and prioritisation for CASS, and to the Director of CASS for the day-to-day operation and leadership of CASS. The Partnership Board chairperson, who is also the Deputy Secretary (Strategy, Change, and Performance) in the Treasury, reports on CASS performance to the Secretary to the Treasury, who is ultimately responsible for CASS.

In our view, the structure and role of the Partnership Board is a sensible approach to manage an organisation supporting three separate agencies.

However, in practice, the delegation arrangements for CASS are not clear. Comments we received from CASS staff and service users indicate that these arrangements are not working well enough to provide effective prioritisation and decision-making. The Partnership Board has sometimes not had the mandate it needs to ensure that its decisions about prioritisation are carried through.

The Partnership Board is not directly responsible for managing CASS. It provides strategic and tactical direction to the Director. Partnership Board members consult with their respective leadership teams on decisions. However, chief executives retain decision-making authority for agency-specific priorities, or when the size or strategic significance of a decision warrants it. This is appropriate, but it is unclear where the delegated authority for decision-making lies and where it is appropriate for the agency leadership teams to override priorities or decisions agreed by the Partnership Board. This needs to be made clear.

A revised charter (effective from January 2014) has strengthened the Partnership Board's authority and the decision-making process. In our view, the central agencies need to build on these improvements to further strengthen CASS's governance arrangements.

Need to consolidate before expansion or use as a potential model

Lesson 12
Build the foundations for business as usual before considering enhancements, expansion, or modelling as an example to follow.

Too soon to say whether CASS will be a good model for the public sector

We expected the central agencies to show leadership through:

  • following sound processes when setting up CASS (as we discussed in Part 2);
  • giving attention to continuous improvement and applying lessons learned in the transition process; and
  • providing a useful model by setting up CASS with the structure and systems that can effectively deliver services to the central agencies.

Despite the central agencies' leaders being committed to the task, the way that CASS was set up was not an example of best practice. The Performance Improvement Framework reports of DPMC and SSC noted that other public entities already hold the view that the central agencies did not demonstrate leadership or provide a good model in working together or in achieving objectives in a timely way. This has led to doubt and scepticism among those entities.

Although we are aware that there is interest in CASS as a possible operational model of shared services for the public sector, CASS has not yet shown it is an effective example of shared services. CASS managers and Partnership Board members we talked to recognise that, if agencies want to increase efficiencies, the CASS design is not yet ready to be used as a model.

CASS needs to settle in before expanding its operations

CASS acknowledges that it should thoroughly consolidate its strategic direction, structure, and operations, and further strengthen its resilience and effectiveness in service delivery, before considering expansion. CASS also notes that primary drivers for smaller shared services arrangements are resilience and risk mitigation, effectiveness, and capability, with efficiency gains a secondary consideration.

Staff resources have been put under pressure and systems are not yet in place to sustain or support the current activities. This was shown in CASS's March 2013 maturity assessments, where all functions fell below – in some instances, well below – the point that might be expected to sustain smooth running of CASS and be able to support expansion.

There also appears to be pressure to show that costs have reduced. Although looking for efficiency gains is important, CASS will need to be careful not to affect its ability to provide business-as-usual services and to make further improvements.

Sharing and using lessons learned

As part of CASS's leadership role (as outlined in its vision statement), we expected CASS to identify lessons learned and good practice examples to share with other entities or jurisdictions. It is clear that CASS has identified some useful lessons. An example is the need to carry out a thorough process of collecting information and assessing needs before establishment (as discussed in Part 2) and the challenge of getting all functions to a common level of capability. CASS has shared these lessons to a limited extent with a range of audiences, such as interest groups of finance managers and IT managers from the public sector.

We are aware that DPMC is incorporating the Ministry of Civil Defence and Emergency Management, which affects the activities of CASS. It is important that those involved consider and apply the lessons learned from setting up CASS.

The 2013 business plan also recognises the need to align CASS with all-of-government directions, such as the all-of-government ICT programme. CASS provided input into the all-of-government ICT strategy and action plan to 2017, and the finance function monitors the progress of all-of-government initiatives.

We strongly encourage public entities considering a shared service approach to consider the lessons learned from how CASS was set up. Appendix 1 contains a list of steps and considerations, which reflect the lessons learned from CASS and incorporate good practice from elsewhere.

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