Friday, 12 March 2010

Shared services: a good or bad idea?

I went to conference yesterday (info here) all about Shared Services. Whilst there were some compelling & candid stories about the value of such arrangements, I remain unconvinced that this approach is relevant to some or even many parts of the public sector or, for that matter, even beyond into the commercial world. It seems to me shared services rest upon two key and dubious ideas:

Firstly that demand is not infinitely variable such that responses can be boiled down to just a few which are then ‘programmed’ into the software and people that make a shared service thrive. Whilst I would tend to go along with the 80/20 rule and that there are patterns to observe, I also think that people are infinitely variable. Certainly for myself, whenever I get caught up in a shared service vortex where I have to ‘press one’ to find out my balance, ‘two’ to make a payment, ‘three’ to etc. – I almost always find myself waiting for the option (usually number nine – by which time I getting very fed up) to speak to an actual person. Perhaps I am cynical, but I do wonder whether such services are actually designed to put people off.

The second idea I would challenge is that you can fragment a customer (or citizen / client / user) driven process into component parts without losing something from the ‘whole’. For me, the greater number of people who are involved in delivering a service to a client – the more likely something will go wrong which will have to be fixed.

But the conference left me with a few good ideas and points to ponder on… (So thank you for the invitation from Public Service Events.)

But what do you think of shared services – is your experience (either as provider or receiver of such a service) good or bad? Are the economies of scale significant to just smoke & mirrors hiding an underlying inefficiency? How would you improve efficiency and effectiveness?

I am open to persuasive ideas…


  1. We need to define what a Shared Service is first, confusingly different people use the same term to mean different things. One example is where two or more organisations merge their equivelent departments into a single one. There is also the front / back office concept. So it could be a single front office with two or more back offices or two or more front offices with a shared back office.

    In my experience either of these two possibilities produces an organisational structure and processes more complcated than a mere, straight, merger of two organisations.

  2. Jon,

    The main benefit to be derived from shared services is economies of scale, which are limited in their capability to deliver benefits to the customer. A shared service arrangement may make sense from an accountant's point of view, but I really struggle to see the benefit to the customer.

    As shared services arrangements are frequently predicated on a static level of customer demand they unlikely to increase the capability of the service to absorb variety - in fact, they may even reduce it.

    If it was proven that a shared service could absorb more variety and meet demand better than a thoroughly optimised existing service then I would be very supportive. I am not aware of any examples where this has actually happened.

  3. Thanks for both your comments. As always we should start with the customer / client / citizen and work back from there - and assess success in their terms!