Shared Services
What is the Shared Services Team?
The Shared Services Team is part of the Prime Minister's Delivery Unit in the Cabinet Office. Established in mid 2005, the team consists of a small number of public and private sector professionals with specialist expertise in shared services and corporate transformation programmes.
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What do we mean by shared services?
- Deploying shared services involves separating the transactional operations of a business or function into a self contained unit which is reorganised to deliver more effective service at lower cost. Savings made through sharing can then be passed to front line services to improve public services.
- There are already good examples of operational shared services which have shown both financial benefits as well as tangible improvements to public services.
- CivicWatch is an example of successful front office sharing in Westminster, London. Police, Council Housing, City Guardians and the Fire Brigade amongst others, meet regularly to generate and share intelligence to develop pro-active policies and inform problem solving with the overall aim of improving the sense of public safety and community confidence. They have seen:
- Significant crime reduction – 67 percent reduction in street crime within 3 years
- Reduced anti social behaviour
- Reduced costs of estates renovation costs
- Transport for London is an example of shared corporate services, in this case HR. The service covers all services to 20,000 staff, from recruitment through training, pay and management to retirement. Their achievements include:
- Completion in 15 months (from inception & design through to implementation and operation)
- 20% savings in first year of operation
- 30% head count reduction in first year
- The Shared Services Team will initially focus on sharing corporate services, specifically HR and Finance, but in the future the focus will shift to include services such as IT, Procurement and front office services.
This will be done through:
- Creation of economines of scale through consolidation.
- Collaborating to approach the market place effectively.
- Standardising on the use of best practice processes.
- Setting up service management structures and capabilities through key performance indicators and and Service Level Agreements.
- Adoption of key principles for implementation, ongoing governance and management of shared services.
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How is the Shared Service Team helping deliver this change?
Three key workstreams exist:
- Shared services in Government
- The shared services supplier market
- Shared service support and tools
Together the workstreams drive understanding in government departments about:
- the benefits of shared services;
- how to go about achieving a successful shared service and with whom;
- how to avoid and solve some of the pitfalls and difficulties during the transition from an existing organisation to a shared one;
- the key characteristics of an effective shared service; what it looks like and how it should perform;
- what is expected from suppliers in order to make the solutions they provide transferable, cost effective and of common design and
- how to share best practice through a knowledge bank of information, case studies and face to face experience sharing at all stages of the transition journey.
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Where has the drive towards sharing come from?
The Gershon Efficiency Review 2004 identified a range of efficiency programmes across the public sector. Corporate Services (HR, Finance, IT, Procurement) was seen as a key area for improvement across the public sector.
The Transformational Government strategy (Nov 2005) highlighted three themes:
- Making services citizen and business centred;
- Delivering a step change in the professionalism with which technology is delivered to government departments and
- Encouraging a shared services approach to release efficiencies across the system and support delivery more focussed on customer needs.
The areas in which sharing has been identified as valuable are:
- Rationalisation of Service Centres
- Common Infrastructure
- Corporate Services
- Data Sharing
- Information Management
- Information Assurance and Security
- Convergence of Electronic Gateways
- Technology standards and architecture
- Shared Culture
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What are the benefits from sharing services?
Benefits can be classified into three groups.
Better Services
- Reliable consistent management information. An easily accessible repository of organisation level data can be formed. Users can, for instance, obtain reliable information on personnel from a single organisation–wide source, instead of referring to multiple inconsistent sources;
- Embedding financial management control. Control features such as authorisation levels can be embedded in the workflow processes thereby ensuring their adherence;
- Making it easier for professionals to provide value–added services. Both through reliable, consistent data and management information and by freeing them from routine transaction processing tasks;
- Consistent, timely period end close. Typically a shared service should be able to operate a faster, more reliable close.
Cost savings
- Typical average savings for HR normally in range 30% to 50%, and Finance 20% to 30%;
- Examples from the Public Sector; TfL 30% in first year, NHS 20%+;
- Spreading investment between many individual organisations.
Employee experience
- Professionals are able to use skills more effectively;
- Business staff can rely on consistent reliable processes and systems;
- Employees working in shared services are provided with a career path and the chance to develop their professional skills and a working environment where their skills and abilities are valued.
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What activity falls under the remit of the Shared Services team?
In due course, all non core activities (i.e. those not critical to the distinctive remit of the organisation) should be covered. The intial focus of the Shared Services Team will be:
- HR
- Finance
- IT infrastructure
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What are the critical factors that lead to a successful implementation?
A successful Shared Service implementation will in general require:
Adequate Scale
Increasing scale enables:
- Realisation of operational efficiencies; for instance through improved utilisation of management supervision overhead;
- Sustainability of services and service levels (e.g. to ensure that service coverage can be maintained or that there are adequate personnel to create a centre of excellence);
- Better payback on development costs, many of which are fixed in nature.
Recent research in the UK public sector and best practice in the private sector indicates that a minimum of 20,000 customer employees are needed for a shared service facility to provide good value with better returns achieved when 50,000 or more employees are served. Over time, the increasing opportunities to fully automate processes mean that the optimal scale is getting larger.
Effective governance and programme management
- Ensuring early agreement on the service offering;
- Clear commercial and service management agreements;
- Alignment to the sector plan to ensure commitment;
- Understanding the difference between customer and owner roles;
- Commitment to making decisions at pace.
Using expert capabilities
Shared services is a discipline in its own right and has not historically been delivered by the public sector. Designing and implementing such services can and should be done quite quickly and with a high likelihood of success. Expert capabilities can ensure the process runs smoothly.
Ensuring that transition processes in particular are approached with expert resources will minimise risk and ensure that the organisations:
- Benefit from the transformation in their retained organisations, otherwise full benefits will not be achieved and there is a likelihood of ‘snapping bac’ into old ways.; and
- Actively support the implementation of transaction services;
Making good use of the supplier market
Using collective buying power and ensuring smaller organisations can access the best providers is key.
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Will I lose control when moving to a shared service platform?
No. Experience shows you will be less focussed on routine transactional problems and will have more time to deliver value added decisions, use information better and have better access to support.
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My department is different. How can it work for me?
Experience across a variety of organisations (NHS, MoD, TfL, DWP, CO & HMT) has shown that basic operational processes are sufficiently similar to be standardised.
Multiple access channels (e.g. Phone, Internet, Tier1/ 2 levels of customer support) give flexibility to cater for different working environments.
Sharing what can be done in a standard manner enables organisation to focus on what makes them truly different.
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How can I get more information about all aspects of shared services?
Go to the toolkit to access the large range of assistance.
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Why have you adopted a ‘sector‘ approach?
Implementing shared services across the UK Government is a substantial undertaking. There are more than 1300 organisations, with well over 5 million employees. Most of these organisations are relatively small, autonomous bodies that could benefit significantly from the scale efficiency that sharing offers.
To help plan shared services across such a landscape, nine sectors of Government have been identified. Each sector is preparing a ‘Sector Plan’ for shared services with the assistance of the Cabinet Office's Shared Service Team.
A sector approach means that:
- Shared service planning and implementation is broken down into manageable chunks that have a greater degree of control and are more likely to succeed
- Investment across government can be optimised
- Risk is reduced enabling more effective monitoring and early warning systems.
- Supply and demand can be better monitored and matched
The nine sectors are:
- Education 1.2m employees: HE, FE, Schools & Children
- Health 1.2m employees: NHS & SHAs
- Home Office including Criminal Justice 330k employees: Prisons, Police, Others
- Defence 340k employees: Civilian & Military
- Revenue and Customs 100k employees
- Work and Pensions 120k employees
- Families 65k employees
- Defra, DfT, TfL, others
- Rest of Central Government 95k employees: Whitehall 2, others
- Local Government 2.2m employees
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Isn't shared services just outsourcing by another name?
While the terms are related, shared services and outsourcing are different concepts. Moving to shared services means a fundamental change to an organisation's service delivery model. Shared services generally will drive, or be a part of, an organisational and functional transformation that leads to lower cost and/or better quality services.
Shared services can make extensive use of the private sector or use internal resources or some combination to deliver the transformation.
Transformation will not generally be the reason why an organisation adopts outsourcing.
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Is shared services an IT project?
No. Shared services is not an IT project. Shared services is a major cultural shift for the wider public sector. To facilitate this shift, barriers and disincentives to sharing have been identified by HM Treasury and the Cabinet Office and these are currently being addressed.
Supporting this cultural shift, the aim of central departments (HM Treasury, Cabinet Office, Department for Communities and Local Government, the Devolved Administrations and the Office of Government Commerce) is to create a landscape more conducive to sharing.
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