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NAO throws spotlight on shortcomings in shared services strategy

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The Cabinet Office has been criticised by the National Audit Office (NAO) for not fully understanding the progress of its strategy to increase the use of back office shared services in central government.

A new report on the issue from the central auditor also highlights issues with the procurement of ERP systems and calls for the clusters of government departments to have more flexibility.

It focuses on the strategy, launched in 2018 and revised in 2021, that aims to achieve value and efficiency through a move to cloud based technology and standardised process and data. It requires all departments to be using cloud for the back office by 2028 and has been supported by the adoption of a model under which they work in five delivery clusters.

The report says that progress has been made with some clusters implementing new systems, but others have yet to go to market and the Cabinet Office is still unclear about the benefits of the programme and its cost to date.

In addition, governance arrangements are fragmented and cumbersome, resulting in duplicated effort and disjointed decision making, and the Cabinet Office is yet to start monitoring progress in areas such as the convergence of data and processes.

Several barriers are still to be addressed, such as delays to funding of the shared services plans. So far HM Treasury has approved funding of £300 million against a projected need of between £382 million and £403 million.

Clusters and cashable savings

The NAO also highlights that the Cabinet Office expects the clusters to use a central digital procurement framework when buying new ERP systems with the standard length of contract being five to seven years. Clusters told them they need longer to maximise the cashable savings and would like more flexibility.

It reports that as of August of this year they were liaising with the Cabinet Office’s digital control team to better understand the options.

Meanwhile, there ae worries about some departments using ageing systems that will soon be unsupported, increasing the risk of failure and additional costs.

In response, the NAO has made a number of recommendations, including that the Cabinet Office should put in place performance metrics, streamline its governance arrangements, ensure future strategies of the type are supported by a full business case, and look again at the digital procurement framework with a view to allowing lengthier contracts. It should also stagger when clusters are allowed to go to market for systems to help ensure there is capacity for all and take into account the contract end dates for ageing systems.

It also urges departments to complete individual declarations that set out agreed ways of working, ensure their cost and benefit figures are calculated in a consistent way, and complete a ‘lessons identified’ assessment.

Off track and unclear

Head of the NAO Gareth Davies said: “Efficient back office functions are key to delivering frontline services and reducing costs but, at present, the strategy is not on track to deliver value for money, and it remains unclear what level of financial benefits it will bring.

“Several fundamental elements of the Government’s latest shared services strategy need to be put in place to ensure its successful delivery.”

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