Shared services become hard to swallow

Council IT bosses have raised concerns at being forced by government into consolidating services with neighbouring authorities, Computer Weekly reports.

They say that while consolidation may seem a good idea from the dizzy heights of the Cabinet Office, it may not make sense from a local perspective.

Government is attempting to coerce local councils into merging departments such as human resources, finance, and procurement, with the aim of lowering costs and increasing the quality of services.

But council heads have spoken out against the the so-called Shared Services programme, unconvinced that either of these benefits will actually transpire.

It is widely assumed that shared services will mean greater efficiency, translating into significant cost savings that can be ploughed back into front-line public services.

But government claims of £4.7bn savings gleaned from its efficiency drive should be taken with a pinch of salt, the National Audit Office (NAO) said in February.

Steve Hodgson, head of shared services for HM Prison Service, said the reasons for consolidating public sector departments was to increase efficiency, but cost savings were "insignificant".

"My experience is, once the savings have been delivered, even though you can take the cost out, it's relatively insignificant compared to the cost of the business," he said.

Hodgson, a veteran of back office consolidations at Royal Mail and BAE, was convinced it was the right thing to do to improve efficiency in the public sector, but he was unable to give any clear justification for the shared services: "It's a leap of faith," he said.

"Shared services can deliver modest but significant cost benefit. Benefits outside of [cost savings] are difficult to measure."

Nevertheless, Hodgson will have consolidated 12 out of 13 back office services for prisons at the end of April and has prepared a number of base measures on which to assess the scheme after it has been done (volume, cycle time, accuracy).

National Audit Office (NAO) advisor Professor Colin Talbot of Manchester Business School urged the government to proceed with caution, and noted that a multi-agency approach was "notoriously difficult to achieve".

David Eakin, managing director of BuyIT, a broker between government and IT suppliers who propose to support the mergers, said it was relatively simple to merge offices associated with a single department or organisation, (as has been done by the prison service) but says there are greater complexities involved in merging offices associated with different organisations, such as local authorities.

The extent to which local authorities will be able to manage the change brought about by mass consolidation is also doubted.

The government's own shared services boss, David Myers, told Computing in February that he feared the IT industry has only a third of the capacity that would be demanded by the shared services programme.

In spite of the concerns, however, Ian Watmore, transformational government tsar at the Cabinet Office told a Society of IT Managers meeting last month that councils would be coerced into merging back office functions with one another.

He was not interested in the many small scale consolidations that have gone ahead already among local authorities. He wanted to see big mergers and he was going to ask councils to explain how they would do it.

"The likely outcome of the Comprehensive Spending Review will mean authorities cannot opt out of the Shared Services programme," he said. ®