1. Next Generation Back Office Shared Services for Government Supplier Conference 21 November 2011 John Collington – Chief Procurement Officer and Director General, Shared Services Paul Marriner- Acting Director, Shared Services PROTECT [IL1]

2. Next Generation Back Office Shared Services for Government : Monday 21 st November 2011 2 of 9 The Current Shared Services Landscape

3. 2 Options Considered Option 1 - Crown Oversight Current services remain ‘as is’ BUT A Crown body is set up to oversee and govern the future direction of those services, including:  Performance standards  Collaborative approach taken to Oracle R12 upgrade to reduce overlap and associated spend  Establishing benefit targets and subsequent delivery Option 2 - Crown Managed Shared Services Consolidation of current shared services in to a small number of ‘hubs’ which service all Department requirements Crown body governs delivery and strategy, including the following:  Common performance standards  Acts as contracting body for all major suppliers  Manages transition programme from current to new PROTECT [IL1] Next Generation Back Office Shared Services for Government : Monday 21 st November 2011 3 of 9

4. Recommended Target Operating Model Crown Shared Service Governance Strategy Development Contract Management Business Assurance Performanc e Managemen t NHS\DH JV Oracle c. 100,000 Outsourced ISSC 1 Large & Small Orgs – c.40-50,000 Joint Venture ISSC 2 ERP c. 175,000 HMRC SAP c. 75,000 MOJ\HO Oracle c.150,000 MOD Oracle c.75,000 Ex SPVA NHS\DH JV Oracle c. 100,000 Next Generation Back Office Shared Services for Government : Monday 21 st November 2011 : 4 of 9 PROTECT [IL1]

5. These Include: 1. Performance monitoring of ALL SSCs - performance through competition. 2. Independent delivery - no Department will deliver services from the two ISSCs 3.Crown Management and Crown as the Contracting Authority for the 2 ISSCs 3.Private Sector involvement through divestment 4.A service for Smaller Departments 3. Implement a single, Value for Money, ERP solution in ISSC 2; and 3.Operate on a single set of processes to ensure performance can meet upper quartile benchmark levels. Key Strategic Principles Next Generation Back Office Shared Services for Government : Monday 21 st November 2011 : 5 of 9 PROTECT [IL1]

6. Core and Optional Service Offerings 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 Next Generation Back Office Shared Services for Government : Monday 21 st November 2011 : 6 of 9

7. Proposed Transition Governance PROTECT [IL1] Next Generation Back Office Shared Services for Government : Monday 21 st November 2011 : 7 of 9

8. Proposed Transition Plan Next Generation Back Office Shared Services for Government : Monday 21 st November 2011 : 8 of 9 PROTECT [IL1]

9. Taking Advantage of ERP in the cloud Hardware Hosting Layer Support Layer Software Layer (Finance / HR / Payroll/ CRM/ Procurement) Tier 1 or 2 ERP Multiple Installations Multiple Support Orgs Private Cloud Single Support Org Estimated Potential Saving 65-70% 3 rd Party Single Support Org Single On-Premises Installation ERP “Software as a Service” (SaaS) “Pay per use” Estimated Potential Saving ??% Estimated Potential Saving 40% Public Cloud Multiple ERPs Single ERP Next Generation Back Office Shared Services for Government : Monday 21 st November 2011 : 9 of 10 PROTECT [IL1]

10. What Do Suppliers Need to Consider? Next Generation Back Office Shared Services for Government : Monday 21 st November 2011 : 10 of 9 PROTECT [IL1] Shared Services is about raising performance but also about saving money. This means we will: 1.look to consolidate services 2.look to use new technology and services such as Cloud which drive better VFM – what is the opportunity? 3.re-use before we re-buy 4.not be ‘Gold-Plating’ our services. But there will be opportunities around: BPO for Back Office functions within ISSC 2 ERP transition services– both Tier 1 and 2 BPO Transition services