Introduction

Shared services offer clear opportunities to both public bodies and to the technology vendors trying to meet their needs. This report explores the market conditions for shared services in government, the strategies of governments themselves and the technology challenges.

Scope

Shared Services and the Future of Technology Adoption in Government (Market Focus) Understanding Shared Services Opportunities in Government (Strategy Focus) Meeting the Technology Challenge of Shared Services in Government (Technology Focus) Shared Services and Outsourcing in US and European Government (Databook)

Highlights

This report combines all three briefs from the outsourcing and shared services in government IT management theme for 2007.

Reasons to Purchase

The market focus section provides an overview of drivers and trends across the government sector. The strategy focus briefs consider the strategies that government is using to handle its challenges incorporating shared services. The technology focus looks at the technology issues in shared services and how vendors can meet them.

Overview 1
Catalyst 1
Summary 1
Executive Summary 2
Introduction 2
Shared Services and the Future of Technology Adoption in Government (Market Focus) 2
Understanding Shared Services Opportunities in Government (Strategy Focus) 2
Meeting the Technology Challenge of Shared Services in Government (Technology Focus) 3
Shared Services and Outsourcing in US and European Government (Databook) 3
Table of Contents 4
Table of figures 5
Table of tables 6
Shared Services and the Future of Technology Adoption in Government (Market Focus) 7
Summary 7
Policy makers are increasingly interested in making use of shared IT services 7
Shared services are an approach to business organization 8
Shared services can be formed using a variety of different structures 8
Shared services has strong benefits as an approach to IT intensive business functions 10
Government is under pressure to realize the benefits of IT systems 10
IT investment in the public sector is low, but current circumstances present reorganization opportunities 12
Investments in eGovernment left the back office untouched, but created another pressure for change 13
Shared services have the potential to generate significant demand for IT solutions and services 14
Strong political will is vital to the success of shared services in the public sector 15
Wait and see culture will hold up the adoption of shared services 15
Managers have little incentive to share services without pressure from above 15
Shared services projects will form an increasing proportion of IT services revenue 16
European public sector IT services spending set to almost equal the US by 2012 16
Outsourcing will form an increasing component of shared services projects 17
Revenue for IT services vendors from shared services will grow by 26% CAGR in the next five years 18
Actions 19
Understanding government need is vital to taking advantage of shared services 19
Vendors need to provide a clear business case and successful case studies 19
Understanding Shared Services Opportunities in Government (Strategy Focus) 21
Summary 21
Most governments are considering the employment of a shared services strategy 21
The Canadian experience has both positive and negative lessons for other governments 21
The approach, the service in question and the right structure will determine strategy 22
Leadership and governance will be crucial to the success 22
Clear top down drive is vital to the realization of shared services 23
The structure for governing the system is as important as the physical infrastructure 24
Agreed technological standards for the common platform are essential 25
Most shared services are driven by agency specific changes 25
A shared service approach will migrate to higher value functions 26
Business functions with wide use and the potential for automation will deliver the greatest savings 27
Human resource and financial functions are common shared service targets in the medium term 27
Shared services will evolve over time to incorporate higher value functions 29
ACTIONS 31
Governments need to put in place the right leadership and governance for success 31
Vendors need to target the right opportunities for the short, medium and longer term 31
Meeting the Technology Challenge of Shared Services in Government (Technology Focus) 32
Summary 32
Shared services will generate demand for a wide range of IT services 32
Standardization is the main technology challenge facing governments adopting a shared service 32
Shared services will generate demand for a wide range of IT services 33
The medium term opportunities from shared services will come from outsourcing 34
A wide variety of shared service models will be used to meet different business needs 35
Political considerations can be as important as maximizing value in the choice of model 36
Financial considerations will not be limited to total cost 36
Existing assets will play a key role 36
The level and type of government agencies will shape the controls required 37
Broad and narrow political interest will be decisive 37
Vendors need to carefully examine the consequences of a particular contract structure 37
Many government agencies will move slowly up the solutions stack with shared services 38
Slow creep experiments with sharing will begin at a pure infrastructure level 38
The spread of service orientated architecture (SOA) will drive shared services 39
Compatibility and integration are the key prerequisites of successful shared services 40
Actions 41
Adapting to the right shared service model will be crucial to success 41
Vendors will need to offer government the scale to cope with their technology needs 41
Pursing an SOA technology story will help in wining shared services deals 41
Shared Services and Outsourcing in US and European Government (Databook) 43
Introduction 43
Total IT services revenue in the United States by type of service, 2006 to 2012 43
IT services revenue from shared services projects in the United States by type of service, 2006 to 2012 45
Total IT services revenue in the United States by sector of government, 2006 to 2012 46
IT services revenue from shared services projects in the United States by sector of government, 2006 to 2012 47
Total IT services revenue in Europe by region, 2006 to 2012 48
IT services revenue from shared services projects in Europe by region, 2006 to 2012 51
Total IT services revenue in the United Kingdom by type of service, 2006 to 2012 53
IT services revenue from shared services projects in the United Kingdom by type of service, 2006 to 2012 55
Total IT services revenue in the United Kingdom by sector of government, 2006 to 2012 57
IT services revenue from shared services projects in the United Kingdom by sector of government, 2006 to 2012 58
Total IT services revenue in France by type of service, 2006 to 2012 59
IT services revenue from shared services projects in France by type of service, 2006 to 2012 60
Total IT services revenue in France by sector of government, 2006 to 2012 61
IT services revenue from shared services projects in France by sector of government, 2006 to 2012 62
Total IT services revenue in Germany by type of service, 2006 to 2012 64
IT services revenue from shared services projects in Germany by type of service, 2006 to 2012 65
Total IT services revenue in Germany by sector of government, 2006 to 2012 66
IT services revenue from shared services projects in Germany by sector of government, 2006 to 2012 67
Total IT services revenue in Nordics by type of service, 2006 to 2012 68
IT services revenue from shared services projects in Nordics by type of service, 2006 to 2012 69
Total IT services revenue in Nordics by sector of government, 2006 to 2012 70
IT services revenue from shared services projects in Nordics by sector of government, 2006 to 2012 71
Total IT services revenue in Benelux by type of service, 2006 to 2012 72
IT services revenue from shared services projects in Benelux by type of service, 2006 to 2012 73
Total IT services revenue in Benelux by sector of government, 2006 to 2012 74
IT services revenue from shared services projects in Benelux by sector of government, 2006 to 2012 75
Total IT services revenue in Italy by type of service, 2006 to 2012 77
IT services revenue from shared services projects in Italy by type of service, 2006 to 2012 78
Total IT services revenue in Italy by sector of government, 2006 to 2012 79
IT services revenue from shared services projects in Italy by sector of government, 2006 to 2012 80
Total IT services revenue in Spain by type of service, 2006 to 2012 81
IT services revenue from shared services projects in Spain by type of service, 2006 to 2012 82
Total IT services revenue in Spain by sector of government, 2006 to 2012 83
IT services revenue from shared services projects in Spain by sector of government, 2006 to 2012 84
Total IT services revenue in Rest of Western Europe by type of service, 2006 to 2012 85
IT services revenue from shared services projects in Rest of Western Europe by type of service, 2006 to 2012 86
Total IT services revenue in Rest of Western Europe by sector of government, 2006 to 2012 87
IT services revenue from shared services projects in Rest of Western Europe by sector of government, 2006 to 2012 88
Total IT services revenue in Eastern Europe by type of service, 2006 to 2012 89
IT services revenue from shared services projects in Eastern Europe by type of service, 2006 to 2012 91
Total IT services revenue in Eastern Europe by sector of government, 2006 to 2012 92
IT services revenue from shared services projects in Eastern Europe by sector of government, 2006 to 2012 93
APPENDIX 95
Definitions 95
Methodology 95
Further reading 95
Ask the analyst 96
Datamonitor consulting 96
Disclaimer 96
List of Tables
Table 1: Total IT services revenue in the United States by type of service, 2006 to 2012 44
Table 2: IT services revenue from shared services projects in the United States by type of service, 2006 to 2012 46
Table 3: Total IT services revenue in the United States by sector of government, 2006 to 2012 47
Table 4: IT services revenue from shared services projects in the United States by sector of government, 2006 to 2012 48
Table 5: Total IT services revenue in Europe by region, 2006 to 2012 50
Table 6: IT services revenue from shared services projects in Europe by region, 2006 to 2012 52
Table 7: Total IT services revenue in the United Kingdom by type of service, 2006 to 2012 54
Table 8: IT services revenue from shared services projects in the United Kingdom by type of service, 2006 to 2012 56
Table 9: Total IT services revenue in the United Kingdom by sector of government, 2006 to 2012 57
Table 10: IT services revenue from shared services projects in the United States by sector of government, 2006 to 2012 59
Table 11: Total IT services revenue in France by type of service, 2006 to 2012 60
Table 12: IT services revenue from shared services projects in France by type of service, 2006 to 2012 61
Table 13: Total IT services revenue in France by sector of government, 2006 to 2012 62
Table 14: IT services revenue from shared services projects in France by sector of government, 2006 to 2012 63
Table 15: Total IT services revenue in Germany by type of service, 2006 to 2012 64
Table 16: IT services revenue from shared services projects in Germany by type of service, 2006 to 2012 65
Table 17: Total IT services revenue in Germany by sector of government, 2006 to 2012 66
Table 18: IT services revenue from shared services projects in Germany by sector of government, 2006 to 2012 67
Table 19: Total IT services revenue in Nordics by type of service, 2006 to 2012 68
Table 20: IT services revenue from shared services projects in Nordics by type of service, 2006 to 2012 69
Table 21: Total IT services revenue in Nordics by sector of government, 2006 to 2012 70
Table 22: IT services revenue from shared services projects in Nordics by sector of government, 2006 to 2012 71
Table 23: Total IT services revenue in Benelux by type of service, 2006 to 2012 73
Table 24: IT services revenue from shared services projects in Benelux by type of service, 2006 to 2012 74
Table 25: Total IT services revenue in Benelux by sector of government, 2006 to 2012 75
Table 26: IT services revenue from shared services projects in Benelux by sector of government, 2006 to 2012 76
Table 27: Total IT services revenue in Italy by type of service, 2006 to 2012 77
Table 28: IT services revenue from shared services projects in Italy by type of service, 2006 to 2012 78
Table 29: Total IT services revenue in Italy by sector of government, 2006 to 2012 79
Table 30: IT services revenue from shared services projects in Italy by sector of government, 2006 to 2012 80
Table 31: Total IT services revenue in Spain by type of service, 2006 to 2012 81
Table 32: IT services revenue from shared services projects in Spain by type of service, 2006 to 2012 82
Table 33: Total IT services revenue in Spain by sector of government, 2006 to 2012 83
Table 34: IT services revenue from shared services projects in Spain by sector of government, 2006 to 2012 84
Table 35: Total IT services revenue in Rest of Western Europe by type of service, 2006 to 2012 85
Table 36: IT services revenue from shared services projects in Rest of Western Europe by type of service, 2006 to 2012 86
Table 37: Total IT services revenue in Rest of Western Europe by sector of government, 2006 to 2012 87
Table 38: IT services revenue from shared services projects in Rest of Western Europe by sector of government, 2006 to 2012 89
Table 39: Total IT services revenue in Eastern Europe by type of service, 2006 to 2012 90
Table 40: IT services revenue from shared services projects in Eastern Europe by type of service, 2006 to 2012 91
Table 41: Total IT services revenue in Eastern Europe by sector of government, 2006 to 2012 92
Table 42: IT services revenue from shared services projects in Eastern Europe by sector of government, 2006 to 2012 93
List of Figures
Figure 1: Five common structures for shared services 9
Figure 2: Pressure to do more with less 11
Figure 3: Extent to which institutions currently have or use enterprise applications 12
Figure 4: Total spending on IT services by the public sector by geography 17
Figure 5: Proportion of IT services revenue from shared services projects in 2012 18
Figure 6: IT services revenue from shared services projects, by government sub-sector, 2006-2012 19
Figure 7: Overlapping factors for a successful shared service 23
Figure 8: Types of function and their correspondence with the criteria for success in shared services 29
Figure 9: The evolution of shared services over time 30
Figure 10: IT services revenue from shared services projects 35
Figure 11: Slow creep up the solution stack 39
Figure 12: A service orientated architecture 40
Figure 13: Total IT services revenue in the United States by type of service, 2006 to 2012 43
Figure 14: IT services revenue from shared services projects in the United States by type of service, 2006 to 2012 45
Figure 15: Total IT services revenue in the United States by sector of government, 2006 to 2012 46
Figure 16: IT services revenue from shared services projects in the United States by sector of government, 2006 to 2012 47
Figure 17: Total IT services revenue in Europe by region, 2006 to 2012 49
Figure 18: IT services revenue from shared services projects in Europe by region, 2006 to 2012 51
Figure 19: Total IT services revenue in the United Kingdom by type of service, 2006 to 2012 53
Figure 20: IT services revenue from shared services projects in the United Kingdom by type of service, 2006 to 2012 55
Figure 21: Total IT services revenue in the United States by sector of government, 2006 to 2012 57
Figure 22: IT services revenue from shared services projects in the United States by sector of government, 2006 to 2012 58
Figure 23: Total IT services revenue in France by type of service, 2006 to 2012 59
Figure 24: IT services revenue from shared services projects in France by type of service, 2006 to 2012 60
Figure 25: Total IT services revenue in France by sector of government, 2006 to 2012 61
Figure 26: IT services revenue from shared services projects in France by sector of government, 2006 to 2012 62
Figure 27: Total IT services revenue in Germany by type of service, 2006 to 2012 64
Figure 28: IT services revenue from shared services projects in Germany by type of service, 2006 to 2012 65
Figure 29: Total IT services revenue in Germany by sector of government, 2006 to 2012 66
Figure 30: IT services revenue from shared services projects in Germany by sector of government, 2006 to 2012 67
Figure 31: Total IT services revenue in Nordics by type of service, 2006 to 2012 68
Figure 32: IT services revenue from shared services projects in Nordics by type of service, 2006 to 2012 69
Figure 33: Total IT services revenue in Nordics by sector of government, 2006 to 2012 70
Figure 34: IT services revenue from shared services projects in Nordics by sector of government, 2006 to 2012 71
Figure 35: Total IT services revenue in Benelux by type of service, 2006 to 2012 72
Figure 36: IT services revenue from shared services projects in Benelux by type of service, 2006 to 2012 73
Figure 37: Total IT services revenue in Benelux by sector of government, 2006 to 2012 74
Figure 38: IT services revenue from shared services projects in Benelux by sector of government, 2006 to 2012 75
Figure 39: Total IT services revenue in Italy by type of service, 2006 to 2012 77
Figure 40: IT services revenue from shared services projects in Italy by type of service, 2006 to 2012 78
Figure 41: Total IT services revenue in Italy by sector of government, 2006 to 2012 79
Figure 42: IT services revenue from shared services projects in Italy by sector of government, 2006 to 2012 80
Figure 43: Total IT services revenue in Spain by type of service, 2006 to 2012 81
Figure 44: IT services revenue from shared services projects in Spain by type of service, 2006 to 2012 82
Figure 45: Total IT services revenue in Spain by sector of government, 2006 to 2012 83
Figure 46: IT services revenue from shared services projects in Spain by sector of government, 2006 to 2012 84
Figure 47: Total IT services revenue in Rest of Western Europe by type of service, 2006 to 2012 85
Figure 48: IT services revenue from shared services projects in Rest of Western Europe by type of service, 2006 to 2012 86
Figure 49: Total IT services revenue in Rest of Western Europe by sector of government, 2006 to 2012 87
Figure 50: IT services revenue from shared services projects in Rest of Western Europe by sector of government, 2006 to 2012 88
Figure 51: Total IT services revenue in Eastern Europe by type of service, 2006 to 2012 89
Figure 52: IT services revenue from shared services projects in Eastern Europe by type of service, 2006 to 2012 91
Figure 53: Total IT services revenue in Eastern Europe by sector of government, 2006 to 2012 92
Figure 54: IT services revenue from shared services projects in Eastern Europe by sector of government, 2006 to 2012 93