What Happened?
Two London councils have consolidated their IT services after realizing a need to upgrade outdated systems. The shared services agreement is projected to save the boroughs $6.4 million over a four year period.
Goal
Kingston and Sutton councils both found an immediate need to replace their antiquated IT systems with new technology. It would be very expensive to buy and implement the new cloud and open data equipment for each London borough. Instead, the councils collaborated on a shared services agreement that combined their IT services into a single team of 100 workers.
Over the next four years, the agreement is expected to save a combined $6.4 million – 25 percent of which comes from operational savings and the rest is attributed to preventing redundant purchases and maintenance costs, Diginomica reported.
The councils were both in a position to upgrade their systems and adopt a cloud-based platform. Because the needs overlapped, it was easy to combine the costs and share the services. After implementing the shared services agreement, the borough councils started to investigate other opportunities to combine resources without sacrificing quality of service to residents. There are talks with other boroughs to include them in the IT shared services agreement in the future, Diginomica reported.
Why We Need To Share
A recent CFO survey conducted by the Association of Government Accountants revealed a need to innovate through collaboration is not limited to local governments, but has become apparent at the state and federal levels as well.
Just as IT departments are teaming up, public financial agencies are turning to shared services to stretch capital and resources farther while enabling projects to move forward despite declining budgets. Without collaboration, many CFOs fear they will not be able to implement improvement efforts where needed.
The New York State Association of Counties compiled a report on local government sharing services highlighting success stories of collaboration between public agencies. The report showcased shared services agreements generating significant savings in a variety of sectors including:
- Education
- Land management
- Healthcare
- Highway
- Employment
- Energy
- Environmentalism
- Parks and recreational
- Legal
- Public safety
- Criminal justice
In addition, the report introduced a plan in Oneida County working to streamline all government operations to save money. The initiative starts by collecting $500,000 from the County Board of Legislators to fund consolidation efforts designed to generate continual savings annually in the long term. These savings pay off the initial investment and support future consolidation efforts.
Learning How To Share
In a piece for the Information Daily, David Moody, Global Head of Government and Public Sector Practice for Kana Software, explained the boom in IT shared services in the public sector is not a new concept. The recent economic downturn and push for more efficient use of resources at the local level, however, has challenged municipalities to implement more solutions while spending less. Thus, shared services have grown in popularity.
According to Moody, all participating agencies must be on the same page when IT shared services agreements are reached. Strategies should include a clear outline of where responsibilities lie, as well as data-driven predictions for current and future demands to ensure savings are realized and enjoyed in the long term.
Shared Services Close Financial Gaps
Gov1 has followed the growing trend of public sector shared services agreements that are increasing efficiency and generating significant savings.