Public sector shared services get a boost

November 18, 2008

Posted by: Martyn Hart

Recent research, conducted by Ovum, has forecast that the European public sector shared services market will be worth £4bn between 2007-2012.

This is further evidence of how the public sector is coming around to the idea of consolidation and rationalisation of services.

Sectors such as the emergency services are taking innovative steps to consolidate processes and to work in partnership with other regional branches, with the aim of creating a more streamlined, efficient working models and of ultimately reducing costs.

What gives European governments even more impetuous to focus on shared services is the recession, with Germany entering into a recession last week, all eyes will be on the European market.

The UK currently leads the field in shared services, a great example of this type of partnership is the police authorities in the East Midlands.

The chief constables and chairs of Derbyshire, Leicestershire, Lincolnshire, Northamptonshire and Nottinghamshire Police have jointly published a three-year collaboration plan to work together to increase productivity and improve future performance.

Shared services have been a viable economical option for many private businesses for some time.

Local government departments are now starting to take advantage of this strategic tactic and public sector managers are realising the benefits associated with shared services.

South Tyneside, Charnwood and Rushcliffe councils have all recently signed shared services agreements, adding to the growing understanding that the consolidation of repeated processes may be the way forward.

Obviously shared services will have some challenges associated with it. For example the handing over of process management to a shared services centre can prove to be a difficult transition, especially if an organisation is used to having full control of every back office process.

Redundancies are inevitable, although difficult to swallow when you are in a government that has sworn to increase jobs.

However in today’s society, where the public sector is under increased pressure to curb expenditure, redundancies are a necessary evil if work is continuously duplicated.

The trick is of course to be creative about placing those people that do not move to the shared service centre.

A shared services strategy has the potential to greatly decrease government spending and increase efficiency, however all parties entering into a shared services contract must ensure that they know the reasons and benefits for doing so.

All groups must agree with the operation model and be fully aware of any consequences that may arise, such as job losses, culture change, pay grade optimisation or the effect of one organisation removing itself from the shared service setup.

Shared services have been tried and tested in the private sector. Quantifiable benefits are seen when processes are correctly implemented and private sector companies are indeed making the most of this innovative model.

The public sector, with its potential for duplication of roles, procedures and effort, will benefit greatly from shared services. From this research, it appears that at least at the strategy stage steps are being made to take advantage of this cost saving, process enhancing, strategy.

Of course the next stage is full outsourcing. But as they say, every great journey starts with one small step.

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