| Advisor: Martin Read The back office operations and IT workstrand has been led by Martin Read. Martin is a non- executive director of British Airways and a senior adviser to Candover Partners. He was chief executive of international IT services company Logica from 1993 to 2007 and has served as a non-executive director of Boots (1999-2006) and ASDA (1996-1999). Prior to 1993, he was supervisory managing director of the GECMarconi Radar and Control Systems group of companies. Martin's other interests include being a director of homelessness charity Shelter,a trustee of the Council for Industry and Higher Education and the Vice Chair of the Council of Southampton University. Summary recommendations (Back office): 1 all public sector organisations employing more than 250 people must collect and publish data using the audit agencies' approved value for money indicators for back office operations with effect from June 2009 for central departments, agencies and NDPBs and by December 2009 for the wider public sector. Benchmarking information from across the public sector should be collected, checked and published on a regular, consistent, auditable and transparent basis in order to drive improved performance; 2 introduce a system of Operational Reviews that examine performance on back office operations, the first of which should take place no later than April 2010; 3 take the estimated £4 billion annual savings in the cost of back office operations into account when determining departmental settlements, taking note of savings already made where appropriate; 4 by the end of 2010-11, and thereafter at least every five years, public sector organisations with more than 1000 employees should conduct a systematic review of their functions, systems and processes to drive simplification and standardisation; 5 accelerate progress in central government shared services by consolidating existing shared back office centres to provide a robust shared services offer to central government (including agencies and NDPBs). A similar drive towards greater use of shared services should be encouraged across the wider public sector; and 6 enhance COINS1 functionality where possible to collect data on the cost of back office operations for all central government departments, executive agencies and NDPBs, centrally and seamlessly on a monthly basis as part of forecast outturn, using consistent definitions. Summary recommendations (IT): 7 take the estimated £3.2 billion annual savings in the cost of IT into account when determining departmental settlements, taking note of savings already made where appropriate and any substantial concentration of major IT-enabled change projects in particular departments; 8 fully integrate management information on IT spend into departmental processes and ensure that this data and the associated benchmarking statistics are collected on a regular, consistent, auditable and transparent basis; 9 strengthen the governance of IT-enabled change projects (including the requirement that ministers and accounting officers are regularly updated on high- risk projects and briefed on projects where the delivery confidence is not high); 10 strengthen the existing Gateway assurance processes (including the introduction of "starting gate" reviews of all IT-enabled change projects); 11 implement portfolio management processes within departments to prioritise the most important IT-enabled change projects and resources and to reduce the overlap and duplication in IT-enabled change projects across the public sector; 12 give government CIOs and OGC Collaborative Category Boards the responsibility for achieving greater standardisation and simplification of IT systems, desktops, infrastructure and applications across the public sector; and 13 develop the internal IT capability within the public sector and continue to professionalise the IT function. |
1.1 The back office operations and IT strand of the Operational Efficiency Programme (OEP) identifies the potential for significant savings from public sector expenditure on back office operations and IT. It sets out how these savings can be delivered whilst maintaining or improving service quality.
1.2 The term "back office" comprises the full range of operations that provide support to the frontline delivery of services, including finance, HR, estates management, procurement, legal services, travel services and marketing and communications. The term "IT" comprises the full range of IT spend, including hardware, software, IT support and major IT enabled change projects. For consistency, the term IT is used throughout this report, but this refers to the full range of Information and Communication Technologies (ICT).
1.3 Progress has been made in improving the efficiency of public sector back office operations and IT over recent years as a result of the Gershon programme and related initiatives. Some encouraging steps have been taken, but there is also a widespread understanding of the need to accelerate the pace of change.
1.4 Key challenges exist in respect of both back office operations and IT across the public sector, particularly when compared to private sector experience:
• the UK public sector is highly fragmented, with a very large number of individual organisations usually having their own back office operations and IT systems and processes;
• there is a lack of robust and consistent management information on public sector spending on back office operations and IT, making it hard to identify what the accurate costs of back office operations and IT actually are. This makes it difficult to establish trends, make comparisons and manage down costs. What is not measured well, will not be managed well;
• limited mechanisms exist today for reviewing an organisation's operational effectiveness in respect of back office and IT. This means that operational costs and processes get limited independent scrutiny and cross-questioning; and
• there is a cost penalty from the lack of standardisation, simplification and sharing of back office operations and IT across the public sector. Devolution of delivery can provide greater responsiveness in the provision of services, but unchecked proliferation of separate back office operations and IT systems and processes can and does lead to significantly increased costs.
If some of these challenges could be successfully addressed, the resultant savings would be substantial.
1.5 Despite the restricted management information available on back office operations and IT, the programme has estimated the total spend in each area and identified a significant level of savings. A set of recommendations has been developed in order to achieve these savings, including producing regular and reliable management information on back office operations and IT, the increased use of benchmarking and the introduction of performance reviews. The savings identified should be taken into account in determining departmental settlements. It is the task of management to decide how these savings are delivered, but a suite of recommendations and best practice case studies have been offered to demonstrate how to achieve this.
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1 The HM Treasury system used to collect financial information relating to Government Accounts and Resource Budgets.