Outsourcing for Radical Change: A Bold Approach to Enterprise Transformation

There’s More to Be Done

The results from transformational outsourcing speak for themselves, and the leaders who have achieved these outcomes deserve our praise. But there’s more to be done. The motivation for understanding how to make transformational outsourcing work in the public sector isn’t just more effective outsourcing, it’s more effective government. When executives around the world are asked to describe a ‘‘massively more effective government,’’ many agree on the broad strokes of a vision. One Australian executive put it best: ‘‘Government services are information-rich. The developments with the Web and the convergence of information technology and communications provide significant opportunity for massive changes. Borders and distance become irrelevant when services are provided electronically.’’ Forward-looking executives anticipate:

• Informational Services Provided Virtually. Many of the world’s governments have placed this objective squarely in the crosshairs with aggressive e-government initiatives. Services like marriage licenses, business registrations, and motor vehicle transactions have moved to the Web en masse, and leading governments have gone much further. Singapore’s Supreme Court, for example, notifies lawyers by Short Message System (SMS) messaging and e-mail about proceedings. It also uses a form of secure videoconferencing to enable them to attend court sessions without being physically present.^[6]

• Coordinated Solutions, Not Fragmented Services. No matter what services the citizen needs, and what government organizations provide these, citizens and businesses will be able to get complete, orchestrated services that make internal government boundaries invisible. This coordination will apply to policy and regulation as well through consolidation and streamlined legal structures, tax collection, and security processes. As a U.S. state executive describes, ‘‘Fifty-eight California cities collect property tax with 58 different property tax systems. There ought to be one. The huge improvement will be aggregation.’’ Canada already provides a Web site for benefits recipients that gives them a comprehensive picture of their entitlements; it spans across agencies and across national and provincial levels of government.^[7]

• Most Important, More Choice. Citizens and businesses will be able to choose levels of service and pay accordingly. As with school voucher systems, they will substitute private for government-provided services. Ultimately, they may be able to choose services from governments out- side their own geographic region. For example, the German postal system already competes with the U.S. postal service as well as UPS and FedEx for package delivery. The entrepreneurial Belgian Post has subsidiaries that provide direct marketing services, document processing and work-flow consulting, specialized distribution for publications, and software solutions for managing mail.

To move in this direction, governments will need an information architecture that enables them to synthesize data from disparate and widespread sources. This obligation becomes even more urgent as governments undertake transformational outsourcing initiatives. Why? As the number of different public and private organizations involved in service delivery grows, the need for coordination expands geometrically. Without a comprehensive understanding of the information jigsaw, governments will never be able to orchestrate good service delivery, either physically or virtually.

Progressive government executives are already laying the groundwork for this radically different information requirement. They are focusing on managing information, not infrastructure, and they are explicitly addressing the information implications of outsourcing. To get the right foundations in place, government leaders should start immediately to:

• Build public-sector information management expertise. They will need information and the ability to use it to survive in tomorrow’s government. An executive in New South Wales, Australia, cautions: ‘‘We outsourced IT for an organization that manages children at risk. The department of finance drove the effort, and they were not discerning about where they drew the line. They never should have outsourced the database. We had to bring it back.’’ Another Australian continues: ‘‘Whether you do core services in-house or out doesn’t really make a difference. But there are some areas of expertise and data knowledge where you need the skills in-house.’’

• Drive interoperability across government boundaries through information architecture. A U.S. state chief technologist has implemented an information architecture that moves disjointed agencies and departments toward just enough consistency to be interoperable. ‘‘We now understand that we’ll be judged by the same yardstick as the private sector when it comes to service delivery. How many Web sites do you have to visit to plan your vacation? One. That’s how many you should have to visit to take care of the details of moving to our state.’’

• Establish an information framework that enables outsourcing. As part of strategic outsourcing initiatives, executives should work with outsourcing providers to define their information obligations. By keeping a company grip on the information in-house, executives can substitute visibility for control and comfortably lighten their touch on service operations. As the value network of outsourcing partners expands, governments will be well positioned to coordinate services and outcomes through an information hub.

Now more than ever, citizens are looking to their governments for leader- ship. We expect our public servants to institutionalize management practices that foster good decisions. We expect them to have sound relationships with private-sector companies to get the right things done right. And we expect them to have the information they need to orchestrate excellence over the long term. In today’s fiscal pressure-cooker, some government leaders are turning to outsourcing to radically and rapidly transform the way they work. We applaud their progress. Now we want them to leverage their outsourcing experiences to drive step-change improvements across government agency silos. In the words of one thoughtful public-sector executive, ‘‘The large, traditional, infrastructure- heavy, investment-eating organization is the past; the lean, virtual business model is the future. Government has a bundle of cash flows and obligations and values, and you can shape them deliberately to get the outcomes you want. Outsourcing is one way to completely change the boundaries.’’

^[6]‘‘eGovernment Leadership: Engaging the Customer,’’ Accenture Government Executive Series report, April 2003.

^[7]Op cit. See www.canadabenefits.gc.ca.