Shared services have been growing in popularity over the last few years as housing providers realise that shared services allows them to either gain access to products and services that they couldn’t otherwise afford on their own or use their IT budgets more prudently by leveraging the costs savings and economies of scale inherent in collaborating and partnering with other organisations.
As the current economy and the impact of the government’s spending review are likely to result in greater interest in shared services, Housing Technology interviewed a panel of IT experts from a cross-section of housing providers to understand their views on shared services.
What are shared services?
The general understanding of shared services is when two or more organisations collaborate in the development and operation of IT services which are used by and benefit those organisations. Common examples of shared services include customer contact centres, choice-based lettings and desktop support.
Home Group runs its entire infrastructure as a shared service, including hosting, desktop support, telecommunications and all business applications. Keith Woolley, director of IT, Home Group, explained, “We run shared services as its own financial cost centre with a clearly defined recharging structure allowing for transparency in each business unit. In short we are a commercial ICT business with Home being our largest customer.”
Ian Robertson, IT manager, Helena Partnerships, said, “There are two aspects to shared services. First, there are shared infrastructure services such as choice-based lettings, contact centres, and using another housing provider’s infrastructure as a redundant DR site. Second, there are housing providers pooling their resources to either develop a new product or service or to simply leverage their combined purchasing power.”
Andrew Carroll, group head of ICT, WM Housing Group, added, “Shared services cover any service collaboration between two or more partnering organisations that is intended to reduce costs by spreading overheads and delivering economies of scale. The key aspect is shared management for economies of scale, as distinct from outsourcing which is effectively buying services.”
Examples of shared services
Helena Partnerships and Vale of Aylesbury Housing Trust (VAHT) both run their choice-based lettings through a shared service, with Helena’s ‘Under One Roof’ service run on behalf of the local council and VAHT’s run as a joint project with four local councils. WM Housing has had a shared HR and payroll service since 2000 and a shared contact centre since 2003.
Mark Fairweather, IT manager, Derby Homes, added, “We have used Derby City Council’s data and voice network since we were formed eight years ago. We share the Exchange server farm for email and have a number of users in the Gov Connect network for Code of Connect-approved access to the revenues and benefits system. Access to the latter is essential for two reasons. First, we provide a scanning service to Derby City Council for benefits-related paperwork, and second so that our arrears staff can access the revenues and benefits IT system.”
Why adopt shared services?
The most commonly cited reason for adopting shared services is naturally cost savings, followed by service efficiencies, economies of scale and, in contrast to outsourced services, greater control and influence on the service’s structure and delivery.
Carroll from WH Housing said, “The reasons for using shared services are cost savings and access to a wider skill base. Shared services also provide more control than a straight outsourced contract, plus sharing can also drive standardisation and commoditisation which reduce costs further.”
Woolley from Home Group agreed and added, “Deployed correctly, shared services provide the business with a consistent and effective ICT solution at a known cost. It harmonises customer service and ensures scale of economies can be achieved.”
Referring to the consistency of information available from shared services, Rick Smith, IT manager, Vale of Aylesbury Housing Trust, explained, “We all need to share the same information and to be ‘singing from the same hymn sheet’, plus our shared services allow tenants from different local authorities to receive the same service.”
Helena’s Robertson and WH Housing’s Carroll agreed that housing providers can often achieve more together than they could alone. Referring to the relationship between IT and business operations, Carroll from WH Housing added, “Shared services means both [business and IT] can achieve more for less. It allows IT to focus on IT excellence and the business to focus on core operations.”
With respect to Derby Homes’ shared services with the council, Fairweather explained, “The business advantages of shared services arise from minimising duplication in both hardware and infrastructure. There is also the advantage of being part of the Gov Connect network. From an IT perspective, it means that joint working with the council is easy to achieve.”
Reasons not to share
The most obvious disadvantage of shared services is that the participating organisations all need to surrender some degree of control and flexibility when compared with in-house operations. This is less significant for services that are, to some extent, now commodities such as choice-based lettings and call centres but much more problematic for core business applications such as housing and asset management, mobile working and job scheduling.
Fairweather from Derby Homes was pragmatic about the disadvantages of shared services. He said, “The disadvantages from a business point of view only really arise when our two organisations decide on competing policies but this has only happened a couple of times and we both made compromises. From an IT perspective the main disadvantage is having to always ensure that changes are in step with or do not mitigate against anything the council want to do with their parts of the infrastructure or services.”
Referring to Home Group’s shared service infrastructure which spans all of the group’s business units and housing providers, Woolley explained, “All business units must compete through a business case for resources as there is no direct correlation between individual business units and the shared service.”
The business of relationships
The need for two or more organisations to work harmoniously together is implicit in the shared service model, yet each organisation will have its own culture, business strategy and financial targets. Consequently, all participants need to have an equal interest in the service’s success alongside shared risk and reward.
Woolley from Home Group said, “Home has dedicated account managers responsible for ensuring that the services being delivered to the ‘front line’ are appropriate and effective. This role also ensures that performance targets are being communicated both in and out of the ICT shared services function – there is no room for a separate strategy.”
What factors determine successful shared services? As with most IT projects, a strong business case, clear objectives and deliverables (via SLAs) and open communication between the service partners are key requirements, alongside the flexibility to discuss and accommodate each organisation’s slightly differing requirements over time.
Derby Homes’ Fairweather explained, “The human element is probably the most important – regularly meeting your counterparts and discussing projects and long-term strategy can avoid misunderstandings and lay the foundations for pain-free resolutions when problems arise.”
Carroll from WM Housing said, “Get the SLA details right, but be prepared to revise them. Equally, don’t be too bureaucratic or ‘commercial’ – shared services are about value, not price. Make sure service charges are reasonably well aligned to real costs, and ensure that all parties understand the model.”
Last word goes to Home Group’s Woolley who said, “Look at the maturity of your delivery processes. If they are not structured, you will need to get them to a basic and explainable level before you can change your service model. At the same time, ensure you fully understand the costs of your current service and then find out how a shared service will reduce those costs while improving service.”