Shared services, many of which are public-private partnerships (PPPs), involves centralizing functions once performed by individual organizations—municipalities, departments, or other entities. In day-to-day operations, problems and opportunities arise that are ideal for this kind of collaboration. The abundance of possible shared services and partnership opportunities can be overwhelming, however, and it can be difficult to identify which projects to try.

This article tells how one organization—the North Central Texas Council of Governments (NCTCOG)—has navigated questions and issues such as this one and discovered the factors that lead to successful service sharing. NCTCOG serves 240 member governments, of which 170 are cities. It has had the opportunity to spearhead a large number of shared services and PPP initiatives, and this article outlines some of the lessons learned. Although NCTCOG is large, the approach outlined here can be applied on a smaller scale as well.

Shared services fulfill NCTCOG’s mission to strengthen the individual and collective power of local governments and to help them recognize regional opportunities, resolve regional problems, and make joint decisions. These initiatives are primarily designed to solve common needs of NCTCOG’s member governments, but they often reach a statewide audience as well.

Steps for a Successful Collaboration

A common recipe for success can be applied to any collaboration effort. By nature, however, shared services have elements that apply exclusively to each individual project. For a project to be successful, it is best to tailor an approach that takes individual differences into consideration for each shared services program.

After identifying a problem or opportunity that can be remedied through a shared services approach and identifying the local government stakeholders, NCTCOG functions as the coordinating organization. The next step is to determine which entity or entities—also called “organizations” in this article—can serve as project champion(s). Project champions need to be recognized leaders within the stakeholder community because they are crucial for the success of any shared services project, as they lend both credibility and energy to the project.

Create a Winning Approach

When deciding whether a proposed shared services project is feasible, NCTCOG and the prospective participants use these criteria:

• Does it have the potential to save money?
• Does it have the potential to provide equal or better service levels?
• Can a governance structure or operational process be devised that assures that the participating local governments share in the control of the program?

If these questions can be answered in the affirmative, then the participants proceed to the next step.

Develop the Request for Proposals

The request for proposals (RFP) process begins with research by the coordinating/planning organization, the project champions, and any other entity that wants to participate in identifying potential solutions to the chosen problem or opportunity. This leads to an understanding of the project dynamics and sets the stage for initial discussions with prospective private and public sector service providers. Conversations with service providers allow insight into opportunities for standardization and other cost-saving measures while validating the parameters necessary to create a credible RFP.

Identifying opportunities for standardization is one of the most important due-diligence steps, and it should be performed collectively. The 80-20 rule is a good guide for assessing opportunities for standardization. In other words, ferret out the things that each participant does in common 80 percent of the time so that they can be the focal point for maximizing efficiencies and economies of scale.

Next, it is essential to visit with the potential service providers to get their input on the program being suggested and to gain an understanding of how they would deliver the service. Doing this allows potential failure points to be exposed. It also ensures that the RFP does not inadvertently limit the opportunities to provide an innovative and cost-effective approach to solving the problem.

It is recommended that a significant amount of time be spent with the subject matter experts (SMEs) and the technical experts from potential service providers during this step. Opportunities for cost savings using this approach will generally be significant.

When the due diligence has been performed, a nonbinding statement of interest is sent to potential users of the service. After these statements are returned, the information is summarized for the RFP. One critical piece of information for the responders is an indication of the volume of activity or transactions that can be anticipated, as this will be important as pricing discounts are considered.

Participation usually far exceeds the initial statements of interest that are returned. As the RFP is developed, it may take several iterations to reach a version that satisfies all groups; therefore, maintaining some flexibility will allow for creative responses. The RFP should also be scalable to various group sizes.

After the RFP draft is completed, it needs to be reviewed by the participants or a representative committee to create the official version. It is helpful for the committee to be composed of SMEs. For best results, they should be from entities of varying sizes in order to gain multiple perspectives concerning the shared services initiative.

After responses to the RFP have been received, a selection committee should meet to review the submittals. Proposals should be scored on the basis of predetermined selection criteria so that scoring will be unbiased.

Test with a PILot program

It is often a good idea to assemble a pilot group to participate in the initial implementation, again including entities of various sizes. Pilot programs are an excellent way to discover unforeseen problems and remedy them before rolling out a program to a larger audience.

During this implementation phase, encourage communication among the stakeholders to get a reading of components working well and those in need of improvement. These are ready-made networks for exchanging ideas and information and are invaluable during the process. When the pilot has proved successful, a more robust rollout can be initiated.

Streamlining

Streamlining administrative activities is one of the biggest opportunities for shared services. Here are ways to streamline access to the project:

• The planning organization executes a master agreement with the selected service provider, and it is structured to allow the participating organizations to gain access through interlocal agreements.
• The participants execute an interlocal agreement with the planning organization.
• The participants can then engage the service provider through a service agreement to perform the required services.

A facilitator normally assumes responsibility for many of the administrative duties that would ordinarily be done by an individual organization or a service provider.

Benefits for Participating Organizations

Participating entities can benefit significantly from shared services. Because individual purchasers are consolidated into an organized, volume-purchase arrangement, the participants are able to realize lower prices while still benefiting from a high-quality provider. This approach also eliminates the need for each entity to go through an individual procurement process and to incur the costs involved in issuing an RFP and evaluating proposals. This is especially true for small to medium-sized organizations.

NCTCOG has been able to leverage the collective bargaining power of several groups to negotiate a lower price for the contract. Given the importance of cost reduction during difficult economic times, it’s notable that NCTCOG’s shared services programs have been able to generate savings of 25 to 50 percent for participants.

Benefits for the Service Provider

The service provider benefits by being able to reach many organizational clients with just one proposal, thus increasing its market penetration and enhancing its ability to sell other services in the future. The provider also benefits from the standardization of operations in the shared services arrangement, which reduces its risk and allows better pricing for the participants.

The clients also can forgo the expense of conducting individual contract negotiations. All of these factors give a service provider ample motivation to respond to an RFP and to partner with the planning organization.

An Example of NCTCOG Shared Services

The iCommunities program created an extensive Internet mapping service that was combined with a set of powerful GIS, database, and Internet technologies. These tools allow local governments to distribute key information to their constituents and other communities in the region.

Residents are able to access specific neighborhood information such as zoning, building and activity statistics, and event notices. Information can be distributed to organizational staff on various program, asset, and work management activities. Traditionally, establishing a tool such as iCommunities would mean that each entity would incur hefty costs for hardware, personnel, and networking. Through this shared services program initiated by NCTCOG, cities can have ready access to this powerful tool for a low cost.

Participants pay a fee to support one network and a group of technicians who serve the entire participant list. As individual participants request additional functionality from the iCommunities program, the enhancements become available to all participants. A base-level functionality is automatically applied to all participants.

Additional functionality is offered on a fee basis; specific features can be set up to accommodate unique needs of a specific organization and costs charged according to complexity and extra support needs. The sharing of knowledge and innovation is one of the most positive by-products of this collaboration.

Strategy for Success

Consider this course of action for shared services success:

1. First and foremost, underpromise and overdeliver! It is important to establish achievable results. If you set unattainable milestones or goals, you can undermine your credibility.

2. Begin the procurement process with the end goal in mind. Look toward the future throughout the RFP research, development, and scoring process. With forethought, you can avoid many of the traps and delays that can evolve during the process. Look for opportunities to standardize, because standardization is usually one of the largest contributors to reducing risk and achieving cost savings.

3. Use a grassroots approach based on a crawl-walk-run philosophy. It is best to start with a small pilot group and perfect the program before rolling out to a larger audience. Project champions are crucial in building a strong foundation for shared services projects as they have a real interest and commitment to performing the due diligence necessary to support the program and to assure its success.

The NCTCOG experience can be used as a model by other local governments that want to navigate the shared services options available today.