UK Government plan for Shared Services – and does it threaten Oracle’s dominance?

Oracle costs the UK Government “three times as much as a Tier 2 ERP would” (even before “Cloud” savings)

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The UK Cabinet Office has slipped out – without a lot of fanfare, on December 28th – an announcement  and strategic plan relating to Shared Services in central government.

And here’s the big shock – the strategic plan is really a  rather impressive document.

Now it won’t reassure those who are opposed to shared services on what we might term philosophical or conceptual grounds, such as John Seddon (I have a lot of time for much of his thinking). The savings projections are of course pure speculation, and the government track record on shared services doesn't exactly fill one with confidence that they will be delivered.  And calling it “Next Generation Shared Services” does sound a bit pretentious and bring to mind dodgy spaceships.

But those objections aside, the Cabinet Office with this plan both lays out a credible way forward, and demonstrates that some serious thinking has been going on around the topic over the last few months.  It is a huge step forward since the previous very thin strategy document published back in July 2011. I suppose they’ve had 18 months since then, so  we might expect some significant progress, but let’s give credit where it’s due..

We’ll feature the material in more depth next week. But one fascinating aspect, slightly buried in the detail, is the comparison of the costs of running Oracle ERP with what the plan calls a “low-cost ERP solution”.

This shows that the government currently pays an average of £160 per employee for the “as is”, multiple installation, Oracle set-up. They estimate that moving to a single Oracle solution for all of Whitehall should reduce that to an estimated £93 per employee – a saving of 40%. But moving to a tier 2, low-cost ERP solution could bring that down to £52 a head, a saving of 67%.

And, as the document says,

This level of saving does not include the savings which would be expected from a competitive procurement or the possibility of hosting ERP in the ‘Cloud’.

Interesting – we’re a long way away from the UK government moving from Oracle as the dominant ERP actually happening of course, but looking at those costs, there seems to be a strong business case for a good, hard look at that Tier 2 option.

More next week..

 

Voices (8)

  1. Joe Gardiner:

    I know it is on a smaller scale but doesn’t the consolidation of department websites to a single domain show successful sharing of services in central government?

  2. Howard Clark:

    Hi Matt.

    You are right Seddon has demanded evidence, which is woefully lacking, to support shared services. It is something’s he written about often.

    But his message is a little more nuanced and sophisticated than that. He does say that if you HAVE to do shared services, you shouldn’t start by standardising and centralising.

    I have collected John’s writings on shared services here:

    http://www.thesystemsthinkingreview.com/index.php?pg=18&backto=1&utwkstoryid=355

  3. Matt:

    “opposed to shared services on what we might term philosophical or conceptual grounds, such as John Seddon”

    I beg to differ, where Seddon is against shared services it is because of EVIDENCE of how they actually performed in REALITY.

    It’s the exact opposite of those pushing shared services – who’s projections of how they will perform are entirely conceptual because the predictions are made long before the evidence is available.

  4. On the Sidelines:

    When are people ever going to learn? The two leading so called ERP systems are at the core level built on the premise of controlling cost inputs and outputs in complex manufacturing and logistics processes.

    So what happens when you “adapt” what is a successfuly technology in one field (manufacturing) to another (government financial management) then see this…

  5. Ian Burdon:

    Who in their right minds in the public sector should be buying an ERP system – any ERP system – anyway?

  6. bitter and twisted:

    So what does a bad strategic plan document look like?

    Why not have a Tier-zilch ERP system, cost 0 GBP per head, – saving 100% !

  7. Dave Orr:

    It was a SNIP compared to what IBM charged the Police and Councils in Somerset through the controversial Joint venture Southwest One (SW1)!

    Total cost of SAP charged was £28.5m for 11,000 users at £2,590 per seat. So, by sharing services and expoiting IBM’s “World Class IT”, it ended up costing Somerset taxpayers almost 20x more than the National framework cost!

    SAP was developed in India at an IBM GSI subsidiary in Bangalore & was so badly configured that Somerset has only just announced that a “snagging list” of outstanding problems & undelivered functionality from 3 years ago are being solved.

    Both parties IN THE SAME JOINT VENTURE SW1 (Somerset are 15% shareholders) are now in legal dispute:

    http://ukcampaign4change.com/2012/10/22/somersets-dispute-with-ibm-is-escalating/

  8. Howard Clark:

    John Seddon isn’t against shared services. Not on philosophical or conceptual grounds. Seddon argues that the current method based upon scale, centralisation, standardisation is all wrong.

    See this short video.

    https://www.vanguard-method.com/content/2/thinking_things/#videob4

    My argument (Howard Clark, CalchasPSS), is that the majority of the claims for shared services are without an evidence base (although there is a widely developed marketing case).

    I am going to write about the Cabinet Office ‘new’ generation shared services.

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