Strong leadership essential to shared services strategy, warns PAC

The Cabinet Office must show strong leadership if it is to make shared services work, the Public Accounts Committee (PAC) has warned

The Cabinet Office must show strong leadership if it is to make shared services work, the Public Accounts Committee (PAC) has warned.

The comments follow a PAC report, which echoes the National Audit Office’s findings in March that the government’s £1.5bn five shared services centres have cost £500m more to build than originally forecast.

Margaret Hodge MP (pictured), chair of the Committee of Public Accounts, said she welcomed the Cabinet Office's ambitious strategy for improving shared services. 

“But unless it learns from the past it will end up making the same mistakes again,” Hodge said.

“In particular, the Cabinet Office must show much stronger leadership. 

"In the past, it has left it up to individual departments to decide whether they use shared services. Departments which do use shared service centres have been allowed to stick to their own ways of working rather than using a single system suitable for all, undermining the scope for efficiency savings.

“It is extremely frustrating that the Cabinet Office has ignored recommendations made by this committee in our previous reports. We expect it to engage constructively this time around."

Since 2004, central government has sought to reduce the cost of administering finance, human resources and procurement services through sharing back-office functions. 

The new strategy contained risks and had a particularly challenging timetable for implementation, said Hodge.

“The Cabinet Office must drive cultural change to secure the intended savings. The Cabinet Office should also develop comparable data on the cost and quality of services provided by the shared services centres, which should allow it to establish a baseline for current performance and set benchmarks for improvement,” Hodge said.  

"It should consider whether it can extend its shared services strategy to include other common functions needed by central government departments.”

Speaking at a select committee earlier this year, former Cabinet Office permanent secretary Ian Watmore told Hodge that the government stood a better chance of succeeding in shared services implementation because more ERP options were now available, specifically smaller-scale cloud solutions other than just Oracle and SAP products.

“We have regarded the past as a sunk cost,” he said. “We have learnt lessons of sharing. So the strategy is now to get three to four departments to finish the job themselves and get the rest of Whitehall to join up."

Watmore said that big departments such as HMRC, the Ministry of Defence (MoD) and Department of Health (DoH) would have their own shared services centres, with other departments piggybacking those services.  

“The lesson learnt from shared services is: do them vanilla, so it’s simple and re-usable,” Watmore said.

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