SHARED SERVICES AND OUTSOURCING:
The Challenge for Public and Private
Sectors
C M Cram
MD Marc1 Ltd
CHALLENGES
• To the Public Sector: To implement the same
efficiencies and shared services operations that
outsourcing companies have to make.
• To the Outsourcing Industry: Produce a Vision
and Model for How Public services Should be
Delivered.
• To the Outsourcing Industry: Operate a Public
Sector/Service Ethos
• To Public Sector and Outsourcing Industry: Work
up a Common and More Cost Effective Approach to
Outsourcings and Shared Services
SHARED SERVICES?
• Benchmarking
• Copying Better Practice
• Collaboration/Consortia
• Joint Service Delivery
• Service Centres
• Outsourcing to a Common Provider
BENEFITS OF SHARED SERVICES
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Clear Understanding of Costs
Defined Outcomes
Defined Levels of Service and Standards (e.g. through an SLA)
Clear Definition of Customer Responsibilities to Support Delivery
Clear Understanding of the Relationship between Costs and Services
Good and Consistent Management Information and Reporting
Hence, Full Accountability and Transparency
Immediate Cost Reduction through bringing down Unit Costs to those of the Lowest
Economies of Scale and General Efficiency Opportunities
Reduced Cost through Cutting out Duplication of Procedures, Processes, Legal Advice, Systems
Reduced Cost through Ceasing Maintaining the Above
Reduced Procurement Costs – Bulk Procurement, Cutting out Duplication
Can be Smoothing of Peaks/Troughs – Reduced Cost
Reduced Cost through Insisting on Commitment from Customers
Consistent use of Best Processes, Procedures and Practices
Opportunity to Employ Best Management and People
Greatest/Specialist Expertise Available to All
Critical Mass, to enable skills retention
Raise Performance to Above that of the Previous Highest
Improved Service Levels
Hlton
South Lakeland
Manchester
West Lancashire
Macclesfield
Knowsley
Chester City
Liverpool
Allerdale
Chorley
Copeland
Ribble Valley
Wyre
Vale Royal
Carlisle City
Crewe
Eden
Pendle
Wigan
Ellesmere Port
Lancaster
Sefton
St Helens
Blackpool
Rochdale
Burnley
Oldham
Bury
South Ribble
Blackburn
Warrington
Preston
Fylde
Stockport
Congleton
Hyndburn
Bolton
Rossendale
Barrow-in-Furness
Salford
Tameside
Wirral
Trafford
COST OF WASTE COLLECTION PER
HOUSEHOLD IN NW: 2005-6
£70
£60
£50
£40
£30
£20
£10
£0
SO WHAT CAN BE THE BENEFIT OF
SHARED SERVICES?
IT
Construction
Excellent Construction Management
Social Care (children’s)
Legal Services
Revs and Bens
Procurement (Doing) Costs
Procurement Spend (overall)
Transport
5 – 80%
5 – 25%
5 – 15%
5%
10%
15%
20 -50%
20%
10%
BUT: Outsourcing Companies Often Take Out 30-40%
BENEFITS ASSESSMENT MODEL
LEAN
B/MARK
JOINT
OUTSOURCE
SAVINGS
SERVICE
ACCOUNTABILITY
ACCESS TO
EXPERTISE
INNOVATION
INCOME
JOB CREATION
INWARD
INVESTMENT
TOTAL
© Marc1 Ltd
CHALLENGE FOR OUTSOURCING INDUSTRY
PROPOSITION FOR PUBLIC SERVICE DELIVERY
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What should be Delivered by the Public Sector?
What should be Delivered by the Private Sector?
Benefits of Proposition
Overall Model for Public Service Delivery
VISIONARY – Nothing Ruled Out
£150bn Further Potential?
WHAT SERVICES COULD BE COVERED?
ALMOST ANYTHING!
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HR
Payroll
Print and Design
Finance
Internal ICT
Legal Services
Procurement
Construction
Asset Management
Revenue and Customs
Benefits
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Roads
Revs and Bens
Debt Collection
Managed CCTV
CRM
Out of Hours Services
ICT Hosting
Data Centre Operations
Environmental health
Elements of Children’s
Services and Adult Social
Care
CHALLENGE FOR OUTSOURCING
INDUSTRY
SERVICE DELIVERY
• Adequate Due Diligence
• Providers: No ‘Getting By’ for Customer Service
Need to Adopt Public Service Ethos
‘TOWARDS TESCO’
A NEW APPROACH TO PUBLIC SECTOR
PROCUREMENT AND OUTSOURCING
https://www.iod.com/MainWebSite/Resources/Document/
policy_article_towards_tesco.pdf
HOW CAN OUTSOURCING AND SHARED
SERVICES BUSINESS BE BOOSTED?
• Eliminate obstacles
– High Costs
– Long Timescales
– Complex Procedures
– Varied Procedures
– Varied Specifications
• Create Model Approach
• Create Matrix of Services and Service Providers
MODEL APPROACH?
• Create Range of Model Specifications
• Create Matrix of Service Providers and Services
that the Public Sector can use without further EU
Tendering
• Provide those Services through building on Existing
Service Centres/Creating New Ones
• Evaluation Criteria: Capability
• Obtain Indicative Prices?
• Grow Matrix Organically
• Consider Dynamic Purchasing System
SERVICES
SERVICE PROVIDERS
© C M Cram
1.
Roads
SERVICES
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3.
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Call Centres √
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Finance
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Construction
Services
ICT
Legal
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5.
SERVICE PROVIDERS
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HR
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6.
TIPS FOR SUCCESS
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Understand Costs
Be Clear about Deliverables
Be Realistic
SLAs to Define Requirements on Both Sides
DON’T try to work with those who are less
committed or are not capable
• Due Diligence!
• Implement Quickly
THANKYOU
Colin M Cram
Marc1 Ltd
Tel: 01457 868107
Mobile: 075251 49611
colin.cram@marc1ltd.com
www.marc1ltd.com
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© C M Cram