Outsource Magazine

What is the state of play in the public sector? Recent news stories regarding massive cost overruns in - and the possible cancellation of - Western Australia's hitherto-lauded Office of Shared Services have brought questions over the value of shared services in the public sector right back up the agenda. However, even in this case matters are hardly cut and dry. Here are a few points worth considering when tackling the ever-thorny question of public sector shared services...

1.Organisations have no real understanding of what an operational SSC organisation delivers in the public sector because so few exist and where they do the track record of success is poor. However, since 2010, SSCs are maturing and beginning to deliver effective target operating models.

2. Organisations have insufficient numbers of internal SSC professionals and many rely upon contractors. Recruiting SSC professionals into public sector is very difficult but there is a growing number of SSC practitioners with not only private but the all-important public sector experience.

3. SROs believe investing in expensive ERP systems like Oracle will deliver the new management buzz word "shared services". Too many SROs are overly influenced by effective selling professionals from ERP vendors and SI companies.

4. Partnering with another organisation to create a joint arrangement via an MOU or JV SSC is time-consuming and requires senior stakeholders to re-define their understanding of what makes a good partner. They personally have to committed to building relationships across organisational boundaries, political control and local rivalries.

5. When SROs become shared services evangelists they have to then remember to take the time and actions necessary to engage their directors and middle managers. Threatening them with outsourcing is not helpful in building commitment within the organisation.

6. SROs have to support an investment in ‘business change management’ alongside the investments to build the SSC organisation and deliver ERP otherwise no business transformation will take place and the business case benefits and savings will not be realised in three or more years' time.

7. The scope of shared services must extend beyond traditional organisational centralised functions of Finance and HR. The SSC service footprint supported by ERP must extend to procurement, estates, logistics and budgeting/planning within the organisation in order to deliver savings over a ten-year period

8. There has never been a better time to implement SSC given the economic climate, the need to protect front line services and the maturity of ERP systems like Oracle R12 with the new shared services functionality in a single instance, on a hosted platform with no major customisations. ERP systems are not the primary reason why public sector SSCs fail.

9. Internal SSC centres by sector should be mandated by the respective funding organisations or the Treasury. External management teams (not consultancies) should be parachuted into the new SSC organisations or JVs to deliver the SSC organisations as fully operational and customer-focused businesses delivering savings back to the partner organisations.

10. Not investing in a SSC arrangement is a crime because at least 20 per cent of public expenditure is being wasted on overstaffed internal functions, managed often by unqualified staff and with no real measuring systems in place to drive down annually the cost of delivering services. Therefore, implementing shared services is the proven way to deliver back office savings and protect frontline services.

About the Author

Colin Grace has been implementing shared services since 1993 and his career in the public sector dates back to 2000. He has worked extensively across central government, the NHS, local government, university and research organisations. He is currently working with a number of police forces in England to create a multiforce SSC model under a JV arrangement. Colin is a director at Praktis.