18 Aug 2011
It doesn’t surprise me that government’s Efficiency and Reform Group (EFG) is going to outline estimates and projections in support of shared services (Efficiency and Reform Group to benchmark shared services).
Why? Because there isn’t any real evidence to support the assertion that shared services save money and boost efficiency.
What flimsy evidence there is comes from within the shared services industry, which obviously has a vested interest.
Professor John Seddon says that there are two arguments for sharing services: the “less of a common resource” argument and the “efficiency through industrialisation” argument.
The first argument is obvious: if you have fewer managers, IT systems, buildings etc, your costs will be reduced. But the reductions are often minor and one-off.
The second argument assumes that efficiencies follow from specialisation and standardisation that results in the creation of front and back offices. The typical method is to simplify, standardise and then centralise, using an IT “solution” as the means.
The problem with the industrial design is simple – it doesn’t absorb variety in demand. Because of this, costs soar as the IT system has to be modified and customers ring back again and again because they can’t get what they want.