The start of 2011 has really seen the UK public sector come under scrutiny as controversial budget cutting decisions were announced following the coalition government’s 2010 Spending Review. While the government has assured us that budgets for the NHS have effectively been ring-fenced and that essential frontline services will not be affected, there is no denying that with rises in inflation, partnered with increased costs of supplies and commodities, the NHS and key areas such as educations will feel the pinch throughout the public sector.
Local governments are going to have to look at new and unfamiliar methods of working that help to improve efficiencies, cut down costs and maintain levels of public services. One such way will be for organisations to embrace new and innovative technology models such as Cloud Computing, Software-as-a-Service (Saas) and, most notably, Shared Services. The sharing of critical business and IT services, if done well, has been proven to cut costs, reduce errors and increase productivity, and according to the Chartered Institute of Public Finance and Accountancy (CIPFA) “will be the main method for cutting costs in 2011.”
So, what is “Shared Services”? Is it just about cutting costs, what does it entail and, most importantly, how can its use result in greater efficiency on reduced budgets and resources?
According to the Confederation of British Industry (CBI), shared services “involves bringing together a set of back-office or front-office services common to multiple business units within a single organisation, or across a number of organisations. The relevant parts of these services are placed into a single delivery structure that is customer-focused and performance-managed.” Typical services suitable for sharing are often characterised as:
- Transactional and process driven
- High volume
- Geographically independent
- Common processes that can be standardised
- Requiring specialist personnel
While these services are deemed crucial to the effective functioning of local governments and public sector organisations, they should not draw unnecessary resources from the frontline. Shared support services can actually have a key role in freeing up resources, consequently allowing front-line service delivery to remain unaffected in the face of budget cuts.
Despite the theory of a shared services model being potentially very beneficial, uptake on a national scale is still remarkably low. However, there are a number of departments in the UK public sector that are taking the lead with this innovative method. One such example is within the NHS – with over 600 autonomous organisations, each with its own finance and accounting function, problems with duplication of effort, difficulty of sharing best practice and fragmented IT infrastructure are rife.
With a view to alleviating this issue, the NHS Shared Business Services (SBS) was launched in 2005 as a 50-50 joint venture between the Department of Health and Xansa (acquired by Steria in 2007). Now in its 6th year, the NHS SBS has been hailed a great success – acting as a commercial venture it can now claim over 130 clients and the organisation has become the preferred choice for NHS Trusts seeking to modernise their back office processes. By sharing best practice, financial control across the organisation has vastly improved using leading automation technology to keep financial services to a consistently high standard.
The NHS SBS is a great example of some of the anticipated benefits of shared services and shows that shared services could be an ideal solution in the private and public sectors for medium- large organisations in multiple locations and numerous divisions that have a high number of repeated tasks that need to be carried out. Joint ventures such as shared services can often lead to other key factors including:
- Increased access to professional skills from across the board, resulting in greater support for a standardised set of back-office shared services, more successful monitoring processes and best practices shared across the board
- Reduced costs and administrative burden on those supporting back office functions
- Consistent achievement of Service Level Agreements (SLAs) including 30-40 percent savings in reconciliation processes and consistently accurate automated month-end close
But while it is very easy to highlight all of the benefits of implementing a shared services infrastructure, no IT project would be complete without assessing some of the potential pitfalls of a switch to this system. Former president of Socitm, Jos Creese, recently commented that a hasty move to shared services driven by cost over necessity could lead to “greater inflexibility” in the public sector.
With savings of up to £15bn to be made in the UK public sector through cutting inefficiencies due to replicated systems, cost reduction will obviously be a driver. For a successful shared services implementation, organisations need to address the issue of planning – what foundations need to be in place to ensure an effective shared services strategy that will prove to be successful in the long term?
Key steps for successful implementation should include:
- Planning: Like any big IT project, all stages must be thoroughly planned to avoid large-scale catastrophes such as the National Programme for IT. The organisation(s) needs to ensure that each stage of implementation is covered, has buy-in at all staff levels and involves the right experienced vendors.
- Strong foundations: Like any good IT project, success often revolves around the need to have the correct tools in place initially. In order to ensure that projects like shared services can be managed and maintained, an effective automation platform that allows for visibility and control across a broad spectrum is crucial.
- Scalability: Projects such as shared services should start small and expand to suit the growing needs of the business, much like the expansion of the NHS SBS.
- Interoperability: When planning what services will be shared, thought needs to go into the fact that IT systems need to be integrated in order for different parties to access information.
- Future proof: Organisations need to think about the long term when implementing a shared services strategy. It needs to be flexible to deal with changes in the organisation(s) but also incorporate new technology methods that have been proven to improve efficiencies and cut costs, such as using cloud services.
- Training: Buy-in for implementation at all staff levels needs to be agreed for a project to be successful. Many staff will be wary of shared services and the security of their jobs, however it should be emphasised that shared services is not about automating people out of jobs – resources that were otherwise wasted within an organisation can be redeployed elsewhere to innovate and help increase effectiveness of an organisation.
If done the right way and for the right reasons, the merging of certain services between public sector bodies could go a long way towards bringing about more efficiencies and value to organisations without affecting front line services. At the same time it can enable unexpected opportunities to bring about new methods and ideas for how things can be done. A problem shared is a problem halved and in the context of the public sector this could not be more apparent.