Reinventing the case for shared services in the public sector
For the past few years, shared and collaborative service delivery has been gaining popularity. Although the model of shared services isn’t new to the public sector and has been in use for over three decades, its growth in recent years has been remarkable.
In the wake of the pandemic, several new initiatives have been introduced in the UK, Benelux, and Nordic regions. Despite this, the truth is that previous shared services programs have yielded mixed results for many.
Challenges in stakeholder collaboration, technology integration, workforce experience, and service disruption have been known to negate cost savings and harm service quality for citizens.
Tackling the challenges
There has been a notable shift in the public sector's approach to outsourcing and business change programs in recent years. Organizations today face more pressure to deliver results quickly, which makes it difficult to undertake large initiatives.
Initiatives across the region have failed due to poor service quality, cost overruns, and lack of cultural fit. Large-scale initiatives are no longer the default option. A more targeted approach is increasingly seen as the most effective way to achieve sustainable change.
The growing interest in more collaborative service delivery between local government authorities has resulted in a resurgence of initiatives ranging from full organizational mergers to more focused approaches targeting specific service areas.
Shared services
The main objective of all new shared services initiatives in public sector organizations is to increase efficiency. These initiatives aim to enhance process performance, improve the employee experience, and leverage data to develop innovative solutions and introduce new services.
Historical shared services initiatives primarily focused on enhancing internal processes to drive efficiency. However, contemporary shared services initiatives are increasingly adopting a citizen-centric approach, prioritizing the needs and preferences of the citizens they serve.
Innovation increases employee satisfaction
A notable shift is occurring among shared services strategy leaders who are now exploring the potential benefits of innovation beyond the obvious efficiency gains achieved through role and workload consolidation.
These leaders are now directing their focus toward effectively utilizing automation tools and platforms to optimize processes for greater efficiency and productivity, which leads to a significant and beneficial boost in employee satisfaction and talent retention.
Embracing intelligent automation
The effectiveness of any strategy for leveraging the capabilities of intelligent process automation is heavily reliant on the quality of the data provided. For automation to function optimally, it must have access to high-quality, accurate, and up-to-date data that is relevant to the specific process being automated.
This data forms the basis for the decision-making algorithms that drive the automation, and any inaccuracies or gaps in the data can result in errors, inefficiencies, and suboptimal outcomes. Ensuring data quality and integrity is critical for successful automation and achieving business objectives.
Understanding shared service failures
Implementing shared services can be challenging for businesses, and failures are common. These include:
The business case
One of the main reasons for these failures is how the original business case was put together. If the objectives of the initiative are not clearly defined or realistic, they will not receive the support of key stakeholders and will likely not be achieved.
Unexpected costs
Some of the costs of establishing and running a shared services center are often underestimated or overlooked, leading to unexpected expenses.
Communication
Even if the plan is well-designed, a lack of communication with employees regarding its benefits can result in a loss of focus and create tensions between the local authority and suppliers. To succeed in implementing shared services, clear objectives and workforce awareness of the initiative's benefits are crucial.
Relationship and contract management
Ongoing relationship and contract management are crucial for both parties to maintain complete transparency of service levels and the overall health and status of the processes that are being transitioned to the initiative. This includes providing accurate information and addressing concerns promptly to ensure a beneficial contract for all parties.
Complexity
Public sector organizations have to navigate a more complex landscape compared to their commercial counterparts. They face various challenges, such as managing multiple stakeholders, meeting citizen demands, ensuring elaborate legal compliance, and working within strict budget and resource limitations.
Lack of buy-in
Gaining support from different levels of an organization can be challenging as various concerns arise, such as loss of control and power. Local authorities often have varying priorities and policies, which can lead to a shift and reduction of common ground over time.
Technology in shared services
Transitioning towards shared services delivery can be a challenge when integrating different tools and applications that support the processes. Combining these systems can be a painful and costly process, as they are often heavily customized and support different ways of working.
However, local authorities are now utilizing standard, Cloud-based platforms, allowing them to scale up and down quickly. This is proving to be an effective solution that enables them to streamline processes and reduce costs.
Local government strategy leaders consider if their unique ways of working can be integrated into shared services or if they need to adopt simpler processes. Non-customer-facing processes like finance, procurement, and human resources are easier to standardize and automate to drive efficiency gains.
Final thoughts…
Successful shared services initiatives prioritize speed and flexibility. They use agile approaches to relationship management, compromising and adapting to achieve success rather than only meeting contract terms.
By adopting a data-centric approach, local authorities can overcome the barriers that have prevented citizens from engaging effectively with different parts of the organization.
This can be achieved by implementing an open and standardized technology platform, which will facilitate collaboration between departments and other public authorities and enable organizations to leverage the power of artificial intelligence to drive automation, efficiency, and insights, thereby enhancing their long-term prospects.
The new generation of shared services initiatives has been borne out of a challenging environment. But the potential rewards from taking a technology-enabled, data-centric approach go far beyond efficiency gains.
Unit4’s people-centric, project-focused solutions are purpose-built. Public sector organizations can better manage their operations with industry-leading software for Financial Planning and Analysis (FP&A), Enterprise Resource Planning (ERP), and Human Capital Management (HCM).
You can check out Unit4's People Experience suite here, and you can read our report with findings from Unit4’s commissioned research - PAC Research Study for Northern Europe here.
