Shared services: Opportunities and issues for the public sector

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Shared servicesOpportunities and issues for
the public sector

• Socitm NI workshop
• 28 April 2006

Peter Eckersley
Cipfa-Socitm ITT network
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Outline of presentation

• The ITT network
• What are shared services?
• What are the benefits of introducing them?
• What are the key things to get right?
• Which models could we adopt?
• How do we go about implementing shared services?
• What have other public sector organisations done
  in this area?

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The ITT network
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May workshops
Engaging the business Managing transformational
change in service departments
London Newcastle Glasgow Taunton
Birmingham Llangammarch Wells
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NI workshop
Efficiency Can we prove it? Measuring,
monitoring and managing the gains
Belfast, 31 May
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IPF and shared services

• Research project for Solace produced in March
  2005
• Seminars on Shared Services Do they Deliver?
  held in March 2006
• White Paper Shared Services The opportunities
  and issues for public sector organisations
  produced in April 2006
• Statistical research project to be undertaken in
  summer 2006

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What are shared services?

• Organisations working together to provide joint
  corporate, transactional and administrative
  services, such as

• HR and payroll
• Finance
• ICT
• Legal services
• Marketing
• Facilities management
• Benefits administration

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They used to be called partnerships

• The terminology might be new, but the ideas and
  issues are familiar

• Change management
• Governance and accountability
• Programme management
• e-Government and transformation
• Business process re-design
• Improving efficiency
• Information management

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Why now?

• Review of Public Administration in Northern
  Ireland
• Gershon efficiency agenda
• Cabinet Office Transformational Government
  strategy
• Technology makes it easier to share information
  across organisations
• A lot of the groundwork has already been
  completed as part of e-Government
• Desire to keep costs down and service quality up

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What are the benefits?
Financial savings a BuyIT Best Practice Group
report found the UK public sector could save up
to 40bn over the next ten years by sharing HR
and financial services. Savings can come from

• Staff rationalisation through economies of scale
• Adoption of best practice work processes, which
  reduce duplication and ensure customer inquiries
  are dealt with quicker
• Lower accommodation costs and other overheads
• Cheaper procurement through demand aggregation

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What are the benefits?
Service improvements experience has shown that
shared services deliver better corporate
performance, often as a result of

• Improving management and procurement information
• Re-designing work processes around customer needs
• Allowing senior managers to focus on more
  value-added activity
• Creating a clearer career path for staff in the
  shared service, which can help improve
  recruitment and retention
• High-performing organisations sharing learning
  with struggling counterparts

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But there are no guarantees
Source Success through Shared Services, White
Paper by AT Kearney Inc, 2004.
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Key things to get right

• Overcome staff scepticism
• Select the right partner
• Clarify scope
• Ensure senior management buy-in
• Baseline current performance
• Resolve any ICT issues

• Agree on how costs, risks and rewards will be
  shared and feed this into the business case
• Ensure sufficient resources and capacity are in
  place
• Identify and follow best practice in managing
  programmes, risks and performance
• Choose the right model

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Overcoming staff scepticism

• Develop a clear vision, business case and
  rationale for the change
• Conduct a staffing, capacity and skills audit
• Ensure that sufficient training is available
• Adopt a joint communications strategy across the
  partners
• Incorporate flexible and/or remote working into
  the design of the shared service
• Think about siting the shared service on neutral
  territory
• Consider seconding rather than outsourcing staff
  to any new organisation
• Appoint someone with both relationship management
  and programme management experience

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Choosing the right model
High
Partnership
Joint venture
Lead authority
Co-sourcing
Trading company
PFI
Degree of complexity
Internal centralisation
Consortium
Outsourcing
Informal collaboration
Insourcing
Low
Joint working
Third party
Principal partner-led
Sourcing strategy
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Joint working models

• Drawbacks
• May not improve business processes
• Unlikely to deliver the full benefits promised by
  shared services
• May not deal with fundamental capacity and skills
  issues
• Could lose momentum easily
• Difficult to sustain progress without further
  integration

• Benefits
• Useful first step towards shared services
• Clear accountability
• Some economies of scale
• Shared learning through collaboration
• Unlikely to provoke much staff opposition
• Flexible

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Principal partner-led models

• Benefits
• Often a cheap way of accessing skills and
  resources
• Can lead to significant efficiencies through
  economies of scale
• More focused management of the services
• Can be easier for an external body to introduce
  new ways of working
• Longer contracts bring greater stability

• Drawbacks
• Loss of some control over the service, leading to
  accountability issues
• Focus is often on cost rather than quality of
  service
• Requires significant contract management
  resources
• Staff opposition
• Longer contracts can lead to inflexibility and
  lock-in

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Third party models

• Benefits
• More focused management of the services
• Often easier for an external body to streamline
  processes and find economies of scale
• More opportunities for career development within
  shared service
• Private sector partner may provide resources
  up-front
• Longer contracts bring greater stability
• Can generate income over medium term

• Drawbacks
• Loss of some control over the service, leading to
  accountability issues
• Long procurement process if a private sector
  partner is to be involved
• Requires significant contract management
  resources
• Staff opposition possible
• Longer contracts can lead to inflexibility and
  lock-in

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Steps to implementation
Supplier engagement
Transition
Operation
Feasibility
Strategy
Solution design
More info at http//www.cio.gov.uk/shared_services
/toolkit
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Existing examples

• Consortium Audit
• Essex Marketplace
• Customer Service Direct
• Surrey County Council
• NHS financial services
• Staffordshire Connects
• ICT services in New South Wales
• Shared emergency contact centre in New Zealand

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Any questions?
Peter.Eckersley_at_ipf.co.uk
www.cipfaitt.net