March 2007 United Kingdom Government Shared Services David Myers

1. March 2007 United Kingdom Government Shared Services David Myers

2. Agenda • Shared Service Vision • UK Government in Context • The Opportunity • Why Sectors? • Case Study: Local Government, Health Sector and Criminal Justice

3. Shared Services Vision “to make a meaningful and lasting contribution to the government’s broader citizen-centred transformation of public services by freeing people, time and money to focus on front-line service delivery“

4. UK Government in Context • UK Government • £500bn, 6-8% overheads typical = up to £40bn • 1300+ Public Sector organisations will invest in Shared Services • Much of this investment duplicated • Too many driven by IT • Culture of sharing not prevalent (white space everywhere) • Public sector must learn from the Private Sector • Economic and social impact • Complexities of public sector may cause sub optimal governance • Key Considerations • Making shared services a political imperative • Driving shared services using common methods and with ambitious targets • Structuring the market to facilitate the sharing of service offerings • Accelerating delivery and reducing risk

5. The Opportunity • Benefits • Efficiency • Effectiveness • Employee value add • Improvements in business process, data and IT systems • Support of other initiatives – Lyons, Productive Time, Procurement • Objectives • Optimise investment decisions through re-use and sharing • Dramatically reduce the number of locations • Coordinate the approach to interacting with the market (MOU’s) • Use standard structures, processes and technology • Match the best performance levels in the private sector • Enable public sector staff to concentrate on strategy and high impact activities so CREATED 9 GOVT SECTORS FOR SHARING

6. Why Sectors? A sector can be thought of as a grouping of organisations for the co-ordination of the planning and delivery of shared services. • Why Sectors? • Manageable chunks, risk reduction and greater degree of control • Optimise investment across Government • Sector Plans - Objectives, Scope, Route-map, Benefits & Investments, Implications, Risks & Issues and Governance • How do we determine sector groups? • Close relationships between organisations within a sector • Sectors ideally contains a large number of similar organisations • Making use of existing mechanisms and arrangements • Which Sectors were agreed? • Criminal Justice, Health, Education, Work & Pension (DwP), Ministry of Defence (MoD), Her Majesty's Revenue & Customs (HMRC), Rest of Central Government, Families and Local Government

7. Case Study: Local government Blackburn and Darwen Council is a success • Multiple back office functions shared • Staff transferred • New jobs created • Inward investment achieved • Business links established • Savings re-invested in front line • BUT, • Some Difficulties • 3 councils took 9 months to define ‘tarmac’ when planning for a road management shared service GOVERNANCE PROBLEM • OJEU’s define too narrowly PROCUREMENT CHALLENGE

8. Case Study: Health Sector The Health Sector • The largest employer in Europe • Budget £79bn rising to £87.3bn in 2007/08 • 22 million transactions pa in scope • 14,000 Finance staff • 619 Autonomous organisations Shared Service Overview • Shared financial and accounting services for NHS organisations • 50:50 Joint Venture between the Department of Health and Xansa • Key response to Gershon review on public sector efficiency • Launched April 2005 • >100 trusts signed up to date • The venture is past break even

9. Case Study: Health Sector Lessons • You need the bigger customers to get economies of scale – experience in Health shows average 20% to 39% • Payback seems to be possible within 30 months in even most expensive trusts • Externally benchmark costs and performance, not just management judgement • Mandated customers are a real pain - creating a “carrot based proposition” is much more successful • Incentives and disincentives are essential - DH profits are shared amongst the customer base after necessary re-investment and capital charges, so added incentive above and beyond cost saving guarantees • Warning: This model does not suit all, best where market is same but many different economically independent entities

10. Case Study: Home Office / Criminal Justice The Home Office / Criminal Justice Sector • Circa 350,000 staff • Over 235 autonomous organisations • Four distinct types of organisation: Police, Courts, Prisons, Probation Shared Service Overview • Six major shared service programmes • Phoenix HR, Finance, Procurement • Shared Business Services HR, Finance, Procurement • HO Property General Estates • IT Shared Service Information Technology • HO Pay & Pensions Service Pay, Pensions • National Police Shared Service HR, Finance, Procurement • Differing levels of maturity • Opportunity to converge and optimise shared service assets

11. Case Study: Home Office / Criminal Justice • Establish a Governance structure that spans the full scope of organisations • Restructures and machinery of Government changes can present opportunities when shared services give you scale and flexibility • Take care when driving out synergies across operations – strike the balance of pace and risk • Driving adoption of shared services requires a customer engagement approach that is ‘voluntary’, staged and relies on business development skills.

12. Conclusions • Shared service is central to UK reform • All areas of public sector are doing it • Governance and culture of local accountability key obstacles to overcome • Not about one size fits all • Is about delivering best value and freeing up resources to be spent on more tailored front line services • SHARING, SO AS TO BE DIFFERENT WHERE IT MATTERS!