Headlines: October 17th, 2005

Procurement was identified in the Gershon report as the most fruitful source of efficiency savings across the public sector. This top slot has now been taken by shared services, where a number of central departments, agencies or local councils share common services such as human resources or finance. Although procurement is still likely to deliver the highest immediate cash savings which can be readily quantified, shared services are driving the transformation process. Delivery requires radical thinking which leads to structural change and a shift in culture. The effect is much more far reaching than short term cash savings.A Shared Services team, headed by David Myers, has been set up in the Cabinet Office to look at how government and the wider public sector can achieve significant savings and increased effectiveness from modernising the provision of corporate services. There are over 1300 public sector organisations in the UK and this gives considerable scope to consolidate to share services across organisational boundaries so that common processes are provided faster, better and cheaper.

More than half of Financial Directors in Local Authorities plan to implement a shared services strategy in the next year, according to a recent report carried out amongst finance directors in 26% of the UK’s local authorities. The report was commissioned by Serco Solutions to canvas opinion towards the Gershon Review and to find out what strategies are being implemented to achieve the savings set out in the review.

The report reveals that the majority of local authorities plan to help realise efficiency savings through sophisticated partnering arrangements. 51% plan to do this in the next twelve months and an overwhelming 86% of finance directors support the principles of sharing support services. The three departments which will benefit most from ‘sharing’ are: revenues and benefits, 37%, transactional services, 24%, and IT 21%.

David Myers, head of the Cabinet Office team has warned that the public sector could disrupt the market by making a concerted move to shared services. A surge of public bodies transforming back offices could have major ramifications for vendors due to the market’s immaturity. The market would grow too quickly for the private sector to respond.