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NOA Public Sector Steering Committee

by Paul Corrall, sourcingfocus.com

NOA Public Sector Steering Committee

Thursday 7th April

The Public Sector Steering Committee follows on from the NOA Public Sector events of 2010. The aim of the committee is to discuss and brainstorm “strategic lessons for successful outsourcing and shared services in the public sector.”

The committee was chaired by Paul Robb, NOA Representative for Suppliers, who initiated the discussion with an overview of the public sector cost challenges and the ‘perfect storm’..
Public Sector Cost Challenge

• Public Sector survival in Austerity…
• CSR Average 19% reduction in Departmental spend (over 4 years)
• “I’m afraid there’s no money left..” Liam Byrne (to David Laws)
• Significant pressure on back and ‘middle’ office spend: transformation required

MoD – 8% over 4 years, back office cuts c.30%
Health Service ‘ring fenced’ – back office cuts c.25-30%

• HMIC: Level of cuts unprecedented in working lives of senior managers across police and wider public sector
• Land Registry: Fee income dropped 30% (year on year)
• £80bn + Public Sector spend on private / voluntary sector services
• One-third of Public Sector services outsourced

The Perfect Storm - Three power forces coming together…

• Technological – Cloud, web based apps
• Commercial – Lock in of legacy contracts, protracted procurement, adversarial approach, input-based approach
• Financial – Cash and capital rationing, once-in-a-generation cost pressure, labour arbitrage, ‘sweat the asset’ – not enough
• Public Sector to re-think the way it delivers services (non-core and core..)
• Outsource Industry to transform at all levels – or miss the boat..

Key Questions

• How can the Public Sector benefit from Private / Voluntary sector Involvement?
• What are the barriers to outsourcing and shared services?
• What changes are required?
- Public Sector
- Outsourcers

Steven Littlefair, Steria, said: “There seems to be a growing maturing in the public sector moving forward and huge opportunities and challenges are present. It is also hard not to generalise but there are vast levels of complexities in the sector.”

There are opportunities to encourage outsourcers to enter the UK market to require processing facilities and take over certain business centres with no redundancies.
Colin Cram, Marc1 Ltd, said: “Outsourcing back office issues can not solve budget issues as they provide only a small amount of public service functions. Outsourcing will have to become more frontline to reach the required savings.”

Barriers

Offshoring – Widespread public sector offshoring on the table? The traditional offshore destinations are now increasing in cost.
Security – Unfounded political and security concerns regarding data. Public concerns about national security and stigma with the security of offshoring public services.
Expectations – “The public sector can not simply set out the perimeters / constraints of an outsourcing contract with a supplier and expect the required cost savings.”
Red tape – There is a need to speed up the outsourcing process but it is hard with the public sector due to changing requirements
Advisory services – can be problematic and have their own interests at heart
Vision – The public sector needs a more streamlined and transparent strategic vision to reduce costs through outsourcing
Procurement process – Lengthy, expensive

Suggestions

• More collaborative outsourcing needed
Clive Parminter, Capgemini, said: “Shared services enable best practice within cuts. Councils sharing best services and even services should be used more to improve capability.”
• Outcome pricing maturity
• Streamlined procurement processes

Actions

• Committee to produce outsourcing recommendations / outsourcing benefits paper (Colin Cram to assist?) – Ongoing
• Next steering committee to be arranged by Events

Attendees included:

Paul Robb NOA Rep for Suppliers, KPMG
Paul Corrall sourcingfocus.com
Leslie Willcocks LSE
Mario DeVarges Bolton Council
Clive Parminter Capgemini
Rainer Majcen Arvato
Colin Cram Marc1 Ltd
John Callachan DDC Group
Steven Littlefair Steria
David Goldsmith Ventura
Bill Hull TLT
Michael Scott RPC
Will McAllister Aegis Global
Stuart Wilson National School of Government


 

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