At its simplest, shared services can be defined as a ‘service or function that is shared between different organisations or departments’. You may come across this, for example, in shared depots, ICT services, payroll, or shared management.
Shared services are not outsourcing and they are not mergers. In a shared service the partners have an equitable share in the decision making, but retain their sovereign identities whilst drawing on the resource they are sharing.
Interest in shared services as a means to deliver customer service improvements and efficiency gains has grown significantly in recent years as a direct consequence of the government’s austerity measures.
In truth there are many definitions of a shared service, depending on whether you are looking at:
- Private sector collaborations
- Public sector and private sector collaborations
- Public sector to public sector collaborations
Shared Service Architects' focus is on 'public sector to public' sector collaborations, for example between two or more councils, police forces, fire and rescue bodies, FE colleges, universities or housing associations who have a common desire to work collaboratively for efficiency, improvement or political gains.
Our purpose, as a teaching company, is to provide the training and knowledge that leaders and senior managers require to be successful at working on shared service and collaboration activities.
Why are shared services only one of the options?
Sharing services represents only one of four relevant options that organisations can use to make efficiency or improvement gains at a time of decreasing budgets.
We agree with the academic study of shared services and collaborations (Inter-Organisational Relationships) which suggests that in many ways shared services should be considered as a "last option" for organisations, for the following reasons:
Firstly they should try to ‘tough out’ the current financial climate by ‘leaning’ themselves, maybe doing less, asking staff to take pay freezes or making redundancies.This enables them to retain 100% control over their destiny and decision making.
Secondly they could look at outsourcing to the private sector or other providers if this will result in an improved service for less money. This still enables them to retain 100% control over their destiny and decision making.
Thirdly, if an organisation has 'leaned' itself and therefore can offer services at a competitive price to others, they could generate income by selling these lower-cost services to organisations to generate income. This still enables them to retain 100% control over their destiny and decision making.
Finally, if none of those three are suitable, then organisations should consider shared services. The reason this last option might be best is that, whilst shared services can potentially provide the largest savings or improvement gains to a group of partners, it is also the most complex to accomplish.
It also requires the acknowledgement that they may have to give up 100% control over parts of their organisation. Where services are shared they now have to negotiate change, where formerly they could 'just do it'.
The 'loss of control' is frequently cited in the academic studies as a primary reason why shared service discussions stumble, or fail. Interestingly where sharing is forced on people is another - hence why the Regional Fire Control fiasco occured.
Having said that, well structured shared services, where there is strong trust between partners, a common vision of a better service, and they have acknowledged the complications of shared control, are banking savings for the partners. For example in the Mid-Kent Partnership, Bromsgrove and Redditch Councils and the Welsh NHS Shared Services.
Click here to find out why the number of shared services are growing