Government expects to save £1.8bn from back-office systems overhaul

The government intends to save £1.8bn over the next 15 years by deploying its shared services strategy, meaning back-office systems in Whitehall will be shared and modernised.

Its original shared services strategy, published in 2018, aimed for each department to procure its own enterprise resource planning (ERP) system. However, the government scrapped the idea and the updated shared services strategy was launched in 2021, aiming to create five shared service clusters for back-office systems, covering 18 departments and more than 100 arms-length bodies.

The government has calculated that if each department replaced their own systems, it would cost more than £1.7bn, but the shared services clusters will cost around £900m and generate £1.8bn of benefits through £500m in financial savings and £1.3bn in efficiencies.

Cabinet Office minister Jeremy Quin said the strategy “was created to offer better cross-government, streamlined services that relieve the burden of bureaucracy”.

“We want to free up civil servants’ time to focus on what they do best: engaging with and delivering for the British public,” he said. “This transformational programme is underway and demonstrates the important steps we’re taking to be more collaborative.”

The aim is to offer departments greater interoperability by linking back-office systems and being able to get a clearer picture of real-time data.

The five clusters, which all vary in size, will use central frameworks as the route to procurement for their systems, with the government hoping to complete the migration to shared services by 2028.

While the government is certain the programme will deliver the intended benefits, the National Audit Office (NAO) is less so.

NAO’s report on the programme in December 2022 said that the financial benefits of the plan remain unclear as the Cabinet Office was still not sure on the “extent of the benefits the programme can be expected to bring”.

At the time of the report, only three of the five clusters had obtained business case approval, “which will allow them to access the requisite funds for their shared services plan”, after HM Treasury rejected spending review bids from the clusters in 2021 due to there not having been enough work done to develop robust cost estimates or consider fundamental elements of the strategy.

“Clusters described the strategy as ‘exceptionally ambitious’ and the timeline as ‘challenging’. Progress is also being made in developing common data standards and processes, but there is also still a long way to go to ensure data and process standardisation across government,” the report added.

Departments were not consulted on which cluster they were allocated to by the Cabinet Office. Some departments also have the added complication of dealing with legacy systems where contracts are due to expire shortly and need to put in place contingency plans should the shared services not be ready by the time of contract expiration.

However, according to the government, some clusters are already seeing benefits of the strategy. The overseas cluster has already moved three legacy systems into one within six months, which has transformed business processes and offered a new HR and finance system for civil servants.

Shared services strategy director Nathan Moores said that he is proud of what has been achieved so far, adding: “We have seen phenomenal progress, collaboration and delivery across government. We are on a journey to ultimately improving the daily working lives of civil servants by creating more joined-up systems and services, saving time and money for the taxpayer.

“I look forward to working with all colleagues over the next 12 months and delivering further milestones set out in the strategy.”