Business Analysed

Observations from a Business Analyst

Shared Service Sorcery

with 3 comments

The concept of Shared Services has been on the Local Government agenda for some time as a way to combine resources and save money. Over the years some of the big consultancies have been touting for business, tempting local authorities into bed, some classic examples include Birmingham City Council’s deal with Capita and IBM’s deal with Somerset. Other local authorities are looking to move to the next level and including a strategic partner to deliver multiple services for the group.

When embarking on the path of Shared Services it is essential that the whole organisation understands what they want to get out of it and what they are willing to put in to the deal. I fear that when Shared Services appears on the agenda no-one asks what do we want and instead focus on how much can we save.

ICT is a key enabler of successfully delivering Shared Services and one of the reasons it is so important to understand the requirements and expectations up front. When explaining shared services I treat it as a journey that takes an organisation from in-house solution through to a fully managed solution. The first question I always pose is – where is the line..? The line defines what one organisation gives up and the other takes up.

Having worked recently with 2 authorities looking to join up their financial services I was interested to learn that different departments had different opinions as to where the line was going to be. Some thought that it was a fully managed service while another department felt that it would be a hosted service. In the end the project was split into 2 phases, with phase 1 looking to implement a hosted solution where one authority would be responsible for the hardware while the other would be carrying on as normal but with a new infrastructure. In phase 2 work would be undertaken to pass some of the operational tasks from one authority to the other.

In summary: Get the line in the right place, avoid the confusion up front.

The second question that I raise is what does the organisation want to get out of the agreement. Is it money, does the authority want to make a profit..? Is it efficiency, by working together does the authority want to deliver a better service for users..? Is it experience, does the authority want to learn more about shared working with an aim to increase usage in the future..?

Profit is always a bit of red herring and no authority should go into a shared services agreement expecting to make money. It is the nature of business to only create an infrastructure that is required for the current service with limited room for expansion. Taking on the work of another authority could mean doubling the infrastructure to support and so will require investment to meet the needs of the agreement. The cost of this investment will affect the price that needs to be charged but this will need to be balanced with the need to be competitive and so the profit margin suddenly stops looking so good.

In summary: If you’re looking to offer shared services, be wary as all that glitters is not gold.

The third question that I ask is what impact will this have. In a shared services agreement, no matter how far down the road, there is a giver and a taker. It is essential that any changes to processes are fully understood before entering the agreement as substantial changes will affect efficiencies and therefore the ‘bottom line’ of the agreement.

Finally – shared services are a good way of delivering better services to customers by utilising the skills in place, however be wary and ask the right questions before taking the plunge.

Till next time.

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Written by Paul Jennings

October 29, 2008 at 2:55 pm

3 Responses

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  1. […] Shared Service Sorcery « Business Analysed "The concept of Shared Services has been on the Local Government agenda for some time as a way to combine resources and save money." (via Paul Jennings) (tags: sharedservices localauthority business enterprise2.0) […]

  2. I have been in Shared Services in the largest Local Government in Australia, and the second largest in the world, for over 8 years, and whilst my experience in Shared Services covers Finance, Procurement and HR, in both private and government sectors, I must say that the approach taken in Local Government, in Australia at least, is not only parochial but also misleading. For example, in my organisation, the senior managers decided to establish a Shared Services in every Division just to include local branch administration functions such admin support, personnel (not HR), bits of accounting, and similar support services ! Secondly, the big functions such as Finance, HR, ICT and Procurement, are not run as a shared services, and are so descentralised that the effectiveness of service delivery and efficiency gains that shared services could provide are non existing ! It is common place in Government to call Shared Services to what is simply Centralisation. It is also common place to hear that internal customer service, SLA’s are a waste of time, because there is no accountability or consequences, such as in the private sector, and it is too difficult to implement. And I won’t even go into Pricing or Chargebacks !
    The truth is that there are no commercial imperatives for governments to establish Shared Services in a serious way replicating the commercial sector, so the approaches are often a mere token or parochial. For example, in 2001 we established a HR Shared Services,
    we did it well to start with but a couple of years later, senior maanagement decided to drop the Shared word, and it became just HR Branch, the original principles were also droped and essentially it has come full circle, that is, back to what used to be, just an innefficient corporate function with a centre and other HR areas in another 10 divisions !

    Joseph Crowley

    November 28, 2008 at 2:04 am

  3. Hi Joseph & thanks for your comment.

    It is interesting to hear your experiences in local government in Australia.

    Your story sounds quite similar to other situations I have come across where an organisation or department start on a shared services model, get the ball rolling and then stop and slowly return to their old ways.

    Shared services, as with any transformational programme have 3 stages – Plan, Do, Review. Many teams and organisations forget the review phase and don’t ask the questions are we still achieving our objectives?

    When looking at your car, when do you decide that you need a new one? – you review your current situation and then decide if you still need that 2 seater sports car with a family on the way!

    Why should businesses be any different? It is important to review the business case to ensure that the current processes are still fit for purposes and delivering what is required.

    Thank you again for your comment.

    Paul

    Paul Jennings

    November 28, 2008 at 1:04 pm


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