©2010 HP Confidential1©2011 HP Confidential1 OPEN DAYS 2011 HP Workshop PPP - New business models...

©2010 HP Confidential1 ©2011 HP Confidential1

OPEN DAYS 2011HP Workshop

PPP - New business models in ICT intensive public services delivery

Sasha BezuhanovaDirector of Public Sector Sales Central Eastern Europe, HP11 October 2011

©2010 HP Confidential2

People (all of us) need more and higher quality public services to live better life


Government try hard to keep up

But they need support from private sector

– to provide moremore and better better

services at either the same or

reduced levels of fundingfunding

– by implementing ICT with raising

complexity complexity and difficulty

– and managing substantial risks risks in

planning, building and operating

complex IT programs that often

result in increased costs, delays

and unsatisfactory results


PPP main characteristics– Long-term contracts between a public contracting

authority and a private sector company on the procurement of services

– Focus on the specification of project outputs rather than project inputs in order to deliver better value for money

– Payments reflect the services delivered (outcomes)

– Transfer of certain project risks to the private sector (design, build, operate and/or finance) with use of private financing

– Typically large projects with a significant build component - projects below a certain threshold 25 M€ do not justify the additional transactional cost associated to PPP


• Quality and value of services to citizens and businesses

• PPP as a government transformation engine• Practical implementation of PPP• Obstacles in front of PPP in EU and possible

solutions

Workshop Topics


Quality of services to citizens and businesses– High quality public services

– delivered with efficiency

– by trusted institutions

– in the pursuit of improved socioeconomic outcomes for everyone


Technology innovation

Efficiency of IT

Quality of services

• Technology capabilities• Best practices

• Lower initial and ongoing costs• Cost transparency• Flexible cost base (e.g. usage-based pricing)

• IT contracts for outputs and outcomes

Three main reasons for public sector to transform


Fiscal pressures drive the need to adopt ‘disruptive’ solutionsc

Disruptive Technologies

DisruptiveProcurement

Disruptive Business Models

•Role-based computing (thin/thick client)

•Cloud infrastructure

•Buying outcomes/outputs

•Pay-per-use•Joint-

procurement

•Shared services•Outsourcing •Participative

services


Business Outcomes

Risk and profit sharing

Business Outputs

Business process outsourcing

IT Outcomes (usage-based)

IT services

IT Outputs IT outsourcing

IT Inputs Systems and components

IT integration

1995 2000 2005 2010 2015

Evolution of IT in the public administration – HP view


IT service as an utility / Business process as a service

No upfront investment, OPEX, predictable pricing – can bring positive cash flow at the start

Service levels dynamically adjusted to business priorities

Professional management: High quality, industry standards, Compliance, Security and Business continuity

Suppliers can take full care of Staffing & Capacity risks, Technology risks, upgrades and renewals and other operational risks

Financial risk and benefits sharing as an option

Benefits for the public sector clients


“Classical” PPP IT intensive public service Government cloud ICT PPP engagement models

Large construction or other public

infrastructures (e.g. highways, hospitals,

schools, environment)

Concession of an IT intensive business process (e.g. claim

processing, revenue/tax collection,

ID/cards issuance/processing)

HP business process outsourcing – direct participation in PPP

Building and operating government cloud and

providing cloud services to the

government and the public

HP jointly with governments exploring new business models

around PPP

HP typically as a subcontractor for the IT

component (IT outsourcing - not direct

participant in PPP)


HP experiences with ITO, BPO and PPP


HP Public Sector BPO/PPP credentials

•Claim processing •Fraud waste and abuse services•HP has provided support services to Medicare and Medicaid clients for 44 years, handling 35 percent of all Medicare and Medicaid claims in the United States and processing 2.4 billion healthcare transactions annually, including 1 billion in healthcare claims

•British Columbia Ministry of Small Business and Revenue

•Ontario Tourism•Bank of Canada

•Revenue collection

•Call centre and document fulfilment•Retail Debt Operations

•HR transactions

•Electronic benefit payment•Electronic payment card•Security Management & document management

•Electronic data exchange with employers & cheque processing

•Procurement services

•Service Personnel and Veterans Agency

•Post Office•Transport for London•Department for Work and Pensions

•Her Majesty’s Revenue & Customs

•Various departments

•Support c. 20 US State and Federal Government agencies


ChallengeThe government wanted to reduce the administrative burden on citizensApproximately 55 percent of Belgium’s 10 million citizens are Flemish and residein Flanders, the nation’s northern Dutch-speaking region. Yet, regardless of whereone lives, Belgium affords every child the birthright of government subsidization tosupport and strengthen the family unit. Whether they are infants or young adults bound for college, children are entitled to benefits as long as the correct paperwork is filed on their behalf. However, with 75 disparate agencies and departments in the Flemish administration, purchasing a bus pass or applying for child benefits often required submitting the same information to multiple agencies at multiple times.

SOA Platform for Flemish government MAGDA

SolutionA team of 20 HP specialists contributed to the service-oriented architecture (SOA) project. They are part of a consortium, managing up to 100 simultaneous projects on any given day at the Flemish Government. After an initial assessment, HP started working on the core solution, a state-of-the-art, inter-agency data exchange platform known as Maximum Data Sharing Between Administrations and Agencies (MAGDA). MAGDA is supported by HP’ SOA, which provides one common Web services platform for the Flemish government’s 75 agencies and departmentsBenefitsWith data centralized and stored in one place, all communications with citizens are focused and deliberate, minimizing correspondence and duplicate requestsfor information. Citizens simply have to enter personal data once and can expect their information to be consistent, up-to-date and complete across all of the agencies with which they interact.


Scope

Service Personnel and Veterans Agency - 1,400 fewer posts and £100m savings p.a. HP provides payroll, pensions and HR administration services.

Across all three branches of the armed forces, during wartime, HP replaced 250+ bespoke HR systems with a single COTS application, giving a better service to end users whilst saving £100m a year and eliminating 1,400 posts

Method

Shared Responsibility•Partnership aligned to business interests.•Supplier added risk sharing arrangement,

performance incentives & dispute resolution mechanism.

Choosing the right partner•Understand each other’s business.•Client chose partner with cultural fit,

proven track record in integrating IT solutions and administrative processes.

Effective Business Change•Dedicated, tripartite team•Supplier, Client and Union

Client let go•Consolidation & harmonisation of

systems.•Three forces embraced tri-service

working practices, supported by a new compensation & pay system.

Streamlined, modernised, standardised•Modernised, refreshed IT infrastructure•Gradual phase-out of legacy systems

as new enterprise-wide personneladministration system rolled out

Management Information•Considerable potential to produce

management information leadingto more informed decision-making


Transport for London The Business Issue– There are more than 3 billion journeys on London’s bus and tube network each year.

– Transport for London (TfL) set out on a mammoth mission to reduce fraud and queues in its Underground stations, expand its ticket offerings and improve the reliability and availability of ticketing machines. For its bus operations, TfL wanted to replace outmoded ticketing equipment, improve revenue tracking and reduce cash handling

– EDS, now HP has connected all of the network’s upgraded devices, giving TFL access to consistent network wide journey and sales data.

– We are responsible for the distribution and quality control of the smartcards as well as the marketing program and the recruitment and performance of the agent sales network across London, now 4000 strong

– In 1998, lost ticketing revenue amounted to £43 million, or 3.7 percept of total revenue, by the end of 1999, once stations had been gated, it had dropped to 2 percept.

– The system allows faster passenger movement so there’s less congestion at busy times

– We have issued more than 6 million cards

– Customers consistently report how pleased they are with the smartcard scheme and the convenience it provides

Transport for London

decided to replace its life-

expired ticketing

equipment on its bus and

Underground network with

an integrated ticketing

and revenue system. It

chose the EDS (now HP)

consortium

Logo

HP approach

The Results


Canada British Columbia - Ministry of Finance

– Need to increase revenue collection but at the same time lack of funding to modernise systems and services

– MoF outsourced collection of overdue receivables and payment processing to HP

– HP developed potential to perform collection for more than 40 government revenue sources

– HP designed, built and implemented Revenue Management System to automate account, bill pay and collect functions

– HP and MoF are on track to net benefits of ~$500 M over 12 years

– Customer service metrics have all improved

– The HP model allows investment in technology to be shared across different programmes and enables multiple debts to be collected from the same debtor

BUSINESS GOAL SOLUTION BENEFITS

Revenue Collection

Province of British ColumbiaMinistry of Finance


Chalanges and recommendations

– Outsourcing of a well defined functionalities or processes where SLA’s can be precisely described helps significantly reduce pricing and delivery risks on both sides (Due diligence process)

– Sourcing is a skill that governments need to develop over time

– The benefits of outsourcing contracts can be best reaped on longer term contracts -> long term partnerships (vs. vendor lock-in)

– Outsourcing in the public sector has specific complexities (compliance, on-shore, data protection, performance measures etc.) – but these can be overcome

What to watch when examining sourcing options for governments


Toward Citizen–centric Government

– Long term ICT Strategy with focus on public value

– Holistic approach in combination with quick tangible results

– Reduced costs and increased efficiency trough Process optimizationProcess optimization

– Shared services and Cloud as a transformation engine

– is the Company in ITO/BPO ready to engage andshare the risk and help transformation


Speakers


Speakers• Sasha Bezuhanova• HP Director of Public Sector Sales, Central Eastern Europe• Geert Mareels• Flemish Government e-government Manager• Paul Timmers• European Commission Director - ICT addressing Societal Challenges

(Information Society & Media Directorate General) • Dinand Tinholt• Capgemini, Vice President, Global EU Lead. Project Director of

SPOCS (Simple Procedures Online for Cross- Border Services)• Francesco Totaro• EIB Advisor to the European PPP Expertise Centre


Geert MareelsFlemish Government e-government Manager

• eGovernment transformation drivers• Quality public services trough information technology• Present status of eGovernment in Flemish Government• Practical ICT implementation models• Partnership with private sector towards efficiency and quality


Paul TimmersEuropean Commission Director - ICT addressing Societal Challenges (Information Society & Media Directorate General)

• Quality public services trough PPP• EU PPP programs and policies in ICT• Practical partnering models• Communication EU-to-regions and regions-to-EU• EU driven ICT projects and deployment in regions


Dinand TinholtCapgemini, Vice President, Global EU Lead. Project Director of SPOCS (Simple Procedures Online for Cross- Border Services)

• Present status of SPOCS project• Current issues and challenges in implementation• Legal, administrative and technology overview• PPP implementation models in evaluation


Francesco TotaroEIB Advisor to the European PPP Expertise Centre• State need to own and control tangible and intangible assets

and staff required to deliver a service • State need to exercise and control the process of delivering

public service• Transfer of risks from the state to the and external provider,

which risks can be managed by business and what new risks do new models bring

• Constraints and caveats in introducing new public service financing models

• Examples and best practices of establishing balance between public sector and ICT industry


End

©2010 HP Confidential1©2011 HP Confidential1 OPEN DAYS 2011 HP Workshop PPP - New business models...

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