Government publishes shared services plan
Next generation back office shared services programme expected to drive £400-£600m annual efficiency savings
The Cabinet Office has published an "ambitious" strategic plan which lays out how it will implement, operate and manage a programme for shared services within central government.
The plan, for Next Generation Shared Services (NGSS) hopes to save £400-£600m each year from back office administration costs as the government seeks to ensure that the back office "plays its part in the deficit reduction programme."
The NGSS strategy has the backing of government departments as well as the Civil Service and its most senior civil servants, including Sir Bob Kerslake, head of the Civil Service and Sir Jeremy Heywood, the Cabinet Secretary.
Its key actions include:
- Creating two independent shared services centres (ISSCs) that will operate in a contractual relationship with its customer departments. ISSC1 is expected to be provided through the divestment of the Department for Transport (DfT) Shared Service Centre to an outsourced provider with ISSC2 built on the Department for Work and Pensions' Shared Service Centre
- Creating and operating a 'crown oversight function' that works with departments to deliver improvements in the quality of service and reduction in the operating costs of shared services and drive the strategy forwards in co-operation with departments
- Providing oversight, sharing of best practice and benchmarking facilities to three 'standalone' departments: the Ministry of Defence (MoD), HM Revenue and Customs (HMRC) and the Ministry of Justice (MoJ)
The government hoped to have the crown oversight function and benchmarking process in place at the end of 2012, with an ISSC1 operating partner in place by March 2013, and an ISSC2 partner in place by March 2014. It then hopes to have most migration and transformational work completed by the end of 2014.
As well as the plan's savings of £400m-£600m a year if all departments achieve 'upper quartile benchmark targets' for the whole back office function, the headline benefits also include £128m of savings on transactional savings by implementing a consolidated shared service strategy through scale savings, efficiencies and lower enterprise resource planning (ERP) costs.
The plan also recommends that 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 as well as around £32m of system upgraded costs that would be avoided through system consolidation.