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

• Benchmarking

• Copying Better Practice

• Collaboration/Consortia

• Joint Service Delivery

• Service Centres

• Outsourcing to a Common Provider

SHARED SERVICES?

BENEFITS OF SHARED SERVICES• 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

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COST OF WASTE COLLECTION PER HOUSEHOLD IN NW: 2005-6

IT 5 – 80%

Construction 5 – 25%

Excellent Construction Management 5 – 15%

Social Care (children’s) 5%

Legal Services 10%

Revs and Bens 15%

Procurement (Doing) Costs 20 -50%

Procurement Spend (overall) 20%

Transport 10%

BUT: Outsourcing Companies Often Take Out 30-40%

SO WHAT CAN BE THE BENEFIT OF SHARED SERVICES?

BENEFITS ASSESSMENT MODEL

LEAN B/MARK JOINT OUTSOURCE

SAVINGS

SERVICE

ACCOUNTABILITY

ACCESS TO EXPERTISE

INNOVATION

INCOME

JOB CREATION

INWARDINVESTMENT

TOTAL © Marc1 Ltd

CHALLENGE FOR OUTSOURCING INDUSTRY

PROPOSITION FOR PUBLIC SERVICE DELIVERY

• 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!

• HR• Payroll• Print and Design• Finance• Internal ICT• Legal Services• Procurement• Construction• Asset Management• Revenue and Customs• Benefits

• 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 OUTSOURCINGhttps://www.iod.com/MainWebSite/Resources/Document/policy_arti

cle_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

SERVICES SERVICE PROVIDERS

1. 2. 3. 4. 5. 6.

Roads √ √

Call Centres √ √ √

HR √ √

Finance √ √ √

ConstructionServices

√ √

ICT √ √ √ √

Legal √

• 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

TIPS FOR SUCCESS

THANKYOU

Colin M Cram

Marc1 Ltd

Tel: 01457 868107

Mobile: 075251 49611

colin.cram@marc1ltd.com

www.marc1ltd.com

PUBLIC SECTOR PROCUREMENT IN 5 YEARS TIME?Central/ Major Departments/Buying Solutions

Industry Specific

Regional P Hubs/Medium Depts

Local/Med/Small Departments

Major National Contracts/Suppliers

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Common Categories * *Relationship Management * *Market Management * *Industry Specific * *PPIs/Major Project Support * * *

Regional/Large Local Contracts/Suppliers

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Small Local Contracts * *Discipline/Implementation/Compliance

* * © C M Cram