Shared Services to Help Unlock USD$3.3 Trillion in Government Cash
Worldwide
Research by A.T. Kearney Shows Public Sector Is Using Technology to
Help Improve Productivity and Provide New Benefits tor Citizens
LONDON -- (MARKET WIRE) -- July 03, 2007 -- The image of the public
sector as slow to innovate is rapidly becoming a thing of the past as
governments are using advanced technology to consolidate back-office
functions, a report released today concludes. The "Shared Services in
Government 2: Building a Platform for Better Public Services at Lower
Cost" study, conducted independently by A.T. Kearney with sponsorship
from Cisco® (NASDAQ: CSCO), has uncovered major service improvements
and cost reductions as a result of "shared services." When shared
services are employed, agencies across government organisations
create shared access to functions such as finance or IT, instead of
having to gather information from and work with separate departments.
Based on data from the Gershon Report in the United Kingdom and
statistics from the Australian National Office for the Information
Economy, Cisco estimates that the total government savings from the
use of shared services could amount to USD$3.3 trillion worldwide
over 10 years (1) -- equal to the amount spent annually on healthcare
worldwide in 2005 (2) or the estimated cost of the United States'
entire federal budget for 2008. (3)
The A.T. Kearney report, which looked at nine countries, suggests
that government organisations which have embraced shared services may
be close to getting their share of this windfall, although there are
clear differences in the extent to which benefits are passed on to
citizens.
In seven of the nine geographies studied -- Australia, Austria,
Germany, the Netherlands, New Zealand, the United Kingdom and the
United States -- the primary focus shared services initiatives is to
cut costs to reduce the burden on taxpayers and balance government
accounts. In Canada, however, there is an additional focus on
improving citizen services, which A.T. Kearney has identified as a
best practice.
"In previous research on shared services in government, we have noted
the case for change and the historic opportunity facing the public
sector," said Ian Morton, Principal Consultant and project leader at
A.T. Kearney. "We have now found that although cost reduction remains
the most significant factor leading government organisations to
combine and share back- and front-office functions, improving
services to citizens is becoming increasingly important, with Canada
taking a lead in many facets of transformation. In addition, the
business case is much better than previously thought, with benefits
being targeted in the 15 to 25 percent range."
The independent A.T. Kearney research, which follows a similar study
carried out in 2005, involved 25 in-depth interviews with chief
executives, chief information officers and programme directors. The
2007 study highlights good and bad practice and offers advice and
frameworks to improve the implementation of shared services
initiatives. The report concludes that, while the major cost benefits
to government were down to headcount reduction, the second most
important contribution was from IT contract and service
consolidation.
"It is clear that technology is both a crucial enabler of and major
target for shared services initiatives," said Yvon Le Roux, Vice
President, Public Sector for Cisco in European markets. "One of the
more interesting findings in the study is that there is often a
mismatch between IT strategies and the real demands of the citizen.
For example, half the organisations surveyed are investing in
automated telephone systems even though research shows only six
percent of citizens would use it. A.T. Kearney has identified that
the critical technologies to enable shared services will help lead to
improved communications, greater collaboration and increased
productivity. Targeting these areas will clearly be of vital
importance to governments in the face of greater financial pressures
and increased legislation to improve citizen services."
About Cisco
Cisco Systems, Inc. (NASDAQ: CSCO) is the worldwide leader in
networking for the Internet. Information on Cisco can be found at
http://www.cisco.com. For ongoing news, please go to
http://newsroom.cisco.com.
A.T. Kearney Ltd. is a management consulting firm that delivers
professional services in: strategy, transformation, technology and
operations improvement. To access their website please go to
www.atkearney.com
Appendix
1. Reference: IBSG presentation on Government Productivity Lags,
provided by Carolyn Purcell
2. Reference:
http://seattlepi.nwsource.com/opinion/251495_blued.asp
3. Reference: http://www.fcnl.org/budget
Cisco, the Cisco logo and Cisco Systems, are registered trademarks of
Cisco Systems, Inc. and/or its affiliates in the U.S. and certain
other countries. All other trademarks mentioned in this document are
the property of their respective owners.
For direct RSS Feeds of all Cisco news, please visit "News@Cisco" at
the following link:
http://newsroom.cisco.com/dlls/podcasts/rss.html
Press Contact:
Alison Stokes
Cisco Systems, Inc.
+44 20 8824 0926
astokes@cisco.com
Investor Relations Contact:
Andreas Goldau
Cisco Systems, Inc.
+44 20 8824 8209
agoldau@cisco.com
Analyst Contact:
David Taylor
Cisco Systems, Inc.
+44 20 8824 0926
dwtaylor@cisco.com