Public Sector Doubts over Potential Cost Savings Through Shared Services

Public agencies also worry about losing control of their key business operations with a move to shared services, Ovum study shows

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London — June 3, 2011 — Despite the cost savings a move to shared services can deliver to cash-strapped public sector agencies, many do not believe it would save enough money to make it worthwhile, according to a recent survey by researcher Ovum.

The independent technology analyst spoke to CIOs in public sector bodies to gauge their attitudes to the sharing of services at a time when many are facing budget cuts. When asked what barriers they faced, almost half of those in Europe (49 percent) cited concerns that it would not save enough cash to make it beneficial for them.

In North America, 46 percent cited this reason, and in Asia-Pacific the figure was 29 percent, Ovum writes in its report, "Austerity Measures take first bite from Public Sector." For the study, Ovum interviewed local and national government agencies across North America, Western Europe, and Asia-Pacific.

"The move to shared services does involve upheaval and invariably means changing software applications, which in turn can require system and data migration and all the complexity that this entails," said Jessica Hawkins, Ovum analyst and author of the new report. "Many agencies have the perception that there is not enough money to be saved to make this worthwhile."

Ovum's survey also revealed that many public sector agencies worry about losing control of their key business operations with a move to shared services. In North America, 68 percent cited this as an issue that would prevent them from making the move. Meanwhile, in Europe the figure was 39 percent and in Asia-Pacific 31 percent.

Hawkins commented: "Changing the dynamics of service delivery is an emotive issue for public sector bodies and can cause them to fear that they are losing control of their key business operations. This is compounded by the prospect of job losses and the legal complexity of transferring staff to a shared-services model."

In Europe, 23 percent said loyalty to their current work would prevent them from moving to a shared-services delivery model. In North America and Asia-Pacific the figure was higher with 26 percent citing this reason as a barrier.

Hawkins concluded: "These barriers that public sector agencies feel they face mean uptake of shared services has so far been modest in some regions. Europe is slightly ahead of Asia-Pacific and North America, but the difference is not considerable. However, this gap does widen when looking ahead to the next two years, when more European bodies will be prepared to make the move."

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