Cutting costs alone won’t cut it in the public sector. The case for shared services is growing ever stronger as political, technological and procurement obstacles are removed
Given the high-profile disasters covered in the press, you could be forgiven for thinking all shared services were forced upon unsuspecting departments by ruthless politicians and capitalists in pursuit of power and a quick fix.
It is not surprising that the failures catch the headlines. But these catastrophes are largely from another time when projects were not constrained by business cases and limited budgets, and the only constraints were around trying to work with small and medium-sized suppliers. Under these conditions, with little accountability or flexibility, it is not surprising that there were failures.
Thankfully the sector has not been put off by the disappointments and there is a real momentum towards shared services. There are three main drivers: the exponential necessity to deliver services with less; the growing evidence that shared services (with the right strategy) work; and the fact that, given the conditions in the market, it’s easier than ever to successfully implement the sharing of services between separate departments and organisations.
So let’s look at that first point – the necessity to deliver services with less. The swingeing cuts being phased in as part of the Comprehensive Spending Review means that for most public sector organisations cutting costs alone will not, in itself, cut it. There needs to be reformation in the way they operate, and a complete overhaul of their structures.
The fact is you can’t have, and don’t need, three people in three separate back-office departments, even separate organisations, labouring over the same task. It’s a threefold waste of money and a breeding ground for erroneous data and customer services embarrassment.
If you need to make internal cuts, far better to work out where it is appropriate to make tasks the role of one individual (or even automated technology). This is the crux of shared services and the reason many are seeing the light. It is a bastion to removing administration, dispensing with red tape and reducing costs. And, what’s more, services should only improve – as you would expect for a customer that is pointed to one individual rather than being passed around three.
So, with tangible business benefits that are wholly aligned to doing more with less, sharing makes undeniable sense during austere times, especially when the savings can be redeployed to the frontline.
Looking at the second driver there are many examples we can turn to of shared services increasing expectations. For instance there’s the Hoople shared service company created by Herefordshire Council, Herefordshire NHS Trust and Wye Valley Trust. This provides a number of back-office services, including finance, HR and payroll, and made savings of over £619,000 on a turnover of £11.5m in the first year of operation.
Then there’s the GO Shared services programme, a venture between four councils in the West Country that has more than doubled its estimated savings to £675,000 per annum since go live. Or Xentrall, a service between Stockton and Darlington councils that has been running for five years and expects savings between £7m to £8m.
Thirdly, the political, economic, and technological environments are all making it easier to establish or join a shared service. Politically, the mandate is clearly there with the government’s next generation independent shared services strategy.
Economically, aside from budget cuts driving change, the government is working hard to make shared services attractive. Take for instance the VAT exemption for services shared between organisations that are already exempt from the tax, such as universities.
Technology has often been the big problem for big projects. It is bizarre that for so long there has been a duopoly in central government of the same suppliers making the same mistakes. The public sector runs the most dynamic services during the most changeable times in history and the ‘big technology’ in place was not flexible enough to cope with the pace of change, as confirmed by last year’s report from the National Audit Office.
However with the introduction of procurement frameworks the government is making it much easier for bodies to work with suppliers outside of the chosen few. There is also the introduction of the G-Cloud framework, allowing organisations to choose from, and more simply engage with, thousands of suppliers. Organisations no longer need to only choose from a list of two, they can turn to flexible technologies that translate to lower costs, aligned processes, faster reactions to sector change and better services.
It’s not all carrot however, there’s also, with increased transparency, an economic stick hanging over the team working on a shared services project. Unlike pre-credit crunch days, these projects simply cannot fail. While daunting for management, the team on the ground and all suppliers involved, new levels of accountability are driving new levels of project success and the plaudits that come with it.
This necessity to succeed is also driving cultural change across organisations. There are new levels of ambition and more of a ‘can-do’ attitude.
Now is the time for shared-services in the public sector. Why not set out a shared service business case for your organisation? There is no risk in doing so – the only risk comes from not taking into account possibly the most effective solution to the issues you face.
Anwen Robinson is the managing director of Unit 4 Business Software
