Public sector could save billions through shared services

That's 15 hospitals, 30 secondary schools, 50 primary ...

By eGov Monitor Weekly, 14th December 2005

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The government could save up to £40bn over the next decade by sharing services across public sector human resources and finance functions, researchers claims.

The BuyIT Best Practice Network, which has been working with the government on take-up of shared services, makes the estimate in a best practice guide published this week.

It calculates that government finance and HR services alone cost £9bn a year more than is necessary, the equivalent of 15 new hospitals, 200 miles of motorway, 30 new secondary and 50 primary schools each year.

The guidance says that to contribute to savings public sector bodies should consider sharing services that are common across different sectors, such as IT, finance and procurement.

By standardising processes such as these, it says will result in greater efficiency and less duplication or overlap between different agencies.

To begin with, the guidance says public sector agencies should carry out assessments of possible shared service partners to establish a list of organisations with similar aims.

Depending on factors such as the size of the organisations involved and the desired outcomes of partnership working, the guidance says there are a number of different commercial structures that can be applied to shared services.

These include the unitary model, where one single organisation consolidates and centralises a business service, the joint initiatives model, where two or more bodies set up and operate shared services and outsourcing, where a third party takes on the running of a department’s service.

Once a model has been agreed, the guidance recommends benchmarking to enable organisations to learn from each other and continue improving.

However it warns these should be used "with caution" as benchmarking data can sometimes be unreliable.

Shared services is a central theme of the Cabinet Office’s Transformational Government strategy, through which it hopes to modernise services and save money,

In an interview with eGov monitor, David Myers, director of the shared services programme in the Cabinet Office, said: "There is every reason to suggest that front line services (particularly within local government), can benefit significantly from a sharing approach. Sharing is now implicit within our Transformational Government Strategy, and requires a major cultural shift across Government."