The business case for establishing shared service centres does not apply only to business – there are clear benefits for government bodies too.
Of course, the public sector has had a tougher time getting the model right, and the pressure to raise productivity while lowering costs weighs heavily. Politicians tend to promise improved services at a bargain, but while shared services can achieve this effect, many centres struggle to meet what are often unrealistic expectations. As any private sector organisation that has tried to implement a shared service model will attest, the transition is rarely an easy one.
Some cases have worked better than others. In the north of England, the financial shared service model was developed initially for five local National Health Service organisations. Due to a successful track record, the customer base has now doubled in size to 10, with potentially three more customers joining and buying services next year.
Shared service boom
There are now about 25 similar NHS local shared service organisations established throughout England providing a mix of services to NHS organisations, such as finance, procurement, estate management and IT. The organisations meet quarterly as a network to review developments, share local issues and invite guest speakers to present on shared service best practice and other topics of interest.
East Lancashire Financial Shared Services was developed during 2001 to support the emergence of several Primary Care Trusts in April 2002 and also the planned merger of two large Acute Trusts (Blackburn and Burnley) in 2003. It is governed by a partnership board made up of directors of finance from local organisations and hosted by Calderstones NHS Trust.
“Localised shared services in the NHS have been delivering savings and efficiencies for several years,” says Graham Gornall, director of East Lancashire Shared Services. However, they will face competition from the Department of Health’s recent joint venture with Xansa, which has been developed as a national financial shared service solution for NHS organisations.
“In the future, local shared services will need to secure investment in technology from their partner organisations in order to continue to compete. They will need to differentiate by providing bespoke localised quality services at a competitive cost to challenge the threat presented by the Xansa/DoH joint venture.”
Recently, the Conference Board of Canada, in conjunction with Accenture, examined the experiences of 15 public sector organisations, five of them international and the rest Canadian, that had set up shared service centres. The study concluded that there are eight “pillars of success” for implementing shared services in the public sector. They are: ensure there is effective governance; allocate proper resources; choose the right leader; engage key stakeholders; ease staff transitions into new roles; build trust through relationship management; use technology for process improvement; and measure improvement.
“Resistance to implementing shared services exists. This is due to the fact that shared services lead to a perceived loss of control, confusion about accountability and concern about new roles for employees,” says Carolyn Farquhar, director of organisational excellence research at the Conference Board.
Meanwhile, Mr Gornall advises: “Ensure that quality and performance are high on the agenda to win the PR battle. We have developed quality and performance scorecard metrics that are now embedded in a focused customer services culture that is continually striving for improvements in costs and efficiencies, making best use of technology linked to process review and standardisation.”
In a report on shared services in government, consultancy AT Kearney suggests that the best thing the public sector can do is to watch and learn from the private sector.
By following the lead of private companies, government agencies can enjoy the various advantages of shared services while avoiding some of the early mistakes that were inevitably made as the model matured. Sometimes there is a late-mover advantage.