article
Share and share alike
23 July 2008
The business case for sharing services packs a powerful punch.
According to the Chief Information Officer Council corporate shared
services within the private sector can deliver efficiencies of
between 20% and 50%. So it comes as little surprise that that the
Government has been keen to emulate this success within the public
sector.
In 2004 Sir Peter Gershon undertook a review of public services
recommending annual efficiency savings of 2.5% for 2005-8, rising
to 3% for 2008-11. The Gershon review, along with the Lyons report
on local government finance, focussed on the opportunity to realise
improvements by joining up back office functions. Sir David
Varney, Senior Advisor on Service Transformation, shifted the focus
further by recommending in 2006 that efforts should be made to save
government, citizen and business time and money by integrating
frontline public service delivery.
So four years on from Gershon’s Review, how successful has
shared services been? According to the latest statistics the
Government states that up to £23bn in savings had been achieved
since 2004, surpassing a target of £21.5 billion. In May this year
The Treasury launched a further 12-month efficiency drive with the
aim of saving up to £5 billion of public money in addition to the
£30 billion already planned for the current spending review.
However a major report by law firm Browne Jacobson sheds new
light on the level of savings that can realistically be achieved
and reveals a series of critical barriers preventing public sector
bodies in seeking to reap the full benefits of shared service
initiatives. These include a lack of available resources, workforce
opposition and risk-averse organisational cultures.
The Shared Services Survey 08 is the result of research carried
out among 178 senior public sector managers in the health, local
authority, social care, education and fire service
sectors. Of those surveyed 63% were senior managers and 37%
were middle managers.
A number of the key findings were positive with an overwhelming
majority of organisations confirming that they are taking part in
shared services, and 88% supporting the agenda. However the report
also identified a plethora of barriers to implementing shared
services with two thirds of public sector managers (65%) citing a
lack of financial resources, while 59% identified insufficient
manpower as key.
When asked to define shared services, the responses elicited an
array of definitions. Examples included:
- “where a number of organisations agree to form a consortium
to provide common services , normally back office
functions”
- “local authority departments working together for their
mutual benefit to provide a service which will reduce costs to a
tax payer”
The vast majority talked about ‘sharing, collaboration and the
pooling of resources’. Surprisingly only one in four public sector
managers (26%) referred to cost savings and end benefits. The
shared services agenda has two overarching aims: to drive cost
efficiencies and improve public service delivery. This raises
an interesting anomaly identified by the research in that managers
appeared far less optimistic about the level of savings possible
compared to government estimates. This is especially true when
financial input of the upfront investment in IT and resources to
implement the changes are considered. According to the study senior
managers in local authorities believe a total of 12% of their
organisation’s budgets could be saved by sharing services over
time. This dropped to 3% for those working in the health
sector.
The research also suggests that front line staff and the public
themselves represent only a marginal influence on its development.
When quizzed on who they believe is the driving force behind shared
services, public sector managers principally identified senior
management and central government. Over three quarters (77%)
pointed to senior management, and over half (52%) Whitehall civil
servants.
Front line workers are seen as a driver of shared services by
just 13% of managers, the public by just 10%. This may shed light
on the back office emphasis when it comes to shared services.
Whilst more than seven out of ten managers regard back office
functions as prime candidates for shared services, less than half
saw the potential for front line services according to Browne
Jacobson’s study.
It is also clear that the momentum behind shared services is
being generated internally –and from the top. However, implementing
shared services effectively by mandate can be very difficult. It is
therefore critical that front line staff are equally engaged in the
process right from the beginning. According to Browne Jacobson’s
research less than a quarter (23%) of the workforce are active
supporters of shared projects, while more than a third (36%)
actually oppose them.
The risks and barriers highlighted by the research perhaps go
some way to explaining why Government targets aren’t being achieved
despite the overall positive views towards the agenda.
Managers need to be aware that in implementing shared services a
series of challenges will inevitable arise which are not
insurmountable and need to be addressed before the long term
benefits can be fully realised. Buy-in from all stakeholders is
key. Clear consultation and communication with employees, unions
and local representatives is essential if public bodies are to
overcome cultural hurdles and internal opposition, and develop
trusting partnerships.
To maintain momentum, an approach must be developed for the
consolidation of front line services and to develop initiatives
which cross geographical or public sector boundaries. Embracing
partnerships with the private and voluntary sector could also offer
further opportunities and expertise, as well as helping to gain
funding which is so vital to set up.
With such ambitious government efficiency targets in place for
the coming years shared services will remain high on the strategic
agenda for public sector leaders. It also means the pressure on
those tasked with delivering cost efficiencies at a national and
local level has never been greater.
The shared services agenda would appear to have had a relatively
successful infancy but Browne Jacobson’s research suggests that
many untapped opportunities exist. A bolder approach, and greater
focus on the front line and the demands of citizens, may be
required as we move into the next phase of the public sector
efficiency drive.
To access a full copy of the report go to:
www.brownejacobson.com/sharedservices
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