the case for shared services. the operation of any organisation can be segregated into one of three...

The Case for Shared Services

The operation of any organisation can be segregated into one of three areas:

Back Office

Middle Office

Front Office

Back Office covers functions and processes which exist in order to for the business to be able to run; thus the term Corporate Back Office is often used.

The functions covered by this area include HR, Finance & Administration, IT, Legal, Estates etc. For GPs this would cover the IT systems they need for their practice, paying of staff , rates and rent etc.

Introduction

© NHS Shared Business Services 2011

Middle Office covers functions and processes which are specific to the actual business of the organisation.

In Local Government such functions would cover Revenues and Benefits, Refuse, Highways, Parking; in Central Government the middle office functions are department specific such as Vehicle Licensing in Transport, Tax Credits and Tax Assessment in HMRC, Command and Control Systems in MOD and the Emergency Services. For the NHS this would cover Healthcare Pathways, Health Information Data, Invoice Verification.

Front Office covers functions and processes which have direct contact with those not directly employed by the business but are users of, or buyers of services, regardless of the channel of communication ( phone, visit or internet).

The traditional Front Office functions covered call and contact centres and help desks. However, with the evolution of applications many middle office functions have now been modified with a front office interface via the internet, for example on-line taxing of vehicles, on-line tax assessments. For the NHS this area would cover appointments and design of new services

Middle & Front Office


Mapping of 6 Business Categories


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BackOffice

MiddleOffice

Front Office/ Front Line

Running A Business

Information & Informatics

Health Needs & Opportunity Assessment

Communications& Partnerships

Clinical Commissioning &

Planning

Commercial Commissioning

Shared Services are the convergence and streamlining of these functions to ensure that they are delivered to the organisation as effectively and efficiently as possible, i.e. the sharing of assets and resources.

In practical terms services to be shared across operational units are usually grouped in either the Back, Middle or Front Office functions and are often implemented as silos within these areas.

A common misconception is that Shared Services are the centralisation of such services. Centralisation can be a part of the implementation but the main attribute for a shared service is one of common processes but not necessarily common “rules”.

Three way matching on Purchase Order, Goods Received Note and Invoice is a process but the time taken to settle the invoice is a rule.

Definition


The service must be:

Be used by more than one organisation or set of people

Use and deliver common business processes

Use a common infrastructure (IT or otherwise)

Share assets

Perform to a Service Level Agreement

The results will be:

Delivered cost savings

Lower Investment Costs

Lower Running Costs

Improved service to the end user (be they citizen or employee)

Better Information/Data

Freeing up of time

Ability to benchmark

To Qualify as a Shared Service


The Benefits


There are three levels of “maturity”:

Functional:

shared services for single functions e.g. stand-alone HR and finance, stand-alone contact centre

Multi-functional:

enterprise view of the services e.g. HR/finance/procurement

Citizen centric:

integrated front and back office shared services giving an end-to-end view of the process e.g. DWP/HMRC/Local Authority eligibility assessment for

benefits and the subsequent payment processing.

Maturity within Shared Services


Maturity Level Outcome/Benefit Example

Functional Consolidated and converged function Single set of Business Processes serving

many users Cost savings

BACS Transport for TfL (HR) MOD (HR) Payrolls

Multi-functional Consistency of service across functions Potential for inter-working or integration of a

range of back office services Consistent data across more than one

business application

GE Mars M&S HMPS

Citizen-centric Shared & consistent information about a citizen/employee

Shared & consistent view of citizen/employee across multiple business applications

Single point of entry for life events Facility for citizens to deal with government in

a simplified way, with one consolidated process, as opposed to dealing with multiple departments and functions that may currently be involved in any transaction.

Amazon Facebook DWP/LA Eligibility Assessments

Examples of Shared Services maturity


Commissioning Consortia create the requirement for new organisations outside of the current GP Practice/PCT/SHA structure of the NHS

Commissioning Consortia bring local engagement and local accountability but they will have many common requirements

Until now most back office and middle office functions were carried out by the PCTs (with some limited outsourcing)

New options exist for the new Consortia:

Set up their own services - is this affordable?

Share with other Consortia - if so at what level?

Work with PCT mangers to set up a Social Enterprise?

Buy from a experienced third party - how much?

Pick and mix with different providers for different support services?

The Challenge


Clinical Commissioners - changing the model of health care delivery

Patients - more self management to keep people out of the health system

Primary Care Clinicians - better identification and management of people with and at risk of Long term Conditions to keep people out of the secondary care system

Secondary Care Providers & Clinicians - improved outcomes and productivity, rapid discharge home and back to primary care

Back office functions are essential but are NOT core to the business of Commissioning

Middle and Front office functions are core businesses for Consortia and significant efficiencies can be made by sharing, providing the ability to benchmark across larger geographic areas

Shared Services require Service Level Agreements and “contracts” so the customer gets more control by outsourcing, not less - as long as there are commercially enforceable contracts

Things to Remember


Commercial Structures

There are basically 6 Commercial Structures for Shared Services :

Unitary - A single organisation consolidating and centralising a business service. Most prevalent in the Private Sector, need to big to sustain own shared service

Lead department/Host - An organisation consolidating and centralising a business service that will be shared by other organisations. HRMC, DWP

Joint Initiatives (Internal)/Club – Agreement between two or more organisations to set up and operate Shared Services. SW1 in Local Government.

Strategic Partnerships (External) – Contractual arrangement with third party provider for a range of services which include Shared Services. BSA and Capita, HRMC and Aspect

Joint Venture (JV) – Joint Venture legal entity between one or more organisations and a third party provider. NHS SBS (50:50 JV between Dept of Health and Steria)

Outsourcing – A third party provider takes full responsibility for managing and operating the service. Prevalent in Private Sector. Steria runs BT’s F&A, Accenture runs BT’s HR

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Barriers to Moving Forward


Issue Characterisation Resolution(s)

‘We don’t have command and control’‘This is too disruptive’

Public Sector organisations even within ‘sectors’ or ‘families’ have high degrees of autonomy

Get project governance in place from the start. A strong SRO empowered to make decisions

‘Not designed here’ Unwillingness to join a solution you did not design.

Use out of box processes wherever possible – you will be surprised by their built in flexibility

‘We are different’‘We are unique’

Over-emphasis on the need for process variation.

Rigorously challenge complexity – why do we need to be different?

‘It’s a technology project’‘This only applies to HR and finance’

Focus on technology change not on people and process change.Limited ambition outside corporate services

Convergence to best practice processes requires a transformational change in working behaviours

Governance Challenges

Shared Services in the Private Sector are relatively mature, in the Public Sector, including the NHS, they are not.

Commercial relationships have to be established and managed

The concept of “shareholder value” is different from that of the private sector.

Profit is not the only driver and success criteria need to be agreed upfront for each participating organisation. In the public sector improved quality of service and reducing the cost of overheads will release monies for additional frontline services

Staff and union concerns have to be addressed


Governance Principles

Irrespective of any chosen Commercial Model, Shared Services must actively manage:

Ownership –the development of the capability is married with an identified business owner for the realisation of the outcomes. Governance straddles both the capability development and the business deployment for Shared Services and is therefore well placed to ensure an integrated approach to benefits realisation

Inclusion – ensuring all stakeholder needs are taken into account. Inclusion ensures the customer view drives the development and deployment of Shared Services. This promotes the development of a robust service that succeeds in meeting the business needs

Communication – ensuring that the underlying business drivers are reflected in the programme communications thus minimising opportunities for confusion within the stakeholder group


Managing your Shared Service

Challenge – provides management assurance to all of the programme processes especially that of risk and stakeholder management

Compliance – ensuring the programme and the business meets agreed commitments to time, quality and cost and challenges the programme to mitigate any variances

Benefits – ensuring outcomes are tracked and benefits realised.

Functional Management – functional expertise and leadership from selected organisations to aid improvement and development plans (e.g. HR, F&A, IT)

Customer Focus Group– An independent voice of the customer from each of the participating organisations tasked with improving the customer experience

Employee Focus Group– key employee representatives (including Unions) tasked with representing the employees


Governance is:

much more than a monthly meeting to validate progress and agree plan to deal with variances

a daily activity that champions change and ensures that the operational management of the Shared Service programme has the formal and informal access to the business decision networks to make the necessary course corrections in real time.

there to ensure that the terms of engagement are agreed for determining costs, benefits allocation, timescales and the transformation required by all parties and that these are adhered to during delivery.

there to ensure that lines of accountability are clear and agreed by all parties and those accountable have authority to deliver;

The role of Governance is the same roll across all the commercial structures. The focus of governance is, however, different in each of the scenarios in order to address the different business pressures emanating from each structure


How to be a Better Buyer/Supplier


the case for shared services. the operation of any organisation can be segregated into one of three...

Documents

office middle office

middle office functions

shared services slide

office interface

common business processes

emergency services

buyers of services

actual business