☛ Want the latest procurement and supply chain news delivered straight to your inbox? Sign up for the Supply Management Daily
16 August 2012 | Adam Leach
The costs of setting up shared service arrangements in local government are recouped within two years through the savings generated.
A report, Services shared: costs spared?, published last week by the Local Government Association and conducted by consultancy Drummond MacFarlane, also found service levels remain the same or improve following consolidation and that “rapid implementation” builds momentum for change.
The report was based on analysis of five shared service arrangements between county councils, fire and rescue authorities, NHS trusts and district councils. It found in each case, the total costs involved in setting up the arrangements were recovered through the savings generated within two years.
The report identified the following five key lessons with respect to successfully implementing shared services: strong leadership; visible commitment from senior managers and councillors; good project management; effective consultation with trade unions and staff representatives; and good communication with staff.
Initial savings, according to the report, are largely delivered through consolidating head count. LGSS, a shared services initiative between Cambridgeshire and Northamptonshire County Councils, delivered £3.79 million in savings by reducing the number of management positions and other economies of scale efficiencies. It also delivered £1.8 million through better IT procurement by leveraging the councils spend.
The report said there was no evidence of reduced levels of service as a result of merging services. But it said, due to a lack of data, it was difficult to identify clear key performance indicators. A lack of robust management data was one of the key shortfalls identified in the report, with all five examples citing it as a problem.
It also identified a conflict between local bodies working to share services and national programmes. For example, an NHS trust could look to share services with other local authorities in its area, or alternatively with other NHS trusts.