The UK government has announced fundamental changes to the way it shares corporate services in order to improve efficiency across departments, champion egovernment and save taxpayers up to half a £ billion a year.
The Next Generation Shared Services Strategic Plan outlines how government departments and arms-length bodies will work together to share functions such as HR, procurement, finance and payroll to deliver potential savings of between £400 and £600 million a year in administration costs.
Civil Service Reform Plan
The Civil Service Reform Plan published in June, made clear that the Civil Service needs to move further and faster than ever before to share a wide range of services and expertise, and this is a key step towards reaching that goal. The strategy sets out a new model of five service centres instead of the current eight – two independent and three standalone.
Minister for the Cabinet Office, Francis Maude MP, said:
” Sharing services simply makes sense. There is absolutely no need for departments and arms–length bodies to have their own back-office functions, and duplicate efforts, when they can be delivered more efficiently by sharing services and expertise. Plus it will save the taxpayer half a billion pounds a year. That’s why we have taken action and fundamentally changed the way central government departments share their services.
We want sharing services to become the norm, so every department has high quality, flexible and resilient services available. This means they can focus on their priority of implementing policy and delivering key public services.
The world is changing and so must the Civil Service. We are in a global race, and are faced with rising public expectations and spending cuts to deal with the deficit. The Civil Service needs to do things faster, be smaller and to provide more services online. It needs to be more unified so we have an exceptional Civil Service delivering the best for Britain.”
The Shared Services Strategy has several key objectives with IT systems playing an important role in delivering long-term benefits. These include:
- Delivering a lower cost of service
Overall, shared services should see a reduction in departmental transaction costs of 25%‑40%.
- Delivering a quality service
The aim of the shared services is to have not only satisfied customers but also loyal customers – customers who are not afraid to look for improvements and innovation but who are prepared to work with the providers to achieve it
- Return on Investment
The headline benefits, if the strategy is implemented and used as the catalyst for driving performance levels across shared services and retained departmental functions, are:
- £400m‑£600m per annum of savings if all departments were to attain upper quartile benchmark targets
- £128m of which are savings on transactional services by implementing a consolidated shared services strategy through scale savings, efficiencies and lower ERP (Enterprise Resource Planning) costs.
- ERP annual operating costs could be reduced by more than 40% through consolidation and by up to 70% through the use of lower-cost ERP solutions alongside approximately £32m of avoided system upgrade costs through system consolidation.
- Removing barriers to inclusion
Current barriers might include: lack of a commercial service for smaller departments; no independence of delivery or governance for major departments; VAT unable to be claimed by smaller departments; security classification expensive; accounting officer assurance; Green Book accountancy rules make services expensive; lack of understanding about being a ‘good provider’ and a ‘good customer’