Shared services centres supposed to save £128m saved £0... and cost £4m

Moves to shift departments' back office servers and ERP systems into two privately owned shared services centres - which had been touted as set to save the taxpayer £128m - have failed to prove "value for money", according to a report by the National Audit Office.

The shared services centres, run separately by IT provider Arvato and French outsourcer Sopra Steria, were set up 2014. Since then they have saved departments £90m over two-and-a-half years but have cost £94m due to escalating costs and delays, said the NAO.

That means the shared services have yet to cumulatively save government any cash and have in fact cost it £4m.

NAO head Amyas Morse said: “The Cabinet Office’s failure to manage the risks around the move to two independent shared service centres from the outset means that the programme has not achieved the significant anticipated savings and benefits to date.

He added: "The programme will only achieve value for money in future if the Cabinet Office shows clear leadership, and government accepts the need for collaborative and flexible behaviours from all departments involved.”

Back in 2012 the Cabinet Office boasted its Next Generation Shared Services strategy would eventually save between £400m and £600m each year. The centres were intended to provide back-office functions for up to 14 departments and their arm’s-length bodies.

Due to delays in designing, building and testing the systems, only two of the 26 planned customers have joined a single operating platform. On one of the centres, and four customers have exited their contracts altogether - as The Register has previously revealed.

The Department for Work & Pensions also missed its most recent migration date of April 2016.

Costs escalated due to major delays as well as maintaining and extending the life of existing and ageing systems.

Weakness in the programme's design was key to undermining its success, said the report. It said the Cabinet Office did not effectively address problems, in part because it did not have a clear mandate to act on behalf of customers.

Five different senior responsible officers have overseen the programme so far. They and others in key programme roles have often not held relevant experience in shared services, the report said.

Several departments also said they were unhappy not to have been sufficiently consulted on key elements, such as the appointment of Steria, which they consider to have been undertaken too quickly, it said.

All customers except the Department for Transport have exited the Arvato and will seek other arrangements.

For the privately run Steria centre, delays and changes in scope have led to significant costs for the government and SSCL. "Both parties are discussing how the plans need to evolve," said the report. However, the Met Police decided to outsource its in-house back office to the centre - a move that has also been described as "high risk".

The report also said that since the delays technology has moved on significantly, meaning new options should now be considered under a revised programme plan.

The significant delays have meant that legacy IT systems due to be replaced by the shared service centres’ single operating platforms remain operational.

"Support arrangements for some legacy systems can be extended, but this may not always be an option, may be costly, or may involve a lengthy commitment that could affect future programmes. It will be important to consider these factors when taking decisions to address short-term risks," said the report.

It noted that "Confidence in the programme is now low." Earlier this year the chief executive of the civil service John Manzoni said the shared services centres were one of three major government projects keeping him awake at night. ®