Opinion On the eve of its fifth birthday, the UK's Shared Services Strategy for Government got a couple of presents. With around £1.7 billion already committed to tech suppliers and a 2028 deadline looming, the 450,000 civil servants and military personnel set to depend on these systems might wonder what was in store.
Step forward Sopra Steria, with the gift of a legal case challenging the Department for Work and Pensions' (DWP) decision to award its £370 million contract to run Oracle-based HR and finance services across four departments. It already runs part of the service under its SSCL subsidiary.
Even losing incumbents are usually dissuaded from challenging government procurement decisions because they don't want to create bad blood with public sector buyers and they know there will be plenty of work down the line. But what better way to mark the anniversary of the strategy than a legal curveball?
In 2018, the Cabinet Office published a new ten-year Shared Services Strategy. The overarching objective was to deliver value and efficiency by moving to cloud-based technology by 2025 at the latest, according to a National Audit Office report from 2022 [PDF]. It delegated responsibility to each government department to manage its own program.
But in 2021, the Cabinet Office ditched that plan and adopted new strategy [PDF] that aims to put 17 departments and 300 so-called arm's-length bodies into one of five cloud-based shared services centers to be up and running by 2028 at the latest. The strategy said it would save 10-15 percent in operating costs, or about £1.8 billion, over the next 15 years. The plan is to have all shared service centers operational by 2028.
Each shared services center would put its users on a new, common set of processes and fresh ERP and HR systems. Anyone who has tried to do this in a reasonably large organization might pause and take a sip of coffee or something stronger. Take one cluster called Unity. His Majesty's Revenue & Customs (HMRC) leads the cluster, hoping to move from SAP's legacy ECC ERP software to the latest S/4HANA software in the cloud. Fans of the German vendor will know this involves ridding the software of any small but complicated customizations and adopting entirely new standard processes. This, for 66,000 employees, just within HMRC. But the cluster also includes the Department for Transport and the Ministry of Housing, Communities and Local Government, which was renamed by the Labour government since the program started. Imagine the meetings, the coffee, the biscuits, just trying to get to grips with the basics.
The same goes for the other clusters. Joining Unity are Defence, Overseas, Matrix, and Synergy under a nomenclature that forces one to examine the waste paper basket of abandoned ideas. Harmony and Tranquility perhaps? Grumpy, Happy, and Sleepy? Given the determined detachment from reality, it's anyone's guess.
But in January, Sopra Steria was on hand with a bucket of cold water to remind those behind this strategy that things have got very real. The DWP leads the Synergy cluster, which also includes the Ministry of Justice (MoJ), Home Office, and the Department for Environment, Food and Rural Affairs (Defra).
Oracle and IBM have already won the contract for ERP technology and systems integration as part of a single £711 million deal.
This week, we learned that it accepted a winning bid from Capita of £370 million for ten years, less than 40 percent of the estimated value outlined during the tender stage.
The procurement pegged the contract price at £958.7 million. In its legal claim, Sopra Steria alleges the DWP has failed to recognize Capita's bid as "abnormally low." It also claims Capita's "low" staffing levels raise concerns about service. Sopra Steria wants the court to get the DWP to terminate and/or rerun the procurement process. It is also asking for damages.
A Capita spokesperson said in a statement: "We took part in a robust procurement process and stand ready to work with the DWP to ensure a smooth transition of service. Our priority remains to ensure value for money for the public."
A DWP spokesperson told The Register last week: "We are aware of the legal challenge and are cooperating fully with the relevant processes. As this matter is currently subject to litigation, it would be inappropriate to comment further at this time. Our priority is to ensure continuity of service and value for money for the public."
On awarding the £370 million deal to Capita, a DWP spokesperson said: "We are committed to ensuring a smooth transition. Our priority is continuity of service and value for money for the public."
Maybe Sopra Steria's legal claim is completely without merit. Maybe Capita will perform its duties perfectly under a contract potentially worth hundreds of millions less than the original estimate. But it would be foolish not to even consider that the government is taking a risk.
The second gift for the shared services' fifth anniversary was an update from the National Audit Office. Within the independent watchdog’s usual measured prose were a few alarming observations.
The report says buy-in from departments is not clear, creating some uncertainty for the overall strategy. In fact, His Majesty's Treasury – the department that has so far agreed £1.15 billion program funding – has yet to make "a firm commitment" to joining the Matrix shared service cluster.
The Matrix cluster is led by the Department for Science, Innovation & Technology (DSIT), and includes the Cabinet Office (CO), Department for Energy, Security and Net Zero (DESNZ), Department for Culture, Media and Sport (DCMS), Department for Business and Trade (DBT), Attorney General's Office (AGO), Department for Education (DfE), Department of Health and Social Care (DHSC), as well as HM Treasury.
The DfE has yet to fully commit to joining Matrix, while the DHSC is being merged with NHS England, which is in the middle of its own Oracle migration.
In 2024, the Matrix cluster awarded Workday a contract for SaaS finance and HR software and Cognizant a systems integration deal with a combined value of £144.3 million.
However, HM Treasury is a well-established user of Oracle's latest SaaS software for HR and finance in Oracle Fusion.
"Cabinet Office has stated that it does not consider departments' joining Shared Services optional, and that departments cannot make the decision to move or leave a cluster without assessing value for money across government, nor the impact on the business case," the NAO said.
It's easy to see how the shared services strategy might begin to unravel when the department that agreed to the funding is reticent to join it. Other departments may have misgivings. What are they supposed to think now?
There have already been signs of problems with the strategy. In 2023, HMRC's Unity got a red rating from the government's projects watchdog because it was deemed undeliverable under its earlier plan. It has since been revised and downgraded to amber. Through the current financial year, it expects to complete detailed design and build testing ahead of its first key projects to deploy HR and payroll systems, according to the most recent report.
HMRC has handed SAP a £246 million agreement to provide software as a service in the cloud for ten years, while global consultancy Deloitte has won a five-year deal worth up to £120 million for the same project.
Defence may seem more simple, as it includes only the Ministry of Defence. However, military and civilian personnel have been supported on different systems, and they are coming together.
Sopra Steria's SSCL is a delivery partner for military HR and veteran services while finance and civilian HR also run on Oracle under Defence Business Services, a government-run shared service. The Overseas cluster is already live on Oracle Fusion, according to reports from 2023, under a £90 million contract with Capgemini.
The Foreign, Commonwealth & Development Office launched a tender for £29.3 million for a new delivery partner in November last year.
The Register estimates that total commitment to the share services strategy so far is around £1.7 billion in contracts and procurements still in train. Some contracts last ten years.
Five years since the UK launched its Shared Services Strategy for Government, the plan is on a fine line. Although cutting the number of systems and processes organizations use can reduce costs, the pain of getting there, in terms of agreeing new ways of working, and deploying and adopting new technology can be so great that early promises are never kept.
And as timelines stretch, technology choices age. Investor talk of a SaaS-pocalypse may be overblown, but users and analysts are questioning whether organizations need to be tied to the main vendor's upgrade path or whether they can wrest control back with a more atomized approach.
The 2028 deadline for adopting shared services is nearing. In a couple of years, we will find out if there's anyone around to share the blame should it begin to fall apart. ®
Source: The register