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Review of major shared services initiatives

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The shared service agenda in Scotland mirrors developments throughout the world. Governments in Canada, USA, Australia, New Zealand and elsewhere in the UK have been exploring and adapting shared service models with the aim of achieving efficiency savings at the same time as improving service to their customers.

A review by the IS of some of the major national and international shared services initiatives shows that, whilst there are service and cost benefits:

  • public sector back office shared services do not generally deliver a positive return in less than five years 
  • building and maintaining workable relationships between organisations within and across sectors is a major long term investment that can be fragile and volatile 
  • plans are often over optimistic, managing change is under-estimated and costs can escalate significantly

We summarise some of the major initiatives in the table below. There are links to further information where it is available.

NHS Shared Business Services Net £250m over 11 years Initial feasibility 2001. In place since April 2005. Year 5

Customer guaranteed initial gross savings of at least 20% of their corporate services and a further 2% each year. Customer service takes two years to settle down.

HM Prison Service Net £120m over 9 years In place since April 2006 Year 6 Estimated 30% saving of gross costs of corporate services
Department of Transport Planned net £57m Online business case developed 2005 n/a £-81m Costs excluding severance escalated from £34.7m in 2005 to £113.6m in 2008
State of Western Australia (Audit Report (Jun 2007), Programme Review (Aug 2008)) $50m per annum by 2006 2002 ministerial directive, due for completion 2006 n/a 2003 - expected costs $91m
2006 - budget now $435m and due to complete by 2013
2009 - looks like complete in 2015 with full realisation of benefits by 2025
North Irish Civil Service Reform Programme - HR Connect Not available OJEU issued 2003, planned to complete implementation between Sept 2004 and Sept 2008 Not available

Capital cost increase from £5.5m to £37.8m.
Contract signed Mar 2006, implementation between Apr 2006 and Nov 2008. Delayed to Mar 2009.
Initial customer service complaints.

Five Councils (Finance, HR, IT, Procurement Shared Services, Central Scotland) Net benefit over 11 years of £46.4m Feasibility 2006/07. Not progressed. Year 6 Implementation costs of £20.7m.
Procurement benefit £48.9m out of total benefit over 11 years of £103.5m
NOSLA Revenues and Benefits (6 councils) Annual savings of £3.7m. NPV of £665,000 after 5 years. Feasibility study 2008/09. Under consideration. Year 5 (4.6 years) Implementation costs of £6.3m.
Recruitment Portal Saving of £4.3m to £6.2m a year Business case approved 2007. Implemented 2008. Year 3 Halving of time to hire.
40-60% reduction in advertising spend.
Positive applicant view of application process.

 


Last Updated ( Tuesday, 25 June 2013 11:54 )
 
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