Bruce Potter, a partner with Oxford law firm Morgan Cole, discusses the implications of shared services for local businesses

More than ever before, organisations are having to deliver more using fewer resources. In Oxfordshire, publicly funded bodies in particular have no choice but to seek greater efficiencies in the services they deliver, by improved cost saving and smarter integrated purchasing.

The savings made are going to be vital to help protect front line public services, and to free up savings that can be reinvested in those services.

The concept of shared services is a key contributor to driving efficiencies and tackling budget pressures in the current economic climate.

That is why many public bodies are considering working together more. Fire, police, health and social care, local authorities and education are all looking at the model — but what does it actually mean, and could it offer your business new opportunities?

It is important to recognise that sharing services is not the same as outsourcing.

Outsourcing means transferring services, staff and often equipment to a third party — usually a private operator — to deliver that service. Oxfordshire has well-known companies which specialise in business process outsourcing — especially in information technology.

There are also mature models of outsourcing in areas such as logistics which have been running nationally from Oxfordshire for several years.

Shared services is a model in which a number of organisations combine their own capacity to carry out a common or similar task such as human resources, finance or IT support.

They transfer all relevant staff and equipment to a new jointly-owned body, or they may just agree that one of the organisations will deliver the service for all of them.

The commercial sector has increasingly used full outsourcing, rather than shared service models, over the last decade to improve the efficiency of their corporate support functions, such as finance, human resources, information technology, logistics and procurement.

Many businesses have asked if these functions are ‘core’ to their operations and, if not, can someone else do it more efficiently, and more cheaply?

Those decisions are not always just about cost. Often the need for new investment in IT or skilled staff can be significant drivers for more outsourcing of functions.

For the public sector, retaining tighter control of service standards and the sustainable delivery of core services often means shared services is a more acceptable model to use.

The benefits of shared services are pretty obvious in terms of costs and efficiency — one warehouse, one telephone system, one HR or maintenance team.

But there may also be strategic and commercial benefits, such as economies of scale when buying, improved administration, better service integration and management, and the pooling of scarce or specialist skills.

Smaller public bodies in particular may gain access to a wider range or depth of expertise, while staff retention becomes easier as work is more varied, with increased development opportunities.

But the real driver for public and private sectors should be the same — to deliver goods and services better and cheaper.

Customers and service users should see the service improvement and the organisation should also see the costs benefits.

For public bodes many savings will be in back office services, but there are often synergies only an outsider can see — and that is where the opportunities lie for private companies.

Many parts of services can be combined, for example deliveries, maintenance, or visits to people’s homes.

It will pay to have a good look at what services you are providing, and then talk to public sector customers about how you could work with several of them to deliver those services better.

They may not appreciate how similar the services are that other public bodies buy from you, or which could be combined.

Of course, there are challenges in moving to a shared service structure.

Our experience tells us the main issues include agreeing common standards of service, combining different workforces and work practices, as well as funding future investment.

Roles and expectations must be clearly defined with robust service integration plans to which all the sharing bodies agree.

n Bruce Potter, Morgan Cole, 01865 262600.

Web: www.morgan-cole.com