New White Paper from critically acclaimed author Jon Hansen on why Virginia's procurement policy succeeded when the majority do not. Who Can Benefit from this Paper? This white paper is an essential resource tool for public sector organizations that are already in the midst of an established program, or ones who are contemplating a change. Although they do not operate within the same framework of a public or government entity, private sector companies can also gain important insight as the principles of a collaborative methodology are universal in their applicability. Release Date: Nov. 2008 Author Contact Information: jwhansen@sympatico.ca

1. Ottawa, Canada
2008
Yes Virginia! A
Profile in
Excellence
White Paper
Jon W Hansen, Chief Architect
Hansen Consulting & Seminars

2. Yes Virginia! A Profile in Excellence
Table of Contents
SHARED SERVICES . . . ANOTHER NAME FOR OUTSOURCING?..................................2
THE EVA INITIATIVE: COLLABORATION OVER COMPLIANCE ……………………4
MORE THAN CENTRALIZATION . . . ....................................................................................5
AVOIDING THE PITFALLS OF A SHARED SERVICES PLATFORM .............................6
A PERSPECTIVE ON POSITIVE CHANGE...........................................................................12
THE BANDS OF PUBLIC SECTOR SUPPLIER ENGAGEMENT ......................................17
UNDERSTANDING AND QUANTIFYING STAKEHOLDER IMPACT …………………24
GOVERNMENT POLICY AND DOMESTIC CLUSTERS ………………………………...27
A NON-PARTISAN PLATFORM …………………………………………………………….33
RISK TRANSFERENCE: HOLDING VENDORS ACCOUNTABLE ……………………..36
MEASURING SUCCESS: SUBSTANCE OVER POSITIONING ………………………….39
PRIVATIZATION AND THE FLAWED NPM CONCEPT ………………………………..42
THE FUTURE OF PUBLIC SECTOR PROCUREMENT (CLOSING SUMMARY) ……47
ABOUT THE AUTHOR..............................................................................................................49
Appendices
1

3. Yes Virginia! A Profile in Excellence
Shared Services . . . Another Name For Outsourcing?
“Shared Services is different from the diametrically opposite model of
Outsourcing which is where an external third party is paid to provide a
service that was previously internal to the buying organization, typically
leading to redundancies and re-organization. There is an on-going debate
about the advantages of Shared Services over outsourcing. It is sometimes
assumed that a joint venture between a government department and a
commercial organization is an example of Shared Services but in fact they
are quite different. The joint venture involves the creation of a separate legal
commercial entity (jointly owned) which provides profit to its shareholders.
It is difficult to see what is being shared rather than bought. Such joint
ventures are really a form of outsourcing.”
Defining Shared Services
GNU Free Documentation License
Wikipedia Foundation Inc.
Last Modified: October 10th, 2008
2

4. Yes Virginia! A Profile in Excellence
The eVA Initiative: An Example of Collaboration Over
Compliance
In yet another example of the value of collaboration over compliance the
Commonwealth of Virginia was ranked alongside the States of Washington
and Utah as a top performer in the PEW Center’s Grading the States 2008
Report.
According to the PEW organization’s web site the report, which is designed
to assess the “quality of management in the 50 states,” focuses on four key
areas of government practice; Money, People, Infrastructure and
Information.
While all four are undoubtedly key elements of a sound foundation for
success, it is the people and information components that form the basis of
this report’s findings on why Virginia is the glowing beacon in a sea of
failed supply chain initiatives that has plagued organizations in both the
public and private sectors the world over.
Based on a series of interviews with key Commonwealth officials,
combined with extensive research of comparable government initiatives,
Virginia’s position that “Managing a state is just too complicated to yield to
one-size-fits-all-equations,” is elucidating in that it is both contradictory to
accepted mainstream thinking whilst being a key tenet of a program that has
and continues to exceed expectations.
This is a critical distinction in that a central coordination of understanding is
often mistaken as being part of an overall shared services strategy. In the
latter instance, there is usually a significant transformation component from
both a process and cultural standpoint, whereby the execution is coordinated
through a central group that then assumes total responsibility for delivering
the “service” to departments who in effect become internal customers. In
short, initiatives based upon the shared services model are in reality an
internalized outsourcing program.
In the case of the eVA initiative, a collaborative understanding of the unique
requirements of key stakeholders both within and external to the
Commonwealth, enabled the Virginian hierarchy to develop and implement
3

5. Yes Virginia! A Profile in Excellence
a model that maintained operational autonomy under a single technological
platform.
Once again, the important differences between a shared services approach
versus a collaborative exercise in which all stakeholders work towards a
collective “best result” outcome cannot be ignored as illustrated in a 2007
Journal of Information Technology article.
In an excerpt from that article, titled “e-government: towards the e-
bureaucratic form?” by Antonio Cordella, the author referenced the
consistently high-rate of public sector initiative failures when he wrote:
“Fountain (2001), for example, asserts that approximately 85% of
government information technology projects worldwide have been failures.
Similarly, the assessment of the case of the UK has recently highlighted that
e-government costs not only soar, but possibly even outweigh the stated
benefits it aims to provide (Rogers, 2003; Timmins, 2003). In 2007, the CIO
of the UK Department for Work and Pensions estimated a public sector IT
expenditure of d14 billion a year, with only 30% of the government’s IT
projects succeeding (Collins, 2007).”
In the end, empowering individual departments to work more effectively
toward a centrally established goal through a collaborative process is
proving to be far more effective that expending tens of millions of dollars
on usurping operational capacity through reduced budgets and arbitrarily
imposed compliance measures.
More than Centralization . . .
“Shared Services are more than just centralization or consolidation of
similar activities in one location. Shared Services can mean running these
service activities like a business and delivering services to internal
customers at a cost, quality and timeliness that is competitive with
alternatives.”
4

6. Yes Virginia! A Profile in Excellence
Avoiding the Pitfalls of A “Shared” Services Platform
In an attempt to address or explain the high rate of initiative failures in the
public sector, (it is worth noting that private sector outcomes have not fared
any better), Layne and Lee’s assertion that e-government reforms should be
viewed as “multi-layered projects that only provide the foreseen outcome
when all different phases of the move online of the government’s activities
are completed,” is questionable. (Note: Refer to the 2001 article by Karen
Lane and Jungwoo Lee titled, “Developing fully functional E-government:
A four stage model” in the appendices bibliography section.)
This is due primarily to the fact that even if one can in theory accept the
explanation that the high rate of initiative failures associated with the public
sector’s pursuit of performance scalability through a centralized operating
mechanism is a temporary hiccup on the road to eventual success, the
inherent flaw of the underlying New Public Management (NPM) principles
that govern the shared services mindset remains. (Note: the premise behind
the New Public Management axiom is that private sector processes
represents a model that public sector organizations should emulate as a
means of maximizing performance in key areas (re Key Performance
Indicators). The public sector’s move to a shared services platform has
largely been based on the strategy’s purported success in the private sector.
We will delve further into this area in the section titled “Privatization and
the Flawed NPM Concept.)
Therefore, it is reasonable to conclude Layne and Lee’s position that these
“temporary outcomes” will be overcome when the project has finally been
fully implemented is a combination of wishful thinking and irresponsible
prognostication. This is because a final or complete implementation often
remains an elusive carrot that is always just beyond the reach of the
implementing organization.
There are many case references illustrating how elusive a goal an end result
or project completion can be. One example is the SAP initiative that was
abandoned by Kings County, Washington after several years and the
investment of millions of dollars. Or the State of California’s Oracle project
that was scrapped after it cost the State tens of millions of dollars.
If anything, the temporary blip on the road to “inevitable” success promise
does more harm than good in that it can paralyze and ultimately delay the
5

7. Yes Virginia! A Profile in Excellence
About the Author
Jon W. Hansen has been generating substantial savings for companies since
he entered the high technology sector in 1983. Featured on CBC’s Venture
program for his innovative Procurement Programs Jon has held several
senior executive positions including that of President of a publicly traded
company. His well rounded experience and expertise has garnered critical
acclaim both domestically as well as internationally, including his being
honored as an Ottawa finalist for the Ernst & Young Entrepreneur of the
Year Award in 2004 and 2005.
Recognized as a leading North America Authority on improving supply
chain management Jon is often retained by organizations such as the
Purchasing Management Association of Canada (PMAC), and the National
Institute of Governmental Purchasing (NIGP) to provide seminars and
courses based on his highly popular Conference Series.
Jon is also author of the Procurement Insights Blog
(http://procureinsights.wordpress.com/) which reaches 300,000 syndicated
subscribers each month worldwide, and is currently available in English,
Chinese, Portuguese, Russian, Spanish and Finnish. The Blogged Rating
Service has ranked Procurement Insights as the top supply
chain/procurement blog in North America.
Linked In Profile: http://www.linkedin.com/in/jwhansen
© Hansen Consulting & Seminars Inc. 2008
6