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Is IT a Business Plan Enabler or Catalyst?
A Presentation by
Harneck Chilemba
HAC Housing Consultancy
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Should IT drive HAs’ Business Plans OR vice versa?
AGENDA
• Background to the Dichotomy
• Business Planning Process
• Key Business Plan Drivers
• The Risk Perspective
• So, what is the answer?
HAC Housing Consultancy
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Real-Life Story
• Integrated Accounting & Management system
•Untried in the UK
•Direct Link to HA’s Bank
•Glitch
•Cash Flow Problems
•Financial Reporting Problems
HAC Housing Consultancy
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Background to the Dichotomy
HAC Housing Consultancy
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Background to the Dichotomy
• IT is critical to the functioning of any business
• IT involves large sums of money in the long-term
• IT is highly technical and
• IT can be complex
• Business Planning is driven by the high expenditure functions
• Business Plans deal with areas of
strategic importance
HAC Housing Consultancy
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Business Planning Process
• Step 1: Board kicks off with an Away Day
• Step 2: Senior Managers Agree the Priorities
• Step 3: FD formulates the Key Assumptions
• Step 4: Financial Modelling of 30 Year Plan
• Step 5: Board approval
HAC Housing Consultancy
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Key Business Plan Drivers
• Its all about the big spenders
HAC Housing Consultancy
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The Traditional Big Spenders
• Development
• Maintenance & Major Repairs
HAC Housing Consultancy
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HAC Housing Consultancy
0.0
20.0
40.0
60.0
80.0
100.0
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140.0
160.0
Tota
l De
bt
less
Cas
h B
alan
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£ M
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Year
PROJECTED NET BORROWING
Net Borrowing - Base Build for Sale proceeds reduce by 10%
1% real interest rate increase from year 2 onwards Voids and bad debts increase to 8%
Rent setting based on CPI rather than RPI (-1% assumed)
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Example of Major Works Spend Profile
HAC Housing Consultancy
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The Risk Perspective
•Business Plans are vulnerable to:Development Programme errors
Unforeseen External Headwinds
•Failure of IT has become an existential risk:Poor implementation of major IT system
Implementation of the wrong system
HAC Housing Consultancy
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IT, The New Kid On The Block
HAC Housing Consultancy
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IT Costs in HAs
• In the past ten years, IT costs have soared beyond all recognition.
•Reasons:Pressures to deliver VfM
Increasing demands from residents
Replacement of legacy systems
HAC Housing Consultancy
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Data: The New Oil!
Then Today
HAC Housing Consultancy
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Housing Technology : 2018
• 98% planning some form of Transformation Programme
• 90% are either ‘early adopters’ or ‘early majority’
• 61% are either ‘digital fashionistas’ or **‘digirati’
BUT
• 89% currently have less than 40% of their customer transactions completed online.
SOURCE: Altair
HAC Housing Consultancy
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Housing Technology : 2025
• Over 75% expect to be utilising:
smart devices,chat bots, offsite manufacturing,big data and apps
• Over 50% see an opportunity for AI.
SOURCE: Altair
HAC Housing Consultancy
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Brave New World
HAC Housing Consultancy
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HAC Housing Consultancy
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HAC Housing Consultancy
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So, What’s the Answer?
•A lot depends on the level of IT representation
•Often IT representation is missing on the Board
•Often the FD produces the Business Plan and has greater influence
•BUT ….
HAC Housing Consultancy
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This is equally deadly!
HAC Housing Consultancy
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Q & A
HAC Housing Consultancy