Stephen Kelly interview – Cabinet Office COO on UK Government Shared Services – Exclusive!

We’ve previously mentioned the UK government’s programme for shared services across the central departments, and last week I got the chance to meet Stephen Kelly, the COO at the Cabinet Office and the top man behind that strategy. He’s also Bill Crothers’ (Government CPO)  boss, but in the limited time available, we resisted the temptation to digress too much from the shared services topic.

Recent announcements include the outsourcing of what was the Department of Transport’s shared service centre (“SSC1”) to Arvato, and the current exercise to find a private sector partner to run what was originally the Department of Work and Pensions centre (“SSC 2”).

Kelly is very much not the traditional “mandarin” civil servant, with his successful career in IT management and his entrepreneurial credentials. That was certainly obvious from his grasp and detailed understanding of what’s going on in the SSC field, and his knowledge of software and service providers. Not many other people at his level in government could give you a run-down of ERP providers’ strengths and weaknesses, for instance!

I started by asking Kelly for some general background to the programme.

-  I think the argument for shared services is clear, and has been for some time. But what we are doing now is getting that private sector involvement to make it happen. There are a lot of very good people – civil servants – working in these centres but there’s a lot more we can do to improve them.

Will that mean my consulting business won’t have to post invoices to the Centre when we do work for government departments?

- Yes, that’s a good example I guess of where we’re not quite best practice at the moment!

I look forward to that. So how are the different  SSCs positioned?

- SSC1 is probably more suitable for the smaller and mid-range departments; we want it to be a low-cost, effective solution - that’s the thinking. Arvato won that contract recently. SSC2 will start with more of the larger departments as customers.

I was interested to see Arvato winning that bid – they’re not well known in the UK so it seemed a bit of a surprise. Did the larger “usual suspects” bid? (Arvato are part of the German Bertelsmann group, a very large firm but one that is majority owned by a non-profit foundation, interestingly).

- I can’t tell you that, but let’s just say we had strong bidders. It was very competitive, Arvato won based on our evaluation process, and we’re happy to see a new player to the UK public sector market coming in to lead this operation.  

So that deal is a traditional outsourcing contract structure I believe - why are you structuring SSC2 as a JV with the government keeping hold of 25% of the equity?

There are a number of good reasons. It means we have “skin in the game” – it shows our commitment to making this work and helping to develop the centre.  It also means we can retain some influence over our partner, as the shareholding entitles us to Board representation, for example. And of course the taxpayer has the potential to share in any gains that might be made in the future.

More tomorrow....

First Voice

  1. Dave Orr:

    If “the argument for shared services is clear” why is there serial failure in every private sector-led Local Government shared service? Clear & unambiguous failure in Beds, Suffolk, Liverpool, Birmingham and here in Somerset (with the IBM-led Southwest One):

    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/

    Stephen Kelly does have an interesting CV:

    http://uk.linkedin.com/pub/stephen-kelly/60/278/329

    He also interviewed in Computer Weekly:

    http://www.computerweekly.com/news/2240176522/Interview-Cabinet-Office-chief-operating-officer-Stephen-Kelly

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