Award-Winner Interview: Steve Hodgson, HMPS

(In May 2008, just over two years after its launch, Her Majesty's Prison Service (HMPS) of the UK won Best New Shared Services Organization at the 2008 Shared Services Excellence Awards for Europe. SSON spoke with Steve Hodgson, Head of Shared Services, about the journey from planning to prize-winning - and what's around the corner for an "exemplary" SSO.)

SSON: Can we have a bit of background, Steve? Tell us about how the HMPS journey began and how you got involved.

Steve Hodgson: I joined HMPS in 2005 to establish a shared service for them, which is how and when I became involved. The Prison Service had a program to transform its support functions (HR, procurement and finance functions); this program was set up with shared services and an ERP solution at its heart with a go-live date of April 2006. Its objectives were to improve the service, and to reduce the cost of the service, whilst also enabling improved performance in its mainstream business through better control systems, and better management information. That was the objective.

SSON: Who had ownership of this program – where was the impetus for change coming from?

SH: In particular, the board of the Prison Service. Obviously the functional directors – the finance director, the procurement director, the HR director – had a particular interest in their own areas, but they all needed a similar capability which was a shared service and the IT that underpinned it.

SSON: What’s the governance structure?

SH: If I tell you the history of it, it’ll make more sense! Although it was originally conceived as a shared service for the Prison Service, during 2006 we agreed that we would begin to deliver services for the Home Office, which is a separate government department now. That went live in February this year. That puts some context on your question about how it’s governed. It’s a cost centre within the Prison Service and it’s part of the finance function – that’s just somewhere for it to reside really. We have a Service Level Agreement with the customers – so one with the Prison Service and one with the Home Office – and alongside that SLA, which defines the services and the standards to which they’ll be delivered, there is a budget allocation to cover the cost of it. So the service and cost are governed through that process.

The processes are aligned through what we call a policy gateway; so for example how we transact HR transactions, is aligned with HR policy, and there’s a similar set-up for finance and procurement. That’s the point at which we discuss with the policy owners, or agree with the policy owners in the business, any change in process which impacts on policy, and where any change in policy which impacts on process is brokered.

SSON: What’s your role? Whereabouts do you fit in that process? 

SH: I’m the Head of Shared Service, so I’m responsible for running the shared service operation. I report to the finance director in the Prison Service, but I also report to a steering board made up of board members from the Prison Service and board members from the Home Office. The steering board is the overarching governance.

SSON: Where are you based and how many employees do you have currently?

SH: In shared services we currently have somewhere in the order of 800 employees. Of those approximately 500 are based in Newport in South Wales, which is the shared service centre, and of those 500 just under 400 are at work in the Prison Service account and just over 100 – rising to 240 by the end of this year – deal with the Home Office account. We also run a prison service training college in a place called Newbold Revel, near Rugby, and that is a big training centre where predominantly we train new prison officers; there are about 100 employees there.

Then the rest of the staff are based in one of the following three operations: field-based teams, which is where the recruiters are (we recruit people out across the UK; we don’t keep recruiters in the SSC, they’re geographically based); regionally-based trainers, to deliver training where it needs to be delivered close to the point of use; and we have a number of purchasing teams who do low-value high-volume transactions for things which cannot be bought from catalogue. We run i-procurement so the vast majority of transactions go through self-service, but if you can’t get it on a catalogue and you can’t use your purchasing card you can raise a non-catalogue requisition, which is a manual transaction. We do those.

SSON: Were these installations built to order or did you occupy existing sites?

SH: The Newport one was a brand-new empty building which we kitted out, so it actually looks like a SSC. The one in Rugby looks like a cross between a stately home and a teaching college. I think there’s a hundred bedrooms – it’s something which you wouldn’t commonly find in shared services. It’s not unique but it’s unusual.

SSON: Turning to the Shared Services Excellence Awards: you won Best New Shared Services Operation of the Year 2008. What was it, do you think, that set you apart from your competitors?

SH: I think there are a couple of things really. One is the scale and pace of the change – we’ve gone from no shared service to a multi-customer, multi-service-line shared service in less than two years – at scale, so we service 75,000 employees across the Prison Service and the Home Office. I think the second one was probably the maturity of some of our practices; we already have quite a lot of automation self-service; we’ve used, since we started, Six Sigma process improvement. I think those are probably the two main reasons.

SSON: To what extent has your personal experience been a key factor in these endeavours?

SH: For me this is the third one of these that I’ve done at any scale, which obviously helps: you know what you want it to look like when you start out, so you have the end in mind from the beginning.

SSON: To do all this in two years is impressive: was that the rate which you had in mind from the start?

SH: The Prison Service had the ambition to do it at that pace. What it didn’t have was the ambition to take that second customer. So that’s the kind of ‘exceeded expectation’ element of it. The reason for doing that was that it’s reduced the Prison Service operating costs by over £2m [$4m] a year because the overhead is spread over a much wider user-base.

SSON: What kind of benchmarking have you done to measure achievement and how successful have you been in hitting your targets?

SH: We’ve benchmarked the services using PWC, so we used the PWC Saratoga benchmarks. We’ve found that in some areas we’re already upper-quartile, and in most areas we are median or better.

SSON: And how long did it take to get there?

SH: We did the benchmarking at the end of last year. The SSO was designed from the outset to run at pretty much the performance levels we’re at right now.

SSON: What have been the biggest challenges you’ve had to overcome? Obviously taking on that second customer has been a huge one…

SH: I think the biggest challenge is business change. Clearly creating one of these things, going from no people to 500 people, all trained and knowing what they’re doing; implementing pretty much a complete Oracle IT system, is tricky. But the hardest bit is business change: getting 130 jails in England and Wales – 50,000 people – to change the way they do things. For example they’ve gone from everything being paper-based and done locally, to increasing amounts of self-service all done from Wales, no local contact, in just under two years. So that’s been a tremendous change for them. And then I guess the third thing is dealing with the things that go wrong: unknown IT, unknown processes, it’s all unproven so things go wrong. Sometimes things happen that you wouldn’t expect would happen: sometimes you have too few people, the IT system doesn’t behave – all those things which are euphemistically referred to as teething problems.

SSON: Has the resistance among general staff more or less been overcome now, or is there still some way to go do you think?

SH: I think there’s still some resistance. I think the approach to what’s seen as resistance is important. We haven’t necessarily always designed a service solution which works for them. And the good news is that they’ll very soon tell you it doesn’t work, and if you change it they’ll cooperate with you. Now a lot of the services they now receive, they’ll say are better. Some were not as good when we initially implemented them, but since then we’ve used process improvements and enhancements in technology to improve those services, so we’ve filled the gaps pretty quickly.

I think that’s what takes them with you. Talk to the average prison officer and say "I run shared services: what do you want from me?" and they’ll say they want to be paid on time, they want their expenses on time, and correctly. Anything else? "Perhaps some training." This is not rocket science! If you speak to the governors, who run the jails, or the finance people or the HR people, they’ve got a much more sophisticated list of things they want, so they’re much more difficult to satisfy. It’s usually in that area that the battle is won or lost.

SSON: Where are you hoping to go over the next couple of years?

SH: I think if you’re going to run one of these with the workforce based in the UK, with civil service terms and conditions of employment, you have to achieve very high levels of productivity, because otherwise you’re not cost-effective. Our strategy is one of growth: the more users we can put on our systems, the more transactions we can put through this building: that brings unit-costs down. So we’re embarked on a strategy of growth which is what the Home Office project was all about really.

We’re currently preparing a business case to deliver some more service into the Ministry of Justice, and we’re hopeful that’ll get approval later on this year. We have the option of delivering a broader range of services to the same customer base – there’s still some administration activity that goes on in jails for example that would respond to the application of a shared service. So that’s where we’re headed.

SSON: Finally, what advice could you give to someone just embarking upon planning and implementing a large-scale shared service operation in the public sector as you have?

SH: Make sure you’ve got a team around you that knows how to do it. This is not something that should be a journey of discovery: it takes too long and it costs too much money. Set off with a clear vision and a capable team around you that already know how to do this. If you can sort that out, then you’ll probably do ok.