Cost concerns and staff loyalty deter public sector CIOs from sharing services

Shared back-office services are being established across the public sector by pioneering organisations as well as service providers, but for public sector bodies yet to make the move there will be difficult decisions and compromises to make.

Ovum predicts 50% of European public sector bodies will use shared services in two years, but says: “Despite the benefits offered by pooling resources or taking them out of house, the option of sharing resources – such as receiving back-office functions from another agency – or outsourcing entire functions to a third party, hasn’t gained significant momentum outside Europe.”

Half of European public sector CIOs surveyed by Ovum said the biggest barrier to adopting shared services is concern that it will not save enough money to make it worthwhile. Can this really be true? Or are some CIOs simply protecting their own jobs behind a smoke screen of cost fudging?

Shared services are seen as key to the government’s drive to cut its spending. IT service providers are creating shared service centres targeted at different industry sectors with UK public sector organisations, such as police authorities, local government and NHS trusts already tapping into them.

Shared services in the public sector are already in use. NHS Shared Business Service is a joint venture between the Department of Health and IT services firm Steria, which began in 2005. It uses an Oracle platform and a single set of processes to run the back offices of NHS trusts. The theory is that the money saved can be invested in front-line services with more doctors and fewer back-office staff.

Another example of the shared-service model is the internal shared service. Nottinghamshire County Council’s recent deal with Logica, to create internal shared services. The council is spending £7.4m over five years on an internal shared service to cut costs by £47m in ten years. The authority’s different departments will be able to share HR, payroll, finance and procurement using services from Logica. SAP ERP software underpins the service.

Public sector organisations are at least considering using shared services. Many have already made the journey or already have plans in place. The pioneers who got into joint ventures with suppliers or become their first customers are now benefiting from lower costs.

But for public sector CIOs moving in the second wave, there are fears of having to make large job cuts and also of losing control of operations.

Perhaps there should be some independent body to ensure CIOs do what’s right and not what’s right for themselves!

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