1. Local Government Solutions Forum Barcelona 2007 March 2007 United Kingdom Government Shared Services David Myers

2. Agenda Shared Service Vision UK Government in Context The Opportunity Why Sectors? Case Study: Local Government, Health Sector and Criminal Justice

3. Shared Services Vision “to make a meaningful and lasting contribution to the government’s broader citizen-centred transformation of public services by freeing people, time and money to focus on front-line service delivery“

4. UK Government in Context UK Government £500bn, 6-8% overheads typical = up to £40bn 1300+ Public Sector organisations will invest in Shared Services Much of this investment duplicated Too many driven by IT Culture of sharing not prevalent (white space everywhere) Public sector must learn from the Private Sector Economic and social impact Complexities of public sector may cause sub optimal governance Key Considerations Making shared services a political imperative Driving shared services using common methods and with ambitious targets Structuring the market to facilitate the sharing of service offerings Accelerating delivery and reducing risk

5. The Opportunity Benefits Efficiency Effectiveness Employee value add Improvements in business process, data and IT systems Support of other initiatives – Lyons, Productive Time, Procurement Objectives Optimise investment decisions through re-use and sharing Dramatically reduce the number of locations Coordinate the approach to interacting with the market (MOU’s) Use standard structures, processes and technology Match the best performance levels in the private sector Enable public sector staff to concentrate on strategy and high impact activities so CREATED 9 GOVT SECTORS FOR SHARING

6. A sector can be thought of as a grouping of organisations for the co-ordination of the planning and delivery of shared services. Why Sectors? Manageable chunks, risk reduction and greater degree of control Optimise investment across Government Sector Plans - Objectives, Scope, Route-map, Benefits & Investments, Implications, Risks & Issues and Governance How do we determine sector groups? Close relationships between organisations within a sector Sectors ideally contains a large number of similar organisations Making use of existing mechanisms and arrangements Which Sectors were agreed? Criminal Justice, Health, Education, Work & Pension (DwP), Ministry of Defence (MoD), Her Majesty's Revenue & Customs (HMRC), Rest of Central Government, Families and Local Government Why Sectors?

7. Case Study: Local government Blackburn and Darwen Council is a success Multiple back office functions shared Staff transferred New jobs created Inward investment achieved Business links established Savings re-invested in front line BUT, Some Difficulties 3 councils took 9 months to define ‘tarmac’ when planning for a road management shared service GOVERNANCE PROBLEM OJEU’s define too narrowly PROCUREMENT CHALLENGE

8. Case Study: Health Sector The Health Sector The largest employer in Europe Budget £79bn rising to £87.3bn in 2007/08 22 million transactions pa in scope 14,000 Finance staff 619 Autonomous organisations Shared Service Overview Shared financial and accounting services for NHS organisations 50:50 Joint Venture between the Department of Health and Xansa Key response to Gershon review on public sector efficiency Launched April 2005 >100 trusts signed up to date The venture is past break even

9. Case Study: Health Sector Lessons You need the bigger customers to get economies of scale – experience in Health shows average 20% to 39% Payback seems to be possible within 30 months in even most expensive trusts Externally benchmark costs and performance, not just management judgement Mandated customers are a real pain - creating a “carrot based proposition” is much more successful Incentives and disincentives are essential - DH profits are shared amongst the customer base after necessary re-investment and capital charges, so added incentive above and beyond cost saving guarantees Warning: This model does not suit all, best where market is same but many different economically independent entities

10. Case Study: Home Office / Criminal Justice The Home Office / Criminal Justice Sector Circa 350,000 staff Over 235 autonomous organisations Four distinct types of organisation: Police, Courts, Prisons, Probation Shared Service Overview Six major shared service programmes –PhoenixHR, Finance, Procurement –Shared Business ServicesHR, Finance, Procurement –HO Property GeneralEstates –IT Shared ServiceInformation Technology –HO Pay & Pensions ServicePay, Pensions –National Police Shared ServiceHR, Finance, Procurement Differing levels of maturity Opportunity to converge and optimise shared service assets

11. Case Study: Home Office / Criminal Justice Establish a Governance structure that spans the full scope of organisations Restructures and machinery of Government changes can present opportunities when shared services give you scale and flexibility Take care when driving out synergies across operations – strike the balance of pace and risk Driving adoption of shared services requires a customer engagement approach that is ‘voluntary’, staged and relies on business development skills.

12. Conclusions Shared service is central to UK reform All areas of public sector are doing it Governance and culture of local accountability key obstacles to overcome Not about one size fits all Is about delivering best value and freeing up resources to be spent on more tailored front line services SHARING, SO AS TO BE DIFFERENT WHERE IT MATTERS!

13. © 2007 Microsoft Corporation. All rights reserved. This presentation is for informational purposes only. Microsoft makes no warranties, express or implied, in this summary.