Background to the report
All government departments need a range of corporate functions including human resources (HR), finance, procurement and payroll to manage their operations effectively. Collectively known as the ‘back-office’, these functions deliver the core business processes needed to support front-line services. More than 450,000 civil servants use these services. Since 2004, central government has sought to cut the cost of these services through the sharing of back-office functions between departments. This work has been led by the Cabinet Office, which owns and oversees the Shared Services Strategy. This includes setting the initial strategy design, overseeing departmental progress and approving departmental plans.Jump to downloads
The aim of using shared services is to standardise processes and services so that they can be provided in a consistent and repeatable way, in high volumes, and therefore reduce costs. This often involves moving to a common IT system or operating platform and transferring operations to a specialist organisation that can provide a service and, through economies of scale, can offer the service at a lower cost.
In 2018, the Cabinet Office published a new 10-year Shared Services Strategy, which had three overarching objectives: delivering value and efficiency by moving to cloud-based technology by 2025 at the latest; standardisation of processes and data; and meeting end-user needs. The strategy delegated responsibility to government departments to deliver these objectives, with each department establishing its own programme.
In March 2021, the Cabinet Office refreshed its delivery model, moving away from the idea of individual departments procuring their own single software platforms known as Enterprise Resource Planning (ERP) systems. Its original approach to allow departments to procure their own shared services meant departments were competing in the market for scarce skills and paying individually for services, rather than using the weight of government in the marketplace. Instead, it proposed that departments be grouped into five shared service clusters of varying size, who are free to procure any system that suits their needs. Government now aims to have five cloud-based shared service centres by 2028 at the latest, three years later than its initial deadline of 2025. It expects that this will lead to savings of 10% to 15% in operating costs.
The refresh aims to make the landscape simpler and is part of wider efforts to reform and modernise the civil service.
Scope of the report
This report examines whether the government’s latest Shared Services Strategy is on track to deliver. It aims to answer the following questions:
- Has the government made progress since we last reported on shared services in 2016? (Part One)
- Are the right conditions in place for the government to deliver its proposed efficiencies and savings? (Part Two).
- Has the government put in place mitigating actions to address the future challenges it faces in delivering its strategy? (Part Three)
The government’s previous shared services strategies failed to deliver their intended cost savings and other benefits. Its new Shared Services Strategy is highly ambitious and, while most departments consider the cluster model a sensible approach, there are several fundamental elements yet to be put in place that are jeopardising the success of the strategy. For example, the Cabinet Office is still unclear on the extent of the benefits this programme can be expected to bring. It is difficult to judge what progress has been made on enablers such as process and data convergence.
We are concerned that these gaps cause uncertainty for departments and mean that the Cabinet Office will repeat past failures. We, therefore, cannot conclude that this programme is on track to demonstrate value for money.
- Report - Government shared services (.pdf — 409 KB)
- Summary - Government shared services (.pdf — 185 KB)
- ePub - Government shared services (.epub — 1 MB)
- ISBN: 978-1-78604-457-0 [Buy a hard copy of this report]
- HC: 921 2022-23
View press release (30 Nov 2022)