Key considerations before embarking on a shared services strategy

Public sector professionals that are struggling with the dual constraints of restrained investment and the government’s Comprehensive Spending Review (CSR) are probably not overly keen to hear about yet another cost-cutting initiative. But the concept of shared services is absolutely crucial.

The context for such significance is simple – The Coalition administration is eager to look at cost reduction measures. Shared services are seen as a means to slash spending by up to a third and political momentum is not the only explanation; many public bodies are already committed to sharing services.

Just over half of local authorities already have some shared service functions in place, according to analyst K2 Advisory. Particular traction has already been witnessed in key business areas such as IT, human resources and payroll.

Such functional sharing provides a good starting point for the inevitable rise in interest during the next few years. According to K2, as much as 40% of local authorities are bringing forward plans to use shared services in 2011.

Momentum for shared services, therefore, continues to build. But with sharp expectations around potential cost savings, what are the key things your organisation should consider before embarking on a shared services strategy?

First, think carefully about your existing organisation and potential public sector partners. Would such authorities make sensible bedfellows? How much essential preparatory work will be required?

Second, do not have unrealistic expectations of shared services. Return on investment in any project, particularly when it comes to IT, can take a while. When it comes to project realisation, the exercise should revolve around pragmatism.

Third, look beyond cost savings. While the CSR provides the context for desired spending cuts, you can also use shared services to drive new, joined-up ways of working that help to deliver knowledge, innovation and flexibility.

Finally, success in shared services relies on the identification of the perfect working partner. Look for a partner that is experienced in sharing services across key areas, such as finance, HR and payroll. They also need to fully understand the nuances of embarking on a shared services strategy. Your ultimate reward will be reduced costs and increased efficiencies.

Dean Dickinson is Managing Director of Advanced Business Solutions, formerly COA Solutions. Dean has been in the finance software business since 1990. He was part of the senior management team at QSP/Arelon prior to the acquisition by COA Solutions at which time he became Deputy Managing Director for the business as a whole. Since the acquisition of COA Solutions by Advanced Computer Software Group in February 2010, Dean has become Managing Director for Advanced Business Solutions. He is a specialist in consultancy and has a strong knowledge of business processes within a high volume/high value environment.