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16 E-Government Implementation in
Times of Change
The Role of Shared Services in
Transforming Government
Anton Joha and Marijn Janssen
CHAPTER OVERVIEW
Governments are looking for ways to reduce costs without eroding service
provision. This vision is founded in the Whole-of-Government Approach
(WGA) in which an integral perspective on government is taken and in
which activities are bundled which were previously fragmented. Shared
services have been embraced for realizing this as the basic premise is that
decentralized services can be bundled into a semi autonomous business
unit and provided to many users. Using shared services requires extensive
transformations, yet there is little known about these transformations.
In this chapter, we examine an in-depth case study of the largest shared
service center (SSC) for human resource management (HRM) within the
Dutch central government, a project that initially failed and only became
successful after redefi
fining the scope, governance, and implementation
strategy. We describe the initial plan to implement the HRM SSC and
the reasons why this transformation initially failed by identifying the les-
sons learned from a strategic, organizational, political, economic, and
technical perspective. We then describe the change and transformation
management process that was required to re-design and re-initiate the
SSC in a diff
fferent form. Finally, we discuss the role and effects the SSC
had on the WGA.
1 INTRODUCTION
Especially in the current economic climate, governments are continuously
looking for ways to work more effi
c
ffi iently and eff
ffectively by reducing costs,
while at the same time maintaining or even improving customer service lev-
els. Shared services have been embraced for realizing organizational trans-
formations by bundling decentralized services into a semi-autonomous
business unit that can be reused by many agencies, therefore avoiding the
need to develop and maintain similar services many times. Transformational
212 Anton
Joha and Marijn Janssen
government encom
t
passes a broad perspective of public administration, in
which structures are radically changed (Irani, Love, & Jones, 2008; Weer-
akkody & Dhillon, 2008; Weerakkody, Janssen, & Dwivedi, 2011) and an
essential element of this is the reengineering of back offi
ffice processes and IT
systems (Weerakkody et al., 2011).
The aim of the research presented in this chapter is to show the nec-
essary changes that are required when introducing and implementing a
shared service center (SSC). To this end, we examine an in-depth case
study of the largest shared service center for human resource manage-
ment (HRM) within the Dutch central government (P-Direkt), a proj-
ect that initially failed and only became successful after redefi nin
fi
g the
scope, governance, and implementation strategy. The lessons learned
from the implementation are identified and the role of shared services for
transforming government will be discussed. The research conducted in
this chapter has an explorative-descriptive nature. We investigated a case
study involving the introduction of an SSC and studied documentation,
in this way creating a retrospective view on the decision process that
should contribute to the understanding of such processes.
The structure of the chapter is as follows. In the following section we
discuss the background of transformational government and how the
concept of shared services fi
fits into this. Section 3 presents the research
approach, whereas in Section 4 our case study is introduced. In Section 5
the case study is further analyzed and discussed, and fi
finally, in Section 6,
conclusions are drawn.
2 BACKGROUND
2.1 Transforming Government in the Netherlands
In the Netherlands there have been many changes in the organization of
the central government over the past decades. All of these changes can
be characterized by participative approaches in which coalition of usu-
ally two or three political parties were in charge. In situations in which
coalitions of diff
fferent parties are in control, only incremental changes
&n
bsp; can be made. This change strategy is found in the very nature of the
Dutch political and cultural landscape in which creating consensus is an
important aspect. Driven by the fi
financial crisis, the ambition of govern-
ment is to lower government spending and to reduce the administrative
burden for businesses and citizens. Therefore, the next challenge is to
transform government. This vision was founded in the Whole-of-Gov-
ernment Approach in which an integral perspective on government was
taken as a response to the fragmentation (Christensen & Lægreid, 2007).
Three spearheads for this policy were defi
fined to transform government
(Donner, 2011):
E-Government Implementation in Times of Change 213
1.
Creating a government-wide infrastructure enabled by shared services;
2. Bundling supporting services driven by process harmonization and
standardization;
3. Avoiding task duplication among execution and enforcement agencies.
2.2 Shared Services for Transforming Government
Shared services are an important strategy for creating WGA and in many
countries the promising benefi ts
fi of sharing services resulted in the estab-
lishment of SSCs. By unbundling services and then concentrating them in a
semi-autonomous business unit, the basic premise for shared services is that
services provided by one department can be provided to others with relatively
few eff o
ff rts (Bergeron, 2003). This could result in service quality improve-
ments as well as cost reduction (Janssen & Joha, 2006). Public sector organizations act as service requesters, users, and share their role as service provider
by joint development, operation, and control of a shared service center.
The choice for sharing services is a major decision having a long-term
and strategic impact, which often competes with outsourcing arrangements
(Janssen & Joha, 2006). Just as in outsourcing arrangements (Baldwin,
Irani, & Love, 2001; Fowler & Jeff
ffs, 1998; Hirschheim & Lacity, 2000), the
intended benefi
fits are not always met, and there are many factors aff ec
ff ting
the decision making, as the different stakeholders have diff eren
ff
t resources,
capabilities, needs, interests, and goals (Janssen et al., 2007).
3 RESEARCH APPROACH
Given the need to understand the development of SSC arrangements, a qual-
itative approach based on in-depth case study research was adopted for this
research (Yin, 2003). Case study research is one of the most common quali-
tative methods used in information systems (IS) (Orlikowski & Baroudi,
1991) and particularly well-suited for IS as the focus is on understanding a
system in an organizational context (Benbasat, Goldstein, & Mead, 1987).
This research was primarily based on document collection and evaluation
in a qualitative setting. There are many theories underpinning sourcing
theory (Baldwin et al., 2001; Hirschheim & Lacity, 2000; Lee et al., 2003)
and given that SSCs can be considered as a sourcing arrangement, we opted
to use Baldwin et al.’s (2001) model to examine documents about P-Direkt
and acquire a good understanding of the strategic, organizational, politi-
cal, technical, and economic aspects as well as issues and problems faced
during the SSC initiation and implementation process. This approach is
consistent with guidelines for qualitative research suggested by researchers
such as Miles and Huberman (1994) and Baskerville (1999). They propose
the study of offi
fficial publications, organizational records, documents, and
reports to identify detailed descriptions of people’s activities, behaviors,
214 Anton
Joha and Marijn Janssen
actions, and interactions within and around the organization. The analysis
of documents regarding P-Direkt allowed the creation of a retrospective
view of the decision and implementation process that contributed to the
understanding of SSC arrangements.
4 CASE
STUDY
Mid 2003, the Dutch government decided to combine the personnel regis-
tration and salary administration of different ministries and to automate
procedures such that staff memb
ff
ers could independently request leave or
retrieve salary information (P-Direkt, 2002; 2003). By centralizing human
resource management and giving staff a s
ff
elf-service function, the govern-
ment hoped to save approximately 400 million euro by 2015. Figure 16.1
provides a simplified model of the HRM SSC that is called “P-Direkt.”
The design and development of the ICT infrastructure of the SSC was con-
tracted out to a third party, and in September 2004 a contract was signed
with a consortium of two IT service providers for the development and main-
tenance of the IT infrastructure underlying the HRM solution. After not
meeting diff eren
ff
t milestones and many discussions regarding the progress of
the project, this contract was terminated in October 2005. At that moment,
the project was stopped and the Minister was ordered to do an investigation
into the failure of P-Direkt. He also expressed that the government wanted
to continue with the project to achieve the initially estimated cost savings.
After a year of investigations and redefi
fining the project plans, P-Direkt was
re-initiated in the beginning of 2007. Compared to the fi rst
fi
implementation
plans in 2004, changes were made regarding the scope, governance, and
implementation strategy. Using an incremental growth model, P-Direkt was
User 1
check HR information
Self-service portal for
User 1User 2
check HR information
personnel and salary
information
User 1User 2User n
check HR information
HRM SSC P-Direkt
User 2User n
Ministry 1
pay salaries
User n
Ministry 2
pay salaries
Salary administration
pay salaries
Ministry n
Figure 16.1 Simplified
fi model of the HRM SSC P-Direkt with its customers.
E-Government Implementation in Times of Change 215
able to become a mature SSC organization that is providing HRM services
to almost the whole of the Dutch central government nowadays. Table 16.1
provides a chronological overview of the diff eren
ff
t stages of the SSC. We can
diff eren
ff
tiate two main phases of the P-Direkt case study:
1. Phase I—Initiation of P-Direkt and its initial failure.
2. Phase II—Re-design and re-initiation of P-Direkt.
These two phases will be used to further analyze and discuss the lessons
learned in the next section.
Table 16.1 Chronological Timeline of the HRM SSC P-Direkt
Phase
Timeline
2001 and 2002
Political discussions took place a
nd reports have been
written about changing the HRM system of the
central government, by making it more efficient an
ffi
d
eff
ffective in diff erent ways, including the use of a SSC.
ff
January 2003
Political approval for renewing the HRM system of
the central government, where the initial plans are
mentioned for an HRM SSC.
July 2003
Final green light for the realization of the HRM SSC
that should be operational on the January 1, 2006.
March 2004
The design, implementation, and maintenance of the
ICT infrastructure will be outsourced to a third party
and only two consortiums are bidding on this project.
One of them decides to retreat as they consider the
I
fi nancial risks too high.
fi
September 2004
The only consortium left signs an outsourcing contract
regarding the ICT infrastructure for the HRM SSC,
which has now been renamed as P-Direkt.
December 2004
The architectural design of the ICT infrastructure for
P-Direkt is politically not approved, and it is decided
that the implementation date of the SSC will have to
be postponed to January 1, 2007.
October 2005
When he architectural redesign that was completed
by July 2005 was also not approved by the govern-
ment, the consortium decides to retract itself from
this process as no agreement could be made about the
next steps.
November 2005
The minister responsible for this project confirms t
fi
hat
he wants to go forward with the SSC and demands an
investigation into why the project failed.
(continued)
216 Anton
Joha and Marijn Janssen
Table 16.1 (continued)
Phase
Timeline
2006
During this year, diff erent investigations took place
ff
about the reasons for the failure of the SSC, the les-
sons learned and a redefi nition of the project in terms
fi
of the scope, the services and the implementation
strategy for the re-initiation of P-Direkt in 2007.
2007 and 2008
HR processes have been standardized and define
fi d
across most of the ministries. Also the governmental
II
personal systems (payroll, portal) have been devel-
oped and implemented.
Public Sector Transformation Through E-Government Page 37
