Leading the transformation of the civil service finance function is a challenge, but one worth taking on, explains Connie Costello
On 30 September 2016, the Minister for Public Expenditure and Reform announced that the Department of Public Expenditure and Reform had taken a significant step towards the modernisation of Government financial management administration. The Government had just awarded a contract to Accenture to build and implement a new single ‘best in class’ financial management system, based on Oracle technology. This followed the validation of the business case to establish a Civil Service Finance Shared Service Centre, which was approved by Government in January 2016.
Forty-eight public service bodies will be serviced by the Finance Shared Service Centre. These include all government departments together with a number of agencies and offices. The introduction of a single finance technology platform will replace 31 existing finance systems across those government departments, agencies and offices.
The Finance Shared Service Centre will operate standardised finance processes and common accounting definitions. When fully operational, it will process approximately 625,000 invoices and account for in excess of €50 billion in gross expenditure. Furthermore, the Finance Shared Service Centre will be staffed and managed by civil servants. It will be based in existing shared services offices in Galway, Tullamore and Killarney and will operate under the governance of the National Shared Services Office.
When fully established, the centre is expected to deliver annual savings to the Exchequer of approximately 33%, c. €15.4 million per annum. This will be achieved through a reduction in the cost of support for existing finance technology and a reduction of approximately 25% in the number of staff involved in finance processing and administration. These staff will be redeployed to fill vacancies across the Civil Service. In addition, there will be movement of staff from existing’ finance functions into the Finance Shared Service Centre, in particular in Galway, Tullamore and Killarney.
The new centre will deliver significant improvements in the efficiency and effectiveness of the government’s finance function. These include:
- Providing greater flexibility and strategic capability to respond to new and emerging requirements in a more consistent, timely and cost-effective manner. This will be based on a common chart of accounts and the capacity to support e-invoicing and e-procurement;
- Enabling Government to meet its current and future finance commitments, such as those emerging from the IMF Fiscal Transparency Assessment and EU Standards and Codes for Government Accounting;
- Improving resilience and sustainability by consolidating capability and building capacity to take advantage of the latest methods and models of ICT delivery, such as cloud computing, in order to drive greater innovation;
- Providing improved financial information and insights to support informed decision-making within government departments and public service bodies, and across central government;
- Realigning finance functions within government departments and public service bodies to focus on higher value-add activities; and
- Reducing costs, improving performance and increasing financial control through sharing processing capacity across collocated resources and standardising processes on a common technology platform.
This move will enhance decision making by enabling finance teams with improved analysis of expenditure and public finances, allowing them to focus on strategy. Meanwhile, the Finance Shared Service Centre will espouse a strong service management culture, focused around the needs of the clients’ and their Accounting Officer.
The provision of shared services, led by the National Shared Services Office within the Department of Public Expenditure and Reform, is a central principle of the government’s reform programme. There are two existing shared service centres in the Civil Service – within the National Shared Services Office, PeoplePoint provides HR and pensions administration for 34,500 civil servants, while the Payroll Shared Service Centre administers payroll and related payments for over 100,000 payees, including 57,000 pensioners.
Transformation and change challenges
This is a significant finance transformation programme, moving 48 organisations – all with their own way of working – to a new, standardised world. The challenge for the Finance Shared Service Centre is to build the capacity and capability to process all public service body finance transactions. There has been significant engagement by all public service bodies in the system design and the overall approach has been based on strong collaboration within the finance community.
The design of each module in the system (purchasing, accounts payable etc.) has been led by process design working groups, which are composed of experienced civil service finance staff from a range of public service bodies. These process design working groups are facilitated by project team subject-matter experts who consistently apply the key principles of the design process – standardise, simplify and automate.
A process design advisory group comprised of finance officers from a number of public service bodies will review the final design recommended by the process working groups. This extensive collaboration is producing a system designed to meet the needs of all clients, while not losing sight of the key benefits to be achieved from standardisation. The 48 public service bodies will migrate in roughly five waves over a three-year period, commencing in 2018. The Department of Finance, the Department of Public Expenditure and Reform and the Office of the Comptroller and Auditor General will be among the first organisations to be served by the new Finance Shared Service Centre.
Significant change management support is required to ensure that a public sector body is adequately prepared for the transition to the Finance Shared Service Centre. To that end, each public service body will appoint a project/change manager who will work with the project change management team to support the public service body as it transitions to the new financial operating model. The role of the project change management support team is to ensure that each public service body knows what it has to do to prepare to go live and also to provide support on that journey.
There is significant engagement on-going with senior stakeholders in each of the 48 public service bodies. This is to ensure that they have a full understanding of the journey their finance teams and organisation is about to undertake.
Finance operating model
The establishment of the Civil Service Finance Shared Service Centre will bring about changes to the Civil Service finance operating model. The finance function in each of the 48 public service bodies will undergo a redesign to ensure it is prepared for its new role and is structured to fulfil its responsibilities. The project team will work with a representative group of finance officers from the public service bodies to agree the key design principles and the methodology to be applied in advance of the build of the ‘new’ finance function in each organisation. The ’new’ finance function must be fit for purpose and meet the statutory requirements of the Secretary General or CEO (Accounting Officer) of the public service body.
Inevitability, a redesign process such as this will identify gaps in existing staff skill sets which need to be addressed through training and development programmes. However, it should open up opportunities for staff movement across public service bodies. The future scenario is one where the Civil Service finance community will operate one finance model on one technology platform, which will be based on a common Chart of Accounts. This will be supported by one business intelligence system.
As previously stated, the Finance Shared Service Centre will be located in Galway, Tullamore and Killarney. Recruitment is expected to commence across all three locations in late Q3 2017 and to continue annually until the Finance Shared Service Centre is fully established and all client operations have been migrated. The recruitment process will run in conjunction with the Public Appointments Service and will seek accountants at all levels, including qualified accountants with experience in shared services, recently qualified accountants, graduates who would like to engage in further development and non-graduates who are interested in pursuing an apprenticeship programme. Interested persons should register on the Public Appointments Service website in order to receive a notification when roles are advertised.
There will be a wide range of roles and career development opportunities within the Finance Shared Service Centre and the wider National Shared Service Organisation, which will be open to both existing civil servants and new recruits. Increasing the number of professionals within the wider Civil Service is a key deliverable from this finance transformation programme.
The scope and ambition of this finance transformation programme is significant and therefore requires a controlled delivery approach, the application of best practice programme and risk management methodologies, strong sponsorship, and ongoing commitment from government and departments. The programme is sponsored by the Department of Finance and the Department of Public Expenditure and Reform. Lessons learned from earlier shared service implementations in the public sector and best practice approaches are being adapted to minimise the inherent risks associated with implementing a Finance Shared Service Centre. There is stringent management of scope, and a rigorous focus on adhering to the key design principles of standardisation and minimal customisation.
Connie trained in Deloitte before embarking on a career in financial services, which spanned just over a decade. Her career saw her hold senior management and executive financial and product development positions in a number of large financial organisations including Bank of Ireland, First Active plc and Ulster Bank.
A constant theme in Connie’s career has been the delivery of change programmes, which range from cost efficiency programmes to revenue-enhancing opportunities. Connie moved to An Post in 2007, prior to the global financial downturn. Her initial task was to transform the finance function, changing divisional finance teams from traditional finance administration and reporting functions to valued business partners who could identify the management information necessary to inform key business decisions. This role was quickly overtaken by the requirement to lead a significant transformation programme with a target reduction of 2,600 full-time employees, or 25% of the organisation’s headcount. This involved challenging union negotiations, with Connie responsible for delivering rationalisation opportunities in the finance, human resources and payroll divisions, the objective being to consolidate administration activities into centres of excellence.
While it was a very challenging environment, Connie is now leveraging her skills to lead this large-scale civil service finance transformation programme.
Connie Costello is Director of the Civil Service Transformation programme.
This article was originally published in the August 2017 issue of Accountancy Ireland.