Operational Efficiency Programme

(By Richard Holway 9.00am 22nd Apr 09) Ahead of the Budget today, HM Treasury has issued the results of the Operational Efficiency Programme. You can read the report in all its 92 page glory by Clicking here.

The bit we are most interested in is the Back office operations and IT part, led by Dr Martin Read ex-CEO of Logica. Indeed, Anthony and I were called in to assist Read in the early stages of the project. Read recommends better management information, benchmarking and review of costs and better governance of IT-enabled change programmes. He reckons this will achieve £4b of savings a year on back office operations and £3.2 billion of savings a year on IT spending.

Clearly the bits we recognize from our input to the study are the increased emphasis on outsourcing and finally getting to grips with getting the best from Shared Services. It notes, in examples we discussed with Read, the 30%+ savings at the HM Prisons Shared Service, the 20-30% savings in the NHS/Steria JV and the 13% savings at DWP where HR and finance operations are shared. Read reckons 25-30% savings could be achieved by more effective use of shared services. We agree – but the obstacles are more likely to be political (ie local job losses and property relocation) than economic. There needs stronger willpower to overcome that.

One thing really did surprise us. There is no mention of offshore anywhere in the report. After scan reading it, I thought I must have missed it. So I did a word search and ‘offshore’ does not appear anywhere in the document. Amazing!

There is also no mention of the NHS IT programme and its possible fate. But the report recommends that there should be no sacred cows.

I've heard these efficiency claims so many times before. Even if some are put into effect, it just seems to boost expenditure elsewhere. As in "Cut permanent staff" - in turn means "employ more temps". The bit that might get this moving is that The Treasury is to 'assume the efficiencies' in setting the budgets. That just might focus the mind.

More later, I'm sure. Also on the Budget and its effect on UK SITS.