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Cabinet Office failed to manage risks around migration to shared service centres, says NAO

The government’s delayed programme to migrate back-office functions to two shared service centres is not achieving value for money, lacks an integrated business case and has failed to track additional costs incurred, says the NAO

The government’s shared service centres programme, which aims to provide back-office functions for up to 14 departments and their arm’s-length bodies, has been dogged by delays and increased costs.

The government claimed to have saved an estimated £90m to date by outsourcing and transforming back-office functions, having invested £94m in the programme so far. 

However, the delays have led to increased costs, but according to the National Audit Office (NAO), the government has not tracked the additional costs incurred by having to extend existing contracts.

In 2013, Whitehall announced plans to save £600m per year through the two shared service centres – one provided through the divestment of the Department for Transport (DfT) Shared Service Centre to Arvato, the other provided by Shared Services Connected Limited (SSCL), a joint venture between Steria and the Cabinet Office.

Faulty business case

An NAO report into the programme found that the Cabinet Office “did not develop an integrated programme business case to include both independent shared service centres and the customer departments” and failed to manage the risks around the move.

“The Cabinet Office did not develop an integrated business case for the strategy that consolidated the business cases for each independent shared service centre and those for each of the potential customer departments for Arvato’s shared service centre,” the report said. 

“This means it has been difficult to demonstrate to customers the impact of their decisions on the programme and the importance of making decisions with the programme’s objectives in mind.” 

The report also said departments weren’t convinced about the merits of the shared service centres, with some saying they “felt pressurised into joining the programme”. 

“Several departments were unhappy not to have been sufficiently consulted on key elements, such as the appointment of Steria, which they consider to have been undertaken too quickly,” the report said. 

Single operating platform failure

As part of the plans, the organisations would also have to adopt a single operating platform by April 2016, in a bid to standardise systems and processes. However, the NAO report found that only two of the 26 government organisations had migrated so far, and none of them had met the deadline for the migration.

“Only the Maritime & Coastguard Agency has migrated to Arvato’s single operating platform. All other customers have not migrated on their planned migration dates,” the report said.

The SCCL centre isn’t faring much better, with only the Environment Agency migrating to its Oracle-based single operating platform.

“Across the two centres, organisations that have not yet agreed plans to migrate are currently behind schedule by an average of 14 months,” the report said.

There are currently 888 outstanding change requests across the two centres. 

Government and suppliers both to blame

The blame for these delays falls with both suppliers and the government. In Arvato’s case, there have been several issues with planning and project management.

“Arvato’s plans for the user acceptance testing phase of migrations have continued to allow only six weeks for this activity, despite it taking several months in attempted migrations – which in itself is an indicator that there are residual problems with the platform design,” the NAO report said.

“Arvato has encountered significant issues with data migration, citing problems with extracting data from the existing systems that it owns and manages under the contract,” it said. The supplier also failed to respond to change management requests.

SSCL, on the other hand, has struggled to produce migration plans “at key moments and with sufficient detail to the approval of the customers”.

“The government believes that SSCL failed to develop an offshoring solution in line with the accreditation requirements of the contract and that those requirements were clear, although SSCL believes that there were changes in the requirements which meant a previously approved plan was no longer fit for purpose,” the report said. 

Out-of-date tech 

The programme has now taken so long that the “current programme plan and system designs may be out of date”. The government is now in dialogue on the future of the service centres. 

“For Arvato, government department customers other than the DfT [Department for Transport] have withdrawn from their shared service centre contracts and will seek other arrangements,” the report said.

 “For SSCL, delays and changes in scope have led to significant costs for the government and SSCL, and while committed to the future of shared service centres, both parties are discussing how the plans need to evolve.” 

Amyas Morse, head of the NAO, said the Cabinet Office was beginning to find its role in leading the programme, but the delays meant technology had moved on.

“The Cabinet Office’s failure to manage the risks around the move to two independent shared service centres from the outset means the programme has not achieved the significant anticipated savings and benefits to date,” he said.

“The programme will only achieve value for money in future if the Cabinet Office shows clear leadership, and government accepts the need for collaborative and flexible behaviours from all departments involved.”

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