As a successful and established shared service, STAR Procurement was looking at growth options and future development. It therefore required expert help and experience that could be shared to explore the ‘art of the possible’.
In particular it wanted advice and guidance in terms of how STAR grows, an options appraisal approach, how growth is managed based on priorities, risks and opportunities, how it restructures itself to deliver to a wider multi-partner organisation and how it ensures the corporate governance is fit for purpose now and in the future. It is important to STAR Procurement that it continue to deliver the same high quality procurement service and savings that it is renowned for.
The challenge
During this commission, STAR Procurement secured Tameside Council as a fourth and full partner. At the same time, there continued to be significant growth in service level agreement (SLA) activity with new and existing clients, and new growth opportunities on the horizon emerged. STAR Procurement identified its growth was not only from paying clients but from leading collaborative activity which was originally predicated on an ‘quid pro quo’ expectation, but due to decreasing resources in partner organisations this was increasingly falling to STAR Procurement to lead. STAR Procurement wanted to ensure that its growth was managed and sustainable long term, while also ensuring the current business operations continued to excel.
The solution
Through the LGA Shared Service Expert Programme, STAR Procurement was able to access support from a shared service expert who worked with its senior management team on a range of aspects to help plan newly secured and for future growth:
- advised on shared service structures and particularly the importance building additional capacity in Leadership resources
- provided advice and guidance to support the successful on-boarding of Tameside Council to the Shared Service
- facilitated discussions with the STAR Board about growth options, risks and opportunities for Shared Services
- provided options on operating model/structure to accommodate future sustainable growth in terms of both participating partners and third party SLA agreements
- facilitated sessions on mobilising new partners and reviewing viability of existing partners or clients
- provided a financial assessment on the current position of STAR budget in terms of cash flow, sustainability and how it can invest in its business.
The impact
- Successful partnership with Tameside Council, increasing its portfolio to four out of the 10 Greater Manchester local authorities. This has since led to a wider offer to a clinical commissioning group and further negotiations are taking place with others.
- A new interim staff structure is in place and planning has started for a new permanent structure for 2020
- Facilitated discussions with management team and STAR Board on options for operating models and corporate structures
- a growth strategy is now in place which underpins all decisions on future growth options
- full financial appraisal in place which has now helped to further develop our budget planning/sustainability and charging policy as well as proactively investing in its business
- the return on investment has increased for the founder partners, efficiencies are being driven from economies of scale from collaborative procurement as well as operating efficiency with a leaner workforce. Immediate savings of £230,000 have already been delivered for Tameside Council in the first few months. STAR Procurement has also been able to deliver £6.3 million of ratified savings to its three founder councils so far this financial year, while also managing this growth programme. This means that STAR Procurement has now delivered over £22.5 million of ratified savings over the last five years.
How is the new approach being sustained?
The new structure is in place and through additional capacity STAR Procurement is now delivering to four partners and continuing to service a number of SLAs. The financial appraisal has helped it to better understand oits sustainable model of operation, test new thinking and plan and forecast for the future. This aids its strategic decision making. This support has enabled it to set foundations for future growth, a clear direction, an appraisal of options which best fit the STAR Procurement Partners and enables STAR Procurement to build, expand, and diversify the business. The advice and facilitated discussions has helped us understand more about the unique complexities of Shared Services as it grows and develops, and the need to consider new operating models and corporate governance structures to underpin the organisation. The knowledge has been disseminated through its new wider leadership team and also to the STAR Procurement Board.
Lessons learned
- Shared Service has a unique complexity that is not widely understood.
- The importance of investing in resources at the right level to facilitate growth and develop strong leadership is essential.
- There are many governance approaches and models of operation not ‘one size fits all’ - A clear plan is required strategically to embrace the pace of change and to ensure we succesful delivery.
Contact
Lorraine Cox, Director
07817 8821 169
[email protected]