Ian Frost is Lead Advisor of Business Change, CIPFA (The Chartered Institute of Public Finance and Accountancy)
When the scale of the financial challenge heading towards public services became clear at the beginning of last year, shared services quickly became the panacea of the newly formed coalition government. Ministers sought to soothe public fears of major cuts to frontline services by hailing shared service ventures such as Suffolk and Norfolk Police as the answer to financial sustainability.
Organisations across the UK responded positively. In 2010 alone over 60 new partnerships were formally announced, with expected savings in excess of £100 million per year. Despite this, the challenges to successful shared services remain considerable. Sharing is not a natural instinct within the public sector and politicians, managers, unions and the public need to be convinced of the benefits. Research published by Canterbury Christ Church University showed that almost 80% of project managers said that any major problems in delivering shared services stemmed from poor partner relationships rather than the development of the services themselves.
Realising the full potential of shared services relies on recognising them for what they are – complicated multi-million pound transformation projects. Many ventures never reach their full potential due to insufficient resources, insurmountable political differences and a lack of resources and skills to deliver the wholesale change required. Recognising the distinct skills required to deliver shared services and ensuring that those involved have the training, tools, resources and support is an absolute must if projects are to succeed.
1) Building the right business case
The business case needs to clearly establish what success will look like and the criteria by which it will be measured. Successful ventures set out their aspirations and vision, use comparative data and understand what can be developed in-house and what should be developed externally. Consultation arrangements should also be clearly articulated. Poorly constructed business cases fail to develop the financial and economic case for the project, including any upfront investment and the benefits/risks to the partners.
2) Managing the change process
Case studies indicate that merely adopting PRINCE2, a process-based approach for project management, to deliver a shared service venture will not work because it is unable to deal with the politics, trust and clarity of shared vision issues particular to delivering a shared service. There is increasing evidence of specialised recruitment across the UK and a new approach to managing the delivery of collaborative initiatives. Specialised posts such as the Director of Shared Services, recruited by East Kent Councils, are now becoming more common. The integration of governance and delivery of shared service projects into the mainstream activity of partners are crucial to success.
3) Understanding the technical and legal constraints
Even within a proactive and successful partnership, the complicated technical environment of the UK public sector cannot be overlooked. Financial accounting arrangements, EU laws, HR and employee rights, confidentiality and the interpretation of law such as the ‘Power of Well-being’, which empowers councils to do anything they consider likely to promote the well-being of their area, have all provided a substantial challenge to the delivery of shared services projects. Goodwill and positive relationships cannot surmount the need to follow proper practice, as some partnership ventures have found to their cost in court.
Despite the challenges, the evidence for shared services is compelling. It is already working across the public sector delivering substantial financial and non-financial benefits (see case studies). Investment in the vision, infrastructure, and most importantly, the people delivering the initiative is all that stands in the way of radically revised, cheaper and better public services. The next twelve months could be very, very exciting.
1) Case study: Service transformation with the citizen at its heart
Serco’s objective is simple – to maintain customer-focused operations while reducing costs by optimising the delivery of services through multiple channels. Most consumers are opting to purchase through alternative channels to fit in with their lifestyles, and there is no reason why this should not be the case when it comes to accessing public services. By profiling customer attitudes, behaviours and preferences, local authorities can identify the most appropriate mix of services and channels to maximise and sustain service accessibility, engagement and performance.
In Hertfordshire, Serco is working in partnership with the County Council on their business transformation programme, ‘The Council for the Future’. The now familiar context of reduced funding has led to this need for a fundamental rethink of how services are delivered. A clear citizen-focused approach to services has been adopted, which is organised around citizens, customers and communities, designed to catch problems early, delivered according to need and, where appropriate, commissioned with partners.
One of the key priorities for the County Council is to drive what is known as channel shift – getting as much transactional activity performed online as efficiently as possible, including school admission applications, library book renewals, highways fault reporting and so on. The council relaunched its website in April to focus upon these online activities and Serco is developing a complementary portal that will sit alongside this to enhance the personalisation and customer journey for residents.
The council is pioneering the benefits of a truly integrated front, middle and back office and implementing channel shift on a scale that makes the self-reliance of citizens a practical reality. A key requirement for the team is to ensure that all service delivery is consistent from channel to channel – so that an engagement that started face-to-face can be continued by phone and completed online with no loss of consistency and progression. Caroline Tapster, CEO of Hertfordshire County Council, describes the hypothesis behind the transformation: “By making better use of technology, streamlining processes and improving training and support we should be able to meet the needs of more people at the first point of contact or reduce the steps they have to go through to get what they need.” Initial phases of the programme are focusing on highways customer contact, disabled facilities grant and care access for the elderly and people with a physical disability.
2) Case study: East Lindsey District Council and South Holland District Council
In 2009 East Lindsey District Council and South Holland District Council began working together to find ways to improve service quality, build greater resilience and save money. Both councils recognised that ‘no change’ was not an option. A year of research and development indicated that merging some of their back office and high volume transactional services offered the best chance of achieving their objectives, while minimising the impact on citizens. As a result of the research, the two councils have established shared services across five back office and transactional services:
- Customer services
- Revenues and benefits
- ICT
- Human resources
- Finance
Financial benefits are planned at £31 million over 10 years apportioned over the population of the two areas. The councils have created an ‘arms-length’ company rather than a joint committee to overcome sovereignty and governance issues. The establishment of the company required the Secretary of State’s approval and shares are allocated to the councils in line with their investment (East Lindsey at 63%). The company can trade with the councils without the need for separate procurement and is also able to trade with other organisations as long as it does not exceed 15% of its total turnover.
The aims of the company are to:
- Maximise economies of scale
- Maximise resilience to service demand through a larger staff pool
- Improve business processes and practices
- Improve access to skilled and specialist staff
- Reduce IT costs over a 10 year period
3) Case study: Blackburn with Darwen Care Trust Plus
Blackburn and Darwen Council, along with its partners, had concerns over the lack of improvement in its Health and Wellbeing outcomes. Despite record levels of investment and excellent/very good performance from the relevant organisations, partners were unable to deliver a positive shift in outcomes for the population of the area. Following the change in legislation, the council and primary care trust (PCT) began negotiations on establishing a Care Trust Plus with the express intention of:
- Reducing health inequalities and improving health and wellbeing
- Giving local people more say
- Delivering greater choice and more personalised services
- Increasing efficiency and effectiveness
- Increasing workforce capabilities
The council and PCT agreed joint management arrangements including a single chief executive and joint management structure under a Section 75 arrangement under the NHS Act 2006. This required specific Secretary of State approval, which was granted in 2009.
This innovative collaboration retains the responsibilities of NHS Blackburn with Darwen (PCT) and provides integrated social care commissioning for adults and children. It also exerts a strong influence on housing, leisure and other council functions to promote health and wellbeing.
The outcomes of the initiative are to deliver:
- A single chief executive and fully integrated senior management team reporting to a care trust, the board and council with a target saving of £1 million per year
- A fully integrated senior and middle management team, with a target saving of £1 million per year
- A structure that will, in time, be underpinned by a fully integrated resource structure serving both health and council services
- Shared back office functions that will provide further savings (for example, communications and human resources)
Blackburn and Darwen’s Care Trust Plus went live in April 2010 and has achieved its initial targets.
