The Scottish Government

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Shared Capacity: Shared Services

One of the key themes being explored by the National Shared Services Board was looking at front and back office support services within a council (such as customer contact, HR, ICT, admin, etc) to identify how, if standardised across the organisation, efficiencies and better support for front line services could be realised. The board looked to understand if the adoption of a common operating model for support services could make partnership working between councils and with other parties much easier. Funding was given to carry out initial diagnostic work in this area.

The NSSB believed that significant benefits could be generated through a national approach based on customer focused, simplified and standardised processes. This would maximise the potential for the emergence of greater collaboration and sharing to generate more efficiencies and releasing 'front-line' staff from repetitive, inefficient support activities, delivering better, more responsive and transformed public services.

The range of work carried out fully explored the potential for 'simplifying, standardising and sharing' and models for support services that would make partnership working and sharing between councils and with other partners much easier. This stream explored different levels of collaboration as illustrated above.

City of Edinburgh and Glasgow City Council Pathfinders

In summer 2007 Glasgow and Edinburgh councils reported to Scottish Government on the diagnostic work they had undertaken. The reports made the case for the transformation of local government service delivery that is based on a better understanding of how resources are deployed across the whole organisation. This understanding was underpinned by an end to end process operating model and leading practices proven by other organisations. The outline business cases from Glasgow and Edinburgh highlighted significant net cash efficiency savings that could result from major changes based on simplified, standardised and shared processes.

In November 2007, Glasgow and Edinburgh agreed to continue in the role of pathfinder for a national approach to shared services for local government by taking forward a second phase of work known as the Design Phase. The stated requirements were:

• demonstrate the practical application of the common process model and update it in light of experience.
• provide the opportunity for continued joint development plans with early adopters in light of their diagnostics.
• identify implementation and benefit milestones.
• provide route maps for improvements and shared services and identify underpinning infrastructure (e.g. governance support, procurement, workforce issues, shared change support, ICT).
• capture the options that provide opportunities for others and ensure that any operating models have the breadth of scope and provide frameworks for other councils / public sector organisations to take advantage of the service.

Glasgow and Edinburgh were asked to work with 'early adopter' councils. Throughout the work Glasgow continued to work with Renfrewshire (in 'early adopter' status) and North Lanarkshire Councils.

The design phase commenced in December 2007 and concluded in June 2008 with the submission of the following documented deliverables:

• updated Business Case
• design Toolkit
• concluding Report.

Edinburgh Pathfinder

In Edinburgh the design phase shaped improvements to services from initial customer contact to service delivery and redesigned the support services that underpinned them. Edinburgh's approach was to promote the simplification and standardisation of internal services, designing new delivery mechanisms to ensure that services would be shareable, where appropriate, internally and externally.

Edinburgh's plan has created an integrated, corporate transformation programme for the whole organisation to reflect collective leadership responsibility through the Council Management Team, where responsibility for leading and delivering specific elements of the programme will be spread across Directors and Heads of Service. This will be driven forward as the Achieving Excellence programme. The aim is that the Policy and Strategy Committee of the council should take political ownership of the Achieving Excellence programme, supporting, scrutinising and challenging it.

The Shared Services pathfinder has defined service delivery models which, alongside other strategic programmes such as Smart City, Fit for Future and the Procurement to Pay programme, will achieve a transformed organisation by following strategic objectives to improve the customer experience whilst delivering efficiency savings. To date, Edinburgh has identified annual savings of £5.2 million in the 2008/09 budget process through recommendations in the original Shared Services business case (submitted July 2007). A further £11.5 million net over 3 years is identified in their revised business case, with annual net savings of £12.1 million after Year 3.

The output from the Pathfinder Source to Pay Project clearly indicates that within the South and East region of Scotland (Fife, Edinburgh, the Lothian's, and Scottish Borders) there is a strong, coherent case for a shared service for the Source to Pay process.

The proposed delivery model sees the City of Edinburgh Council, Fife Council and Scottish Borders Council as Founder Members of the shared service with the City of Edinburgh Council implementing first, then Scottish Borders and Fife Councils respectively. Fife and Scottish Borders Councils' full participation is dependent upon the development of separate robust business cases and the approval of elected members. The new financial efficiencies arising from a shared service with the initial partner authorities Edinburgh, Fife and Scottish Borders would be conservatively £17 million over three years to April 2011.

The model is predicated on best practice processes and capabilities not upon technology as the main driver. The model does not require technology as a prerequisite to achieving benefits, although this will be required longer term to achieve further efficiencies in the region of centralising payments.

This model is complementary to the national agenda on Procurement. The output of Procurement Scotland (Scottish Government) and Scotland Excel is fully integrated with the approach of the model proposed. The model is not limited to Local Authorities within the region. These linkages are being fully explored with other councils in taking forward the procurement theme emerging from the Diagnostic Pathway programme.

Glasgow Pathfinder

Shared Services are strategically important to Glasgow City Council and central to its service reform programme.

The council has embraced a shared services approach, firstly in its telephone call centre and more latterly in a shared services centre for back office functions. Initially established to service one organisation - the City Council - the shared service centre is now maturing in a multi client environment, servicing the council and all of its arm's length organisations, its Joint Venture LLP and a number of smaller external bodies. The shared services model has recently been extended to ICT and Property services through the creation of a joint venture limited liability partnership with Serco PLC.

A diagnostic phase, reporting in March 2007, concluded that there was a significant opportunity for Glasgow to transform the way it provides services and at the same time realise efficiency savings through implementing an operating model based on simplifying and standardising the processes and systems required to support service delivery.

The revised business case concentrated on opportunities for extending these to functions not currently covered by existing strategies and to adopt the principle of shared services wherever possible. For example the customer call centre has been in operation for some 7 years and is now mature in its operating model. However, opportunity exists to widen the range of services covered and to deepen the integration between first contact and service fulfilment.

The benefits of the proposed national approach were:

• a strategic tool for helping councils seek and prioritise strategic improvements to their business that could release financial savings;
• a platform for streamlining processes and improving the delivery of public services;
• the creation of an informed basis for accelerating discussion and development of shared service delivery;
• further development of the pathfinder target operating models through the design phase and the opportunity to consider and take forward joint development plans;
• a common platform for leading practice sharing;
• increased local government capacity for customer focused process and service improvement; and
• stronger relationships with national initiatives and capacity.

The resultant programme, the diagnostic pathway, which supported all councils in looking at how resources were deployed across support activities across the whole organisation, has demonstrated the benefits of a nationally-supported approach which builds on local identification of opportunities to simplify, standardise and share. The work done by all the projects has highlighted that a nationally supported approach to sharing leading practice and collaborative working is essential.

Local Government Diagnostic Pathway

The Diagnostic process is an innovative approach of engaging an organisation in identifying opportunities for improving services to customers and realising efficiencies through simplifying, standardising and sharing and then developing those opportunities into practical solutions.

The Diagnostic approach was pioneered by the City of Edinburgh and Glasgow City councils with the support of their consultants PWC & KPMG, who undertook their Diagnostics during 2007. The lessons learnt and experiences of their differing approaches were consolidated so that, with support from the Improvement Service, the other 30 Scottish Local Authorities were able to undertake it during 2007/8.

What is it?

The diagnostic takes an end to end, process-based approach to reviewing an organisation rather than the more traditional functional-based approach. This process-based approach provides an organisation with the opportunity to better understand how it undertakes the processes required to deliver services, where these processes are undertaken, where processes are replicated or duplicated and where processes are fragmented. This view of the organisation can then be used to identify opportunities for simplifying processes, standardising processes and ultimately sharing processes within directorates, across the organisation and potentially with other organisations.

Its key features are:

• its focus on engaging with managers to ensure opportunities are practical, customer-focused and bought-into;
• it is based on a standard process model, which enable the similarities between teams to be exploited;
• resources are analysed across the generic processes;
• opportunities are based on data, providing a quantitative base-line;
• opportunities are focused on organisation-wide opportunities to 'simplify, standardise and share';
• it raises the level of vision and aspiration through a gap analysis against leading practices and metrics;
• it integrates existing projects and initiatives into a strategic change programme; and
• it develops opportunities into practical solutions.

Benefits

The diagnostic has made a significant contribution to the strategic improvement agenda for councils and has enabled existing initiatives to be reviewed and challenged.

Over 200 business cases have been prioritised and put forward and councils are currently further developing their business cases.

Cumulatively the projected savings are expected to be £200 million over the next few years through taking forward the work that has been identified through the diagnostic.

National common areas have been identified in the areas of Business Support and Information Management, Customer Management, Finance; Flexible, mobile and home working, Human Resources, Procurement; Programme and Change Management, Property and asset management, and Transport (see diagram below). Councils are willing to share knowledge and information and to learn from others as they progress. The main focus is on opportunities within their councils. Inter-Council opportunities have been identified and councils are continuing to share as they move through the next phase.

Examples from individual councils below demonstrate a range of standardising and potential sharing that is envisaged by councils.

The Diagnostic Pathway has given councils the opportunity to invest in building their internal improvement and change management capacity. Councils have also matched the ERF funding provided. The Diagnostic itself has been a shared programme which has created a sector wide, reusable approach which reduces the cost through reuse of common tools and learning.

Undertaking the Diagnostic has been a positive experience and an important tool for supporting councils in developing a corporate wide and strategic review of their organisations. Councils have worked together and met regularly to share the opportunities and are continuing to share as they develop their business cases which will realise significant savings over the next few years. Examples include:

• Moray, Highland, Argyll and Bute and Dumfries and Galloway,
• Perth and Kinross, Dundee and Angus
• Inverclyde, East Renfrewshire and Inverclyde
• Edinburgh, Fife, Scottish Borders

Scottish councils will continue to work together to make the best use of investments that have been made by individual councils and others. The scale of the opportunities that have been identified and the evidence that a significant number of councils are already establishing the teams for the next phase - designing and delivering the opportunities - points to the value that has been generated through this initiative.

The Improvement Service is working with lead councils to support collaborative development of how the design of these is taken forward to ensure that the opportunity for common approaches, standardised processes and shareable designs is achieved. This work must make best use of the progress made within the Design pathfinders and existing shared capacity such as Scotland Excel and Customer First. The work is also being taken forward in partnership with Scottish Government to ensure that this is shared with the wider public sector.

Case Studies - Argyll & Bute Council

"Process for Change" is the name of an Argyll and Bute Council programme which is looking at "what we do, how we do it and how we can do it better".

The programme is managed by the Council's Business Improvement Team and is the follow up to the work undertaken in 2008 under the title "Shared Services Diagnostic". That work identified key areas for improvement within the council and has resulted in the emergence of seven themes which form the basis of the Process for Change programme.

By examining how it currently does things within these themes, the council believes that it will be able to identify potential savings in terms of both cash and efficiency, which can then be directed to front line services, speed up processes, make services more accessible to customers and enable it to focus more clearly on customers' needs.

The outcomes of this Process for Change programme will enable the council to take a long term view of the changes it needs to make, the costs and benefits of those changes and what the options are for making them happen.

"Process for Change offers us a great opportunity to provide better services, better customer care and be more efficient in how we go about our business. This is an exciting time for the council - a time where customer, staff and elected members will see real improvements."

Sally Reid, Chief Executive, Argyll and Bute Council

"Collaborating with other councils - in particular Dumfries & Galloway, Moray and Highland with whom we use common consultants - has been invaluable in giving us confidence that we are moving forward in a logical direction. We learnt from each other throughout the diagnostic phase and now during the high level design we have developed a common approach to developing each of our opportunity themes. We share document templates and programme management techniques as well as experiences about what works and what doesn't."

Judy Orr, Head of ICT and Financial Services, Argyll and Bute Council

Moray Council

"The Shared Services Diagnostic has highlighted the potential for a significant modernisation programme for Moray Council. Following on from the Scottish Government's investment of £150,000 the council has committed a further £800,000 to take forward detailed design and implementation plans for modernisation, referred to locally as "Designing Better Services". The council is targeting efficiency savings in excess of £4 million per year and is also convinced that services to customers will be improved by the Designing Better Services programme. Working with partner councils during the diagnostic phase was of great benefit and we are delighted to be maintaining that partnership through the joint procurement of consultancy support for the detailed design and implementation phase.

Working with consultants on the shared services diagnostic confirmed that there are no easy options remaining for further efficiency gains and the council has recognised that the next changes need to be transformational. Councillors acknowledge that this scale of change needs careful planning and will take a number of years to fully implement."

Mark Palmer, Chief Financial Officer, Moray Council

The Way Forward

Over 200 opportunities have been generated across local government through carrying out the diagnostic. These have demonstrated that:

• simplifying and standardising within an organisation is an essential part of the journey to greater collaboration. Internal transformation will in itself generate projected savings of up to £200 million over the next few years.
• shared capacity initiatives such as Scotland Excel and the recruitment portal are relatively easy to put in place and further sectoral and cross sectoral shared opportunities may arise from requirements for specialist professional and advisory services.
• however, whilst being relatively easier to implement, there are significant opportunities to build on, reuse and derive more value from shared capacity that has been put in place (Customer First, Scotland Excel, myjobscotland)
• the overall approach is being taken forward in the context of a tightening financial position, as well as a greater recognition that shared services is about the front line delivery as well. Shared services need to be seen in the context of single outcome agreements and community planning partnerships and working across the wider public sector.

Leadership and sustained commitment, at a political, senior officer and operational level, are essential to moving this next phase forward. A new politically led Shared Services Board has been established within COSLA and is currently working on establishing its vision for the future of shared services across local government which will be taken forward in partnership with councils and wider public sector partners. Leaders advocating the need for collaboration is key to the future success of any national approach.

Joint Working in Orkney

The Joint Working in Orkney Programme is a unique collaboration between Orkney Islands Council and NHS Orkney to simplify and share public service provision. The objectives of the programme are to secure the sustainability of island and remote communities and to keep viable services on Islands. Community and economic wellbeing in Orkney is underpinned by the services and jobs of local public services. By building critical mass and innovation through joint service delivery, the aim is to create a modernised public sector which can deliver the best possible outcomes for the people of Orkney.

There are three strands to the programme: Joint Build Projects, Shared Support Services and a Community Health and Social Care Partnership. The ERF has been used to establish the governance arrangements for the programme and to progress specific shared support services projects. The different legal frameworks governing local authorities and NHS bodies, the impact of Procurement Rules for shared services and the conditions of Scottish Government Grant for the Schools Investment Programme have all significantly shaped the governance and procurement arrangements for taking our joint working programme forward.

The Joint Build Projects are a programme of health, education, leisure and social care projects.

They are:

• a Schools Investment Programme to build two replacement schools, halls of residence for pupils and a swimming pool using a "Hybrid" PPP model developed by the Scottish Government and Partnerships UK. This will be procured by a special purpose vehicle - Orkney Infrastructure Limited - which will be a wholly publicly owned community interest company established by the Council and NHS Orkney. The company will be established prior to contract close in April 2010, with project completion scheduled for September 2012;
• a business case for a replacement hospital and other NHS facilities will be submitted to the Scottish Government in early 2010. Subject to Government approval and funding arrangements, these facilities may also be procured using Orkney Infrastructure Limited;
• two jointly funded integrated health and care projects comprising residential and high dependency care facilities which will allow "step down" from hospital care and reconfiguration of hospital services. These projects are currently scheduled for completion in 2011 and 2012.

The second strand to the programme is Shared Support Services.

The Council and NHS Orkney have worked through a range of legal and procurement issues affecting shared services and have agreed that creating a wholly publicly owned and controlled Special Purpose Vehicle "Orkney Public Services Limited" is the most effective way to achieve the goal of shared support services and to deal with these complexities. Orkney Public Services will start up in October 2009; initially providing a joint IS service, which will underpin other joint working initiatives, including the Community Health and Social Care Partnership described below. HR and certain finance processing functions will transfer into the new shared organisation in a phased way over the following 12 months. The success of Orkney Public Services Limited will be reviewed in year three of its life.

ERF also funded three other pieces of work on Non Emergency Patient Transport, Property Maintenance and Hotel Services (Cleaning, Catering, Laundry and Janitorial Services). The joint governance body for the Joint Working in Orkney Programme, the Public Sector Reform Programme Board, will consider the final reports from these projects at its June 2009 meeting. These projects involve other partners including Scottish Ambulance Service, the voluntary sector, commercial transport providers and Orkney Housing Association. The recommendations for all three projects focus on making better use of assets and staff, simplifying processes, eliminating duplication and eliminating gaps in service.

The third strand of the current programme is the establishment of a Community Health and Social Care Partnership.

A Community Health and Social Care Partnership for Orkney has been established in shadow form since April 2009 and an interim joint Director has been appointed. It is intended to proceed to fully establish a Community Health and Social Care Partnership by April 2010. Orkney Islands Council and NHS Orkney believe that this is the best way to deliver services that will support people in their own homes and communities and aim to prevent emergency and repeat admissions to hospital, prevent delayed discharges and reduce the numbers of people going out of Orkney for long term support.

The Joint Working in Orkney Programme is now moving from the development phase to delivery phase. We believe that through this programme we have made significant progress towards creating a modernised public sector which will deliver the best possible outcomes for the people of Orkney.

Comhairle Nan Eilean Siar Integrated Service Delivery

Under the auspices of the Outer Hebrides Community Planning Partnership (OHCPP), the establishment of the Integrated Services Project Management Team provides a formal structure for identifying and driving forward integrated service opportunities. The project aimed to maximise the positive impact of the Scottish Government agendas relating to Integrated Service Delivery and Efficient Government through the development of a service delivery model and governance arrangements that would secure the future of locally delivered and accountable public services on the islands.

The benefits of the project included increased sustainability of service delivery and increased sustainability of governance, contribution to the sustainability of local communities, increased local accountability for and community engagement in service delivery, reduced duplication of effort and realised efficiencies and enhanced public sector employment and training opportunities throughout the islands. There are many workstreams underway in the project.

Asset Management

The Comhairle and NHS Western Isles are in process of developing Asset Management Planning Policy and Strategy in partnership. The Comhairle and NHS are already in full partnership on the Carbon Management Programme and this will lead to the development of shared services in Energy Management. The Comhairle's Asset Management Strategy is currently out to consultation and NHS Western Isles is a consultee in its development, approval and implementation.

Customer Services

One of the elements of the Comhairle's Customer Service Strategy is the establishment and development of Customer Access Points (CAPs) which, among other things, will increase the range of services that are provided through a single point of contact at times convenient for the customer. However, these CAPs should not be seen exclusively as Comhairle facilities and a range of other potential transactions that could be delivered through these access points are being explored: Credit Union, Health Board and HHP

Connected Communities

The partnership between HIE and the Comhairle essentially involves the roll out of broadband to domestic users in rural areas. Future financial stability is the most significant challenge facing this project and partners will continue to work together to resolve pertinent issues.

hub Initiative

hub is essentially a procurement vehicle for delivering fit for purpose, value for money public sector premises to provide better public services to communities, involving public-private sector partnerships and pooling of resources. In a wider context, this type of initiative could provide a model for the benefits of joint working outwith procurement. hub has strong government backing. Following a report to the Comhairle's Policy and Resources Committee in February 2009 the Comhairle agreed formally to participate in hub and submitted a signed Letter of Intent on 4 March 2009. The Comhairle has also signed the Memorandum of Understanding, although NHS Western Isles had not done so by 22 May 2009.

A report also went before Integrated Services Project Team on 26 March 2009 to inform partners about the Comhairle's commitment to hub. Since then there have been two meetings of the Northern Territory Partnership Shadow Board. The most recent meeting of the Partnership was on 22 May 2009 and was attended by representatives from the Comhairle and NHS Western Isles by video conferencing. A number of issues were discussed, notably the hub Delivery Plan that is currently in draft. Partners need to contribute to this plan. It is clear that the Comhairle need to discuss further in-house which projects, in relation to its own Capital Programme, can be incorporated into hub. These would then need to be agreed formally by the Comhairle. Similarly, the Comhairle would need to discuss further with local partners which joint projects may be appropriate for hub. It is possible that an Officers Group may be formed to move hub forward locally.

Financial and Corporate Services

In summary, this involves a commitment by NHS Western Isles and the Comhairle to explore other areas of possible integration and to develop a schedule for progression accordingly.

Demand for better quality of public services continues apace and significantly exceeds available local agency resources. Since the inception of the OHCPP in particular, it is clear that local agencies now recognise and understand in a practical way that in certain areas of public services it makes sense to pool and maximise local agency resources where there is a commonality of interest to deliver cost effective public services.

Revenues and Benefits

North of Scotland Local Authorities (NoSLA)

The ERF funded seven Local Authorities in the North of Scotland (NoSLA) to undertake a Shared Services Feasibility Study to join together to provide a shared service for local tax administration, billing and collection, the administration of council tax benefit and housing benefit and non domestic rates administration, billing and collection.

The seven councils involved were Aberdeenshire, Aberdeen City, Argyll & Bute, Comhairle Nan Eilean Siar, Highland, Moray and Orkney Isles. Sharing of revenues and benefits services has not been undertaken before in Scotland and there are only a limited number of examples in England (such as Worcester City and Anglia Partnership).

The vision of NoSLA is to create a single organisation across participating local authorities in the north of Scotland, to deliver shared services for local tax administration, effective prevention and detection of fraud, billing and collection, the administration of benefits and non domestic rates administration, billing and collection. The organisation will provide the highest quality and most efficient administration of local tax collection and benefits service in Scotland, contributing to a more radical future for public service provision. There will be potential for improvement around customer services e.g. making better use of web based forms and self service. The aim is for the organisation to be attractive to other councils and other public sector organisations.

The original aims and objectives of the project, which have been modified slightly to allow for anticipated changes to local taxation including the Government's intention to introduce a local income tax, are as follows:

• to commission the necessary work by the partner authorities working together to examine the feasibility of creating Shared Services for Local Tax administration, billing and collection, the administration of Tax Benefit and Housing Benefit and Non Domestic Rates administration, billing and collection;
• to consider the impact on the feasibility of the project of the timing of a change from Council Tax administration to a local income tax on a shared service arrangement and existing collection arrangement within each council;
• to evaluate alternative models for future delivery of these Shared Services and their components across the North of Scotland;
• to assess any improvements / quick wins which could be made to existing services within councils that will increase revenue collection across all councils and/or improve the administration of Housing Benefit;
• in arriving at a preferred model for Shared Service delivery, the partners would wish to consider the extent to which the approach and model is capable of being applied on a wider and potentially national basis (Scotland-wide). Evidence should be taken from any available case studies or other reference sites where similar work has been conducted;
• the study outcomes should specify a possible timetable for implementation, taking due account of individual authorities' contractual constraints/opportunities, information technology issues (both infrastructure and software) and manpower and training aspects; and
• the preferred model must be capable of implementation incrementally without any deterioration in relevant Statutory Performance Indicators.

The feasibility study has established that significant savings are available from moving to a shared services solution based on a single ICT platform. The costs involved in such a move are significant and to pay back the investment in a reasonable time period will require commitment from the majority of the local authorities involved and in particular at least 2 of the larger authorities. The study therefore recognises the need for large scale collaboration to deliver financial benefits in a reasonable timescale. However, where more parties are involved in change management the challenges to be faced are greater and the study highlights some key challenges associated with collaboration amongst a large number of authorities. The feasibility study identifies investment costs of £6.3 million and potential annual savings of £3.7 million. The timescale for detailed design and implementation are estimated to be around 5 years and so the full projected annual savings would therefore not begin to take effect until 2013.

The potential for wider change arising from the introduction of a Local Income Tax (LIT) as well as possible changes to the Benefits processing role for local authorities means that investment to develop a shared service solution for Revenues and Benefits could not be recommended at this stage. However, following the Government's announcement in February that a Local Income Tax Bill will not be introduced during this Parliament NoSLA councils have arranged to meet with Scottish Government officials, COSLA and the Improvement Service to consider the potential future of the project. The COSLA Shared Services Board has recently agreed to formally support a bid to the Scottish Government to support the implementation of the NOSLA proposals as a pathfinder project for shared services. A meeting is due to take place with Government Officials in June to discuss the format of a bid for further support.

As a minimum the project has identified the need for the seven participants to establish and standardise agreed leading practice. The participating authorities will then be well placed to develop a shared services solution which could be adapted to meet future changes in local taxation practice. This next phase of work should prove to be ideal for testing some of the challenges, referred to above, associated with joint working arrangements. The officers involved are in the process of reporting the feasibility study to their respective councils. They are also drafting a further report to identify the lessons learned from collaboration on the study and developing a work plan to pursue the initiative further.

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