Andrea DiMaio

Sir Peter Gershon, who developed the famous Efficiency Review for the UK government in 2004, recently released a similar report for the Australian government. Among other things, the report includes a very enlightening section on shared services:

[...] 5.3.3 Consider shared services carefully

The review received a number of inputs from industry indicating the significant benefit to be obtained from shared services. In respect of back office applications, however, I also considered the mixed experiences reported to us by the CIOs of a number of states and territories, together with the recent experience of the UK Government as described in the May 2008 UK National Audit Office report Shared services in the Department for Transport and its agencies. In light of this, I have concluded that moves towards back office shared services between agencies should only be undertaken on a very carefully selected and controlled basis. In the meantime, as a first step towards a wider adoption of these arrangements, I consider it essential that all agencies quantify both the back office service levels and the associated costs of their current provision arrangements, and that they use this as the basis for determining what improvements can be realised through their own efforts, such as process simplification and a reduction in manual interventions. This will help create a stronger foundation on which to assess the additional benefits that can be obtained from moving to a shared service in the future. [...]

 

The bottom line is that agencies should benchmark what they are currently doing, and improve themselves, before deciding whether it makes sense to enter into a shared service agreement.

But while they do so, they may find out that externally sourcing some of their processes could be a good fit, irrespective of whether there are other agencies to share those services with. In other cases, they may discover that collaborating with other agencies ( which ranges from buying together, to sharing processes and assets, to centralizing them) is the way to go.

The economic downturn will call for grater sharing and consolidation, but it is important to dispel the myth that shared services are the solution to most problems and recognize that – sometimes - they make problems even more complicated.