Transformational Government - Shared Services

Background

Shared services are the standardisation, re-engineering, and consolidation of the non-core functions of an organisation to increase efficiency and achieve economies of scale.  Shared services generally involve the centralisation of administrative or back-office functions such as finance and HR.  A shared services centre may serve a single organisation or a group or consortium, and can be an internal service or be outsourced to an external supplier.

Markets are becoming increasingly competitive through globalisation, deregulation and easier market access, which are pushing down margins. However, customer expectations are rising and this is driving both private and public sector organisations to find new solutions to reduce costs and improve service levels.  Shared services are an increasingly attractive solution and are strongly supported by central government which regards shared services as a fundamental prerequisite for the Transforming Government Agenda - a major programme to deliver citizen-centric services and improve efficiency and professionalism in the delivery of public services.

As a result, shared services have been mandated for public service organisations by Ian Watmore, who heads the Prime Minister's Delivery Unit, and by John Oughton, CEO of the Office of Government Commerce.  Moreover the 2007 Comprehensive Spending Review and the funding of local authorities beyond 2008 will assume substantial savings from shared services. Government objectives for shared services are:

•         Convergence - Prevent the creation of silos

•         Transformation - focus on people more than IT

•         Procurement - treat suppliers fairly

To illustrate that shared services can transform people's lives, we are looking at instances of good practice where shared services have enabled or improved the delivery of citizen centric services.   However, converging and streamlining functions in both the public and private sectors through shared services involves considerable cultural and process transformation.  Like any change programme there are obstacles and barriers.

Benefits that Shared Services can deliver

To All

• Transparency - Reputational Index / benchmarking cost and success of delivery

• Standard offerings with greater re-use benefits, lower maintenance costs
• Reduced time to deploy solutions
• Futureproofing
• Access to skills by all

To the Citizen

• Citizen-centric services

• Guaranteed performance levels

To Government

• Reduced costs

• Ongoing economies of scale
• Legislative compliance
• Simplicity - single core government solutions

To Business (Suppliers)

• Rewards for success

• Government level agreements with key suppliers

Shared Services should enable us to escape from existing problems which include:

• Low economies of scale

• High cost of delivery and maintenance
• High ratio of back office staff to employees
• Paper intensive operations
• Poor cost control and accountability
• Legacy systems with poor compliance and high cost of change
• Supplier orientated systems that make sharing more difficult (non-interoperable / proprietary)

Problems, Barriers and Issues

• Sign-up and engagement
• Cultural objections to change - already efficient, afraid to lose control, our system too complex to use standard procedures
• Jobs leaving the area
• Inequality of skills in the public sector client base
• Same mistakes repeated across the public sector - lessons not shared
• Common platforms do not exist - no coherent approach in the market
• Too much disparity in effort, cost and operation of SS
• Suppliers to not liaise with Government enough on government's corporate agenda
• Suppliers don't understand Government's corporate agenda
• Public sector shared services poor value for money compared to private sector - ROI 4.5 years rather than 1.5 years
• No effective commercial and contractual structure for government to buy shared services

Lessons Learned

• Technology should not be the driver
• Common processes and structure essential to obtain maximum benefit
• Governance is key
• Interest grows with take-up once ease of use is proven

Case Studies

The working group has identified ten case studies of successful shared services.  These brief studies demonstrate how shared services can transform services for the citizen - improving quality, increasing efficiency and providing citizen-centric service delivery.  

We also plan to investigate some case studies looking at shared services in the private sector to show how private sector organisations that have implemented shared services centres are improving efficiency and reducing costs (with an average ROI of eighteen months) and to make comparisons between the implementation of shared services in the public and private sector. 

If you have been involved in a successful shared services implementation, which has delivered customer benefits and/or efficiency gains, we would like to hear from you.  Please email info@eurim.org 

What do the Case Studies tell us?

These case studies suggest that the public sector is already  successfully delivering the key objectives of the current Transformational Government Agenda through the implementation of Shared Services.  These objectives are:  Increased efficiencies, citizen-centric delivery and improved professionalism in public services.  

At first glance it appears that increased efficiencies are being achieved in nearly all cases.  The factors for success in achieving this objective include a clear business case, strong leadership that can drive change even in culturally resistant organisations, and standard system offerings. 

Fewer case studies demonstrated genuine citizen-centric delivery, although this was explicitly not an objective for a number. Successful citizen-centric delivery relies on good collaboration users, effective data sharing between service providers and strong leadership to drive change.   

All case studies that demonstrated improved citizen-centric service and increased efficiency demonstrated improved professionalism as a corollary to the other deliverables.

It appears that successful shared services projects often start small and then grow organically.  Many of the most successful case studies started as relatively small, low budget projects which gradually spread to attract new users who could see the benefits of buying into a shared service. On some occasions potential clients waited to see how a project progressed before signing up, in other instances a shared service started in the public sector and then spread to private sector clients.  Standard offerings that can be applied beyond the initial client are absolutely key to spreading the benefits of shared services.  

See full set of case study summaries and links to full case studies

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