Shared Services Trends in the UK Public Sector
There are several routes to Shared Services that Government is taking. But broadly speaking, we are seeing a focus on three. These can be described as:
Standards based – where one contract is established which stands in its own right, as opposed to being a pilot. Others can then buy into the service, with some minor variations to suit their local needs. An example of this is the Cabinet Office shared IT outsource public sector Flex which has been developed for one customer but is now being supplied and offered to a range of entities.
With respect to Governance, Stakeholder, Change and Benefit Management, the initial establishment of these services is relatively easy – because of single lines of accountability. Once the service is stabilised and expansion begins, the Governance, Stakeholder, Change and Benefit management become more complicated – needing two separate strands - Business as usual and Transition projects - to bring on new “customers”.
Build shared services within one “accountability” group and grow – In these approaches, one department brings together shared services under its own roof first (and the business case is predicated on this one programme), with the possibility of offering those services further once the shared services organisation is operating effectively.
Examples of this approach are the Department of Work and Pension’s (DWP) establishment of shared services (HR, Finance, Procurement and Debt Management) across JobcentrePlus; Pensions, Disability and Carers and corporate functions. The Cabinet Office and DWP are now considering how the Cabinet Office might run its HR services from the DWP hub. Another example is the Defence Information Infrastructure – to provide a single technology platform across all military services involving over 150,000 personnel.
This approach is slightly more challenging than the standards based approach, because, despite being within one organisation, there are usually several major departments whose needs have to be addressed cooperatively. Usually, the implementations are on a much larger scale too and design may not have taken into account the possibility of sharing services outside the department. Once again, approaches to Governance, Stakeholder, Change and Benefit Management need to change to reflect two strands once expansion of the service begins.
Build a hub across many and grow – This is the most challenging approach, because of the significant Governance, Stakeholder and Change management requirements when bringing together multiple organisations at once. However, for many working together, it can be a faster route to benefits, since one programme delivers benefits to all at once (as opposed to being spread over time as each organisation is brought on).
Lessons learnt from these three approaches so far
Our experiences from supporting shared service programmes across Government indicates some common themes that provide a learning base:
When delivering corporate shared services internally:
- Establish governance that engages operational units at all levels, leadership down – Corporate shared services implementations, because of their underpinning reliance on enterprise wide technology, are often led and governed from the IT domain within an organisation. Our experience, and strong advice, is that such programmes need to be led from the relevant business function (HR, Finance or Procurement) with representation from operational units at all levels of governance. For reasons outlined below, programmes that focus inwards on building a “future perfect” enterprise, tend to suffer as implementation rolls out, because of a failure to engage in the real operational issues faced by Finance, HR and Procurement functions within the business.
- Be aware of local departmental practices – It is inevitable that “siloed” functions will have developed their own local practices. Clearly, one of the objectives of shared service programmes is to remove these variations where they are not necessary. The difficulties we see in programmes that fail to engage with operational units and understand local practices are that assumptions are made that all local practices can be eliminated and this will be done as the shared service is rolled out. Often what happens is that the local practices are retained, as localised operational units work round the shared service implementation, and benefits are lost.
- Cleanse data early on in the programme - Many shared services programmes suffer from poor quality of data within existing systems. For this reason, part of the stakeholder and change management within the shared service programme should focus on data accuracy prior to implementation – this may include, for example, specific projects for data cleansing, or the early roll-out of “self service” modules, so individuals can take responsibility for their own data.
- Change what’s left as well as what is new - The activities within a shared service programme are usually focussed on establishing what is new: A new shared service organisation; new processes; new technology. Much of the stakeholder and change management can be focussed on training the new team. It is equally important that appropriate stakeholder and change management techniques are deployed within the functions retained in the business units and staff who will be using the shared services. It is these groups that will need to change their behaviours in order to realise the full performance benefits of the shared service – as opposed to simply the cost benefits as fewer resources are needed in the shared service centre.
When growing shared services from an existing hub:
- Market the benefits - Government organisations, unused to marketing their services to other organisations, tend to treat the expansion of services from a hub as another project. A more appropriate approach is to treat the activity as a marketing campaign, where new users of the shared services need to be sold on the benefits of becoming a user and be reassured that the risks to their business performance can be mitigated and their concerns will be unfounded.
- Keep the show on the road - Organisations have a tendency to treat expansion as a rolling programme of activity, with the leadership of the shared services continually focussed on the next organisation to be brought on. It is essential once the hub is established and operating successfully that governance of the day to day service to existing customers is separated from the programme of work to roll in new customers. This may lead to conflicts, for instance delays to roll-out and hence benefit delay, in order to resolve issues with the existing service.
When sharing sector specific data, knowledge and processes:
- Establish pilots to understand behaviour and benefit reality - It is almost guaranteed that citizens will behave in unexpected ways when presented with new ways of interacting with Government. For that reason, when establishing services that share data, knowledge and processes across a sector, it is important that the impact on customer and stakeholder behaviour is understood. For this reason too, all suppliers and stakeholder groups should be engaged in the pilots. This ensures that both the benefit reality of the final approach is understood, and that the deliverers of the service can then scale at the rate necessary as citizens and stakeholders adopt the new processes.
- Establish sector wide governance involving user and supplier stakeholders - Optimised benefits from sector wide sharing of data, knowledge and processes only accrue if most user stakeholders adopt the new processes and if suppliers are able to deliver those processes satisfactorily at sector scale. For this reason, having design governance that includes all stakeholders who accrue the benefits is essential. Equally, having delivery governance that includes all those suppliers/partner organisations with a stake in delivering sector scalability is important.
- Establish a genuinely scaleable solution and approach - Ideally, the benefits to sector level organisations of sharing data knowledge and processes, are that rapid adoption across the sector should raise performance and lower costs very quickly. If, as part of the pilot, there is no approach established for scalability – benefits will be delayed and worse, the sector may become frustrated as stakeholders can see the benefits, but are unable to access them. A good example of the benefits that can be delivered was the public’s rapid take-up of online vehicle licensing, once the Government had proved the approach across the sector. Not only did this significantly increase perception of the application process, it drove down costs of administering the process across the sector.
So the implications for any Government department wishing to enter this area are, that in order to pursue their shared services ambitions, they will have to establish governance and approaches to stakeholder, change and benefit management that will probably not have traditionally been deployed in their change programmes.
Clearly there is much still to be done but many initiatives are now under way and, so long as the learning and lessons from previous programmes is heeded, the momentum for public sector shared services will become unstoppable.
About the author
David Tryon is a Director with Alsbridge plc, the independent advisors on outsourcing, shared services and offshoring. David can be contacted on +44 (0) 20 7242 0666 or email david.tryon@alsbridge.eu
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