Introduction
Shared services involve bringing together essential business functions into a central unit, which helps to enhance efficiency and service delivery. By consolidating departments such as finance, human resources, IT, and supply chain, Governments can reduce costs, streamline operations, and offer more consistent support across the Public Sector. In addition to improving processes, shared services also provide government employees with opportunities for growth through cross-functional training and skill development.
What are shared services?
Cross-agency government shared services are about centralising similar support functions to serve the entire Public Sector from one central location. Functions like HR, finance, and IT, which are usually handled separately by individual government agencies for their own organisational requirements (by independently functioning business units), are now brought together to be managed by a shared services centre (SSC). This approach allows individual agencies to focus on its main business objectives while ensuring that core and necessary support functions are handled efficiently and consistently.
Advantages of shared services
Shared services provide multiple benefits, such as lowering costs, improving service quality, and supporting better decision-making. When services are consolidated, agencies can reduce duplication, which leads to significant cost savings. Standardised processes can also help maintain higher service levels, while better communication and coordination across government agencies can make it easier to adapt to changing needs.
Cost efficiency
One of the main benefits of shared services is the ability to cut both time and costs. By centralising business functions, tasks are completed more efficiently, often at a lower expense, as resources are used more effectively. This reduction in duplicated efforts means the Public Sector can better allocate its resources overall towards its primary service delivery priorities.
Improved service delivery
Having a centralised unit for services makes it easier to monitor performance and identify areas for improvement across agencies. It offers the opportunity for performance improvement in an 'all boats rising' scenario across agencies. With shared services, agencies can track operations more accurately, ensuring that issues are addressed quickly. This leads to better service quality and ensures all agencies receive reliable support, no matter their needs.
Better decision-making
A key feature of shared services is the ability to centralise data across agencies offering senior officials and Ministers a clearer, more comprehensive view of the whole Public Sectors operations. This could in turn support these leaders to make informed decisions, improve compliance with cross agency requirements, and ensure better control and governance.
Flexibility and scalability
Shared services allow Public Sector agencies to adapt quickly to changing circumstances without needing to restructure. Whether during functional mergers or other streamlining, shared services can simplify the integration of different agencies, making it easier to expand or reduce operations based on the Governments needs.
Building a Shared Services Centre (SSC)
The creation of an SSC could follow a structured process designed to ensure successful implementation. There are five key phases in developing an SSC that include: Undertaking an achieveability assessment, design, build and test, implementation, and optimisation. Each phase plays a crucial role in ensuring the smooth transition and then efficient operation of the SSC.
1. Assess 'achieveability'
This first phase involves determining whether an SSC is the right solution for the Government considering it. It includes evaluating current processes, identifying areas that could benefit from centralisation, and outlining the SSC’s scope. Key activities include:
Defining the baseline and vision: Establishing what the shared service aims to achieve based on the current state.
Service delivery model: Determining which processes should be centralised and defining the overall cross agency organisational structure.
Cost-benefit analysis: Estimating costs and the potential benefits, such as cost savings and operational improvements.
Identifying barriers to implementation: Identifying potential obstacles, including technology challenges or organisational/cultural resistance to change.
2. Design phase
The design phase translates the vision into a detailed, actionable plan. During this phase, both technical and organisational aspects need to be addressed.
Process design: Mapping out how each task will be performed and clearly defining roles and responsibilities.
Technology selection: Choosing the systems that will support SSC operations, such as Enterprise Resource Planning (ERP) systems, and customising them to fit the organisation’s needs.
Site and organisation preparation: Deciding on the SSC’s location within the Public Sector, developing an organisational structure, and making recruitment and training plans.
3. Build and test
This phase focuses on constructing the SSC and testing its systems to ensure they work as intended.
Process and system testing: Conducting rigorous tests, such as user acceptance and volume testing, to ensure the systems handle the expected workload.
Data conversion: Transferring data from old agency based systems to the new SSC systems, ensuring accuracy and consistency.
Recruitment and training: Hiring staff and providing comprehensive training on new systems and processes.
4. Implement and roll-out
The implementation phase is when the SSC goes live and begins its operations. Careful planning and communication with agency stakeholders are essential for a smooth transition.
Migration strategy: Deciding whether to implement the SSC all at once or in phases, with a phased approach is often preferred for its flexibility.
Change management: Effective communication and training for Public Sector employees help manage resistance to change and ensure a successful transition.
Service level agreements (SLAs): Setting clear expectations between the SSC and government agencies and to maintain high service quality.
5. Optimisation
Once operational, the SSC must be continuously monitored and improved to meet long-term goals and adapt to changing needs.
Performance monitoring: Regularly comparing the SSC’s performance against its goals to identify areas for improvement.
Process re-engineering: Adjusting and automating processes as necessary to increase efficiency.
Expanding the SSC: Considering whether to broaden the SSC’s scope or explore outsourcing to improve operations further.
Conclusion
Shared services are a strategic way to manage Public Sector agencies core functions, helping agencies reduce costs, improve service quality, and operate more efficiently. By following a structured approach to building an SSC, Governments considering this approach can ensure long-term success and maintain the flexibility needed to grow and adapt in a competitive market.
What are the advantages of shared services?
What are the downsides of shared services?
What are the problems with shared services?