Shared services plan: UK.gov hitches wagon to cloudy Oracle offering
What – no bonkers projected cost savings? You disappoint us, UK.gov
Another year, another government shared services strategy. This time Whitehall wants to roll out Oracle Cloud across departments - a move it says will require "substantive negotiations" with the Sopra Steria-run joint venture.
No estimated cost savings or timelines were included in the strategy (PDF), naturally.
The Cabinet Office's "Shared Services Strategy for Government" doc said the next step is apparently to "open and conclude negotiations" with the 75 per cent Steria-owned Shared Services Centre Limited (SSCL) outsourcer, which runs Oracle licences across a number of departments.
There is no publicly available ERP spend figure for departments, something the current shared services centres were created to manage. Annual licensing costs for Oracle, the largest provider, are thought to be around £300m. SAP is the second largest supplier, and is used by HMRC.
Insiders have said the government wants to renegotiate the SSCL contract, so Steria manages the software-as-a-service agreements directly with Oracle – rather than having layers of systems integrators involved – such as in the case of Fujitsu.
The 16-page doc said adopting cloud software "will lead to wider value" – pointing to the example of the Oracle Cloud Home Office pathfinder being extended to other departments.
The Home Office is currently trialling Big Red's Fusion, which allows any user to access the product via their internet browser.
Under the new strategy - which aims to roll-out Fusion across departments - the Cabinet Office reckons its will save a further 10 per cent - 15 per cent. But omitted to anchor that in any meaningful figure. "There is potential that further savings could be delivered through an increase in offshoring," it added.
"Departments will have a choice between Oracle, SAP, and a third modern flexible platform," it said.
"As established, leading ERP providers SAP and Oracle will create commercial tension and allow government to demonstrate commercial leverage during negotiations."
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According to its full-year company accounts for 2016, SSCL turned over £187.5m and made a loss of £3.81m. It paid out £58.9m in employee costs to 1,500 staff for the year.
That body was created under the last shared services strategy in 2011 – and had promised to save between £400m‑£600m per annum (PDF). However, it has fallen woefully short of that goal.
The National Audit Office revealed last year that while the shared services centres – run separately by IT provider Arvato and Sopra Steria – had saved departments £90m over two-and-a-half years, they have also cost £94m due to escalating costs and delays.
Since the centres were established, a raft of departments have dropped out of the programme, deciding it was not "commercially viable". Insiders have said the Arvato centre has all but crumbled into the dust.
No wonder this strategy didn't make the same mistake of including projected cost savings. ®