The business of local government is changing and citizens are demanding more out of their local administrations. Town and City governments continue to struggle to find ways to meet these needs, often with smaller budgets and fewer resources. Municipalities must look within themselves for opportunities to share, partner, and collaborate to better meet citizen needs and make progress toward the future.
One option for municipalities to consider is to look for opportunities to share internally. For example, combining the financial and human resource operations of their town and school district into one operations office, or sharing information technology departments and systems creates ways to lower expenses, while optimizing current workloads.
The time it is taking to recoup the costs of transferring functions to a shared service centre (SSC) has fallen from 2.6 years in 2013 to 2.3 years in 2015, according to research.
Deloitte’s Shared Services Survey for 2015 shows SSCs are generating productivity gains of 8 per cent a year and 71 per cent of respondents are looking to increase the number of functions within their SSCs in the future.
Read more: Shared service centres generating 8 per cent productivity gains
Reading a piece of news about a shared IT service which failed to produce the expected cost-efficiencies or even created extra costs is far from unusual nowadays – the latest concerns being the Government’s new shared models, but many other cases have populated the press. However, this doesn’t mean the model is wrong: if implemented correctly and with the right metrics in place, it can deliver a whole new world of efficiencies, cost savings and value to organisations in both the public and private sectors. But to understand how to achieve success we first need to ask ourselves: why does a shared service fail?
Early shared services centers (SSCs) were set up with a clear objective: efficiency and centralization in pursuit of cost reduction. Many firms successfully trimmed costs in this way, and the ability of SSCs to generate impressive one-time savings was indisputable. Consequently, the majority of the Fortune 500 now operates shared services in one or more functions.
But limiting the role of shared services to merely reducing costs ignores the other benefits that SSCs can provide. When done right, shared services can increase efficiency, drive productivity, enhance controls, and, ultimately, help companies make smarter decisions.
In reality, the BPO function is nothing more than the contracting of specific business tasks, typically back office business tasks, to a 3rd party service provider. Companies like a payroll bureau and recruitment agencies have been effectively performing these kinds of services for decades. In the late 1990's improvements in computing technology, the internet and global communications allowed an explosion in outsourced customer services centers. This in turn led to an increased focus in businesses not just looking at the BPO function but also in the breaking down of traditional organizational processing silos and the creation of aggregated back-office functions in the form of shared services centers.
Read more: Business Process Outsourcing and the Shared Services Center