Public sector unconvinced of savings from shared services

Many public sector bodies are not convinced about the cost savings that can be made through shared service arrangements, according to research from Ovum.

Large sections of the public sector believe not enough money can be saved, Ovum said, to make the move to shared services “worthwhile”.

The analyst house interviewed CIOs at local and national government agencies across North America, Western Europe and Asia-Pacific for its ‘Austerity measures take first bite from public sector’ report.

It gauged attitudes to the sharing of services at a time when many public sector bodies are facing budget cuts. When asked what barriers they faced to moving to shared services, almost half of the CIOs in Europe (49%) cited concerns that they would not save enough cash to make it beneficial for them.

In North America, 46% cited this reason, and in Asia-Pacific the figure was 29%.

Jessica Hawkins, Ovum analyst and author of the report, said, “The move to shared services does involve upheaval and invariably means changing software applications, which in turn can require system and data migration and all the complexity that this entails.

“Many agencies have the perception that there is not enough money to be saved to make this worthwhile.”

Ovum’s survey also revealed that many public sector agencies worry about losing control of their key business operations with a move to shared services. In North America, 68% cited this as an issue that would prevent them from making the move. In Europe the figure was 39% and in Asia-Pacific it was 31%.

Hawkins said, “Changing the dynamics of service delivery is an emotive issue for public sector bodies and can cause them to fear that they are losing control of their key business operations.

“This is compounded by the prospect of job losses and the legal complexity of transferring staff to a shared services model.”

In Europe, 23% said loyalty to their current workforce would prevent them from moving to a shared services delivery model. In North America and Asia-Pacific the figure was higher with 26% citing this reason as a barrier.

Hawkins said: “These barriers that public sector agencies feel they face mean uptake of shared services has so far been modest in some regions. Europe is slightly ahead of Asia-Pacific and North America, but the difference is not considerable.”

However, she added, this gap widens when looking ahead to the next two years, when “more European bodies will be prepared to make the move”.

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