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

COST OF WASTE COLLECTION PER HOUSEHOLD IN NW:

IT 5 – 80% Construction 5 – 25% Excellent Construction Management 5 – 15% Social Care (childrens) 5% Legal Services 10% Revs and Bens 15% Procurement (Doing) Costs % 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 LEANB/MARKJOINTOUTSOURCE SAVINGS SERVICE ACCOUNTABILITY ACCESS TO EXPERTISE INNOVATION INCOME JOB CREATION INWARD INVESTMENT 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 Childrens 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 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 SERVICES SERVICE PROVIDERS Roads Call Centres HR Finance Construction Services ICT Legal

Understand Costs Be Clear about Deliverables Be Realistic SLAs to Define Requirements on Both Sides DONT 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: Mobile:

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 ** Common Categories ** Relationship Management ** Market Management ** Industry Specific ** PPIs/Major Project Support * ** Regional/Large Local Contracts/Suppliers * Small Local Contracts ** Discipline/Implementation/ Compliance ** © C M Cram