Shared services: handle with care
Paul Simpson, Chief Technology Officer, Civica
The Government's clear commitment to improvements in public services has signaled the need for innovative thinking in the creation of efficiencies, especially from the back office. This has brought about the concept of shared services but this strategy must be handled carefully, in order for local authorities to meet their efficiency goals yet maintain their service levels.
A local authority provides many services to its community, not all of which have the opportunity to be shared. The selection of such services is one of the first challenges an authority faces before it even debates the issue of how to share and with whom. Additionally there may be political issues locally, such as employment, which have as much impact on the decision as practical reasons, such as efficiency. High volume transaction processing, for example Benefits Services can clearly be seen as having potential, particularly in the areas of efficiency gains through consolidated processing. However, benefits is a complex service which can deteriorate rapidly in periods of change or through unexpected peaks in workload. A sustainable, cost-effective approach to these challenges has proven difficult to find, with many authorities resorting to temporary staff. Whilst seeming to offer a quick and flexible solution, this often turns out to be expensive and produces work of variable quality.
Perhaps more challenging is what the term shared services actually means. Does it involve sharing with a neighbouring authority, a private sector partner or any other authority. Is it outsourcing or is it partnership? In many ways all the options are valid and must be measured in terms of efficiency against flexibility. Civica advocates a model where the "pooling" of human and technology resources can be developed in order to achieve economies of s Typical areas where this can help are In the management of workload peaks and troughs and facilitating high quality processing more likely to deliver a "right first time" service.
However, even when it is possible to develop a shared service, the concept should be handled with some care, based on common needs. This is about shared objectives and shared risk management with partners contributing the appropriate complementary skills and resource.
Civica's approach is to help local authorities to manage requirements jointly, together with an enabling private sector partner, for example in "top-up" processing. This fosters a style of collaborative working where the private sector partner supports participating councils to improve services by understanding each others' issues and concerns and by exchanging best practice. It can also maximise efficiency by managing the service demands in order to develop capacity. Moreover, the model can help to reduce the risk associated with any new service and serve to drive innovation and thought leadership in an area of common concern.
The key point however is that whenever services are shared, the local authority has to be seen to retain ownership and control. The citizen expects the local authority to be the body to which they turn when service performance slips, even if the actual work is being done somewhere else. The citizen must not be confused about who they are dealing with.
While shared services can develop efficiency and potentially take away some of the risk involved, they can never take away the responsibility.
Shared services: An essential tool
Robert Della-Sala ACFM, IRRV, MA MCMI
Head of Revenues and Benefits (Client Services)
The Government's clear commitment to improvements in public services has signaled the need for innovative thinking in the creation of efficiencies, especially from the back office. This has brought about the concept of shared services but this strategy must be handled carefully, in order for local authorities to meet their efficiency goals yet maintain their service levels.
Shared services have come to the fore since Sir Peter Gershon's 2004 review of public sector efficiency. Gershon said that authorities that share resources amongst themselves, such as back-office processing and call centres, will be more efficient and will release funding for front-line work.
Shared services, like outsourcing, have a simple aim: delivering services at the best possible value.
What's made shared services inevitable is the leap in technology. IT systems have become much cheaper, much faster,more secure, and more reliable, and we now have the communications to do many jobs remotely. This gives us more tools to deliver the necessary outputs. And it's our job to use whatever tools are available, to deliver services for a lower council tax.
Authorities can share a service whether they have outsourced that service or not. If their outsourcer uses shared services, there is a financial benefit which can be passed on to the council in the shape of lower prices.
Hounslow, for example, outsourced its Revenues and Benefits work 7-years ago (and some aspects of council tax processing are now handled as far away as Delhi). Without a shared service on hand, a call centre, for example, can reach capacity at peak times. Callers will be left on hold for long periods, and often simply hang up. If my department sends out two thousand summonses on a Monday, my call centre could get flooded. An outsourcer with several clients can arrange to stagger the summonses, so there is capacity at the shared centre to handle all the peaks in demand. Shared services ease the problems of recruitment, which is a tough problem in London boroughs. In particular, they take away the unknown costs associated with temporary staff, staff that have to be taken on at high rates to cover peaks of demand on a standalone service.
A shared service centre in the north of England can cover peaks for a large number of authorities, and retain its staff. That makes for a better service, because the longer people are around, the more expertise they have. And it lets us buy extra capacity at a fixed cost - something that cannot happen using temps or overtime.
Some people have imagined local authorities setting up shared services amongst themselves. In practice, I believe shared services will predominantly be based on private sector engagement with local government.
To set up and manage shared services, a group of authorities would have to take the risk of finding premises, setting up the services and staffing them. It would be a huge step for them to take - just on capital expenditure grounds. And the ongoing management would be a complex issue.
Authorities that find outsourcing a difficult step to take could use shared services as a more palatable step in that direction. A resource from a third party can meet peaks of demand for an in-house service. If it works well, the authority may consider full outsourcing. The difference is in the level of risk. When I outsource a shared service, the risk transfers to the provider, and resourcing the service becomes the supplier's problem.
There are limits to shared services, of course. Social service functions can't be run as shared services, and nor can other activities that are not process - driven, or need local knowledge .