the uk government shared services - a leadership story

In business for people.

The UK Government Shared Services

A Leadership Story

Paul MarrinerGlobal Head of Unit 4 Government Advisory

Unit4 Business Software

In business for people. Proprietary and Confidential

Shared Services will get you up the maturity model faster

8-Oct-15 The UK Government Shared Services Story

Automatedself-service model

Remove structuraldeficiencies

Free up time for high value activities

Scale supportsustainably

STANDARDIZE

OPTIMIZE

PREDICT

Allows all to

participate by

sharing costs

DRIVE

Essential but

does require

leadership to

deliver adoption

Level

of

em

po

werm

en

t

Level of maturity

But it will require strong

leadership


The UK Story


The UK Government Landscape in 2011/12

• Coalition Government in Austerity measures

• Departmental budgets cut by 25-40% - a need to focus on front line priorities

• Minimal action since Sir Peter Gershon review 10 years previously

• Cabinet Office became a central administration strategic hub

- ‘Efficiency and Reform Group’ – ERG

- Minister very interested in administration reform: shared services, Digital services, IT infrastructure

- Provided essential Leadership

- Civil Service Reform – bringing in Private Sector experiences

• National Audit Office release very critical report on progress of Shared Services in central government


Overall a compelling and almost perfect

storm for driving through reform


The Financial Return - £400m per annum


£128m savings

• full-year savings from all 4 functions (HR, Payroll, Finance, Procurement);

• from all in-scope Depts moving to ISSC 1 or 2;

• with some efficiency improvement in ISSC 1 and 2 delivery; and

• ERP consolidation.

£300m-400m pa savings

• Includes the £128m but in addition:

• assumes that all ISSC’s and Depts using them reach Upper Quartile performance across Transactional and Retained functions.

£400m-600m pa savings

• Includes the £300m-400m but in addition:

• assumes that all ISSC’s and Depts, including the standalone Shared Service Centres, reach Upper Quartile performance across Transactional and Retained functions.

5

Total Spend

£1.5BN per year


The Previous Shared Services Landscape- Leadership Required


6

• Dept Focused

• Expensive

• Risk Averse

• Dominated by large depts.

• Tactical only

KEY

BEHAVIOURS

• No Sharing!

• No Service!

• But quite a few Centres

IN TERMS OF

‘SSC’ THERE WAS:


Target Operating Model (TOM)

The UK Government Shared Services Story

Crown Shared Service

Governance

Strategy Development

Contract Management

Business Assurance

Performance Management

MI and Analytics

Shared Service

F&ATransactions

Case Management

Systems and Support

Performance Management & Reporting

Case management and telephony solutions

Contact Centre

SS

CM

anag

em

ent

Service Management

Customer Relationship

HR & PayrollTransactions

Case Management

ProcurementTransactions

Case Management

Management Information &

Analytics

MI and Analytics

Shared Service

F&ATransactions

Case Management

Systems and Support



Contact Centre

SS

CM

anag

em

ent

Service Management



Case Management


Case Management


Analytics

Outsourced ISSC 1

Large & Small Orgs – c.40-50,000Joint Venture ISSC 2

ERP c. 175,000

MI and Analytics

Shared Service

F&ATransactions

Case Management

Systems and Support



Contact Centre

SS

CM

anag

em

ent

Service Management



Case Management


Case Management


Analytics

MI and Analytics

Shared Service

F&ATransactions

Case Management

Systems and Support



Contact Centre

SS

CM

anag

em

ent

Service Management



Case Management


Case Management


Analytics

MI and Analytics

Shared Service

F&ATransactions

Case Management

Systems and Support



Contact Centre

SS

CM

anag

em

ent

Service Management



Case Management


Case Management


Analytics

MI and Analytics

Shared Service

F&ATransactions

Case Management

Systems and Support



Contact Centre

SS

CM

anag

em

ent

Service Management



Case Management


Case Management


Analytics

HMRC

SAP

c. 75,000

MI and Analytics

Shared Service

F&ATransactions

Case Management

Systems and Support



Contact Centre

SS

CM

anag

em

ent

Service Management



Case Management


Case Management


Analytics

MI and Analytics

Shared Service

F&ATransactions

Case Management

Systems and Support



Contact Centre

SS

CM

anag

em

ent

Service Management



Case Management


Case Management


Analytics

MI and Analytics

Shared Service

F&ATransactions

Case Management

Systems and Support



Contact Centre

SS

CM

anag

em

ent

Service Management



Case Management


Case Management


Analytics

MI and Analytics

Shared Service

F&ATransactions

Case Management

Systems and Support



Contact Centre

SS

CM

anag

em

ent

Service Management



Case Management


Case Management


Analytics

MOJ\HO

Oracle

c.150,000

MI and Analytics

Shared Service

F&ATransactions

Case Management

Systems and Support



Contact Centre

SS

CM

anag

em

ent

Service Management



Case Management


Case Management


Analytics

MI and Analytics

Shared Service

F&ATransactions

Case Management

Systems and Support



Contact Centre

SS

CM

anag

em

ent

Service Management



Case Management


Case Management


Analytics MOD

Oracle

c.75,000

Ex SPVA

NHS\DH JV

Oracle

c. 100,000


Key Principles of TOM addressed key issues

Performance monitoring of all SSCs to enable real comparisons and to performance manage through competition –delivering improved customer service1

Independent delivery - no department will deliver services from the two Independent SSCs (ISSCs) thereby treating all customers equally whatever their size2

Crown Management by an experienced team to set and execute the strategy, to be the independent contracting authority and to ensure Business Assurance to minimise Accounting Officer risks3

Private Sector involvement by full or partial divestment of the DFT Swansea SSC as ISSC 1 and the DWP SSC as foundation for ISSC 24

Deliver a service appropriate to smaller organisations and priced accordingly to remove the barrier to entry5

Implement a single, Value for Money, ERP solution in ISSC 2 based on the DWP platform; and a lower cost ERP for ISSC 1 6

Operate on a single set of processes to ensure performance can meet upper quartile benchmark levels 7



Future Assurance Model – ISAE 3402 Part BRequired for Outsourcing model – but good practice

The UK Government Shared Services Story8-Oct-15

Customers

Internal Audit

• Receipt assurance report

• Notify need to access ISSC

Accounting Officer

• Liaise with other ISSC customers via forum to define and agree key controls, risks and assurance requirements

Crown Oversight Function

Accounting Officer Forum

• Review Assurance Report

• Agree and define a single set of key controls, risk and assurance requirements

Business Assurance

• Receive Assurance Report

• Chair Shared Services Audit Committee

• Chair Accounting Officer forum

• Resolve and escalate in year assurance issues

Shared Services Audit Committee

• Review Assurance Report

• Takes into account priorities and concerns of Departmental Audit Committees on assurance

• Review ISSC response to resolving significant control weaknesses

• Consider appropriateness of level of assurance provided by ISSC

Shared Service Centre

Business Assurance

• Commission independent 3rd party to carry out annual assurance

• Annual assurance report

• End to end process mapping

• Process map key controls and transactional risks

• Attendance at Shared Services Audit Committee


Proposed Core and Optional service offerings


Human Resources

Payroll*Record to

ReportOrder to Cash

Accounts Payable

Procurement

• Employee lifecycle processing (Starting, Leavers, Changes)

• Fist level HR case management

• Absence management

• Query handling and resolution

• Strategy development

• Complex case management / investigation

• HR projects

• Policy development

• Legal Service

• Health & wellbeing

• Master data changes

• Process payroll (AOE, payments deductions)

• Post payroll reconciliation

• Payments processing (BACS, CHAPS, third parities)

• Payslip production

• Emergency payments

• Administer post payroll returns

• Overpayment recovery

• Year end and other statutory return

• P45 / 60 production

• My CSP interface

• Remuneration statements production

• General Accounting

• Reconciliations

• VAT accounting

• Period close

• Planning & budgeting

• Asset accounting

• Bank reconciliation

• Cash management

• VAT advice

• 1st draft statutory accounts

• Grant payments and accounting

• Project accounting inter company accounting

• WGA

• Customer management

• Billing

• Income collection

• Cash application

• Debt management (during letters write off, credit notes)

• Job costing / Service management

• Customer credit check & credit limit assessment

• Negotiate debt recovery

• Calculate Bad Debt provision

• Supplier maintenance

• Purchase or processing

• Invoice processing

• Payment processing

• Expenses processing

• Supplier reconciliations

• Statutory reporting

• Stock & inventory management

• Expense payment compliance checks

• Manage Contract Management and E-procurement tools interfaces

• Manage contract and catalogue master data maintenance

• Quotes Management

• GPC admin

• Spend analytics

• Post GPC usage compliance checking

• Supplier financial assessments

• Monitor supplier performance

• Procure up to OJEU threshold

• Procure over to OJEU threshold

The key principles of the Service offerings are:

1. Only pay for what you need. i.e. Grants admin is optional

2. Need to take all core processes that are end-to-end i.e. P2P

3. Consultancy type services is optional to preserve VAT refund for Core services

* Payroll may be separate external bureaux

Core Optional

KEY:

NOTE:


The ERP Impact


Comparing the ERP Alternatives vs Oracle estate


Software

Hardware hosting

Support

Lower Cost (CAPEX / OPEX) / Higher Risk

1. Oracle “As Is”

2. Oracle “To Be”

3. Tier 2 ERP

Multiple Oracle Single Oracle Tier 2 ERP

Multiple InstallationsSingle On-Premises

InstallationPrivate Cloud

Multi Support Orgs Single Support Org3nd Party Single

Support Org

Average current Annual Cost £s per employee

Average annual TCO / Professional users:

Average annual TCO / Professional users:

£1,435(Range: £797 to £19,971)

£839Estimated Potential Saving

£468Estimated Potential Saving

42% 67%


ERP Solutions - Roadmap to ‘No Frills’ SaaS Delivery Model

The UK Government Shared Services Story

Single

Database

Administration

Application

Configuration

Application

Processing

Current

• Managed by outsourced provider to individual customer demands

• Individual Customer configuration

• Managed by customer or outsource provider

• Processes managed by department or shared service provider

• Multiple process variations

• Managed by outsourced provider to shared customer demands

• Lower upgrade costs

• Shared customer configuration

• Centrally managed with updates by outsourced provider


• Single processes

• Managed by SaaS provider

• No customer interaction

• No upgrade costs

• SaaS provider managed configuration

• Customer influence restricted to business rules


• Single processes

Govt ‘SaaS’ Pure SaaS

Transactional Processing

System Administration

8-Oct-15


What progress are other countries making?


Great Britain

• Strategy established but still in implementation

• Local Govt and Health quite advanced – LGSS example

PROGRESS

USA

• Not really discussed but Enterprise CIO’s may drive

• Huge country – huge opportunity!

PROGRESS

Canada

• Created a central Administration department

PROGRESS

Norway &Sweden

PROGRESS

• 90% plus of central government now in Shared Services

Ireland

• Some successes: Education, Health, Local Gov

• DPER created for Central Govt – ERG peer

PROGRESS

Australia

• Some successes outside Central Govt e.g. Schools

• Central Govt looking atUK model

PROGRESS

France

• No discussions

• Budget setting does not drive a compelling need

PROGRESS

Spain

PROGRESS

• Previously no ambition and budget culture an issue

• Now Central CIO starting to pull together strategy


Key Lessons


• A Clear vision to be more efficient

• Standard processes and systems – needs to have some sharing!

• Leadership is paramount – but needs to be credible

• Not just centrally driven – but within departments

• Finance Officers are the most important players:

- Business case development

- Business Assurance

- Agreeing to risk transfer

- Driving through the reform

- Accepting standard (different) ways of working

It’s a‘Sell’ & a ‘Tell’


Thank You

Full details of the Next Generation Shared Services Strategy can

be found at:

https://www.gov.uk/government/publications/next-generation-

shared-services-strategic-plan

https://www.gov.uk/government/publications/next-generation-shared-services-strategic-plan