The Department for Transport’s shared services fiasco

Like most bloggers, I just love it when events prove me right. It’s only two weeks since I commented on the government’s plan to cut 30% off the cost of its back office functions by setting up shared service centres for human resources, payroll and finance. As I said then, shared service centres are not a magic bullet. They can save money in the long run but the implementation almost always turns out to be more complex than anticipated. The cost of setting them up can therefore be expensive, so they often take longer than planned to pay for themselves. In short, shared service centres are not an easy win. 

As if to prove the point, the government has given us a case study in the Department for Transport’s shared services project. The plan was to consolidate transactional human resources, payroll and finance activities in Swansea, facilitated by a state-of-the-art computer system. For an outlay of £55 million the project would save £112 million – or so the business case said. But according to the Commons public accounts committee, the new shared service centre cost £121 million to set up and will only save £40 million. As the Americans say, “Go figure!”

If you have time and, especially, if you are planning a similar exercise in your own organisation, you could do worse than read the full report. The mistakes listed are all too common. The Department for Transport is not the first organisation to have made them and it won’t be the last.

This bit gave me a wry smile. 

The Department’s plans for implementing Shared Services were too optimistic and were imposed in the full knowledge of the risks, difficulties and slippage. The tight timetable led to the Department taking shortcuts which subsequently caused problems.

One of the things that used to frustrate me when I worked for one of the Big Five consultancies was the language we were told to use. In circumstances like this, I had to say things like, “That is an extremely aggressive timetable,” or “You have set yourself a challenging deadline,” or “This is a very ambitious plan.”  Now that I work for a smaller outfit, I can simply look the client in the eye and say, “You haven’t got a cat-in-hell’s chance!”

And, typically, when things start slipping, no-one wants to be the first to say “We ain’t going to make this!” After all, who wants to be accused of being ‘negative’. So everyone just pretends the whole thing is still on track until overwhelming evidence shatters the pretence. 

Two months after the project started, the Department knew that the initial assumptions were incorrect but did not deviate from its timetable.

Stick to the plan and hope that, somehow, we will catch up. Yep, that sounds familiar too.

I don’t want to sound as if I am kicking the DfT while it is down. This sort of thing happens throughout the public sector and in the private sector too. Many large private sector companies make similar cock-ups but they can hide the cost beneath their massive internal budgets, safe from public scrutiny.

Unfortunately, while the Public Accounts Committee’s report may have identified the problems with this project, its recommendations are trite and probably not a lot of use to those trying to sort out the mess. The suggestions amount to putting more monitoring processes in place and having clearer targets and plans.

But, if the report is at all accurate, the problem was not a lack of planning and monitoring processes. I would be willing to bet that the Department for Transport had Gantt charts, milestone plans, stakeholder analyses, accountability matrices and all the paraphernalia of project management methodologies. It was not a lack these tools that scuppered the project but the collective disingenuousness that allowed everyone to pretend that what was written on them reflected reality and what was achievable.

This, too, is something you often see in large organisations and, especially, in the public sector. If some facts are inconvenient, people simply pretend not to know them and act as if they are not there. It is this collective disingenuousness which enables people to carry on working to a plan which, from day one, is clearly unachievable.

When projects fail, it is not always due to lack of proper planning. The use of project management tools is now standard in most organisations. What often causes problems is the unrealistic shared assumptions which underpin the planning process and the collective delusion which allows them to persist.

If the government is planning to take 30% off its back office costs by 2011, there will be considerable pressure on civil servants to make those savings happen. Against such pressure, it is likely that any inconvenient obstacles will be ignored and more government projects will be implemented in that parallel ‘as if’ world.

As I said, these shared services projects may turn out to be a lot more difficult than the government realises. The disaster at the Department for Transport is, perhaps, an early warning.

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5 Responses to The Department for Transport’s shared services fiasco

  1. joshua karl says:

    I agree 100%. I worked at DFT for a month or so in March as a HR Advisor. I knew there was little to no chance of this project going according to plan. There was too much pressure as it was a project that had been put on hold in the past so yes planning was definitely an issue. It’s a real shame because some constructive working relationships have been broken, people have lost their jobs and staff morale is at an all time low. HR as it was, was a really efficient effective department torn to shreds by changing directors. Change management and strategic thinking are well implemented when decisions are made at all levels of the organisation right down to administration. Without the full support of the people that make the organisation any project would prove more costly or take longer than planned to roll out. Staff were misinformed or uninformed and days before the project was due to go live there were still way too many uncertainties and unanswered questions. This is not a dig at DFT, a lot of organisations find themselves falling into this trap. Poor research, poor communication and unrealistic targets are usually the main causes of expensive, unnecessary projects.

  2. In my recently released white paper titled Yes Virginia! A Profile In Excellence I highlight the fact the the Commonwealth’s eVA initiative is one of the few successful programs in either the private or public sectors based primarily on the fact that they abandoned the shared services strategy early in the launch. (Note 85% of all eGovernment/eProcurement initiatives worldwide fail to achieve the expected results. Private sector performance does not fair much better with highprofile failures including Cadbury-Scwepps, Hewlett-Packard and Maytag to name just a few.)

    The reality is that the shared services designation is a misnomer in the public sector, as it is in truth an outsourcing strategy that in some instances might very well represent the first steps towards privatization.

    I would certainly be happy to provide the links to both the white paper as well as the numerous articles I have written on public sector practice. My e-mail address is jwhansen@sympatico.ca

  3. Rick says:

    Thanks Joshua. I note that it is now the DfT not the DoT. I’m showing my age there. I will correct it now.

  4. Rick says:

    Yes, James, it’s nice to be right in an itellectual sort of way, but I can’t help thinking about the millions of quid squandered on this project.

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