Local Government Solutions ForumBarcelona 2007

March 2007

United KingdomGovernment Shared Services

David Myers

Agenda

• Shared Service Vision• UK Government in Context• The Opportunity• Why Sectors?• Case Study: Local Government,

Health Sector and Criminal Justice

Shared Services Vision

“to make a meaningful and lasting contribution to the government’s broader citizen-centred transformation of public

services by freeing people, time and money to focus on front-line service

delivery“

UK Government in Context

UK Government£500bn, 6-8% overheads typical = up to £40bn• 1300+ Public Sector organisations will invest in Shared Services• Much of this investment duplicated• Too many driven by IT• Culture of sharing not prevalent (white space everywhere)• Public sector must learn from the Private Sector• Economic and social impact• Complexities of public sector may cause sub optimal governance

Key Considerations• Making shared services a political imperative • Driving shared services using common methods and with ambitious

targets• Structuring the market to facilitate the sharing of service offerings• Accelerating delivery and reducing risk

The Opportunity

Benefits• Efficiency• Effectiveness • Employee value add• Improvements in business process, data and IT systems• Support of other initiatives – Lyons, Productive Time, Procurement

Objectives• Optimise investment decisions through re-use and sharing• Dramatically reduce the number of locations• Coordinate the approach to interacting with the market (MOU’s)• Use standard structures, processes and technology• Match the best performance levels in the private sector• Enable public sector staff to concentrate on strategy and high impact

activities so CREATED 9 GOVT SECTORS FOR SHARING

A sector can be thought of as a grouping of organisations for the co-ordination of the planning and delivery of shared services.

Why Sectors?• Manageable chunks, risk reduction and greater degree of control• Optimise investment across Government• Sector Plans - Objectives, Scope, Route-map, Benefits & Investments,

Implications, Risks & Issues and Governance

How do we determine sector groups?• Close relationships between organisations within a sector• Sectors ideally contains a large number of similar organisations• Making use of existing mechanisms and arrangements

Which Sectors were agreed?• Criminal Justice, Health, Education, Work & Pension (DwP), Ministry of

Defence (MoD), Her Majesty's Revenue & Customs (HMRC), Rest of Central Government, Families and Local Government

Why Sectors?

Case Study: Local government

Blackburn and Darwen Council is a success• Multiple back office functions shared• Staff transferred• New jobs created • Inward investment achieved• Business links established• Savings re-invested in front line• BUT,

• Some Difficulties• 3 councils took 9 months to define ‘tarmac’ when planning

for a road management shared service GOVERNANCE PROBLEM

• OJEU’s define too narrowly PROCUREMENT CHALLENGE

Case Study: Health Sector

The Health Sector• The largest employer in Europe• Budget £79bn rising to £87.3bn in 2007/08• 22 million transactions pa in scope • 14,000 Finance staff• 619 Autonomous organisations

Shared Service Overview• Shared financial and accounting services for NHS organisations• 50:50 Joint Venture between the Department of Health and Xansa• Key response to Gershon review on public sector efficiency• Launched April 2005• >100 trusts signed up to date• The venture is past break even

Case Study: Health Sector Lessons

• You need the bigger customers to get economies of scale – experience in Health shows average 20% to 39%

• Payback seems to be possible within 30 months in even most expensive trusts

• Externally benchmark costs and performance, not just management judgement

• Mandated customers are a real pain - creating a “carrot based proposition” is much more successful

• Incentives and disincentives are essential - DH profits are shared amongst the customer base after necessary re-investment and capital charges, so added incentive above and beyond cost saving guarantees

• Warning: This model does not suit all, best where market is same but many different economically independent entities

Case Study: Home Office / Criminal Justice

The Home Office / Criminal Justice Sector• Circa 350,000 staff • Over 235 autonomous organisations• Four distinct types of organisation: Police, Courts, Prisons, Probation

Shared Service Overview• Six major shared service programmes

– Phoenix HR, Finance, Procurement– Shared Business Services HR, Finance, Procurement– HO Property General Estates– IT Shared Service Information Technology– HO Pay & Pensions Service Pay, Pensions– National Police Shared Service HR, Finance, Procurement

• Differing levels of maturity• Opportunity to converge and optimise shared service assets

Case Study: Home Office / Criminal Justice

• Establish a Governance structure that spans the full scope of organisations

• Restructures and machinery of Government changes can present opportunities when shared services give you scale and flexibility

• Take care when driving out synergies across operations – strike the balance of pace and risk

• Driving adoption of shared services requires a customer engagement approach that is ‘voluntary’, staged and relies on business development skills.

Conclusions

• Shared service is central to UK reform• All areas of public sector are doing it• Governance and culture of local

accountability key obstacles to overcome• Not about one size fits all• Is about delivering best value and freeing

up resources to be spent on more tailored front line services

• SHARING, SO AS TO BE DIFFERENT WHERE IT MATTERS!

© 2007 Microsoft Corporation. All rights reserved.This presentation is for informational purposes only. Microsoft makes no warranties, express or implied, in this summary.