September 2011
Share The Service, Share The Benefits
"A problem shared is a problem halved" is one way of viewing the benefits of a shared services model, particularly with respect to the potential cost savings that it can realise. With public sector budgets being cut relentlessly, it can be an effective model to help reign in and control expenditure with respect to streamlining back end systems.
Research firm Ovum believes that the cost-saving benefits are persuasive enough to encourage a predicted 50% of European public sector bodies to use shared services in two years. Naturally there are the early adopters that have already moved to a shared services model. NHS Shared Business Service for instance, is a joint venture between the Department of Health and IT services firm Steria. It uses an Oracle platform and a single set of processes to run the back offices of NHS trusts. The rationale behind the venture is that the money saved by the shared services model can be invested in essential front-line services, which means more doctors and fewer admin and back office staff. To date, approximately 100 NHS trusts now use the NHS Shared Business Service, which in 2011 paid the NHS back £1 million. It promises trusts up to 30% cost savings, so you can see its attraction for today's budget restricted healthcare providers.
Local authorities are also taking notice, too. In the Hammersmith and Fulham, Kensington and Chelsea, and Westminster councils' 'Tri-borough' project, the three councils are planning to share a range of services. They estimate that their ICT savings will reach £5m in three years, rising to £9.6m by year five. Additionally, the potential benefits include lower staff training costs, and cross-council reporting to assist in policy and strategy.
While the Tri-Borough project is ambitious, local authority shared services proof points already exist that demonstrate how well structured shared services, with well trained and successful management, can yield dividends. Xentrall Shared Services, is a groundbreaking partnership between Stockton-on-Tees Borough Council and Darlington Borough Council. The partnership was set up to deliver essential back office services, and drive costs savings as a result. The group was quick to consolidate its two incumbent IT asset management solutions; not surprisingly, as cost reduction is the top reason for investing in software asset management and IT asset management activities, according to surveys conducted by the International Business Software Managers Association (IBSMA) from 2005 to 2009.
Moving to one solution would enable Xentrall to drive rapid cost savings. Kelvin McIvor, Business Analyst at Xentrall Shared Services, explains the attraction of the shared service solution. "When the partnership was formed, we realised that we needed one system rather than the two that were already in place." For the partnership, the new IT asset management solution had to provide a single comprehensive hardware and software inventory of their client computers, the ability to tell what software was being used, and what software wasn't being used. The council required an integrated, real-time review of software licences and compliance, while facilitating a detailed import of software licences to establish its effective licence position. Kelvin is adamant that the single IT asset management approach has delivered on expectations. "We now have the information we need to free up and transfer existing licences to new users as we grow and expand. Rather than spending money on new licences, we can identify and reallocate our existing ones". Proof indeed that investing in a shared service, takes you some way to halving a problem.
