Central government’s first major shared services project has been cancelled halfway through the procurement, but will be replaced with a much more ambitious programme in the New Year.

Shared services is a central theme of both the eGovernment Unit (eGU) transformation plan and the Treasury’s public sector-wide Efficiency Review. The aim is to cut administrative costs by sharing back-office systems such as human resources (HR) and finance between organisations.

The eGU procurement for a central HR system for the Cabinet Office, the Treasury and the Office of the Deputy Prime Minister started in the summer (Computing, 13 July). Three suppliers, including Fujitsu and IBM, were shortlisted, but the plan has been shelved because it was too expensive.

The eGU is now working on a larger project that could include as many as 10 separate government bodies and benefit from greater economies of scale. Sources suggest the plan could include most of the smaller Whitehall departments, such as the Department for Constitutional Affairs and the Department for Culture, Media and Sport, alongside the three original participants.

‘The economic case for the shared service centre serving the three departments was not clearly strong enough,’ said a spokesman for the eGU.

‘To achieve greater efficiency, we plan to explore options including catering for a much larger group of departments and potentially covering additional services other than HR.’

Best practice network BuyIT’s shared services advisory group predicts efficiency savings of £40bn over 10 years if the model is implemented for HR and finance across the public sector.

In a report released this week, BuyIT outlines five focus areas, including the capacity of the supplier market and effective use of benchmarking.

‘It is not just about savings,’ BuyIT chief executive Frits Jannsen told Computing.

‘Shared services are a stepping stone to the public sector reform and transformation that the Prime Minister is after. You don’t get best value by doing the same thing better, you have to transform.’

In 2006 the group will consider four key issues determined by eGU director of shared services David Myers.