Preparedon Behalf of Thedepartment Ofpublic Expenditureandreform By

AnExaminationofSharedServicesintheIrishPublicServiceandInternationally

DepartmentofPublicExpenditureandReform

November,2015

Preparedon behalf of theDepartment ofPublic ExpenditureandReform by:

TableofContents

Foreword

ExecutiveSummary

1.Introduction

1.1.Background

1.2.ObjectivesScope

1.3.Approach

2.Findings Conclusions

2.1.Impetusfor Change

2.2.Adoption

2.3.Benefits Baseline/ BusinessCase

2.4.Approach

2.5.Leadership

2.6.BenefitsRealisation

2.7.BenefitsTracking

2.8.CustomerEngagement

2.9.FuturePlans and ExpectedBenefitsReferences

ListofFiguresListofTables

AppendixA –Approach and MethodologyAppendixB –StakeholderInterviews

AppendixC –Shared ServicesJourneyacrossCountries

AppendixD – Comparative Investmentand Approachto Shared Services

acrossCountries45

Examination of Shared Servicesin the IrishPublic Service and Internatio

Foreword

Itis nearlyfouryears since theGovernmentgave amandate to expand andaccelerate the useof sharedservicesin theIrish PublicService,asone ofthekeycross-cuttingreforminitiativesunderthe PublicServiceReformProgramme.Although the sharingofservicesin the PublicServiceisnotnew; for exampletheestablishedOffice ofPublicWorksandthecreationofSUSI(StudentUniversalSupportIreland),this report provides solidevidence thatsignificantprogress insharedservicesis beingmadeacrosssectors.Ithighlightsthesubstantial gains ofconsolidating transactionalcorporateserviceswhenDepartmentsand PublicService Bodies cometogether and collaborateon thebasisofsharedaccountabilityandresources.

Iam particularlyproud of thestridesmadebytheNationalSharedServicesOffice(NSSO)within myownDepartmentin overcomingthechallengesofchange tocreate both PeoplePoint(theCivilServiceHRandPensionsAdministrationShared Service Centre)and thePSSC(the Civil Service led PayrollShared ServiceCentre). Thereare alsogoodexamplesof successin theHealthsector, with the establishmentof HealthBusinessServices(a divisionwithintheHSE), andMyPay (theLocalGovernment Payroll andSuperannuation SharedService Centre). Anumberofsignificantprojectsarebeingadvancedin the Education sectoralso.

Sharedservicesisnota short-termefficiencymeasure.Thisreport highlights thechallengesinvolved in innovatingand thelength oftimerequired torealise thefull benefitsbeyond costeconomies.

Ibelieve the Government’scommitmenttoinvestingin sharedservicesmustbemaintainedin ordertorealise the fullbenefitof shared services.

Consequently, thisGovernment hasdecided toestablish aNationalShared ServicesOffice onastatutorybasisto allowtheseand othersharedservicesplanssuchasLearning andDevelopmentandICTto move forward withconfidence.

Reflectingonthe totality ofprogressmadeunderthePublic Service ReformPlan,and other initiativesledbythe Office ofGovernment Procurement withinmyDepartment,it isimportantto recognise thatsignificantserviceimprovementsandefficienciesarebeingdeliveredacross theState. I lookforward tothe ongoingdividendsthatshared serviceswilldeliver.

BrendanHowlin,TD

MinisterforPublicExpenditureandReform

Examination of Shared Servicesin the IrishPublic Service and Internationally

ExecutiveSummary

In November 2011theGovernmentlaunchedthe PublicServiceReformProgramme, includingspecificsharedservicesobjectives.Withinthe Programme, asset out in the 2014 PublicService ReformPlan, thereare fivemajor commitments–placingthecustomer at thecore;maximisingnewandinnovative servicedeliverychannels;radicallyreducingcosts todrivebettervaluefor money; leading,organising andworkingin newways; andastrong focuson implementationand delivery.

The introductionof shared serviceswasidentifiedas akeycross-cuttinginitiative whichhas thepotentialto impact positivelyon all ofthesecommitments.InMarch 2012, theGovernmentissued amandateforsharedservicesto beprogressedinallsectorsof the PublicService.

As wasthecase inIreland, sharedservicesprogrammesoftenarisefroman economic or financialneedto reducecostsandimproveefficiency.However,asprivate sectorandinternational public sector experienceillustrates,the valueof sharedservicesstretchesbeyondthedirect benefitsof costsavingsand efficiency, toother benefitssuchas theprovision ofbetter

managementinformationto enhancedecision making

and thefreeing upofseniormanagement resources tofocus onpolicydevelopmentovereffortsrelatedto

Sharedservicesprogrammesrequire

acontinuedanddefinitiveGovernmentmandateandeffectiveseniormanagementsupport;thisisbestachievedbycreatingacompellingvisionthatevolveswithchangingstakeholderneeds.

transactionprocessing.Further,internationalexperienceshowsthatsharedservicesprogrammesare necessarilylongjourneysthatevolveovertimeand requireacontinued anddefinitive Governmentmandateandeffectiveseniormanagementsupport.This is bestachieved bycreating acompellingvisionthat evolveswith thechangingneeds ofstakeholders.TheU.K. Governmentforexample,seven yearsintoitssharedservicesjourney,introduced anewstrategyin 2011tofurther rationalisesharedservice providersand deliverservicesthroughbothpublicsectorandprivatesector serviceproviders.

Now,three anda halfyearsintoIreland’s shared servicesjourneyandastheIrisheconomyquicklyprogressesthrougheconomicrecovery,the timeisrightfor thevarioussharedservicesprogrammes across theIrishPublicServicetoreaffirmtheir focusondelivering theoriginal efficiencyandcostsavingsobjectivesandassociatedbenefits,andtoensure thevisionremainscompelling.

In this context, Deloitte Consulting wasrequestedto undertake a reviewof progressagainstsharedservices plans,acrosstheIrish PublicService (the four sectors of Education,Health, Local Government and CivilService– “thesectors”).1Afurtherobjective of the reviewwas to identify, based onexperience inIrelandandabroad,actualand anticipated benefitsderived fromsharedservices,factorscritical to thesuccessof sharedserviceinitiatives,and potential risks.Finally, thereviewconsideredhowthesharedservicesprogrammesacross the IrishPublicServicecan continue toevolve tosupportand enable achievement ofthe five majorcommitmentsunder the PublicService ReformProgramme.2

1TheJusticeandDefence sectors arenotidentifiedseparatelyinthisreport,asthesesectorsarerecipientsof sharedservicesolutionsprovidedby theCivil Service.

2Deloittehasprovidedvariousadvisory, consulting, andauditservices to a numberof thesharedservicesprogrammesoverrecentyears.

Examination of Shared Servicesin the IrishPublic Service and Internationally

84%

percentage ofCivilServantsreceivingsharedservicesof someform3

75%

percentage of Healthsectoremployeesreceivingsharedservicesof someform4

56%

percentage of LocalAuthorityemployeesreceivingsharedservicesofsomeform5

59%

percentageof Educationsector employeesreceivingshared servicesofsomeform6

Whilesharedservicesandsimilardeliverymodelsdo applyto operationalareasofpublicsectoractivitysuch asgrantsadministrationand waterandwaste management, thescopeof thisreviewwasfocused onthe followingcorporateservices,which arecommonlydeliveredthrough ashared servicesolution:HR,Finance,Pension Administration,Payroll, and ICT.Further,thescopeof thisreviewconsideredonlyinitiativesthat meet the definitionofshared servicesdetailed in Section1.2,and those commencedsince the launch ofthe PublicService ReformProgramme.Assuch, there aregood examples ofprogresstowardshared orcentralisedserviceswhich arenotincludedin thisreview.These examples extend to allpartsofthe PublicService,demonstratingthe whole ofGovernment approach to reformarticulatedin the PublicService Reform Plan and include: LocalGovernment’swaste managementsharedservices,the Health sector’sEasternHealth SharedServices, and theEducationsector’scentralisedpayroll andpension paymentprocessingcentre(basedinAthlone). Inaddition,significant progresshasbeenmade intheareaof procurement,whichisa significantportionof overall Governmentspending. The Office ofGovernment Procurementwascreated in2014 tosourceallgoods andservicesonbehalfof thePublic Service, working together with the Health,Defence,EducationandLocal Government sectors, and to take fullresponsibilityforprocurementpolicyandprocedures.

The findingsandconclusionsinthisreport arebased oninterviewswithstakeholdersacrossthefoursectorsof Education,Health,Local Government andCivil Service, general research, a reviewof Deloitte casestudiesandthe Deloitte GlobalShared ServicesSurvey,interviewswith internationalstakeholdersinvolved inpublicsectorsharedserviceinitiatives,andareviewof documentation received fromstakeholders.

The reviewdemonstratesthatthe Irish

PublicService hasmade significant

progressagainstplans inashort

TheIrishPublicServicehasmade

significantprogresssinceitbeganitssharedservicesjourney;atthesametimethereareanumberofcriticalsuccessfactorsnecessarytosecureinitialgains,toensurecontinuedprogressagainstplans,andtofullyrealisebenefits.

timeframe.Irelandcomparesfavourably,not justin termsofprogressmadeon anumber ofkeyprojects over thepast threeandahalfyears,butalso intermsofthegovernance and accountabilityframeworksput in place,including the establishmentoftheNationalShared ServicesOffice (NSSO;currentlyonan administrativebasiswithin the Departmentof PublicExpenditureandReform7).Bothof these elementsare

3BasedonPeoplePoint current customernumbers andestimatedcustomernumbers whenfully implemented. PleaserefertoAppendixDforfurtherdetails.

4BasedonHealthBusiness Services(HBS)customers, consistingofTuslaemployees,healthsectorpensioners, and statutory healthsectoremployees.While amixof centralisedandsharedservices existedacross theHealthsectorfromtheoldHealthBoardstructuresprior to 2011, thecreationof HBS in2013markedthesector’s firstnationalapproachtosharedservices andHBS’ current model, albeit atanearlystageofmaturity,meets thedefinitionof sharedservicesdetailedinSection1.2of thisreport.

5BasedoncurrentLocalAuthoritypayees(staff andpensioners)centrally hostedinLocalGovernmentDataCentre)andestimatedpayees

whenfully operational.

6Basedon Educationsectoremployeesreceivingsharedservices fromHEAnet,includingstaff fromHigherEducationInstitutions,postprimaryschools,and EducationandTrainingBoards. HEAnetwas first establishedin1983;inits current sharedservices model, HEAnetmeets the definitionof sharedservices detailedinSection1.2of thisreport.

7References totheNSSO throughoutthis reportshouldbeunderstood tomeantheinterimNSSO,whichnowexistsonanadministrativebasiswithintheDepartment of Public ExpenditureandReform.Wherecommentsorrecommendationsrelatetothefuturestatutory NSSO,thisisexplicitlystated.

Examination of Shared Servicesin the IrishPublic Service and Internationally

evidence ofthestrongGovernmentsupportto date.Withfivesharedservicecentresoperationalacrossthe sectors,andnumerousothers plannedin thenext fewyears, Ireland has an ambitiousplan forinvestment inshared servicesincomparison with internationalpublicsector counterparts.Basedon current businesscasesacrossthesectors, the estimatedquantitativebenefitsaresubstantial.However,overallthesectorsarein earlystages ofprogressand thereare anumberofcriticalsuccessfactors,outlined below,necessarytosecureinitial gains, toensurecontinuedprogressagainstplans byestablishingsustainable platforms,andtofullyrealise benefits.

Keypositivesidentifiedduringour reviewincludeastructured andthoroughapproach tobusinesscasedevelopment; asectoral(Civil Service,LocalGovernment,Healthand Education) and phasedapproach, which enablesbenchmarkingacrosssectorsandmitigatesagainst riskbyallowingmore time toincorporatelessons learned andbuild stakeholderengagement; a positive impact on process quality, datavisibility, data comparability andinternalcontrols;and strongoversight and governance atcentral(Government)andsectorlevels.

Keychallengesrelateto difficultiesinfinding resourceswith the skillsandcapabilitiesrequired todeliver thesecomplexprogrammesandin obtainingthe collaborationofclientorganisations to releaseresources;variedratesof progressacrosssectors;and challengeswithdevelopingformal processesforbenefitstracking,changeandcommunications management,andcustomer engagementearlyoninthesharedservices journey. Further,therearestrong positives inthepublicsectorapproachtominimising risk,doingthingsright,wide consultation, publicprocurement andaccountability.However, thesecanaddcomplexityand extendtimelinestobenefitsrealisation– anexperiencecommon in otherpublicsectorenvironments.

Basedoninternational experienceandinterviewswith stakeholdersacross the Irish PublicService, thecriticalsuccessfactorsconsist ofa definitiveGovernmentmandate andeffectivesenior managementsupport; realisationofplannedbenefitsanddemonstrationofthosebenefitstointernal andexternalstakeholders;andevolution ofthesharedservicesvisioninlinewithstakeholderneeds,including acleararticulationof therole thatimprovementsin “retained” functionssuchas Payroll andHuman Resources(withincustomerorganisations)playin theoverall transformation. Failureto addressorsustainthesecriticalsuccessfactorswillrepresentkeyrisksto the variousprogrammes.Inaddition,there areadditionalopportunities forimprovement,asoutlinedbelow. For example,Irelandhasa maturesharedservicesenvironmentwithdozensof multi-nationalcompaniesandseverallargesemistateorganisationshavingestablishedsharedservicescentresin the State.There isaconsiderableopportunitytoleveragethis experience andtobuildcompetenciesandcapabilities inasubstantiveway.

The findingsand conclusions oftherevieware outlined indetailinSection 2.The key findingsand conclusionsaresummarised onthe following pages,including referencesto relevantsections of thereport.

KeyFindingsandConclusions

ProgressAgainstPlans / •The Irish PublicServicehasmadesignificantprogressagainstplans inashorttimeframe.
•In particular,goodprogresshasbeenmadebythe CivilServiceand Healthsectorsinimplementingshared servicesacrossthree andfour corporateservices,respectively.(Section2.2)
•The EducationandLocalGovernmentsectorshave madegood progressonbusinesscase developmentand,tosomeextent, implementationofsharedservices. Recognisingtheprogressonimplementation todate,thesesectorsshould look toacceleratetheirjourneyswhere possible, inorder tomaintainmomentumand torealise benefits. Further, thereisanopportunityfortheIrishPublicService toachievesubstantiallymore benefitsfromthe progression ofcorporateservicessharedservices,whenoneconsiders theproportionof theIrish Public Service which theEducationandLocal Government sectorsrepresent (morethan40%). (Section2.2)
•Overall theIrish PublicServiceisintheearlystagesof progressandtherearea numberof criticalsuccessfactorsnecessarytosecureinitialgains, toensure continuedprogressagainstplans, and tofullyrealisebenefits. (Section2.4.2)

Examination of Shared Servicesin the IrishPublic Service and Internationally

KeyFindingsandConclusions

BenefitsRealisation / •Internationalexperienceandbusinesscasesprepared bythesectorsdemonstrate thatsharedservicesin the public sector offersconsiderablepotentialforarangeofbenefits:
•Qualitative benefitssuch asimproved efficiency, consistencyandservicedelivery, thefreeingupof seniormanagementresources tofocus onpolicydevelopment over effortsrelatedto transactionprocessing,acustomerfocused culture,improvedmanagementinformation to support decisionmaking, thedeepeningof skillsandexpertise both inthe sharedservicecentre andretained functions,andscalable and resilient technology. (Section2.6.1)
•Basedoncurrent businesscases,theestimatedquantitativebenefitsaresubstantial:
•FortheCivil Service HR shared services(PeoplePoint),theDepartmentofPublicExpenditure and Reform hasindicated that reductions inthecostofHRtransactional unitsofparticipatingPublicService Bodieshave beenachieved.Separately, furthercost reductions are expected over time,as theremainingPublic ServiceBodies aretransitionedinto PeoplePointandasteady-stateisachieved inoperational performance.10Payrollsharedservices(PSSC)isalsoon trackto deliver benefits.
•Anticipated headcount reductionsandpaybackperiodsfor the IrishPublicServiceare inline with international comparators.(Sections2.6.2 and 2.6.3)
Publicsectorsharedservicestypicallyhave paybackperiodslongerthanthoseintheprivate sector, pointingtounique challenges.(Section2.6.3)

8Basedonfigures fromFebruary 2014,this istheexpectedsavingfrom2017-2023withthefigureexpectedto riseto €5.3millionapproximatelyafter2024. Thisincreaseisbasedontheexpectedcompletionof theloantofundtherunningofMyPay duringtheimplementationphase.

9The HBS figureisnotbasedonbusiness cases butonachievementsmade.

10As indicatedbytheDepartment ofPublicExpenditureandReform, 28September2015.

Examination of Shared Servicesin the IrishPublic Service and Internationally

KeyFindingsandConclusions

KeyPositives / •The sectors havegenerallyadopteda structuredandthoroughapproach tobusinesscasedevelopment. Thedevelopmentof baselinebenchmarksiscrucial,asit enablesleaderstomeasureand reporton benefitsrealised,postimplementation.(Section2.3)
•Processquality, datavisibilityandcomparabilityandinternalcontrolswereidentified byIrish PublicService stakeholders as thetop areaswhere sharedserviceshashada significantlypositive impact todate.(Section 2.6.1)
•The sectoralandphasedapproachtosharedservicesimplementation(separateimplementations bysector and asinglefunction ata time)whichthesectorshave adopted isthepredominant model forpublicsectororganisationsinternationally. Thisapproach allowsmore timeto build stakeholderengagementandtoincorporatelessonslearned intofutureplanningandtherefore, mitigatesagainst the risksassociatedwith a morerapidimplementation. The sectoralapproachserves tobalance needsaroundscale,commonality, complexity and governance; italsohasthepotential toencourage performanceimprovements byprovidingforcompetitionacrossserviceprovidersandenablingbenchmarkingacrosssectors.(Sections2.4.1,2.5.1)
•Strong oversight and governancearrangements, essential to facilitatedecision making,havebeenestablishedacrossthesectors,for example(Section2.5):
•HBSGovernanceCommittee (Health);
•EducationandTrainingReform Board(Education);
•Public Service Reform Oversight Group(Local Government);and
•Shared ServicesSteeringBoard (CivilService).
•Irelandcomparesfavourablywith internationalcounterparts,bothin termsofthe progress made ona number ofkeyprojectsoverthepast threeanda halfyears, andalsoin termsofthegovernanceandaccountabilityframeworks putin place. Aninternationalcomparison foundthatonlyIrelandand Portugalappeartohave establisheda centralorganisation, whichserves todriveaprogramme approachto sharedservices(i.e. eSPapandIreland’sNationalShared Services Office). BothIreland’sprogressand itsgovernance andaccountabilityframeworksareevidence ofthestrongGovernmentsupporttodate. (Sections2.2 and 2.5)

KeyChallenges / •The reviewhighlightsa number of keychallenges toovercome inorder toprogressthesharedservicesagenda inIreland:
•Difficultiesin finding resourceswith the skills andcapabilitiesrequired todeliverthesecomplexprogrammes andinobtaining thecollaboration ofclientorganisations to releaseresources.(Sections2.3,2.9)
•Variedrates ofprogressacrosssectors. (Section2.2)
•A formal approach to communicationsandchange, includingdedicated resources, was notconsistentlyputin placeacrosssectorsin theearlystagesofIreland’ssharedservices journey.However, the IrishPublicService has learnt fromexperienceandsectorsareshowing improvement.(Section 2.5.2)
•The developmentof aformalapproachto benefitstrackingand
customer engagement isstillevolving acrosssectors.(Sections2.7,2.8)

Examination of Shared Servicesin the IrishPublic Service and Internationally

KeyFindingsandConclusions

Critical SuccessFactorsandOpportunitiesforImprovement / •The reviewdemonstrates anumberof criticalsuccessfactorsnecessarytosecure initialgains, toensurecontinuedprogressagainstplans,and tofullyrealise benefits. Failure toaddressor sustainthesecritical successfactorswillrepresentkeyrisks tothe variousprogrammes.Inaddition,anumber ofpotentialimprovement opportunitieswere identifiedthrough the review.
•Acontinued anddefinitive Governmentmandateandeffectiveseniormanagementsupport(Sections2.4.2, 2.9)
•Realisation of plannedbenefitsand demonstrationof thosebenefitsto internal andexternalstakeholders,beginning with thedevelopmentofmoreformalprocesses forbenefits trackingandcustomer engagement:The four sectorsshouldseek tofurtherdevelopprocesses forperformancemanagementand customerengagement,includingcapturingand incorporatinglessonslearnedfromcustomers.The NSSOshouldseekto support improvementsinthisareathroughguidance and tools.(Sections2.7, 2.8)
•Developing acompelling vision thatintegratessharedservicesintobroadertransformationprogrammesthat includetheoptimisationofretained functions, where programmesexist, andthatevolveswithchanging stakeholder needs. International experiencedemonstratesthat realising reductionswithinretainedfunctionsisa commonchallenge andshould be akeyfocus.(Section 2.6.2)
•Networking withprivate sectorand publicsectorleadersforlessonslearned and talentdevelopment: Given the maturesharedservicesenvironmentacrossIreland’sprivate sectorand severallargesemistatebodies, thereis aconsiderableopportunitytoleveragethisexperienceand tobuildcompetenciesandcapabilitiesinasubstantive way.The Irish PublicService is ina unique position tonetworkwith theirpeersforlessonslearned,and toidentifyandbuildtalent throughmeasuressuchas jobrotations/ swapswiththeprivatesectororsemi stateorganisations.(Sections2.2,2.9)
•Enhancementof employeeculture: Oncethe NSSOisformallyestablished, the sectorsand the NSSOshouldseek toenhanceemployee culture acrossthesharedservice initiatives,throughmeasures suchasjobrotations, eventstodevelopnetworksacrosssharedservicesinitiatives, andbuilding theNSSObrand. (Sections2.8,2.9).
•Reassessment of timelines: Current timelines across sectorshared
servicesshould be re-evaluated to determinewhether adjustmentsare required, in considerationofthechallengesexperiencedto daterelated tocapacityandcapabilityto deliver multiplecomplexinitiatives.(Sections2.3,2.9)

Examination of Shared Servicesin the IrishPublic Service and Internationally

1.Introduction

1.1.Background

The globaleconomiccrisis,recession andfiscaldeficitshavepushed publicsectororganisationsacross theglobe toseekprocessefficiencies andcost savingsthroughalternativemodels suchasshared services. Followingmore thanthirty years ofsharedservicesexperienceintheprivatesector,Governmentsacrosstheglobeat alllevelsare adopting,expandingandmaturingin theirsharedservicesimplementationsandthe gains achievedindicate that thistrend willcontinue.A numberofcountrieshavesharedservicesexperiencein thepublicsectordatingback tothe1980s,whileothersbegantheirjourneyinthe early2000sor later.

In theIrish PublicService,thereweresome examplesof servicesharingpriorto 2011 in theCivilService (financeandpayrollservicesdeliveredbythe DepartmentsofFinance andJustice), Healthsector(EasternHealthSharedServices for Procurement,Finance, ICTand HR), and Educationsector(centralisedpayroll and pension paymentprocessingcentre).TheGovernment’sPublicServiceReformPlanin2011providedthe mandate andthemomentumfor further sharedservicesinitiatives.The National Shared ServicesOffice (NSSO) wasestablishedon an administrativebasisin2014toleadsharedservice strategyand implementationacrosstheCivil Serviceandto provideguidanceandsupport toother PublicServicesectorsinprogressingtheir sharedservicecommitmentsunder theReformPlan.InJuly2015, Governmentagreed to thedrafting ofa Billtoestablishthe NSSOas astatutoryCivilServiceOffice.

However, Irelandisapproximately15-20 yearsbehindcertain internationalcounterpartsinbeginningitssharedservicejourneywithin the PublicService.(1)11At the sametime,Ireland hasbeen hugelysuccessfulatattractingleading multi-nationalprivatesector organisations such asGoogle,Pfizer, andGlanbiatoestablishsharedservicescentresin the State.Irish semi state organisationssuch asErviaand ElectricitySupplyBoardhavealso establishedsharedservicescentres.

There isa generalperceptionthatshared servicesinitiatives in the CivilServicebeganon thewrongfoot, duein part totoomuch emphasis oncostsavingsoverprocesseffectivenessand toinsufficientconsideration of inputreceived fromclient DepartmentsandOffices.

However,significant progresshasbeenmade in theIrish PublicServiceina shortperiodand thisisevidenced bya comparisonwith internationalcounterparts.SufficienttimehaspassedsinceGovernmentbeganitssharedservicesjourneyto warrantreflecting onlessonslearnedfrompublicandprivatesector shared services experience,andusingthese lessonsto informfuture planning.

In thiscontext,the NSSOhas commissioned thisreview,with theobjectivesand scope outlined inthefollowingsection.

1.2.Objectives Scope

Theobjective oftheengagementwas toconduct a review,examiningthefollowing:

The extent to whichsharedservices have beenadopted byIrishPublicServiceorganisationsand the extent to whichsharedserviceuptake hasincreasedin the periodsincethepublicationof the Government’sfirst PublicService Reform Plan (November2011);

Actualand anticipated benefits(bothquantitative and qualitative) associatedwithsharedservices internationally, related trendsand howtheIrish PublicServicecompares;

11Numbersinbolditalics denoteendnotes(“References”section).

Examination of Shared Servicesin the IrishPublic Service and Internationally

The plansacrossthePublicService to furtherdevelopsharedservices, asdefined, over thecoming3-5 years;and

The level ofinvestment and commitment required bythe IrishPublicService to continue todevelop shared services asakeypriority.

Forthepurposesofthereview, the followingIrish PublicServicesectorswere inscope:

Education
Health
LocalGovernment
CivilService

Forthepurposesofthereview, the following definitionofsharedserviceswasutilised:

*Note: sharedservicesis distinct from a centralisedadministrativefunctionmodelprimarilyinthat asharedservicescentreis generallyoverseenby aclient governanceboardandnot a functional unit, sees its clients (individualsandclient organisations) as customers andnot endusers, andusesservicelevelagreements asquasicontractualmechanisms to definecosts charged to customerunitsandperformancemeasures.

Assuch,thescopeof thisreviewconsideredinitiativesthatmeetthedefinitionof sharedservicesdetailedaboveand those commencedsincethelaunchof the PublicServiceReformProgramme.There are goodexamplesof progresstowardshared orcentralisedservices acrossthe PublicService,which are not included inthisreview. Theseexamplesextendto allpartsof the PublicService,demonstratingthe whole ofGovernmentapproach toreformarticulated in the PublicService ReformPlan:

Local Government’sBuildingControl Management System(ICTdriven sharedservice);
Healthsector’sEastern HealthShared Services forProcurement,Finance, ICTand HR (nolongeractive);
Educationsector’spayrollandpensionpayment processingcentre(Athlone); and
CivilService, Health, Defence,Education and LocalGovernmentsectors’ procurement

initiatives(including thoseledbytheOGP).

1.3.Approach

The approachandmethodology utilisedtoconductthe reviewaredetailedin AppendixAand consistedof interviewswithstakeholdersacrossthe foursectors, generalresearch,a reviewof Deloitte casestudiesandthe Deloitte GlobalShared ServicesSurvey, interviewswith international stakeholdersinvolved inpublicsectorshared serviceinitiatives,and a reviewof documentation receivedfromstakeholders. Inaddition to findings frominternationalinterviews, Deloitte’sGlobalSharedServicesSurvey2015 (theSharedServicesSurvey) wasused as asourceof internationaltrendsthroughout thereport. (2)Responsesfromtwo categoriesofsurveyrespondents areused asapoint ofcomparison: 1)publicsector respondents(14organisationsout ofa totalof311 organisations forall industries)and2)all otherindustries(297organisationsoutofatotal of311organisationsforallindustries).

Examination of Shared Servicesin the IrishPublic Service and Internationally

The followingindicatorswereused, inallor in part, tomeasureand analysetheextent towhichsharedserviceshavebeenadopted bythe IrishPublicServiceandtheincreasein adoptionsince2011(Research questions 1 and 2,respectively):

Corporateservices(asdefined)includedin asharedservicescentre,in2011 and2015
Numberof publicserviceoperatingunits or publicservants receiving corporateservices(asdefined) bywayof asharedservicesolution,in 2011and2015
Numberof public servantsemployedin ashared services centre,in 2011and2015

To analysefindings, drawconclusionsandjustifyconclusions, descriptive andinferentialstatisticsandcontent analysiswasutilised.

Examination of Shared Servicesin the IrishPublic Service and Internationally

2.FindingsConclusions

The followingsectionoutlinesthekeyfindingsandconclusionsbasedon thereview conductedduringthe monthsofJulytoSeptember2015.Please seeAppendix Bfor asummaryofstakeholdersinterviewed, bothin Ireland andinternationally.

2.1.ImpetusforChange

Theglobaleconomiccrisis,recessionanddeficitspushedpublicsectororganisationsacrosstheglobetoseekprocessefficienciesandcostsavingsthroughmodelssuchassharedservices;widerreformagendasprovidedthemandateand themomentumrequiredtoestablishenablingstructuresforsharedservicesinitiativesandarguablyledtogreatercostsavingsandefficiencies

Theimpetus forchange acrosscountries isgenerallythesame- theglobaleconomiccrisis, recession,deficits,citizensexpectingmore for less,and a widerreformagenda.

The UK’sjourneytosharedserviceslargelybegan afterthecommissioningof the GershonEfficiencyReviewin2004(3). It proposedsignificantsavingsin expenditure,partiallythroughsharedserviceimplementation.
In Denmark, themovetoshared serviceswaslargelydrivenbya generalshift toenhancepublicsector efficiency, service quality, “competitive advantage vis-à-visthe private sector…”andenhance working environments foradministrative functions.(3)
In Finland theimpetusforchange wascost reduction, butalso aneed toenhance thecapabilitiesof PublicServiceICTemployeesandincreaseefficiencies tocounterbalancehigh ratesofretirementacrossthePublicService.(4)
Without exception, IrishPublicServicestakeholderscited theeconomiccrisisasaninitialdriverand the subsequentwider reformagenda asthedriverthat helpedtobuild momentumfortheshared servicesagendawithineachsector,establishingshared servicesasakeypriority acrossGovernment.

Conclusion

The wider reformagenda in the Irish PublicServicehad theeffect ofproviding themandate andthemomentumrequired toestablishenablingstructures for sharedservicesinitiativessuch asaccountabilityarrangements.Further,astandardisedapproach tosharedservicesdrivenbya centralorganisation, theprogrammeapproach,arguablycontributedto theachievementofgreatercostsavingsand process efficiencies. Thisisdueto thefactthatbestpractices andlessons learnedcanbedrivenfromthe centre.

2.2.Adoption

WhilecertainIrishPublicServicesectorshadexperiencewith“shared-service”typeoperatingmodelspriorto2011,thePublicServiceReformPlanservedtoestablishsharedservicesasakeypriorityacrossGovernment

Each oftheIrish PublicServicesectorsboasts aslightlydifferent journeytowardssharedservicesoperatingmodels. Thefollowing figure depicts theadoptions of sharedservicesacross thesectorssince 2011.

Examination of Shared Servicesin the IrishPublic Service and Internationally

Figure1–Adoptionofsharedservicesacrossthe IrishPublicService

As outlinedin the following table,theCivil Serviceand Healthsectorsareincomparablymorematurepositions,compared with the LocalGovernmentandEducation sectorsthatareinearlystagesofimplementingthe corporateservicessharedserviceswithinthe scope ofthisreport.Itis interesting tonote thatthe CivilService andHealthsectorscombinedrepresentnearly 50%of theIrish PublicService,and therefore,thereis anopportunityto achieve substantiallymore benefitsfromprogressingcorporateservicessharedservicesacross theothertwo sectors:Education and Local Government.

Table1–Shared servicesjourneyacrosstheIrishPublicService

The journeytowards theimplementation ofshared serviceswithin the CivilServicelargelybeganwiththe publicationof the Government’sfirstPublicService ReformPlanin2011.With thepublication ofthe Plan, anumberof businesscaseswere drawn up to testthe

viabilityand feasibilityofimplementingasharedserviceoperatingmodel. Thefirst area investigatedforfeasibilitywasHR, followed byBanking, FinanceandPayroll.Finance SharedServices iscurrentlyin projectphase.HR andPayroll werefurther progressedand

implemented intotheorganisationsPeoplePointandthe Payroll Shared ServiceCentre,respectively.These

operationsencounteredconsiderablechallenges,due inparttoan overemphasison costsavings over processeffectiveness. Inaddition,thereis ageneralperception thatinsufficientconsideration wasgiventoinputreceived fromclientDepartments and Offices.Bytheendof2015, 35organisationswill have beenmigrated toPeoplePointand37to thePayrollShared ServiceCentre,with an estimated40 and 53organisationsmigrated,respectively,by2016/17.(5)TheNSSO

is implementing ISAE3402 forits operations, an internationalstandard on controlsataserviceorganisationissuedbythe InternationalAuditingandAssurance Standards Board(IAASB).

Examination of Shared Servicesin the IrishPublic Service and Internationally

Theshared servicesjourneyforLocalGovernment beganlargelybeforethe PublicServiceReformPlan. It would befairtosaythat localauthoritiesoperated, insome capacity, asshared-service type

organisations,in thatcorporate serviceswere consolidated to deliver toalltowncouncilswithina county. The sector hadalso begunstandardising priorto 2011.Whilethesector hadbeenworking onashared basis(through theLocalGovernment ManagementBoard onHRand the Local GovernmentComputer ServicesBoardon ICTand theirsuccessortheLocal GovernmentManagement Agency), theeconomiccrisiswas acriticaldriver forthe need forchange. TheLocalGovernment EfficiencyReport,when published, wastaskedwithinvestigating whichareas could be transitionedandmovedtowardsa

shared serviceoperatingmodel.Currently, PayrollandPension Administration (MyPay) is the onlycorporateservicetohave beenimplemented. 15 local authoritieshavemigratedto thenewmodel atpresent,with aplannedtotal of 31atcompletion.(5)Financeshared servicesisalsobeingprogressed and iscurrently inthe design phase.MyPayis implementing ISAE3402 foritsoperations,an internationalstandardoncontrolsataservice organisationissued bytheInternational AuditingandAssuranceStandardsBoard(IAASB).

Traditionally, theHealthsectorwasdividedup into whatwerecalledhealth boards(approximately10in total) whichoperatedastheirown separate units, with theirownCEOs and managementstructures/boards.In 1999, asa further developmentof thesystem, the EasternHealth Board wassplit into agoverning authorityand threeseparateAreaBoards.Eastern Health SharedServiceswasestablished at thistime todeliverProcurement, Finance, ICTand HRshared services totheEastHealthBoard.

Thissystemcontinued up until2005,when theHealthServiceExecutive(HSE) wasestablished.TheHSE operated with asingle CEOandasinglemanagementboard.At thistime, astudywasconducted toassess the feasibility of a nationalsharedservicesprogramme,however, it concludedthat the timingwasnot rightfor advancingsharedservices.

TheHealthsector wasrestructured again in2013, andone resultof thisrestructuringwasthedevelopment ofa nationalprogrammefor sharedservices.Health BusinessServices(HBS) was