Shared services in the public service

The CEO of the government’s National Shared Services Office, Hilary Murphy-Fagan discusses the findings of the recently published shared services report.

It is now four years since the Irish Government gave a mandate to expand and accelerate the use of shared services in the Irish Public Service as a key cross-cutting initiative under the 2011 Public Service Reform Programme. The National Shared Services Office (NSSO) was established in 2013 within the Department of Public Expenditure and Reform. It is responsible for delivering shared services within the civil service and setting standards and implementing government policy for shared services across the public service in Ireland.

As was the case in Ireland, shared services programmes often arise from an economic or financial need to reduce costs and improve efficiency. However, as the CEO of the National Shared Services Office, Hillary Murphy-Fagan notes, such programmes often have many benefits.

“As private sector and international public sector experience illustrates, the value of shared services stretches beyond the direct benefits of cost savings and efficiency, to other benefits such as the provision of better management information to enhance decision making and the freeing up of senior management resources to focus on policy development,” explains Murphy-Fagan.

Research findings

“It was in this context,” Murphy-Fagan continues, “that the NSSO commissioned Deloitte Consulting to undertake a review of progress against shared services plans across the Irish public service (in the four sectors of Education, Health, Local Government and Civil Service).” She says the review also identified actual and anticipated benefits, factors critical to the success of these initiatives, and potential risks.

The review confirmed that the Irish public service has made significant progress against plans in a short timeframe. “Ireland compares favourably, not just in terms of progress made on a number of key projects, but also in terms of the governance and accountability frameworks put in place. Both of these elements are evidence of the strong government support to date,” explains Murphy-Fagan.

The report highlights that with five shared service centres operational across the sectors, and numerous others planned in the next few years, Ireland has an ambitious plan for investment in shared services in comparison with international public sector counterparts. The findings indicate that the estimated quantitative benefits are substantial. However, overall the sectors are at an early stage and there are a number of critical success factors necessary to secure initial gains and to fully realise benefits.

Benefits

“The report outlines that international experience demonstrates the considerable potential for a range of benefits that shared services in the public sector offer. These include improved efficiency, consistency and service delivery. The freeing up of senior management resources to focus on policy development is also a significant benefit of shared services that businesses across the world are realising,” adds Murphy-Fagan. “Added to this are the benefits of having a customer-focused culture, access to improved management information to support decision making, the deepening of skills and expertise and scalable and resilient technology.” 

For the Civil Service HR and pensions shared services (PeoplePoint), the Department of Public Expenditure and Reform has indicated in this report that reductions in the cost of HR transactional units of the participating public service bodies have been achieved. Separately, further cost reductions are expected over time, as all identified customers come on board and a steady-state is achieved in operational performance. Payroll shared services (provided in the civil service by the PSSC) are also on track to deliver benefits. Public sector shared services typically have payback periods longer than those in the private sector, pointing to unique challenges. However, the research has confirmed that the anticipated headcount reductions and payback periods for the Irish public service are in line with international comparators.

Key findings

The key positives identified included the existence of a structured and thorough approach to business case development. “The sectoral (Civil Service, Local Government, Health and Education) and phased approach is also a clear positive as this enables benchmarking across the sectors,” adds Murphy-Fagan. “It also mitigates against risk by allowing more time to incorporate lessons learned and build stakeholder engagement. There is also evidence of the positive impact on process quality, data visibility, data comparability and internal controls, and also strong oversight and governance at central (government) and sector levels.”

The main challenges identified relate to difficulties in finding resources with the skills and capabilities required to deliver these complex programmes and in obtaining the collaboration of client organisations to release resources. According to the report authors, Deloitte Consulting, there were also varied rates of progress across sectors identified in the research. The challenges identified were developing formal processes for benefits tracking, change and communications management, as well as prioritising customer engagement early on in the shared services journey.

The report concludes that there are strong positives in the public sector approach to minimising risk, doing things right, wide consultation, public procurement and accountability. However, these can add complexity and extend timelines to benefits realisation – an experience common in public sector environments internationally.

Critical success factors and opportunities for improvement

The review demonstrates a number of critical success factors necessary to secure initial gains, ensure continued progress against plans, and fully realise benefits. According to the report authors, failure to address or sustain these critical success factors will represent key risks to the various programmes.

These critical success factors include the ongoing need for a definitive government mandate and effective senior management support, as well as delivering a realisation of the planned benefits and then demonstrating those benefits to internal and external stakeholders. Also critical is developing a compelling vision that integrates shared services into broader transformation programmes that include the optimisation of retained functions and a clearer articulation of the role that improvements in retained functions, such as strategic HR, play in the overall transformation. 

Further opportunities for improvement, outlined in the report, include the considerable opportunity in Ireland to leverage existing experience and develop competencies and capabilities, due to the maturity of its shared services environment with dozens of multi-national companies and several large semi-state organisations that have established shared services centres in the State. “Added to that, the Irish Public Service is in a unique position to network with its peers for lessons learned, and to identify and build talent,” says Murphy-Fagan.

“The findings in this report will assist us to develop the NSSO programme of work in 2016 and beyond. We will focus very strongly on achieving the benefits tracking called out in the report. We are focusing on our people, our processes and our technology to make the improvements that matter the most. We will also be looking to develop peer networks within the shared services community in Ireland and see how we can learn from each other,” she adds.

Shared services is not a short-term efficiency measure. “This report highlights the challenges involved in innovating and the length of time required to realise the full benefits beyond cost economies, but it is a journey worth taking as at the end, the benefits and value for the public will be delivered,” Murphy-Fagan concludes.

The full report is available on www.per.gov.ie.