The state government’s failed shared services scheme will be completely decommissioned and its managing office shut down by the end of 2013 at a cost of $90 million.
A steering group led by Department of Finance director-general Anne Nolan has been allocated $89.9 million to extract about 60 government agencies from the Office of Shared Services – which the government decided to axe last year.
Ms Nolan told WA Business News all the agencies rolled in to the scheme would be reinstated with their own IT systems and processes for back-office functions by the end of next year.
Of the approximately 90 agencies in total that were expected to roll in, only 59 had been rolled in to the service since it was launched in 2005; 58 had been set up with shared finance functions, one with procurement only.
Of those, 37 had progressed on to the full shared service, including human resources and payroll.
All agencies have already been handed back responsibility for human resources, which Ms Nolan said was the easier bit.
The real “meat and bones” of the challenge of decommissioning is moving from the Oracle finance and payroll system and allowing agencies to install systems of their own choice.
The aim was to have the first six agencies transferred successfully by the end of the year with the remainder completed by the end of 2013.
At that point the Office of Shared Services, which sits within the Department of Finance, would cease to exist.
Despite the plan for shared services resulting in a resounding failure costing upwards of $440 million (it was intended to cost only $82 million when first mooted), Ms Nolan said she was hopeful decommissioning the service would be a “happy-ending story”.
“It’s about doing things efficiently and delivering services effectively, where the model fell down was that it didn’t deliver the services required by agencies,” she said.
Ms Nolan said agencies became frustrated with the lack of service and errors within the payroll module of the system.
“If you have got a resulting solution where you are not delivering services, the service recipients become antagonised and so upset that it turns into a dysfunctional environment,” she said.
But she said the good news was that some agencies were choosing to work together to procure shared services.
“If you mandate agencies to do this sort of thing without fully understanding what they need, it’s probably not going to work, but if they’re left with some choice, agencies are more likely to choose to work together,” she said.
“What we are finding is that it’s very important to match the complexity of the system with the complexity of the agency – rather than saying one size fits all – which is probably one of the shortcomings of the previous model.”
The office had negotiated extended licences with Oracle to ensure the system was still supported until the end of 2013.
But, even if agencies chose to keep working with that system, they would be provided with a completely new updated model.
Ms Nolan said it was important to note that the failure of the project was not a reflection on the 400 staff who had worked to implement the
shared service but rather the implementation plan and business case that was put in place at the outset.
The OSS project was initiated by the Labor government in 2005 when then treasurer Eric Ripper said it would cost $82 million, be completed in 2007 and deliver annual savings of $57 million, largely as a result of reduced staffing in government agencies.
Slow progress and rising costs prompted a review by the Economic Regulation Authority early last year, which said the initial plan was fundamentally flawed and recommended decommissioning would be the least costly option.
Premier Colin Barnett supported the conclusion and announced the government would write off the $440 million already spent on the project up until July 2011 and abandon the plan to centralise the back-office functions.
