IfG.CC -
Institute for eGovernment

The report, entitled "Efficiency and reform in government corporate functions through shared service centres", published today, follows another report from government spending watchdog the National Audit Office, which in March this year found that the five shared services projects it had been tracking were £500m over budget.

The government’s ambition to generate significant savings by sharing back office functions is failing and is ultimately costing the taxpayer millions of pounds.

In a report by the Public Accounts Committee (PAC), where it investigated the government’s shared services strategy, which began in 2004 but was refreshed in mid-2011, it found that setting up centres to share back office functions had cost £1.4 billion, some £500 million more than expected.

Whitehall's shared services centres were designed to reduce the cost of back-office functions.

But by creating complex services overly tailored to individual departments, government has increased costs and reduced flexibility, said the NAO. Government has failed to develop the benchmarks to measure performance and the software systems used in the centres have added complexity and cost, said the NAO report.

It concludes that, despite significant cost and effort, the planned benefits of the initiative have not been achieved. By creating complex services overly tailored to individual departments, government has increased costs and reduced flexibility. There has also been a failure to develop the benchmarks necessary for measuring performance.

In 2004, the Gershon Review recommended that the Government pursue the sharing of services, including human resources, finance, procurement and payroll, to achieve cost savings. It has been up to individual departments to establish their own arrangements and, between 2004 and 2011, eight major shared service centres emerged.

The two forces have created a combined information, communication and technology department, which is being managed by Thames Valley.

The forces said the deal aims to "realise cost reductions that would not be achievable individually".

Hertfordshire residents with care, mobility or other specialist needs can now find out about support available to them from the council and private providers 24/7, thanks to a new website launched in May. The eMarketplace is Hertfordshire county council's new one-stop shop for residents and enables users to search for services and goods, compare prices, contact providers directly and rate those they have used.

This is the latest innovation to come out of a shared services partnership between Hertfordshire and Serco, which aims to broaden and deepen services as well as deliver cost efficiencies. The contract builds on Serco's long-standing relationship with the council to deliver back office savings in areas such as finance, HR and property. However, an extra clause on 'innovation' has, two years into the contract, begun to deliver added value to Hertfordshire's adult social care.

Local authorities that have been encouraged towards sharing or outsourcing back-office services, such as facilities management, finance and human resources, are being forced to look wider and go deeper in the pursuit of future savings.

You would be forgiven for thinking that this was the worst mistake ever, as the press is full of stories of shared arrangements that end up costing more or joint arrangements that have fallen apart. Vivienne Russell pointed out some of the problems in her recent article for Public Finance magazine.

A unique post graduate qualification is helping to equip public sector senior managers with the essential skills they need to deliver the government's shared services agenda.

For former HR professional Kiran Lahel the six-month course has given her "the right tools and techniques" in her new role as shared services architect for Walsall metropolitan borough council in the West Midlands.

Rob Miller is breaking new ground in local government ICT. Last month he became head of a joint ICT shared service for Sutton and Kingston councils in outer south London. The joint post is the first appointment of its kind in the capital but is a role that is expected to become increasingly common as more local authorities move to share services and save money.

Just as Miller took up his appointment, which came with a salary of around £100,000, the tri-boroughs of Westminster, Hammersmith and Fulham and Kensington and Chelsea launched their own drive to find a chief information officer (CIO) to transform ICT to create a "single seamless high-quality [ICT] service" across all three boroughs. Holding an annual budget of £40m and responsible for a team of 123, the appointment is being described as "truly career defining" by Hays Executive, which is managing the recruitment.

In the 2010 Spending Review, Chancellor George Osborne outlined £81bn in cuts over four years. Integrated and shared services will be a vital part of meeting this goal. But the coalition will face a significant challenge in achieving the collaboration, joined-up thinking and effective management needed to realise this target unless it tackles the inefficiencies in government departments that are caused by harmful complexity.

Overly complex organisational structures, convoluted decision-making processes, poor coordination and communication between departments mean that these efforts, and the resources funded by public taxes, are not going directly into services that add value for the public.

What makes an ideal outsourcer for local government? An organisation that understands a local authority's business requirements, makes no secret of its pricing structure, is open about potential problems, or one that grasps the particular challenges of the public sector at a local level?

The civil service reform plan, published by the Cabinet Office in June, stresses the case for creating by the end of 2013 the infrastructure for give centres for back office transactional services – payroll, finance, HR, procurement - to service the whole of central government.

But cost-cutting aside, the take up of shared services may get a further boost from the PSN (public services network). It is anticipated that as many as 80% of public sector employees, or four million individuals, will be using the PSN by the end of 2014, and the two key frameworks that govern the network of networks are expected imminently.

Chief Minister Allan Bell MHK last week signalled his intention to consolidate a number of back office and support functions as a way of making Government more cost-efficient.

The move was announced during the debate on proposals to Modernise Ministerial Government, which were unanimously approved by Tynwald Members.

A report from the Local Government Association (LGA) says that five local shared services arrangements have saved a total of £30m through a range of measures, including integrating IT systems and better procurement.

The figures also show that at least 337 local authorities in England are sharing at least one service, with a further £169m in savings expected from these arrangements in the next few years.

Since the last decade debate about public sector technology and provision has regularly featured the term shared services. With public sector cuts at the core of the current government’s policy as it seeks to reduce the deficit following the bail out of the troubled banking sector, the need and desire to take shared services to the next level is important to business technology leaders in local authorities. One organisation has pioneered the shared service delivery in East Anglia, but as its head of operations tells CIO UK, the IT vendor community is holding back the development of shared services and the adoption of cloud computing.

Public sector CIOs are being forced to focus on tactical cost reductions in periphery IT services, are acting in a piecemeal way due to limited availability in the vendor market and feel they are not able to deliver shared services on a major scale.

These were some of the findings of a recent Local Government Study by RPC Consulting, released earlier this month, after interviewing 27 CIOS and senior transformation executives in local government - including a housing association and one arm's length management organisation alongside 25 councils.

The neighbouring town halls expect to generate savings of around £4m over the next four years by sharing information and communication technology systems and working together to establish more cost effective ICT investment.

New jobs will also be generated by the arrangement, which is thought to be the first integrated shared council ICT service in the capital.

A local pioneering government group that is trying to save costs by pooling IT resources says it wants to extend out its platform, possibly to many of its neighbors.

Three London-area councils -- Kensington and Chelsea, Westminster and Hammersmith, and Fulham -- have been collaborators since 2011 in what's being dubbed the "Tri-Borough" shared services partnership. The idea: share IT, finance and human resources functions between the three, instead of duplicating the same functions. When it's set up, the partners said they expect to be able to pare as much as £40 million ($61 million) per annum off their operating costs.