Next Generation Back Office Shared Services for Government

1. Next Generation Back Office Shared Services for Government Supplier Conference 21 November 2011 John Collington – Chief Procurement Officer and Director General, Shared Services Paul Marriner- Acting Director , Shared Services PROTECT [IL1]

2. The Current Shared Services Landscape PROTECT [IL1]

3. 2 Options Considered • Option 1 - Crown Oversight • Current services remain ‘as is’ BUT • A Crown body is set up to oversee and govern the future direction of those services, including: • Performance standards • Collaborative approach taken to Oracle R12 upgrade to reduce overlap and associated spend • Establishing benefit targets and subsequent delivery • Option 2 - Crown Managed Shared Services • Consolidation of current shared services in to a small number of ‘hubs’ which service all Department requirements • Crown body governs delivery and strategy , including the following: • Common performance standards • Acts as contracting body for all major suppliers • Manages transition programme from current to new PROTECT [IL1]

4. Recommended Target Operating Model Outsourced ISSC 1 Large & Small Orgs – c.40-50,000 Joint Venture ISSC 2 ERP c. 175,000 Crown Shared Service Governance NHS\DH JV Oracle c. 100,000 Strategy Development Contract Management Business Assurance Performance Management MOJ\HO Oracle c.150,000 HMRC SAP c. 75,000 MOD Oracle c.75,000 Ex SPVA NHS\DH JV Oracle c. 100,000 PROTECT [IL1]

5. Key Strategic Principles These Include: Performance monitoring of ALL SSCs - performance through competition. Independent delivery - no Department will deliver services from the two ISSCs Crown Management and Crown as the Contracting Authority for the 2 ISSCs Private Sector involvement through divestment A service for Smaller Departments Implement a single, Value for Money, ERP solution in ISSC 2; and Operate on a single set of processes to ensure performance can meet upper quartile benchmark levels. PROTECT [IL1]

6. Core and Optional Service Offerings The key principles of the Service offerings are: Only pay for what you need. i.e. Grants admin is optional Need to take all core processes that are end-to-end i.e. P2P Consultancy type services is optional to preserve VAT refund for Core services PROTECT [IL1]

7. Proposed Transition Governance PROTECT [IL1]

8. Proposed Transition Plan PROTECT [IL1]

9. Taking Advantage of ERP in the cloud Software Layer (Finance / HR / Payroll/ CRM/ Procurement) Multiple ERPs Tier 1 or 2 ERP Single ERP ERP “Software as a Service” (SaaS) Hardware Hosting Layer Single On-Premises Installation Multiple Installations Private Cloud Public Cloud “Pay per use” 3rd Party Single Support Org Multiple Support Orgs Single Support Org Support Layer Estimated Potential Saving 40% Estimated Potential Saving 65-70% Estimated Potential Saving ??% Next Generation Back Office Shared Services for Government : Monday 21st November 2011:9of10 PROTECT [IL1]

10. What Do Suppliers Need to Consider? • Shared Services is about raising performance but also about • saving money. This means we will: • look to consolidate services • look to use new technology and services such as • Cloud which drive better VFM – what is the opportunity? • re-use before we re-buy • not be ‘Gold-Plating’ our services. • But there will be opportunities around: • BPO for Back Office functions within ISSC 2 • ERP transition services– both Tier 1 and 2 • BPO Transition services PROTECT [IL1]