RELEVANCIA Y SIGNIFICADO DE LA INTERNACIONALIZACIÓN

International experience suggests that the development of shared services as a model to drive cost efficiencies and improved services to citizens has been slow to progress. Amalgamations of local authorities and legislative requirements (more in the central government sector) as a driver to provide for shared services have arguably been a more effective basis for change. Conversely, such legislative requirements in Australia, for example, have largely failed to deliver the benefits initially sought from the likes of amalgamation.

The constraints to progressing local government shared services fall into the following four broad categories.

2.6.1 Political and behavioural

Protecting local autonomy can be a strong political motivator. The idea of

locating staff and services outside a local jurisdiction can be unpalatable for local politicians, as can sharing or buying support services from neighbours, even at a lower cost. Thus, to overcome such political concerns, any joint arrangements or shared services need to firstly develop a robust business case that is publicly defendable. Secondly, any governance arrangement will need to account for local representation so that an element of local control is maintained.

At an operational level, generally there is no incentive to reduce staff levels as a cost-saving measure. Thus efficiency drives through shared services may find internal resistance and strong desires to protect individual careers. The 2007 research conducted by the AISR demonstrated the need for robust planning, clear objectives and realistic expectations when dealing with organisational change. Staff-related concerns are countered by messaging, in shared services good practice material and surveys, on the need to involve staff during the change process to implementing shared services. Mature shared services centres in the UK have demonstrated improved staff benefits, better training and job

opportunities arising from centralised processes that offset any initial staff losses.

2.6.2 Uncertain benefits

Assuming that the primary drivers for shared services are cost efficiencies, improved services or improved standards, then the ability to demonstrate in a business case that such benefits can be accrued will be critical at an early stage. While there is an increasing body of international evidence, international surveys suggest there is comfort that shared services do provide a range of benefits, but often with limited data outside cost savings to support this belief.

Thus, in the absence of compelling information and evidence in support of shared services arrangements, it can be difficult to convince constituencies of the merits of collaboration across councils. Other than direct procurement activities where cost savings can be easily demonstrated through contestable processes and historical information, demonstrating significant cost benefits for back office and technology projects can be more difficult. This is particularly so where projected benefits from existing shared services have not resulted once tested.

Other than numerous individual local government examples of shared services benefits being quantified in international reports, the more compelling cost-saving benefits can be found in central government. This is likely to be a factor of scale,

centralised monitoring functions and common performance measures being in place.

Table 8 International examples of public sector cost savings

Agency Activities Savings Period

Queensland Shared Services Initiative Procurement and administration functions $42.5m 2002-07

Victoria State Procurement, integrated ICT, administration, fleet management

Forecast $209m Four years to 2010/11

WA Procurement, administration,

ICT

$55m pa 2007-09

Two UK Councils ICT outsourcing $1.5m Over five-year contract

As for other benefits gained, such as resource sharing, expertise gained and improved service delivery, these can be more difficult to measure and / or have a “value” placed on them. Having some clarity on performance measures and benefits sought from any initiative will aid in managing expectations and deciding the viability of a proposed shared service.

Government agencies in most jurisdictions surveyed are still in the transition phase as far as the implementation of shared services arrangements is concerned. There is no clear evidence that improvements in service delivery outcomes are a major objective of shared services arrangements

(Firecone Ventures Pty Ltd, Background Paper on Shared Services for Victoria State Government, July 2007)

2.6.3 Conflicting objectives

The ability of parties to agree on what a shared service can provide can be

constrained by the presence of multiple agendas and different objectives for each participating council. Factors such as the maturity of an organisation and the differing levels of experience with joint arrangements can equally result in frustration in advancing shared services projects. In their report Deloittes noted that delays or directional changes often defeated the outcomes sought and increased established costs.

Thus clarity of purpose and a commitment to implement appear to be essential ingredients to successful models.

2.6.4 Complexity of process

For some shared services projects there will be multiple requirements and stages to implementation, all of which require commitment and leadership from the participating councils. Progress can be constrained here because of complexity factors such as:

 initial investment costs being high or being unable to reach agreement on the necessary funding contributions. Any need for additional funding will generally be in the context of existing financial constraints. Also it may be difficult to apportion benefits so the funding model becomes difficult to agree on. Front-end capital costs are most often associated with ICT projects

 an absence of internal expertise for project management or the ability to provide the required technical skills. This situation can be a factor of skill shortages or the need for expertise outside what the councils already provide. Having to contract the necessary expertise can become expensive  limited internal capability beyond business-as-usual activities. In rural

areas, for example, there will likely be increasing skill shortages for professional and technical occupations. However, if structured

appropriately, shared services arrangements allow for scarce expertise to service multiple councils

 multiple processes and systems having to be integrated into a centralised function take planning and time. There are likely to be numerous

prerequisites to enabling an integrated delivery function, each of which has the potential to derail progress. Examples are common collection processes, common datasets and the use of common software applications  legal and structural requirements associated with governance and the

provision of shared services can be outside traditional experiences of local government.

Being able to plan for and address the above constraints as appropriate for individual councils is crucial to the overall success of shared services.