Shared services 'about more than cost savings'

Shared services is about more than saving money - but it is likely to lead to big changes for staff and IT suppliers, according to the head of the Prime Minister's delivery unit Ian Watmore.

The Gershon Report of July 2004 calculated that the government could save as much as £20bn annually if departments found ways of sharing back-office functions such as finance, HR and IT - and the concept of shared services has been rising up the public sector agenda since then.

Watmore, whose role is to lead the drive to deliver the Prime Minister's public service priorities and act as his key advisor on delivery, said: "At the time of the launch of the initiative, there were 1,300 different organisations that had their own finance or HR function. That cannot be an efficient use of government funds."

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But shared services is about more than cutting costs, he said: "The driver of shared public service is more about making public services more relevant to the customer. Any service is likely to involve more than one department but we don't find it a natural process to work across boundaries. The priority of shared services is customer first and efficiencies second."

It's a big prize - and not an easy one to win, as Watmore admits. The scale of the public sector - which spends 40 per cent of the national GDP - can't be underestimated.

Speaking at a forum on shared services run by legal firm Addleshaw Goddard, he said: "We are an industry, not an organisation. For shared services to work, there has to be buy-in from those who are affected by it. The PM can't just say 'thou shalt' and it will be done."

As a first move, Watmore said the Cabinet Office will join services with another big department as an example and the hope is that the rest of Whitehall will follow the departments' lead.

However, shared services will mean rationalisation in some cases.

He said: "We have to expect a reduction in headcount. We will be consolidating call centres. The same will be happening in front-line offices and we will be consolidating our presences on the high street."

Of course, not all departments will feel the same impact, Watmore said: "For the big departments, the drive for consolidation will shine a bright light on back-office functions. For smaller departments, shared services will put pressure on them to sharpen their delivery model."

But this does mean big changes for IT suppliers as well as IT organisations within government.

He said: "The SAPs and Oracles of this world, there is a clear market position for them. However, this will be a vanilla flavour product set. In the case of the Cabinet Office, if it were to merge back-offices with the Department for Work and Pensions, for instance, we will take their processes and their systems."

And even with the Prime Minister likely to change over the coming months, Watmore insists the shared services initiative will not see any reverse. "Even with a change in PM, much of this stuff is pretty hard to argue with. Blair and Brown are aligned on this," he said.