How shared services can help the public sector and consulting firms

Shared services have been used as a method of managing expenditure in the public sector for a long time, but limiting them to this kind of thinking overlooks their potential in the digital era. Unit4’s Senior Manager Industry Solutions Bryce Wolf argues that it can be not only a source of cost efficiencies, but more importantly an enabler for collaborative working that will transform organisations into more agile operations that can respond more quickly to customer need.

Shared services have been around forever, particularly in the public sector, but too often they are honoured in the breach. Last month, though, SIGOMA (the Special Interest Group of Municipal Authorities) suggested that 10% of its member councils were considering a Section 114 declaration this year and 20% said it could be a possibility in 2024. This makes it even harder to dismiss the financial benefits of sharing services such as IT to manage expenditure. However, we are finding that it is not just appealing to the public sector.

We also have a number of customers in professional services, and given the concerns about the outlook for the sector as clients reduce budgets or delay projects, firms are having to look at new ways to drive efficiencies. But looking at shared services primarily as a cost saving exercise overlooks the true value of the model. The clue is in the title, ‘Shared’ suggests collaboration and more streamlined business processes, which in the era of digital-first businesses is even more critical. The more your organisation is singing off the same hymn sheet, the more agile your operations will be and that agility is what is going to help professional services consultancies be more responsive to market opportunities.

As such, we may be on the eve of the fulfilment of the promise of this collaborative discipline, whereby organisations decline to reinvent the wheel and instead piggyback or augment outstanding work already done by peers. In a similar vein, it's clear that many organisations are seeking to centralise tools and processes to gain a holistic understanding of operations and trends. By building these more collaborative environments, leadership teams will be driving positive change in culture and operations that will enable organisations to be more resilient to volatile market conditions.

The evidence for this comes from two recent reports, both commissioned by Unit4. The first is the 2023 State of the Digital Nation and the second is the Pierre Audoin Consultants (PAC) Study: Professional Services: A Benchmark for 2023.

These are in-depth surveys and outlined below is a useful introduction to the underlying data, which suggests that public sector and professional services organisations (PSOs) are targeting shared services and centralisation as means to achieve improved operations, faster decision making and organisational agility.

Here are seven things you need to know:

Shared services are driving centralisation

About half of the PSOs in the PAC Study said they have centralised project management, customer services, and sales and marketing. This finding points to the usefulness of shared services in streamlining major customer-facing business processes and providing a control nexus for core operations.

Remote-working and the need for 360-degree visibility

One fifth of PSO firms said that in the next three years they will focus on aligning core project, contract and resource management processes. It’s natural to consider that this may be a response to the massive impact of remote working in the sector, during and after pandemic-induced lockdowns. By centralising these critical processes, often in the cloud, organisations effectively are providing a central point of contact for users wherever they are in the world, so long as they have access to an internet-connected device.

PSOs are changing how and where they work

Previous research suggests that PSOs have more staff working remotely, saving costs and time relating to business travel, hospitality and accommodation. At the same time, ongoing globalisation means that there are more potential markets to serve and scale. Shared services and global delivery models are a good fit for a shrinking world where we worry less about where people work than the quality of work and how processes can be replicated.

Across markets, almost a quarter (24%) of respondents said they will centralise Financial Planning and Analysis (FP&A) in the next three years. (The lower priority in the UK, at 15%, probably reflects the high proportion, 60%, that have already centralised finance and accounting.)

Shared services act as a buffer

The findings immediately above also show that the benefits of shared services are not limited to cost reductions, but also the need for greater agility in responding to opportunities in close to real time. Clearly, the shared services model offers a more effective way to establish the right foundations for global delivery strategies.

Countries that haven’t moved to shared services are going there fast

Belgian PSOs (37%) are ahead of the global average, intending to move finance and accounting functions to a shared services model in the next three years, compared to 25% in the Nordics. The DACH region illustrates the benefits of moving to a shared services model, as 77% of PSOs have already moved their project management teams to this way of working. They are benefiting too, with data showing they are outperforming their peers in timely project delivery. This can, in part, be attributed to having a holistic view of all the project management data within their organisations.

Public Sector shared services are booming

There has been sharp rise in the adoption of central and shared services in the public sector, which has gone from a negligible number in 2021 to 33% in 2023, according to the State of the Digital Nation study. Expanding that footprint has been one of the top three changes that public sector organisations have experienced over the last 24 months. That boom may be in part explained by severe budget cutting necessitating radically different approaches.

Data compatibility is BIG

But what of the data underpinnings of successful shared services? In 2023, 29% of respondents reported a need for wholesale improvements in data compatibility, while another 34% say large improvements are required. These indicators highlight the role of centralised services to integrate data sources and provide that much-desired phenomenon of a single version of the truth. But shared services and centralisation offer no universal panacea: if the data is dirty, incorrect or old, the principle of ‘garbage in, garbage out’, still holds.

For years, organisations have attempted to differentiate themselves through best-in-class applications and bottom-up software development. The latest data research suggests that we may, however, be reaching a state of realpolitik and pragmatism. By working together, sharing services and centralising tools and data, we can move faster and without risks.

Bryce Wolf is a Senior Manager of Industry Solutions at Unit4 and is responsible for the delivery of Unit4’s product strategy for our strategic verticals. He is responsible for the delivery of Unit4’s PSO Industry Models and MESH, and works closely with Product Directors to ensure a complete end to end solution for Professional Services Organisations.