Government targets £600m savings through shared services

The government aims to save £600m per year through its Next Generation Shared Services Strategic Plan

The government aims to save £600m per year through its Next Generation Shared Services (NGSS) Strategic Plan, which the Cabinet Office has dubbed as "ambitious but not without risks".

Under the plan, Whitehall will create two shared services centres, one of which will be provided through the divestment of the Department for Transport (DfT) Shared Service Centre (SSC) to an outsourced provider, with the other provided through the Department for Work and Pensions’ (DWP) centre.

The move follows news last year that the government’s previous £1.4bn shared services centres failed to achieve value for money, according to a report from the National Audit Office (NAO).

Stephen Kelly, Cabinet Office chief operating officer, said: “The programme is ambitious, yet achievable. Goals include improved service quality, value for money and price certainty. Performance benchmarks have been set to monitor the shared service centres which will be supported by robust governance.”

Enterprise resource planning (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 alongside approximately £32m of avoided system upgrade costs through system consolidation under the plan.

Costs for Oracle ERP per employee vary from £160 per person, to £89 at the DWP. A single low-cost ERP solution would show an average saving of 67% against the Oracle average. This is based on user levels expected for small organisations, so a larger user base would provide a greater level of savings, said the report.

“The programme recognises that the plan is ambitious and not without risk; however, it is the most pragmatic way forward to build on the current implementations of shared services rather than starting from scratch,” said the Cabinet Office in its report.

It also flagged up concerns around cultural issues. “There is a risk that departments may be unable to agree common processes, or may simply decline to join the NGSS programme on the basis that it does not deliver sufficient benefit for the individual department,” it said.

“These factors are being addressed through early engagement with departments to ensure alignment and participation,” added the Cabinet Office.

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