Stephen Kelly interview – Cabinet Office COO on shared services (part 2)

Here’s part 2 of my interview with Stephen Kelly, COO at the Cabinet Office, covering the UK government’s plans for SSCs (shared service centres).

So you’re just going to market now looking for a JV partner to run the second shared service centre (SSC 2), which was originally DWP's I believe. How is the competition  running – what is the basis for the contract and the selection process?

Basically, we’re asking for bids whereby the supplier will acquire 75% of the equity, and will be awarded a fixed contract including pre-agreed terms and prices. So the contract isn’t negotiable, but the variable element is the value the bidders put on the equity, which they’ll base on the future expected income and profit stream.

That seems a neat way of doing it actually. But is it a real “disposal” – for instance, will staff transfer to the JV partner?

Yes, that’s the intention. I’ve been out meeting people and discussions with staff have been pretty positive – they know something has to happen, and that the SSCs need investment. So I feel many people are pleased that there is now more certainty and the prospect actually of a very successful future for the centres. There’s potential for example to look at business from the wider public sector – local authorities, police forces and so on.

And the private sector?

Certainly - the operation has to prove itself, and other parts of the public sector will probably be higher on their list of new prospects, but there’s no reason why it can’t move beyond that.

What about the software platforms for the centres? And do you see more opportunities in areas like e-invoicing?

Arvato bid and won the contract for SSC1 with a proposal to use Agresso as the platform. SSC2 will run an Oracle platform. And yes to the e-invoicing question – that’s one of the obvious improvement we’ll be expecting to see.

Can I make a plea for you to look at Supply Chain Finance – and consider the interesting new software options, not just the traditional bank-driven processes?

Yes, I think we’re aware of the options and it should be on the radar for the SSCs. And I’ve come from the software industry, so I still keep a reasonable eye on what’s going on in that market!

And that was that – a lively and interesting 35 minutes...

 I know the whole concept of shared services has come under fire (from John Seddon for instance) and there are certainly valid questions to ask about the best way of running these operations – the question  of what type of work really can be standardised, for instance, is an interesting one. And  I don’t pretend to be a real expert on that.

But given we’re starting from (and I can’t see the consolidation already done being reversed and work going back into individual departments, to be honest ), this looks like a sensible approach to what we might consider as a strategic procurement question – how do we structure and buy shared services for government?

Creating some competition in the system through multiple centres, the mixed economy with traditional outsourcing and the JV with government retaining  some interest.. this all looks like a sensible approach. It all needs successful delivery of course, but if it means we don’t have to post our invoices forgovenrment work any longer, then I’ll certainly be cheering anyway!

First Voice

  1. Dave Orr:

    Peter: So many un-posed & therefore un-answered questions here. Stephen Kelly looks to have got off lightly.

    Why not have a Q & A on-line and open up the questioning within a known time band on a known day?

    Meantime, you could consider collating relevant blog comments to another round of questions Stephen could answer?

    Who will be in charge of an over-riding IT Strategy across Government then?

    If there is a Government IT Strategy then how will that be applied contractually if the contractor has a massive 75% controlling interest?

    That 75% shareholding mirrors IBM’s shareholding in the failed joint venture Southwest One here in Somerset. Can those shares be traded or sold off and offshored (like PFI)?

    What about public and MP and select committee accountability for SSCs then?

    Will the SSCs accept Freedom of Information requests?

    Can the relevant select committee call to account the CEO & executives of an SCC for publlic questioning, if a project fails or there is massive over-spend (or suspected over-charging)?

    How have lessons from the Rural payment Agency and IBM at DVLA been learnt and what mitigations will be applied to SSCs?

    How will a common IT architecture be created/mainatined? What about G-Cloud?

    Why didn’t Stephen Kelly get asked to respond to John Seddon’s evidenced and respected views….especially as central Government is taking housing benefits away from local Councils and centralising it? Many suspect housing benefit fraud will increase without local knowledge in a Big Shed centralised system.

    This sounds terribly familiar: “There’s potential for example to look at business from the wider public sector – local authorities, police forces and so on. ”

    That was the script for the failed joint venture Southwest One (with IBM) here in Somerset. After more than 5 years….NOT ONE OTHER LOCAL AUTHORITY OR POLICE SERVICE HAS JOINED.

    http://www.bestpracticegroup.com/southwest-one-failure/

    And, in the DVLA, despite offshoring of work & skills, another IBM-led shared service initiative cost way more than it saved:

    http://www.european-services-strategy.org.uk/outsourcing-ppp-library/contract-and-privatisation-failures/ibm-savings-failure-in-department-for-transpor/

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