What next for shared services after GovERP decision

Ed Chung

Typing pools were once the height of cutting-edge business practices and technological sophistication. Fast forward to today, and we might chuckle at their portrayal in the movies and TV shows we binge on Netflix, amusing relics of a bygone era.

It is comedic because technology has evolved so quickly. Yet the underlying concept of pooling essential functions persists in many environments, notably in accounting and financial processes within state governments.

Last month’s decision by the Minister for Finance to abandon the previous government’s costly and flawed GovERP program is both a recognition that policy-makers are now asking some fundamental questions, and a major win for Australian taxpayers and the Buy Australia Plan.


In a recent paper, tech sector researcher Joseph Sweeney highlights how technology is sweeping away the rationale behind those outdated shared services arrangements.

“The majority of the public sector’s shared services operating today are at extreme risk of being viewed as failures in regard to providing core enterprise solutions – within the next three to five years,” Dr Sweeney warns.

That’s because the benefits underlying the shared services concept come from another era. This was a time when you had to buy software from one place, buy hardware from another, employ people with extremely specialised skills to install and then run each, and, on top of that, maintain an army of operators who knew exactly how to use the application. A lot of basic tasks were largely manual, such as entering and matching invoices and reconciling bank accounts.

The most common adopters of these shared services models were governments, and they remain the biggest enthusiasts. They could see opportunities for savings through buying one set of software licenses and hardware, economies of scale in service delivery, and opportunities to drive standardisation across many agencies and optimise staff levels.

Which of these, though, remains relevant when technology has moved to consumption-based Software as a Service? Today, SaaS inherently embodies scalability, continuous support and updates, process automation through advancements like embedded artificial intelligence, and built-in standardisation, governance, and audit processes.

Dr Sweeney contends that the shared services paradigm in government requires a comprehensive rethink, advocating for a new model aligned with contemporary understanding.

It is important to note shared services come in many shapes and sizes. Some have proven more adaptable to technology changes. TechnologyOne, for example, supports an arrangement with federal government agencies built around standard terms and conditions and a standard configuration used by agencies ranging from 30 to 8000 staff.

In Queensland, the Corporate Administration Agency supports more than 20 agencies on a cost recovery basis with a lean but efficient team. In both cases, all agency customers have successfully transitioned to SaaS. Other shared services, though, can have a staff of more than 1000, which makes change much harder.

A little over a decade ago, government agencies were slow to embrace the first generation of cloud computing, citing reasons ranging from security risk to sunken costs. Eventually, it took the intervention of ministers to overcome institutional inertia.

Successive federal ministers took leadership, making policy changes that culminated in a ‘cloud-first’ policy direction, which Covid helped fast track.

Similarly, shared services are usually delivered by agencies within government that is set up for that purpose. Those same groups are often primary sources of advice to Government about future investment approaches and needs.

It is understandable that they are not likely to lead calls for a robust review of everything they do. Rather, they are more likely to seek to fit a completely different generation of technology into their existing model.

The cracks in that approach are inevitably going to become impossible to ignore. Hammering that square peg of SaaS into the round hole of a 30-year-old shared services approach will be their upcoming challenge.

Dr Sweeney does however see a valuable future role for shared services in providing whole of government skills that are often lacking in individual agencies, whether that’s serving as a connection between different agencies, sharing information, governance, and best practices.

They can help agencies whom we know are under-resourced in cybersecurity by offering support in policy, governance, auditing, and daily security operations. Additionally, they can act as a mediator for data exchange between agencies and support open data initiatives.

The conversation is starting to happen in government, as shown by Finance and Public Service minister Katy Gallagher’s call last month, but too slow and too few for us to be confident there will not be poor investment decisions made. Digital ministers, take heed. This is likely to be a conversation leaders will need to ignite.

Ed Chung is managing director and chief executive office at TechnologyOne.

Do you know more? Contact James Riley via Email.

Leave a Comment

Related stories