speakers - AGA

Session W105 – Managing
Third Party Providers

Speakers
• Adam Goldberg, Department of the Treasury
• Dennis Coleman, Office of Personnel
Management
• Tim Soltis, Department of Education

Office of Personnel Management
Approach to Managing Third Party Vendors
Presented By:
DENNIS COLEMAN, CHIEF FINANCIAL OFFICER
UNITED STATES OFFICE OF PERSONNEL MANAGEMENT

Topics
• Background
• Governance Structure
• Relationship Overview
• Commercial Vendor Governance
• Oversight
• Monitoring
• Federal SSP Governance
• Oversight and Monitoring
• Conclusion
• Contact Information

Background
• OPM’s Blended Approach
• Procurement of Commercial Systems Integrator
in July 2008
• Deployment of modernized Core accounting
system in October 2009
• Transition of AP Invoice and Disbursement
Processing to Federal SSP in January 2013

Governance Structure
• OPM Project Lead
• OPM Systems
Lead
Management
Governance
• Systems Integrator,
Commercial
Vendor
• Federal Shared
Service Provider
• OPM Executive
Steering
Committee
• Government
Executive Sponsor
Execution
OPM Executive Steering Committee – Made up of
OPM Senior Executives
Government Executive Sponsor – OPM, Chief
Financial Officer
OPM Project Lead - Works in partnership with
systems integrator and Federal SSP on the overall
project and its deliverables
OPM Systems Lead – Responsible for managing
the CBIS system.
Federal Shared Service Provider – Responsible for
OPM invoice processing
Systems Integrator – Commercial Vendor
responsible for IT hosting and administration,
application management services and system
implementation services for CBIS.

Relationship Overview
Governance,
Oversight &
Monitoring
IT Hosting &
Administration
Application
Management
Services
System
Implementation
Services
Business
Transaction
Processing
OPM Chief
Financial Office
Systems Integrator
(Commercial)
Shared Service
Center (Federal)

Commercial Vendor Governance
Oversight
• Agency Director-Endorsed Executive Steering Committee
• Project Management Office
• Quality Management Plan / Quality Assurance Evaluations
(QAE)
• Operational Level Agreement (OLA)
• Service Level Agreement (SLA)
• Authorization & Accreditation (A&A) and continuous monitoring
for Security Assessments with dedicated DSO
• SSAE16 (formerly SAS70) obtained as part of initial award

Commercial Vendor Governance
Monitoring
• CFO Executive Review Meetings
• Investment Review Board (IRB)
• Capital Investment Committee (CIC)
• Change Control Board (CCB)
• Team Core Status Meetings
• Deliverables Management
• Earned-Value Management (EVM) Reports

Federal SSP Governance
Oversight and Monitoring
• CFO Executive Review Meetings
• Site visits
• Recurring Status Meetings
• Standardized Metrics
• Prompt Payment
• Cost Utilization Reports
• Audit Reviews
• Central CFO Correspondence E-mail Box
• Earned-Value Management (EVM) planned for the future

Governance Framework

Conclusion
• Lessons Learned
• Use of hybrid shared service partnerships and a
talented analytical workforce to deliver
comprehensive work products cost effectively
• Development of mutual performance indicators or
standards between Agency and Vendor and Agency
and Federal SSP
• Phased approach to transition of any/all services
• Benefits to using EVM to manage and control
Federal SSP

Contact Information

Selecting and
Monitoring a
Shared Service
Provider
Tim Soltis
Department of
Education

Agenda
• Entity Mission Objectives
• Phased Approach to Shared Services
• Factors to Consider
• Inventory Current Services
• Identify Feasible Shared Service Candidates
• Recommended Course of Action
• Recommended Conversion Strategy
• Establish and Monitor Service Level Agreement
• Common Issues and Impediments
• Success Factors

SHARED SERVICES
Shared Service
Definitions
Entity
Mission
Objectives
Customer
perspective
Obtain costeffective
and quality
services consistent
with organizational
mission objectives
Federal
Shared
Service
Provider
(FSSP)
17

Phased Approach to Shared Services
Data Source: Executive Office of the President - Federal Information Technology Shared
Services Strategy - May 2012 18

Good Reasons
•OMB Mandate –Consider
shared solutions for future IT
modernization efforts
•Aligns with entity strategic
goals and objectives
•Achieves benefits such as:
o Lower costs
o
Reduced complexity of
business processes
o Improved/more
predictable data quality
•Addresses other challenges
such as:
o Hard to hire /sustain staff
o
o
Heavy reliance on
contractors
Rapidly changing
technology
Factors to Consider
Not‐So‐Good Reasons
•Everyone else is doing it
•Service provider will fix
problems
•Avoid the need for a
reorganization or personnel
changes
•Advances in technology
alone in business segment
o Technology should be
seen as a mission enabler
19

Inventory Current
Services
1. Define
business
operations
into horizontal
lines of
business 2. Break lines of
business into
specific activities
and identify:
• Organizations and people
• Legacy systems and interfaces
• Manual processes
• Other related activities
3. Determine
Resource
Requirements
• Identify cost drivers
4. Determine
Performance
Requirements
5. Identify
known
deficiencies
• Current performance metrics
• Define acceptable level of
service
• Identify related must‐have
requirements
20

Identify Feasible Shared Service Candidates
Identify list of best shared
service candidates
• Don’t try to “boil the
ocean” –focus on the
best feasible candidates
and seek win‐win
Involve key stakeholders
• Listen and act on valid
concerns
• Avoid parochialism
Benchmark against other
Federal organizations
• Focus on success stories and
details of execution
• Lessons learned
21

Recommended Course of Action
Identify potential matches
• Fully understand service provider capabilities and past performance (‘track record’)
• Ensure service provider understands your requirements and expectations
• Determine the extent of internal change required and willingness to change
Narrow list to most suitable candidates
• Select best win‐win situation
• “Red team” potential issues and concerns
Build the business case to support the decision
• Be fully transparent about risks, costs and intended benefits
• Fully document the “is‐is” and proposed “to‐be” models
o Define impact on people and organizational structure
o Identify changes in the budget
• Define change management requirements
o Get leadership support and stakeholder buy‐in
• Make go/no‐go decision
• Identify accountable officials
22

SHARED SERVICES
Recommended Conversion Strategy
1
Develop detailed implementation plan with timelines
2
Appoint implementation team and establish governance process
3
Establish budget – reallocate funds as needed
4
Execute plan
5
Implement change management and communication plans
6
Monitor transition progress and post-implementation performance
7
Ensure intended benefits are realized
23

Establish Service Level Agreement (SLA)
• Negotiate Terms of Agreement – Agreement
should define the following:
• Customer requirements – level of service, quality, and
other expectations
• Interoperability requirements – open standards
• Costs and funding requirements
• Audit expectations (SSAE16)
• Performance standards (range, if appropriate)
• Period of performance
• Governance and dispute resolution process
• Sign Agreement
24

Monitor Service Level Agreement (SLA)
• Active Management
• Assign accountability – contractual perspective
• Communicate regularly – consider on-site presence
• Hold service provider to terms of agreement
• Resolve issues quickly or elevate them
• Consider evolving requirements
• Other Considerations
• Transition support requirements
• Retain knowledge of entire business process
• Have an exit strategy
25

Customer
People
Internal processes
Organizational
structure
Data
System Architecture
Legacy systems
Interfaces/controls
Data standards
Approach to changing
technology
Common
Issues and
Impediments
Service Provider
Quality
Costs
Transparency
Adaptability
Governance
Audit requirements
Dispute resolution
Metrics
Achieving intended
benefits
26

SHARED SERVICES
Success Factors
• Pick the right team –“win‐win”
• Customer support/continuous improvement culture
• Tone at the top with cascaded accountability
• Robust governance
• Performance monitoring/dispute resolution
• People first strategy in change management
• Communicate with staff and stakeholders
27

Q&A