Despite Some Set-backs, Public Sector Shared Services Remain in Vogue

The public sector has long been a prime market for Shared Services, and we’ve seen institutions in Canada, the UK and Australia leading the way, with the US also showing signs (albeit less cohesive) of adopting this model to drive cost savings and better "service per dollar spent." This week a spate of encouraging news continues to bolster Shared Services in the public sector. UKAuthority.com reports the results of a recent survey showing that"sharing services" is now all but universal in the UK’s local authorities, with 96% of councils taking part in some kind of sharing. The total amount thus saved has increased by £83 million since last year, to £357 million to date, according to the latest figures from the UK's Local Government Association (LGA). Its website hosts an interactive map that shows 337 councils engaged in 383 shared service arrangements, and highlights the range and scale of service sharing. Councils can also use the map to find potential "partners" for sharing services, and it is expected that the service may expand to other public sector institutions. Click here to access the interactive feature Financial benefits to date include £75 million of savings from back office shared services such as legal, audit and HR, and £46 million of savings from Procurement, capital and assets. [eventPDF] Shared Services are expanding fastest in London and the South-East, according to LGA data: eg, Havering and Newham councils are cited as having brought together 21 separate support services, including HR, payroll, IT, legal services and asset management, and 1,350 staff, into a new single shared service called oneSource, which is expected to deliver savings of £40million over the next five years. See more details below (click to enlarge): With savings from shared services now worth more than a third of a billion pounds, Cllr Peter Fleming, chair of the LGA's Improvement and Innovation Board, is optimistic about the model’s continued expansion: "Even despite the massive cuts local government has faced, it has continued to be the most efficient part of the public sector and councils have worked hard in the face of this to deliver vital services. We are optimistic other areas of the public sector will be inspired by the shared services map and follow the example set by local government." (Read the full article here and view the map here.) In Australia, meanwhile, there are reports on a move inCanberra, to once again embrace shared services procurement via a super-department that would aggregate back-office functions. This would apply to all the Commonwealth agencies’ back office functions. The Abbott government is currently awaiting the results of a Commission of Audit (due in the next few weeks) before deciding on an appropriate strategy. But the feeling is that joining forces to exploit purchasing power and eliminate duplication is expected to weigh heavily in Shared Services’ favor. The Canberra Times reports that Education and Employment have already taken steps to form a Shared Services centre to provide IT, human resources, procurement, financial and other services to the two departments, marking it the first centre of its kind in the Australian public service. A third department, Environment, is planning a similar move. (Read the article here). Australia also has a number of high profile examples of Shared Services gone wrong, however – for example in 2011 Western Australia’s Office of Shared Services was disbanded, after it was found to be over budget and not on target to achieving expected savings. The Queensland Health payroll upgrade, also developed as a Shared Services, suffered similar disappointment. More recently, the Queensland Government has taken steps towards scoping out the sale of its ICT service bureau, CITEC. A number of complaints around this service centre focus on the fact that instead of developing and deploying expertise in information and communications technology delivery, it locked agencies into expensive services and opted for the "easiest solutions". However, the issue may not lie in the model, which, after all is proving itself in public sector institutions around the world. As Gartner analyst Rick Howard says in the article, the problem is that too many "government shared-service organizations are not operating a customer-oriented, value-based service portfolio". (Read the article here.) Canada, meanwhile, has often been held up as the poster child for public sector Shared Services, with numerous examples of success including Shared Services Canada, New Brunswick’s Internal Services Agency, and British Columbia. It’s part of what’s prompting Alsbridge Inc., a benchmarking, sourcing and transformation advisory firm to open a new office in Toronto to better support its growing Canadian client base. The expansion is being led by Managing Director Robert Joslin, Country Head for Alsbridge Canada, who explains: "Much of the demand we are seeing is being led by the need to develop robust sourcing strategies – particularly for IT and business process outsourcing – as well as network sourcing, transformation management, and vendor management". He adds: "The public sector in Canada is extremely active and we are actively pursuing opportunities to serve this sector." With constant pressure to reduce cost, augment or replace existing resources and gain access to new skill sets authorities at the Federal and the Provincial level, as well as Crown corporations, are taking an interest in exploring alternative sourcing models. Joslin cites two of the most common go-forward roadmaps in the public sector as (1) centralizing service delivery into a shared services model; and (2) outsourcing. Both models have their unique set of challenges in the public sector but when done correctly can bring operational and financial value while addressing organizational risk, he explains. Follow the live discussions around this piece in SSON's LinkedIn group. NOTE: If you’re interested in learning more about Shared Services, join us in Australia, Dublin or Canada, to discuss the latest trends with your peers. Attend our Shared Services & Outsourcing events to find out how SSOs are driving performance.

Despite Some Set-backs, Public Sector Shared Services Remain in Vogue

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