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Rumours of Shared Service Benefits Greatly Exaggerated

Rumours of Shared Service Benefits Greatly Exaggerated

A new research report on shared services in the UK public sector finds the short term impact of shared service initiatives is being greatly exaggerated, and predicts promised savings targets will not be achieved.

The report, prepared by e-government and public sector technology experts Kable, concludes shared services will provide long term benefits in the delivery of citizen-centric services, but suppliers will find a more modest market than some have forecast.

The report contradicts claims by the BuyIT Best Practice Network, which has been working with the government on take-up of shared services, that the government could save up to £40bn over the next decade by sharing services across public sector human resources and finance functions.

BuyIT's practice guide, released in December last year, concluded government finance and HR services alone cost £9bn a year more than necessary, the costs of 15 new hospitals, 200 miles of motorway, 30 new secondary and 50 primary schools each year.

It advised public sector bodies to consider sharing services that are common across different sectors, such as IT, finance and procurement.

But Kable highlighted the turf issues confronting governments keen to achieve shared services, and noted shared service arrangements always involved a loss of control and reduced ability to influence priorities and future directions.

And it pointed out the cost benefit that may flow from an initiative rarely finds its way back to the agency concerned. "There have been estimates of savings of up to £40bn over 10 years for the UK public sector from shared services, but Kable believes it is more realistic to assume that shared services would deliver a long term saving of some 20 percent - or £2bn - of the estimated annual cost of otherwise providing certain corporate services. This is broadly in line with the expectations of current public sector projects, and comparable with actual results achieved in commercial organisations," Government Computing reports.

The research company expects finance and HR to represent 70 percent of the potential scope for shared services, with a further 10 percent represented by revenues and benefits, and 20 percent from miscellaneous, smaller scale and sector-specific initiatives. It predicts over the medium term most of the measurable benefits will be achieved in the back office.

Meanwhile Gartner vice president Asia Pacific Richard Harris says while pressures over cost and paucity of resources have driven most Australian government shared service initiatives to date, it is the smallest jurisdictions which have been most successful so far.

"Local governments have probably the longest history in Australia with shared services," Harris says. "A decade or more ago they pioneered many shared initiatives, driven largely by their lack of resources and preparedness to do this jointly with other Councils, especially where they had trusted personal relationships. In more recent times, state and territory governments have been the most enthusiastic adopters of shared services, again largely driven by pressures over cost and paucity of resources. Success has so far been strongest with the smallest jurisdictions. For example, the Northern Territory and ACT have the most developed - and accepted - shared services arrangements in place."

Harris says while there are aggressive moves in across government to achieve shared services, including the HeatlhSmart project, and aggregation of human services at the federal level, these projects are very high risk and success is by no means certain.

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