The Cabinet Office has said it can save up to £600 million a year in administration costs by centralising some of the work of back-office functions such as procurement and payroll across government.

The Next Generation Shared Services Strategic Plan, published last week said two Independent Shared Service Centres (ISSCs) will be created and will take on contracts to run functions for central government departments. In terms of procurement this will primarily be transactional work.

Under the current plans, the ISSCs will be formed from the Department for Transport shared service centre, which is being outsourced to a private provider. The second ISSC will also be run by a private provider and expand the Department for Work and Pensions shared service centre. These ISSCs will take on work for all departments except the Ministry of Defence, HM Revenue & Customs and the Ministry of Justice, which will incorporate work from the Home Office.

The outsourcing partner for the first ISSC is due to be appointed by March of this year, with the provider for the second in place by March 2014. The aim is to have the majority of department activity transitioned across to the centres by the end of 2014.

Announcing the strategy, Francis Maude, minister for the Cabinet Office, said: “Sharing services simply makes sense. There is absolutely no need for departments and arms-length bodies to have their own back-office functions, and duplicate efforts, when they can be delivered more efficiently by sharing services and expertise… we want sharing services to become the norm so every department has high quality, flexible and resilient services available.”

A central objective of the strategy is to ensure that the ISSCs will offer a lower cost ERP solution for departments. The strategy explained without a single provision of ERP across government, reaching efficiency targets would be a “struggle”.

Adam Leach, SupplyManagement.com

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