The following is a precis of part of an email from Professor John Seddon of Vanguard Consultants who spoke at a public-sector ‘shared services’ conference
The opening keynote was from the interim leader of the Government Shared Service programme – a very nice man – who said:
- We aim to be the best civil service in the world, we are already world class
- Shared services is a lever for change
- Shared services in government is no longer a ‘programme’ it is ‘strategic’
- We are to be a centre of excellence
- We are re-shaping our governance to be more inclusive and more strategic
- Technology drives a different way of doing things
- The wider changes in society mean greater expectations amongst the public
- Implementation will be Agile
- We are going to professionalise our people
- We will drive value and efficiency
- We will take advantage of off-shoring
- We want more self-service
- We will be using robotics and artificial intelligence
Interim Leader described how this was going to be done:
- A decision has been made to split up the management of technology and management of the service centres as this, we were told, will drive lower costs
- There will also be ‘process convergence’; process standardisation will be ‘relentlessly’ driven and there will be ‘standardised functions across government’
- The services will be ‘designed around user needs’ and will be ‘intuitive, easy to use and mobile’
- Just as services will be digital, government will be ‘digital on the inside’
- And everything will be done in a ‘collegiate and collaborative’ way, establishing a ‘cohesive community of practice’
Hearing that, what’s your level of confidence (as a tax-payer) – would you invest?
Well, actually, you are investing
Interim Leader assured us they had already saved 20% of their operating costs. This was a surprise to me. The most recent National Audit Office (NAO) report said the savings were less than the costs.
The NAO Representative there then told us that shared services should be seen in conjunction with ‘transformation’ and the quality of business cases – and they should be ‘realistic’, represent ‘value for money’, have ‘clarity’ and show understanding of ‘risks’
However, despite a series of NAO publications evidencing the expensive failures of shared services, we had no explanation for this
And a quick search on the internet revealed NAO Representative used to work for McKinsey – and I knew already his boss used to work for PWC
Next up was IT Man who proclaimed:
- Digital and Artificial Intelligence (AI) are ‘disruptive’ technologies
- ‘You don’t want to go the way of Blockbuster’ (yawn – how often has that been cited as the ‘killer’ case?)
- ‘It’s a mobile / social media world out there now’ – ‘the technology is coming to the office’ – ‘traditional organisations are ‘edging towards digital’
- The two ‘operating models’ will meet – ‘AI will connect them’
- It’s all about doing things in an ‘Agile’ way.
And he banged the same drum that is the basic rationale – transactions will be cheaper – we will save enormous sums of money.
When it was my turn I presented a report from the Public Accounts Select Committee which had this to say:
“Central government has long pursued shared service centres as a way to reduce costs and free up resources from back-office functions to provide better front-line services. The principles of reducing costs through using shared services are straightforward and widely understood, combining two key elements:
- Standardise processes and services so that they can be provided in a consistent and repeatable way, in high volumes, by a single provider on a common operating platform;
- Outsource operations to an organisation that can specialise in providing a service and, through economies of scale, can offer the service at a lower cost.”
But these are politicians – what can we expect them to know about management?
How did they come to this view? By listening to advisers
And where were most of them from? The IT and Big consultancies
And they should be aware of four basic arguments for not sharing services:
- A ‘common operating platform’ is a euphemism for a large-scale IT system:
- 90% of large-scale IT systems fail
- 30% fail completely (e.g. Single Farm Payment, NHS patient records)
- 60% fail in as much as they cost much more than planned, are not fit for purpose and don’t deliver the planned savings
- Standardisation of service work drives costs up, not down, simply because a defining feature of many service organisations is the variety of customer demand – if you push high-variety demand into standardised processes you drive costs up.
- Economies of scale:
- From less of a common resource – i.e. fewer managers, IT systems, buildings and so on – it’s often hard to dispose of buildings or existing IT contracts and any saving from less of a common resource is relatively trivial, albeit the only real evidence protagonists cite
- From lower transaction costs – much larger savings are promised here but, if you focus on cost, your costs go up.
- Outsourcing services to specialist organisations – but when you do that you lock in cost escalation
I then asked the audience how politicians react to the abundant evidence of failure with ‘shared services’.
Admittedly, they were unaware of failures in the private-sector, and there have been many, but public sector failures have been in the news regularly:
- Think Cornwall, Somerset, Sandwell, Liverpool, Rotherham, Birmingham, Suffolk, Account NI, Research Councils, centralised police call-handling in Scotland among many others
- And news of the same in Australia, New Zealand and Canada where governments have imagined the UK government knows what it’s doing
When the shared services initiative started five years ago we were told it was going to save £2 to £4 billion a year – we haven’t seen anything to match this promise – instead we are overwhelmed with evidence of failure – and, as time has gone on, the promises become less ambitious
By contrast there is abundant evidence that public services can be massively improved while at the same time radically reducing costs and it can be done in months, not years
But that’s for a precis of another part of Seddon’s talk