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Cabinet Office calls for government departments to move to shared services model

Kathleen Hall

The Cabinet Office has released guidelines on how central government departments could accelerate the move to shared services as a means of cost cutting.

In its report "Shared Services: a Strategic Vision", the Cabinet Office called for a standardisation of back-office services and functions to cut the estimated £2.5bn spend on HR, finance and procurement in Whitehall last year.

According to the document, the Department for Work and Pensions, the Home Office and the Ministry of Justice have already made respective savings of £35m per year, £13m and £20m through their back-office shared services centre.

But the report said in many cases services are joined up rather than truly shared, with much scope for improvement.

The report said a move to shared services would dovetail with a number of departments due to upgrade their supporting IT systems for back-office corporate services in the coming years.

Large departments with enterprise resource planning (ERP) platforms need to prepare for the expiration of support to the current instance by 2013, for example. This presents an opportunity to source a "vertical" solution for a "cloud-based" ERP standard platform which departments could buy into and from, said the report.

The vision statement follows an announcement from the Department for Transport (DfT) to spend £750m on a shared services centre, after the failure of the DfT to create such a model in 2005.

Over the next three months, the Cabinet Office Efficiency and Reform Group will be conducting a due diligence exercise to develop a shared services migration plan, and a cost and benefits analysis. This work will be reported in November 2011, said the Cabinet Office.

The Cabinet Office's lessons learnt from shared services to date:

Independence is important to incentivise a better quality of services at a lower cost.

Delivery of shared services is not a core government skill and bringing in operational and commercial expertise is vital to improving current capability.

Smaller organisations need an affordable solution as recruiting a bespoke service can be expensive.

Shared services should be thought as comprising a range of key components that influence cost and require standardisation, such as infrastructure, IT platform, ERP, business change, and business processes.

Strong governance is essential and efficiency gains are proportional to the level of mandation in the use of shared services.


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