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xx Month 2010 Local Government Chronicle xxlgcplus.com?? Local Government Chronicle 25 March 2010 lgcplus.com

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Research

ValueValue for money: latest thinking and case studies

‘Making effi ciences in an unplanned or unmanaged way can be damaging’ p18

‘The risk is always that IT is viewed solely as a cost, with organisations focused on cutting it’ p14

Services across the two councils have now been successfully shared p8

‘Before, there was a lot of maverick spending and it was diffi cult to monitor’ p16

‘‘ If you are going to share systems, you have to step back and examine your processes Paul Blantern, chief executive, Northamptonshire CC p10

LGCplus.com 10 June 2010 Local Government Chronicle 1

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Research

Value Introduction ▼

EMMA MAIEREDITOREfficiency and ‘more for less’ dominated the pre-election period as politicians sought first to promise the greatest public spending cuts, and then to protect frontline services by waging a war on ‘waste’.

Post election, the new Treasury’s deficit reduction plan began with an announcement of £6.2bn of cuts – with local government footing the bill for 20%. Meanwhile a review of all recent spending commitments leaves local government capital projects in jeopardy.

The real cuts are yet to come, and will become clear in the autumn spending review. But it is clear that the scale of the challenge ahead requires different thinking.

While an element of salami-slicing seems inevitable to meet short-term spending curbs, sustainable long-term thinking is vital. A core part of this is value – not always the lowest cost, but the best possible outcome in the long term relative to the cost.

This may mean investing now to save significantly later, with all the challenges involved in finding ways to invest when all the focus is on cuts.

It will certainly involve focusing on outcomes, not services. Where that means potentially cutting services and doing things differently,

members will need to provide strong leadership. This underpins successful resource planning, which will be crucial in the coming months.

Achieving the best outcomes from resources may mean working very differently. For many authorities, shared services offer significant potential. As Northamptonshire CC chief Paul Blantern says, you may still be able to afford the best for less by sharing. But achieving real value is not about simple joint tendering – vision, priorities and desired outcomes for participating authorities must all be aligned.

Technology also offers significant promise: with the right senior-level backing, investing in the right IT now to support new ways of operating, such as remote working, could offer value in the long term.

Underpinning all of this is the workforce. Job cuts will be necessary, but the approach is all-important if the right people with the right skills are to be retained and productivity improved.

Expert writers explore these issues in more detail in this special LGC Value supplement.

significant promise: with the right senior-level backing, investing in the right IT now to

operating, such as remote working, could offer value in

Underpinning all of this is the workforce. Job cuts will be necessary, but the approach is all-important if the right

‘‘ The real cuts will become clear in the autumn spending review. But it is clear that the scale of the challenge requires different thinking


The new value for money As local authority budgets face an unprecedented squeeze, Robert Bullard looks back at what value for money has meant in the past, and argues that a fundamental rethink of service provision is needed now p4-5

The chaptersRESOURCE PLANNINGChris Pope, director of transformation at Merton LBC, explains why the traditional approach to resource allocation will not work in today’s unprecedented climate of cutbacks PLUS local authorities are delivering better services at a lower cost in innovative ways, as our case studies reveal p6-9 Chapter sponsored by Public Sector Consultants

SHARED SERVICESChief executive of Northamptonshire CC Paul Blantern on what he found were the advantages – and pitfalls – of sharing services with another local authorityPLUS case studies: three different public sector bodies, three different ways services can be shared p10-13 Chapter sponsored by Logica and Vertex

TECHNOLOGYInvestment in technology can improve efficiency, but needs to be managed carefully if it is to make a real difference, says Waltham Forest LBC’s director of ICT Graham BellPLUS case study on how Hartlepool BC reduced its costs by investing in a new finance system p14-16 Chapter sponsored by iSOFT

HUMAN RESOURCESAnne Gibson, head of human resources and organisational development at Norfolk CC, argues that as the focus on doing more with less grows, care must be taken not to overlook the effect of cutbacks on staff morale – and performance PLUS case studies on HR’s crucial role at Birmingham City Council and East Sussex CC p18-21

Agenda 1Research

Value Contents ▼

The chaptersThe chapters

The new value for money

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4 Local Government Chronicle 10 June 2010 LGCplus.com

Efficiency, best value and value for money have been the driving forces of local

government for nearly 20 years. But what do terms such as value for money actually mean in today’s financially challenging times?

To answer this it is necessary to take a look back. Increased efficiency was the undisputable goal of compulsory competitive tendering back in the 1980s. But the focus on reducing costs came at the expense of the quality of services and conditions of employment.

Best Value was then introduced to correct these problems. But it prioritised on advice – for example through the ‘4Cs’ of challenge, consult, compare and compete.

Value for money was introduced in the public spending reviews of the early 2000s. But, as the title of the 2004 Gershon efficiency review – Releasing Resources to the front line – reveals, it too was lop-sided, and was focused on getting ‘more bang for the buck’.

“There is almost a tacit admission from politicians that the Gershon era was not necessarily improving services, it was cutting funding,” says Peter Eckersley, performance improvement adviser at the Chartered Institute of Public Finance & Accountancy.

To such experts, such a misinterpretation is

What does value for money really mean?A different attitude to efficiency is needed in today’s straitened times, writes ROBERT BULLARD

measure outcomes,” says Mr Eckersley. “Unless you have well-developed indicators you can’t necessarily tell if you are having a negative impact on the quantity or quality of services.”

By giving greater weight to outcomes, Mr Eckersley thinks the comprehensive area assessment has been an improvement on comprehensive performance assessment, which mostly recorded average costs and satisfaction levels.

But he describes ‘National Indicator 179: value for money’ as “fairly irrelevant”.

‘‘ It is easy to measure inputs and whether you are spending less money, but it’s a lot harder to measure outcomes Peter Eckersley, performance improvement adviser, CIPFA

Landscape

annoying. After all, he explains, value for money has an agreed and clearly understandable definition – the 3Es. It’s about achieving a balance between economy (lower unit costs), efficiency (increased productivity) and effectiveness (the impact on outcomes).

Since the comprehensive spending review of 2007, however, the government has widened the value for money concept. It now includes looking at new ways of delivering services and making them more responsive to users’ needs; having a more radical review of spending; and working across organisations. It has been expanded to qualitative as well as quantitative measures, the consideration of equity across communities and the issue of sustainability.

“The 3Es model is a strong one,” agrees Gareth Davies, managing director for local government at the Audit Commission. The only permutation in meaning he accepts is the need to update for priorities.

For example, ‘sustainable value for money’ means taking account of whole-life costs rather than just short-term ones, as well as the wider impact of procurement decisions on carbon consumption.

Such broad terms are hard to measure. “It’s easy to measure inputs and whether you are spending less money, but it’s a lot harder to

Councils have been trying to make their services more efficient for decades


What does value for money really mean?

This is because councils are not required to break down their figures, nor are the figures checked up on.

In his view, the government introduced value for money as a way of conveying the idea that performance is improving at the same time as costs are going down – which therefore risks becoming a tainted term.

So what does value for money actually mean today? Does it simply mean doing the basics better – what prior to the election David Cameron described as councils being required to

“do more for less”? Or does it require something more innovative and creative?

Mr Davies opts firmly for the latter. “‘More for less’ suggests more of the same for less, but what we might actually need is something quite different for less – and maybe better, in terms of outcomes,” he says.

The government’s Improvement Network website gives a similar steer, emphasising that “instead of cuts in services and budgets … [it] must include innovation in service delivery, investment in technology, rationalisation of back-office functions, and organisational development”.

“Value for money for whom?” asks Mr Eckersley. Some people might be prepared to pay high council taxes for good public services; others might prefer the opposite. He therefore calls for greater input from councillors to ascertain councils’ priorities.

Across the country, councils are already exploring new ways to deliver, such as through customer-centric services, ‘lean’ or systems’ thinking and the Total Place pilots, through which councils are encouraged to take a ‘whole area’ approach to identify duplication.

Barnet LBC, for example, is exploring offering residents a no-frills, ‘easyJet’ model of basic services and the chance to pay for anything extra they want on top.

Lambeth LBC believes the answer is to involve residents in service delivery, as it has been doing for several years. The borough claims to have more tenant-managed estates than any other London council and the borough’s first parent-promoted secondary school. Residents also undertake clean-ups of derelict land, and operate a sports hub and children’s centre.

“Working co-operatively with residents means services meet their needs better and cost the council less,” says council leader Steve Reed. “It also has massive community cohesion benefits, as leadership develops and people tackle other issues as well.”

Lambeth’s John Lewis, co-operative-type ideas are not new, but the council plans to roll them out to areas such as housing, schools, youth services and community centres. A white paper with its proposals will be published shortly, which will include a council tax rebate for citizens who help with service delivery.

“Value for money is clearly going to be the dominant issue for public services,” says Mr Davies, who welcomes the “interesting thinking” being adopted by councils such as Barnet and Lambeth. His advice to councils is: “Innovate and learn from one another, and consider the specific features of your area.”

SeCurinG vaLue for money in StoCktonAchieving value for money in Stockton-on-Tees BC – for which it scored four out of four in its comprehensive area assessment – is about “having the right building blocks”, says Julie Danks, the council’s corporate director for resources.

Successive capping of council budgets at 1% has made efficiency part of Stockton’s culture, and value for money is a management competency for staff. Its three-year financial plan is flexible enough to allow heads of service to manage resources over years and to ‘invest to save’ where needed.

But work is not done in isolation. Each service is comprehensively reviewed every three years. Annual surveys review customer priorities, with services tweaked as needed. ‘Care for your area’ services were introduced after residents prioritised improving the town’s dirty streets. And sharing services with neighbouring Darlington BC has led to immediate and knock-on efficiencies.

“Achieving value for money is not rocket science,” says Ms Danks. “It’s about linking service and council planning with financial planning – being clear about priorities and resourcing them.”


Have no doubt, the need to reduce the size of the public debt will

result in some fundamental changes to the delivery of public services.

Although it will take time for the details to emerge from central government, we can be sure there will be a significant impact on the resources available at the local level.

The implication of this is that, irrespective of the strength of local strategic partnerships and the progress of initiatives such as Total Place, local authorities will need to focus on achieving value through the careful allocation of resources – and focus harder than ever before.

The traditional approach to resource allocation will no longer work. Applying savings targets across the board to budgets on an annual basis (salami-slicing, in other words) can only take you so far. A different philosophy is needed.

Resource allocation is really about the balance of investment and, while investment might be a word that feels uncomfortable in today’s economic climate, effective resource planning is about applying resources to achieve the maximum outcome in the short, medium and long term.

This temporal issue is important. Most local authorities are engaged

It’s a diffi cult balancing actManaging resources in a climate of shrinking budgets needs a fresh approach, says CHRIS POPE

FOREWORD STEPHEN PRINCE Chief executive Public Sector Consultants

Like many other travellers, I was stranded by the eruption of the Eyjafjallajökull volcano in Iceland. I had two options: try to struggle back to England, or think laterally and see it as an opportunity. I was overdue a holiday anyway and taking an (admittedly enforced) extended break would give my staff a chance to show they could run the company without me. The result was a good one for all of us.

The public sector is facing the equivalent of Eyjafjallajökull. After years of expansion it is going to have to manage with a significant reduction in expenditure. The traditional approach would be to look at

last year’s budget and find cuts. However, this is unlikely to achieve the goal of maintaining service standards while reducing costs.

Public sector staff have the same needs as everyone else: job security, an appropriate wage, scope to learn, to get paid more, the prospect of promotion and job satisfaction. To tell anyone they must be ‘cut’ or their pay needs to be reduced is not good. The way forward is to tell people that, by working together and thinking laterally, we can achieve ‘more for less’.

How can this be achieved? The traditional route of reassessing the inputs needed to create the desired outputs is still part of the equation. Next, the following approaches should be also considered:● external review, or carrying out a non-partisan assessment to see if efficiency and effectiveness can be improved● enhanced training, through which staff outputs, efficiency and effectiveness can be improved and maybe fewer inputs will be needed ● more use of external inputs so that, rather than being seen just as additional costs, they become something to improve outputs, transfer skills or even remove the need for existing posts; and● externalisation, or delivering a whole service through a partner more efficiently and effectively. In this scenario, one key is to assess what scope there is for people to gain some benefit. Perhaps they will be joining an organisation offering more, or will be spurred to move to something to which they are more suited.

When the private sector feels threatened, as it did during the recession, this often leads to increased innovation, driven in part of course simply by the ‘needs must’ imperative to make a profit. Now is the public sector’s turn to feel a different sort of threat. The challenge is whether it can respond in the same innovative way.

The public sector’s very own volcano

FOREWORD SUPPLIED BY

Resource planning ▼

‘‘ When the private sector feels threatened, this often leads to increased innovation. The challenge is whether the public sector can respond in the same innovative way

ALAM

Y


It’s a diffi cult balancing act

assumptions about, the resource envelope that will be available.

Local authority income comes from a variety of sources and ring-fencing arrangements vary, so clarity is essential during this first stage.

Next, it is essential to understand what must be provided (statutory services), what is optional and what is simply ‘nice to have’. This will help focus decision-making as it becomes more challenging, with non-statutory services often those that affect the majority of residents and which contribute most to the local ‘feel-good’ factor.

Anticipating demand for services is also a prerequisite. An ageing population and increasing public awareness over child protection issues are two areas that are having an impact on the demand for services and which might require additional resources.

The final piece of the information jigsaw is risk. Risk can only be managed effectively by the application of resources, and so understanding the risks associated with delivering services helps shape the resource picture.

Only when we know the total resources available, what choices we have over the types of services we need to deliver, how demand will change over time and the relative service risks are we able to make strategic-level

decisions about shifting resources from one service to another to achieve the overall desired outcome(s). And we should make those decisions in the context of a longer planning horizon.

Resource planning is, however, an iterative process – the final plan is unlikely to resemble the first draft because practical delivery issues have yet to be taken into account.

But from the initial plan the impact of changes to the resources allocated to a particular service can be considered, setting the baseline for what needs to be done to transform the service.

Provided changes can be identified that will transform the service within the resources available, then all is well. If not, then the overall balance of investment will need to be adjusted to take into account what is achievable.

Taking a longer-term, strategic approach to resource planning, one that incorporates balance of investment thinking, is essential if local authorities are to deliver quality and value in today’s climate.

The challenges of such an approach should not be underestimated. But they are challenges which the bravest and best will, I am sure, rise to with alacrity.

Chris Pope is director of transformation, Merton LBC

‘‘ Taking a longer-term, strategic approach to resource planning is essential if local authorities are to deliver quality and value

in transformation programmes of some shape or form and additional investment is necessary to achieve down-stream economies and efficiencies.

However, in an annualised resource planning framework, there is often insufficient confidence in future savings to support investment from reserves and balances – or the notion of ‘spend to save’. This argues for a longer-term approach to resource planning with, for example, a four-year horizon not out of the question.

Getting the balance of investment right requires a strategic approach. It starts with knowing, or at least making reasonable


Watford BC and Three Rivers DC: successful shared servicesTwo years ago, neighbouring Watford BC and Three Rivers DC had common aspirations to increase the efficiency, improve the resilience and raise the performance and quality of four of their services – human resources, IT, finance, and revenues and benefits. And as part of what they now view as ‘a significant value for money initiative’, the services across the two councils have been successfully shared.

“We didn’t just plough into the project regardless of other options,” explains Tricia Taylor, Watford’s executive director of resources, who led the project with David Gardner, director of corporate resources and governance at Three Rivers.

“We did a market test of the four services first, but no private sector company offered to deliver better savings … and our members backed staff to deliver,” she adds.

A strong business case was prepared and the implementation plan has now been executed.

There were set-up costs of £2.7m to purchase common IT systems and to fund a programme team – but these were internal appointments rather than consultants.

There were several challenges to the project. It had to be ‘sold’ to staff on the basis that, by widening their

Whether it’s by teaming up or focusing on steady change, councils are finding what works for them, writes robert bullard

t

briefs, it would be good for their careers in the long term.

The councils themselves placed different emphases on the project objectives. Ms Taylor says: “We had more ‘fat’ to pare away, but Three Rivers were already down to the bone.”

In addition, services in the two councils were not completely aligned.

Creating a new culture was the final challenge. “We did not realise how different we were,” says Ms Taylor.

She is proud of what has been achieved. The four services were merged on time. Annual savings of £1.6m are being realised, which meets the project’s efficiency target.

Resilience to staff absences has been improved by getting staff to double up in critical areas such environmental services, and looking after the customer relationship management system.

Case studies: there are different ways to improve vaLue for money

Nevertheless, it will not be until the end of 2010-11, the first full year of operation, before the councils know the impact of the project on performance and the quality of the services.

Ms Taylor offers three lessons for other councils considering sharing services. First, prepare a business case. Second, make sure you have the same goals – they ran workshops for senior officers and members to clarify aspirations.

And last, appoint new heads of service staff early on. “Bite the bullet – they need to know they are part of the future,” says Ms Taylor.

l For more information contact tricia taylor, Watford bC, 01923 278187, [email protected]; david Gardner, three rivers dC, 01923 776611, [email protected]

Resource planning

‘‘ We did a market test of the four services first, but no private sector company offered to deliver better savings tricia taylor, director of resources, Watford bC

david Gardner of three rivers dC and Watford bC’s tricia taylor; a shared services project has teamed up staff from both councils (right)


the council is always looking forward – aware of future potential budgetary pressures and able to adapt quickly if necessary,” says Mr Buss.

The council is rich in improvement data. The introduction of electronic pay cards, plus increased use of the internet and direct debits have helped increase collection rates for rent, council tax and non-domestic rates – all of which are in the upper quartile of London councils. The processing of benefits has also improved, with a six-day reduction in processing time and reduced customer costs.

Complaints to Mr Buss’s finance department have fallen by 32% thanks to investment in staff – the department is an Investor in People – and a willingness to learn when things go wrong.

Recruits are told “how they deal with the public affects the public’s attitudes towards us”. An Investor in People assessor recently praised the

staff for their readiness to share responsibility, look for solutions and improvements, and realise that each contributed to a wider goal.

While some finance departments have a reputation for saying ‘no’, in Wandsworth the department plays the role of “critical friend”, says Mr Buss. For example, when customer services wanted to change the way it issued parking permits, the department merged the process with its collection of council tax data, to prevent duplicating data collection.

“Wandsworth’s record has not been achieved overnight,” stresses Mr Buss. “It’s been a gradual and incremental process – a slow evolution rather than revolution, and not a quick fix. It’s part of the council’s culture to try and do things quicker, better and cheaper – but not at all costs.

“Our ultimate marker for value for money is having a low council tax – but we don’t sacrifice quality.”

Mr Buss predicts councils will have to find different ways of doing things. But by having an evolutionary approach to improvement he says councils can see much better how things can be tweaked, and from there extend successful ideas to other areas.

l For more information contact Chris Buss, Wandsworth LBC, 0208 871 8300, [email protected]

Case studies: there are different ways to improve vaLue for money

Wandsworth LBC: year-on-year improvementIncreasing value for money does not always mean implementing just one big idea – ask Wandsworth LBC.

It boasts the lowest council tax and highest resident satisfaction levels in the UK, something achieved through years of hard work on the basics. Yet Wandsworth argues that even councils with a strong track record can continue to improve.

“As part of the council’s performance management, there is a general aspiration of trying to improve

performance by 2% each year – across all services, and year on year,” explains Chris Buss, Wandsworth’s director of finance.

That improvement is built into the council’s culture, as well as into team and individual staff targets. “We don’t just go for numbers, but for qualitative improvements as well,” he adds.

Another key ingredient to the council’s high comprehensive area assessment rating for use of resources is its robust financial planning. “Our three-year timescale means

Resource planning

‘‘ We don’t just go for numbers, but qualitative improvements as well Chris Buss, director of finance, Wandsworth LBC

This page was sponsored by Public Sector Consultants. The case study subjects were agreed in partnership with LGC,

which independently commissioned and edited the report. Public Sector Consultants supplies interim managers and consultants to local government and the NHS. It specialises in finance advice for councils, and a range of other services.


When we linked up with Cambridgeshire CC back in

2008, it was a ground-breaking partnership, not so much because shared services was a new concept – it wasn’t – but because of the size of the collaboration and the ambition of what we were trying to achieve.

We came to an agreement where, operating through a single Oracle e-business suite, we could bring together our finance, human resources, procurement and payment facilities into one, shared service.

From this summer we will be extending this relationship, bringing together the professional and transactional elements of our support services.

This will put legal, finance and organisational development under the shared services umbrella, making it one of the biggest back-office shared services arrangements in the country. We are even, uniquely, sharing director and statutory posts.

For many local authorities, shared services are already a relatively familiar concept. But in the cost-cutting, efficiencies-focused climate we all know is coming, the only way local authorities are going to be able to deliver at least the same quality of service is to combine and share. Best value in this context is being able to say

You have to work at teamworkPAUL BLANTERN shares his experiences of working on a ground-breaking collaboration

FOREWORD PHIL BARNETT Head of local government, Logica MARTIN VINCENT Business development director, Vertex

Shared services in the public sector – whether the centralisation of internal back-office transactions or a service centre supporting multiple agencies – could benefit every citizen. However, there are all-too-few examples where their full potential is being achieved.

Within local government, shared services are increasingly becoming the only way to reconcile the rising demands on front-line services with reducing resources. The challenge for councils will be how to deliver effective front-line services through smarter sourcing, in the process achieving a ‘virtuous circle’ of reduced costs, improved quality, increased customer satisfaction and value-added services.

Shared services that take a radical, collaborative approach have the potential to allow both the individual citizen and communities to become more involved. A citizen-centred joined-up approach can

also ensure not only maximum efficiency but also that there is effective and appropriate support for those who need it most.

Real shared services require a shift in behaviour, both for providers of services and their communities. The challenge is to effect realistic behaviour change that reflects what citizens expect ‘their’ public sector to provide, what can be afforded and what communities should provide themselves through civic pride, local care and good citizenship. Local government’s community leadership role demands it shows leadership, not only in this debate but by its actions, too. There is, of course, much local government can still do in reducing waste in processes around HR, finance, procurement, IT, property utilisation and customer services. Rationalising these general business functions releases resources to improve front-line services.

Sharing back-office services is where best practice can be established. Standardisation is required – there is no value in diversity in these areas, merely waste and inefficiency.

Ultimately, the challenge for local government is to identify the best way to achieve this model, whether through an internally proven best practice approach, by sharing back-office services between authorities or through the private sector. Only then will authorities start to see shared services achieving their full potential.

Sharing services to benefit the citizen

Shared services ▼

‘‘ Sharing back-offi ce services is where best practice can be established. Standardisation is required – there is no value in diversity in these areas, only waste

FOREWORD PHIL BARNETT Head of local government, Logica MARTIN VINCENT Business development director, Vertex Business development director, Vertex

you can still afford, say, a really good lawyer, but you might not be able to have that lawyer all to yourself.

One of the benefits, of course, of shared services is the potential for significant savings; we, for example, save around £1.5m just on the shared Oracle licences.

Obviously, having a single administrative team is also

FOREWORD SUPPLIED BY LOGICA AND VERTEX


‘‘ In the efficiencies-focused climate we all know is coming, the only way local authorities are going to be able to deliver at least the same quality of service is to combine and share

You have to work at teamwork

cheaper and we have also been able to share our enterprise resource planning development costs.

Secondary benefits There are other, less overt, benefits that come from effective shared services. If you are going to share systems, you have to step back and examine your processes. This is because as you develop more uniformity across the two organisations it becomes easier to identify areas where you may be able to release value.

You also tend to find you have clearer governance, control and more disciplined business practices.

We, for example, have designed a huge number of best practice business processes together, involving more than 200 staff from both organisations.

So, how to make it work? The best piece of advice I can give is: do not pretend. There has to be mutual benefit and the timing and phasing has to be in sync.

Yes, you want to ensure that business practices are being run at optimal cost, but it is also about having the right vision at the outset, being clear about what it is you want to achieve and what you see as your destination.

We have a series of design principles we have worked to throughout the process, and which have even been ratified at cabinet level.

We also have a strategic

stakeholder board, comprising both chief executives, two portfolio folders, two leaders and senior responsibility officers (SROs).

Just as importantly, there has not been a single stakeholder board meeting the chief executives have not attended. You have to foster open, honest relationships. If you do not get on with the other SRO it is going to be hard. So you have to learn to trust that person and be prepared to talk about difficulties.

It is no good just having trust between two people. You have to make sure people in both organisations are working together well.

As well as the many joint process workshops, we have had common shared briefings, even a joint union forum and joint scrutiny. Our cultures were very different and we started off from different points. But you have to accept and work with that.

Finally, the journey has been much harder than it needs to be, not from our side (although change is never easy) but because of the legal and procurement framework the public sector operates in.

If I have one message for our new coalition government it is this: make sure our legal framework keeps up with the constant innovations in local government.

Paul Blantern is chief executive, Northamptonshire CC


Wiltshire’s shared service Wiltshire does not do things by halves. Not only did the region have to handle the move to unitary in 2009, the county council and four districts also revamped the IT system and set up an innovative shared service at the same time.

The business management programme had its origins in a decision taken by the-then county council to upgrade its HR, finance and procurement systems. That was subsequently adapted to incorporate the four districts when the move to unitary came on the agenda.

But during the tendering stage in late 2007, during which officers consulted with other councils that had gone through similar processes, it became clear greater benefits would be gained by a more wide-ranging overhaul.

Logica eventually won the contract to partner the council and the shared service went live with the launch of the unitary in April 2009.

Now, a year after it was launched, the system includes more than 400 staff working not only across the traditional areas of finance, HR, payroll and procurement but also in postal services, customer care and occupational health and safety.

Jacqui White, service director for shared services

Across the public sector, organisations are discovering the benefits to be gained from joint working, reports NICK TRIGGLE

▼

and customer services at Wiltshire Council, says: “In talking to other councils, it became clear that to get the maximum leverage and benefits it was better to develop a shared service at the same time.”

Ms White says the council is now on target to make £7.8m of efficiency savings over five years. “It can only be achieved by getting staff on board. We invested a lot in communicating with staff. There were hundreds of workshops, team and one-to-one discussions and training for staff moving into new jobs,” she adds.

The programme was overseen by a board, led by director of resources Carlton Brand, a technical team and a change team with ‘change agents’ in every department.

Now, with the new systems bedded in, the council is considering ways in which to expand the shared service, with areas such as legal and audit under consideration.● For further information contact Jacqui White at [email protected]

The Dutch experienceIn terms of size, P-Direkt takes some beating. It offers HR services for the entire Dutch central government, which includes more than 120,000 civil servants working across 12 ministries.

P-Direkt is, in fact, a

CASE STUDIES: LEARNING FROM THE SUCCESS S TORIES

government agency created in partnership with Logica.

The first phase of the project was to create uniform IT systems for 26 different HR functions. Work started five years ago on the new system and each department has now adopted the SAP program, revolutionising the way human resources are run in the process.

Employees can view and edit their own data at any time, allowing them to book leave or read performance assessment reports, while managers can register sickness absence, process reports and read guidance.

It has meant that many HR staff have been freed from basic administration tasks and can now support employees who need more complex help.

Dennis Smit, a Logica consultant who works for P-Direkt, says: “Before, every department had its own system and interpretation of how things should be done. It made it impossible to compare what was going on and integrate anything.

“This, of course, is a much more effective and efficient way of doing things,” he adds.

But that is not the end of the process. Over the past two years P-Direkt has been rolling out a shared service centre to run the HR functions.

This is in place for six ministries, with the remaining expected to come on board by the end of 2011.

Shared services

‘‘ Before, every department had its own system and interpretation of how things should be done Dennis Smit, Logica consultant for P-Direkt

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London. And, to keep pace with the demands on services, it has pioneered a ground-breaking contract with the private sector.

Westminster City Council signed a 10-year deal with Vertex in 2002, which at the time was the largest of its kind. Vertex took control of running almost all of the front-facing customer service roles – about 70 in total – covering every department with the exception of revenue and benefits.

Transactional jobs, covering issues such as HR, payroll and accounts, were also handed over, while some strategic services such as IT also fell within the remit of the deal. Overall, more than 400 staff were transferred.

John Holmes, Vertex’s client director for Westminster, says: “I think there was a feeling that more could be done to provide joined-up customer services.

“Traditionally, each department had had

responsibility for it, but we have been able to introduce a more standardised, streamlined and efficient approach,” he adds.

Indeed, the partnership has seen a rise in customer satisfaction ratings, with the latest figures showing rates at well over 90% and nearly three-quarters of contacts being resolved at the first point of contact.

Westminster has also been praised for its innovative approach to parking, allowing drivers to pay online and via their mobile phones.

A call centre has also been established in Dingwall, Scotland, while a shared services centre has been created in Warrington.

“This has, of course, helped save money compared with paying the premium rates in London,” says Mr Holmes.

But the benefits go beyond the purely financial. “We have found it is much easier to retain a skilled workforce outside London and I think we have managed to create a flexible workforce that can respond easily to demand,” he explains.

“For example, we can cover peaks in demand through our flexible resourcing model, which makes experienced people available through the sharing of skills across several clients’ services,” he adds.● For further information contact John Holmes at [email protected]

CASE STUDIES: LEARNING FROM THE SUCCESS S TORIES

It means that over a period of 12 years HR costs should be halved.

Of course, such an undertaking required detailed preparation. Workshops and consultations were run with each department and training was offered where necessary.

Mr Smit says: “With something like this it is essential to get everyone engaged. You have to make sure everyone has the same understanding and vision of what needs to be done. If you have that there is no reason why it can’t be used across

any central or even local government grouping – no matter how large or small.”● For further information contact Dennis Smit at [email protected]

The Westminster approachIt does not get much more high profile than the City of Westminster. Home to the government, the Queen, 200,000 residents, 50,000 businesses and with a million tourists passing through each day, it is truly the heart of

Shared services

‘‘ We have been able to introduce a more standardised, streamlined and effi cient approach John Holmes, Vertex client director for Westminster City Council

Westminster City Council has taken an innovative approach to its parking services

This page was sponsored by Logica and Vertex. The case study subjects were agreed in partnershipwith LGC, which independently commissioned and edited the report. Logica provides business and technology services to organisations around the world. It works withclients to deliver benefits that help to save money, improve services and connect with citizens. Vertex provides business process management services. It works with local authorities to reducecosts and improve the end-to-end delivery of services in order to provide a better citizen experience.


It is all too easy within local government ICT to settle for blanket deals – deals that can often

seem cheap or good value at the time.

The key in an environment of cost efficiencies, however, is that if you want to get the best deal you need to have really tight specifications and requirements or you can find yourself paying more than you intended.

Managing change is never easy, in IT or elsewhere, and it might be that people need to be coming at things from a different tack, perhaps looking at shared services or the use of cloud technology and so on.

Nevertheless, the key question always needs to be – and will increasingly be – what efficiency is going to be achieved?

At Waltham Forest LBC we recently agreed a £4.3m, three-year contract to deliver a new ICT infrastructure, something which, under the “One Infrastructure” banner, will provide us with a common approach to ICT.

It’s a big investment, of course, and the risk is always that IT is viewed solely as a cost, with organisations, especially in a constrained climate, focused on cutting it.

But you have to recognise that by doing that you are also taking a risk, a risk that you will in the longer run incur much greater costs because your organisation has been unable to adopt

IT today for savings tomorrowGRAHAM BELL explains why a £4.3m investment in technology will pay dividends in the long run

FOREWORD EAMONN MORRIS Managing director iSOFT Business Solutions

iSOFT Business Solutions has been providing financial management and purchasing software to the public sector for more than 30 years. In this time the services, technology and solutions have evolved significantly to meet the ever-changing needs of the marketplace.

Just as importantly, there have been profound changes within local government. Yet from the early days of compulsory competitive tendering, through to the Gershon Review and the Operational Efficiency Programme there has been one underlying concept – value for money in the use of public resources.

While a database of information remains at the hub of financial management systems, there has been an increasing focus on effectiveness in terms of how that data gets on to the system and, once there, how it is managed and interpreted. This has in turn meant providing solutions, such as Integra Open Enterprise, that streamline transactional processing and allow finance and purchasing systems to become ever-more efficient, including:● improvements to interoperability with third-party systems;● inbuilt workflow processes and document management; and● strong links to e-mail for document and information distribution.

For a significant number of transactions, a paperless office is a reality. But driving efficiency through technology is not solely about offering clients technological solutions. It has to be a partnership. We believe that understanding the changing needs of our clients has been a critical factor in the success of our business.

More widely, the emphasis we have seen in recent years around transformation and making the transition to shared systems and services has changed the technological landscape, requiring new and innovative business models and solutions on both sides and, again, much closer collaborative working.

In a climate where the issues of efficiencies and value for money are going to remain at the top of the agenda, councils are going to have to recognise that simply sharing a finance and procurement system is unlikely to be enough in itself. Local government will need to look at more innovative models of shared transactional processes across multiple ranges of services and functions. No one doubts the years to come are going to be challenging but, in partnership, we can rise to those challenges.

Technology? It’s all about teamwork, too

FOREWORD SUPPLIED BY

Technology ▼

‘‘ The emphasis we have seen in recent years around transformation and making the transition to shared systems and services has changed the technological landscape

better ways of working or better working practices that are technology driven.

Renewing your technology infrastructure will always cost money. What you have to think about – and the


‘‘ Best value in the coming years is going to be different from what it was, even just two or three years ago. It is going to become more about thinking in a consistent, robust and planned way about your requirements

IT today for savings tomorrow

business case you need to be making – are the savings you will make further down the line as well as the potential costs you will incur if you do not make this investment for the future.

In our case, managing our technology as part of a single estate will allow us to become much more customer focused and service based. We, for instance, have been piloting a project within our

children and young people’s directorate that offers reliable, secure remote access and a ‘thin client desktop’ – ie, where most data processing occurs on the server – for our social workers. Yes, there is an element of investment and training, but being able to offer people something where they can work more effectively and efficiently, and where they are not having to run around chasing things up or coming back to the office all the time, can make a real difference in terms of savings.

An effective, value-led IT strategy needs, first, to have senior-level backing throughout the council and, second, the right partner.

There can often be a real trick to choosing the right scale of partner and one who is going to provide the best relationship. There can be a tendency in the public sector to choose partners because they are large. But size does not guarantee they are going to be able to supply your needs.

It is absolutely imperative therefore your partner is one that fits; that they have the

right size, strength and depth to meet the needs of your organisation.

For us, the next three to five years are going to be very much about the continued development of our IT infrastructure, applications and the renewal of our vendor relationships.

What this also means is that the next 18 months will be critical in that we will start to look at how we are going to be renewing these contracts when they come up, to ensure that we get the best value out of them.

In terms of technology, best value in the coming years is going to be different from what it was, even just two or three years ago. It is going to become more about thinking in a consistent, robust and planned way about your requirements, how they will be changing and who will be the right partner or vendor as a result.

Ultimately, when you do things together, as partners, the opportunities for driving value become more apparent.

Graham Bell is head of ICT, Waltham Forest LBC


Streamlining ICT systems has reduced administration costs at Hartlepool BC and improved the management of its finances.

Officers at the council reviewed the authority’s financial systems five years ago and concluded that its numerous, disparate systems were a source of major inefficiencies.

“The previously separate job costing system required significant volumes of creditor invoice transactions to be regularly transferred to the core purchase ledger system so that the invoices could be paid,” explains Kevin Johnston, who is group accountant for financial systems at Hartlepool.

Moreover, the authority’s system could not support electronic transactions.

“We wanted to make savings on administration, and also better equip ourselves to track how money was being spent in order to find further efficiencies,” says Mr Johnston.

The authority decided to invest in a new, integrated financial information management system – the Integra Enterprise system by iSOFT Business Solutions – that also enabled the electronic transmission of all documentation.

The investment has successfully brought together the different systems Hartlepool used to have into a much more integrated whole, explains Mr Johnston.

The authority decided to

An integrated ICT system has helped Hartlepool BC to streamline its administration, reports LEE BAKER

▼

introduce the new system in phases. First, it installed the core modules, including general ledger, purchase ledger, sales ledger and bank reconciliation.

In the second phase, the job costing, job billing and stock management modules brought together information that had previously been held and processed in separate systems.

The third phase of the project introduced significant new processes into the purchase-to-pay cycle, including web-based ordering and the implementation of Integra eSeries.

Finally, the council added iSOFT’s Integra ‘Business Intelligence’ module, which allows it to manage its financial data more proactively, in turn giving a better insight into how and where money is being spent and, crucially, a much clearer

CASE STUDY: MAKING THE MOST OF IT

picture of where it might be possible to make efficiencies.

The result, explains Mr Johnston, is that the authority has benefited from significant savings. Previously, for example, the administration or finance teams would run budget reports and then send them out to the relevant staff.

Now transactions are paperless and, because information is held on one system, it can be sent out in a much more cost-effective way. “This used to take quite a lot of resource – and paper – printing them out, sorting them and sending to the relevant budget holders. This is now a fully automated process,” says Mr Johnston.

Another feature of the system’s report-writing tool is that it automatically e-mails budget holders up-to-date information to their desktops on a monthly basis.

They can then drill down to individual transactions, including scanned copies of documents, so all the information can be accessed from a single report in their inbox. Previously, they had to sign on to the system and search for information.

“Before, there was a lot of maverick spending and it was very difficult to monitor. The new system allowed us to tackle this,” says Mr Johnston.

The new system has also improved decision-making, something Mr Johnston says will be invaluable as Hartlepool strives to identify further efficiencies. “Now, everything can be monitored more easily and non-contracted spending has been reduced,” he adds.

For further information contact Kevin Johnston, [email protected]

Technology

‘‘ We wanted to make savings on administration and also equip ourselves to track how money was being spentKevin Johnston, group accountant, financial systems, Hartlepool BC

This page was sponsored by iSOFT Business Solutions. The case study subjects were agreed in

partnership with LGC, which independently commissioned and edited the report. iSOFT works with councils and other public bodies on transformation, performance, efficiency and e-business solutions.

Hartlepool is a town with history that is

looking to the future

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It goes pretty much without saying that the focus on reducing the deficit in the public

finances and the need for local authorities to make significant savings and efficiencies are set to be some of the biggest challenges facing HR in the next few years. But they will also present opportunities.

The risk is that organisations focus on cutting jobs or salami-slicing budgets, functions or roles. Making efficiencies in an unplanned or unmanaged way can be very damaging. It can affect performance, damage morale, leave staff demotivated or feeling disengaged and disempowered and it can even lead to an exodus of key people from the business.

So what you need is a comprehensive organisational strategy, one that looks across the whole system and which can help you implement the changes and efficiencies you need to make.

At a practical level, I think more organisations will be having a wholesale rethink about what they as local authorities are there to do. It will be a debate about what their role is and should be, both internally and within their local community. What kind of organisation do they want to be and therefore how do they need to go about designing or redesigning their organisation?

It’s time to change our thinkingThe challenges ahead demand a fundamental shift in our attitudes to staff, says ANNE GIBSON

FOREWORD GILLIAN HIBBERD Director, resources and business transformation Buckinghamshire CC

There has been a recognition for some time now that human resources’ transactional activities – paying people, recruitment, training, benefits and so on – need to be differentiated from its more strategic, added-value work.

In the coming financial climate, and particularly with many local authorities already making the transition to shared HR services, HR’s transactional role will, I suspect, come under ever-greater scrutiny. But there is also likely to be more focus on its more strategic role as the imperative for efficiencies and value for money takes centre stage.

HR can be an enabler to make change happen within organisations and it can help them to speed up the pace of change, whether by that we mean efficiencies, restructuring, transformation, or all three. It can help organisations embed change and ensure it is managed and delivered without causing unnecessary damage and conflict. In this context in the coming months and years I believe HR will have four key strategic roles to play:● there will be a greater emphasis on talent management and talent spotting, including how organisations can nurture, develop, coach and retain key performers in a challenging climate, as well as how they manage under-performers;● HR will need to play a more prominent role in prompting organisations to discuss strategic issues, such as organisational design and shape and the direction they should be travelling in. In a climate of efficiencies and cuts, authorities that do not discuss what sort of organisation they are or want to be can all too easily fall back on to a damaging “slash and burn” approach; ● HR will play a key part in helping organisations achieve significant change, including how to get and keep their workforce on board during periods of transition and uncertainty; and ● HR will need to become much more commercially savvy. This is something that has been happening gradually, but if HR is going to help to deliver real benefits, value and efficiencies it will need to become even more business focused. HR will, as a function, have to learn to be more hard-nosed and prepared to make a robust business case every step of the way.

Best value or value for money is about creating organisations that are fit for purpose, both now and in the future. It is about making change happen and pushing organisations in the right direction in the least damaging way to ensure benefits can be delivered back into the business more swiftly. In all these areas the effectiveness of HR will make a key difference.

A more strategic role is on the horizon

Human resources ▼

‘‘ HR will play a key part in helping organisations achieve signifi cant change, including how to get and keep their workforce on board in periods of transition

In turn, there will need to be discussions about what roles and skills are going to needed, now and in the future. To get this right will require a fundamental change in thinking across the sector as a whole.

In this context HR, even GETT

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‘‘ Human resources will need to be working right alongside senior management and thinking about strategy and future direction – not just waiting for those discussions to happen elsewhere and then receive the results

It’s time to change our thinking

more than it does already, will need to understand all parts of the business and what is going on.

It will need to be working right alongside senior management and thinking about strategy and future direction – not just waiting

for those discussions to happen elsewhere and then receive the results.

On top of this, HR will have a very important role to play in empowering managers further down the organisation, to give them the skills to manage the

performance of their teams and give them clear lines of accountability.

For a long time, there has been an emphasis within local government on people balancing their budgets – not over-spending, but not necessarily trying to under-spend, either.

One change I suspect there will be is a shift to where organisations recognise that, if they want to drive down costs on an ongoing basis, cost-cutting will have to become something that permeates everything they do.

This in turn will require a culture shift, and HR will need to be central in engendering it. Rewarding different things and different behaviours will be an important part of this, for example by ensuring that performance around driving down costs becomes a central part of the appraisal discussion process and target setting.

When organisations talk about cuts, one of the biggest risks is that they inadvertently end up losing some of their best people as well as those whom they intend to let go.

So organisations will need to be absolutely clear about what talent they have and which people they need to retain, with an organisation’s culture central to that discussion.

Best value as a concept has been talked about for a long time, but now we are entering a different territory.

Yes, it will be imperative for organisations to bring down costs – and to be seen to be doing so – but they will also need to ensure they are continuing to engage their staff and are looking at how to work most effectively within the new climate of efficiency.

Maintaining trust and ensuring open feedback about these issues will be important. It might even be a case of using HR to help create, as much as it is possible, worker ‘buy-in’ around the cuts agenda.

People will simply need to start thinking and working differently.

Anne Gibson is head of human resources and organisational development, Norfolk CC and vice-president, Public Sector People Managers’ Association


Birmingham City Council: transitionWhen it comes to dealing with transition and transformation, Birmingham City Council has more experience than most.

In 2007 the local authority had no fewer than nine business transformation projects under way, with the aim to save an ambitious £1bn over 10 years.

But with any change, of course, comes uncertainty and the potential for conflict. For example in February the council announced it was cutting some 2,000 jobs and freezing pay. This came on top of its controversial decision in 2008 to implement a new pay structure, a process that threw out 35 old pay grades and at the time led to threats of strike action.

HR has therefore played a key role in helping managers manage these transitions, as well as supporting staff through the changes. One important innovation was the launch in 2007 of an in-house ‘change management’ consultancy called In-Source, with an annual budget of £500,000.

Its activities have included appointing 12 ‘change agents’, essentially ‘champions’ recruited from various levels and functions and seconded to a range of projects. These include working on ways to reduce the council’s carbon footprint, improve its website and enhance the use of

Whether it’s redeployment or conflict resolution, HR is a key player, writes Amy TAylor

t

mobile technology for front-line housing staff.

The consultancy service has also developed an innovative placements service designed to help staff whose jobs have come under threat, including offering one- to three-day placements in another part of the business, work-based assignments of up to eight weeks and even career change support. The latter resource gives workers help to develop skills to allow them to apply for new positions, should they wish to do so.

As well as giving people extra skills and confidence, the placements have helped staff develop contacts and build up experience for when jobs do come up, explains HR director Andy Albon.

“It really worked in terms of reassuring the workforce and managing some of the adversity that was coming out of the changes,” he says.

Placements can be in similar roles to those people are in already or in completely different ones. They are also available to staff whose jobs are secure, he adds.

“Our workforce was historically quite static. People got into a role and stayed in it forever, say 10-15 years. Their skills stagnated and they were working in silos and that was what we were becoming known for,” Mr Albon explains.

“The placements let

Case studies: in a time of ChanGe, you need to have your staff on side

people spread their wings a bit and think about other opportunities.”

At the same time, the council has been working to develop a range of ‘talent pools’, designed to identify and groom future leaders and managers as well as encourage more staff mobility and flexibility.

“We realised that historically we always seemed to nurture leaders of a particular kind. We always used to pick our leaders based on technical knowledge rather than anything else. Due to the transformational agenda we

Human resources

‘‘ Due to the transformational agenda we needed leaders who had the ability to manage change Andy Albon, director, Hr, Birmingham City Council

Changes at Birmingham City Council led to a period of uncertainty for staff

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the council decided to act and set up its own in-house mediation service.

“The idea was to say that there has got to be a better way to deal with workplace conciliation. Our service is less time consuming, more cost effective and provides a more human perspective for employer and employee,” explains Leatham Green, assistant director of personnel and training at the council.

Under the initiative, 11 accredited mediators work with both parties to try to resolve disputes, intervening as early as possible. As a result, the average time taken to reach a resolution is three days, compared with 60 for those dealt with by the formal grievance process, Mr Green estimates.

He also cites a 100% success rate in the 34 cases referred to the initiative since

it started and a 47% decrease in formal workforce disputes. The scheme has even helped to get some employees back from long-term sick leave.

Another key element has been in ensuring the mediation service is seen by employees as something constructive and not a threat, Mr Green says. The council has, for example, involved trade unions closely in the process to help provide reassurance.

“The unions were part of the policy’s development from the start and we have trained union reps to be mediators. The whole development process was transparent and [the unions] could see the whole drive behind it was about resolution,” he says.

Other benefits have included reduced administration costs and savings because less time is taken up in dealing with disputes. In fact, Mr Green estimates, the cost of setting up the service was recouped within a month of its start.

“I wouldn’t say an organisation can say ‘we are going to save half a million pounds from mediation’, but it’s an innovative way to tackle workplace disputes and, if it’s used effectively, can also help to improve efficiency within your workforce,” says Mr Green.

l For more information contact [email protected]

Case studies: in a time of ChanGe, you need to have your staff on side

needed leaders in the future who had the ability to manage change and had those transformational qualities that perhaps many of our leaders might not have had,” explains Mr Albon.

And, he says, although the change agents are only working inside the council at the moment, there are plans to develop a region-wide pool that could be accessed by smaller local authorities that might lack the capacity to run such a service themselves.

l For more information contact [email protected]

East Sussex CC: dealing with disputesFormal workplace disputes, as any local authority HR department will well know, can be vastly expensive, a drain on resources and damaging to morale and performance, especially if they drag on for months or even years before a resolution is achieved.

The danger for councils as they slash or restructure jobs, functions and departments in response to public sector funding cuts is that such disputes could increase dramatically, as the Public Sector People Managers’ Association warned last November.

But an initiative at East Sussex CC has shown that cuts need not inexorably lead to conflict.

Four years ago, recognising the strain that formal disputes were putting on both sides,

Human resources

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