Decentralization could potentially offer superior results when it comes to providing general public services by the government.
The Trump administration has proposed a new approach to government services, aiming to create marketplaces of service providers in financial management, HR, grants, and cybersecurity. This model, known as the shared services model, is designed to offer several advantages over the traditional centralized services.
The shared services model provides improved transparency, expectation setting, and accountability with customer organizations and end users, as established through service level agreements (SLAs). This is a significant advantage over centralized services, where there is no negotiation of terms with customer organizations or end users during the consolidation process, leading to a suboptimal alignment of services with customer needs and expectations.
One of the key advantages of the shared services model is a greater incentive to reduce costs. By encouraging competition among service providers, it fosters a competitive environment that drives down costs. In contrast, centralized services lack this competition, potentially leading to less cost savings and efficiency.
The shared services model also offers better alignment of services with customer needs and expectations. Unlike the centralized model's top-down, one-size-fits-all approach, the shared services model is more likely to align services with customer needs and expectations.
Consolidation of common services across the government is a major initiative, with executive orders issued to centralize acquisition services, financial management transactions, and human resources operations. However, a centralized governance structure is necessary to get the most out of a shared services model. Historically, a centralized "monopoly" model in government has led to suboptimized service quality, cost savings, and other business outcomes.
A Quality Services Management Office has been established to set standards, a performance management framework, and serve as a gatekeeper for entrants into each marketplace. SLAs in a shared service organization are driven by upfront standardization of policy, process, and data, and are negotiated between the SSO and its customers.
The new approach has been praised by Gartner in their report "Three Advantages of Shared Services Over Centralized Services" from 2021, authored by Holly Muscolino. According to Gartner, the shared services model, as compared to centralized services, has a distinct advantage in terms of customer service, performance management, and continuous improvement.
The Trump administration's management agenda is focusing on government reorganization and reform, acquisition reform, Buy America, and IT modernization. Cost-cutting and efficiency improvement are key components of the government reorganization and reform efforts. This new approach to government services is designed to promote competition among service providers and provide opportunities for industry to infuse the latest technologies and services.
Agencies were given the freedom to choose their preferred providers, either government or commercial. However, the new Trump-2 approach centralizes services in government agencies, eliminates customer agency choice of providers, and provides uncertain and potentially less attractive opportunities for industry to participate.
If implemented successfully, both the marketplace and centralized models could improve efficiency, reduce duplication, and free up agency leaders to focus more on mission performance. The shared services model, with its focus on competition, customer service, and continuous improvement, offers a promising approach to achieving these goals.
