SHARED SERVICES -- NOT JUST SIMPLY A TALE OF COST REDUCTION

Just Cutting costs is not enough

Given the austerity that many organisations currently face, is the solution to this a pursuit of a potential shared service agenda whose aim is to increase economies of scale for the organisation's service outputs?  Reducing the average cost of these service outputs is a necessary condition of a shared services  approach but is it sufficient on its own to make a successful shared service arrangement? There are huge pressures to cut costs but is it fair to use shared services as a cloak for cost cutting?

In my view shared services cannot just be taken as a route to speedy cost reduction although that is possibly what many practitioners think. There needs to be evidence of increased efficiency and in my view improved service outcomes from a shared service arrangement, without service improvement as a key element a shared service agreement will be an empty shell. It cannot be solely a tool for cost reduction

A shared services arrangement needs to be measured on a before and after basis showing how services have improved from a shared services approach. Prior organisational success in achieving cost improvements and better service delivery outcomes are helpful but the lack of previous success in these areas should not preclude an authority undertaking a shared service journey for the first time, providing it has got the tools and advice to move forward positively in this area.

Where external partners are brought into the shared services arrangement it is important that the contracts and other service agreements amongst all the key players are watertight and that the lead authority or whatever the structure of the shared service is -- has commercially based approaches which are robust and unflinching. This has not been an area where the public sector has excelled in the past and I believe it still has ground to make up here. The responsibility for the areas of service accountability and service risk ( i.e. avoiding service failure) should be clearly defined within any shared service agreement and the focus should be on service outcomes provided we know what outcomes the shared service is working to deliver and what influence it has over those outcomes.

The before and after approach to the performance measurement of shared services needs to be refined and developed to ensure that any authority embarking on a shared services journey should have the best prospects of successful shared service delivery. Cost  reduction can never be the sole measure of shared services success although it must be recognised that many people mistakenly think it will be. This assertion should be rejected