Why do so many IT deployments fail to realise their promised benefits?

Insufficient focus on business change.

MARTIN MALLEY, DIRECTOR – BUSINESS CHANGE & TRANSFORMATION

What went wrong?

The Chief Executive of a local authority wondered what had gone wrong. After 18 months of intense work to improve service quality and reduce costs, the authority had spent £10m on new technology, £2m developing new processes, used sophisticated modelling tools and trained 100 staff in Six Sigma. But there were virtually no improvements .

She thought she’d done everything necessary – she’d agreed this at the Board, published progress on the website, and held three major staff events with plenty of QA.

But:

• No one owned the change

• People were still working in silos

• Managers and frontline staff quickly slid back to old ways of working

Introducing Hedra

• Hedra is UK’s largest independent public sector only consulting organisation

• Over the last three years Hedra has delivered some £156 million of consulting services to the public sector

• Our clients comprise Central and Local Government, NHS, Ministry of Defence and a wide range of public service agencies

• Our work covers, strategy, service improvement, cost reduction, procurement, business change and transformation and technology implementation

Hedra and Local

Government

• Shared Services – ERP, HR

• Business Change & Transformation

• Customer Services

• Procurement

• Solution Delivery - Catalist

• Over 60 consultants carry significant Local Government experience

We also have an extensive list of central government clients which is available on our website - www.hedra.com

Benefits

Strategic Outcomes

New ways of working

New ITProcess changes

+

Sta

keh

old

er M

anag

emen

t &

Co

mm

un

icat

ion

s Pragmatic Delivery

Local Teams Local Teams

Central TeamApproach, Knowledge, Communications Templates & Tools

Local TeamsImplementation, Tailored Processes, Local Comms & Readiness

What is Hedra’s approach to change?

Including • Vision• Change readiness• Sponsorship• Right governance• Communications• Stakeholder management• Business ownership• Skills transfer

Vision

Requirements

Readiness

Opportunities

Benefits

Sponsorship

Planning

Commitment

Governance

StakeholderManagement, Ownership & Commitment

SupplierManagement

Prog. Mgmt

Funding

Skills, Coaching& Training

KnowledgeTransfer

RewardMechanisms

BenefitsManagement

Operations

PerformanceManagement

DIRECT

PLANMANAGE

SUSTAIN

WHAT SHOULD WE DO?

CAN WE DO IT?

WILL WE DO IT?

CAN WE KEEPIT GOING?

People, Process & Technology Change Skills

& Infrastructure

Change Comms

Critical Success Factors for Business Change

Role DescriptionsLeading Practice Processes

Balanced Scorecards

CYP CS SUS PP SSS excl Finance Finance Total

Finance Process

FTE £ 000 FTE £ 000 FTE £ 000 FTE £ 000 FTE £ 000 FTE £ 000 FTE £ 000

Invoice Processing - AP 51 1,080 38 842 9 201 7 152 9 194 6 186 120 2,725 Commitment Accounting 15 320 11 249 3 63 2 36 3 64 1 24 34 775 Management information 8 302 8 287 3 129 1 59 2 113 15 446 38 1,365 Journal Processing 7 144 5 109 1 27 1 16 1 26 4 105 18 439 Budget Preparation 3 120 3 109 1 56 1 31 1 53 9 251 17 635 Year End / Month End 3 78 3 75 1 20 0 10 1 16 16 473 23 692 AR Manual Processes 5 108 4 86 1 23 1 13 1 19 4 103 14 362 Other (incl. local reconciliations) 4 85 3 75 1 19 0 10 1 20 2 66 11 283 Report Preparation 4 144 4 137 1 58 1 37 1 58 28 838 39 1,308 Direct Debits 0 0 0 0 0 0 0 0 0 0 1 38 1 39 Bank Reconciliation 1 16 1 13 0 3 0 2 0 3 0 14 2 51 Debt Collection 0 11 0 10 0 4 0 2 0 2 3 103 4 136 Care Payments 0 0 0 0 0 0 0 0 0 0 13 373 13 386 Non Care Payments 0 0 0 0 0 0 0 0 0 0 2 70 2 73 Financial Assessments 0 0 0 0 0 0 0 0 0 0 21 621 21 642 Managing Assets 0 2 0 3 0 0 0 0 0 1 0 3 0 9 System Maintenance 0 0 0 0 0 0 0 0 0 0 3 85 3 88 Other Finance Activities 0 0 0 0 0 96 2,824 96 2,920 Total FTE Cost 100 2,411 78 1,995 21 604 13 369 19 568 224 6,624 455 12,926

Baseline Data Collection

Local Government ERP Business Cases

9

8

7

6

5

4

3

2

1

9 7 5 3 1

Perfo

rman

ce A

gain

st E

xpec

tatio

n

ServiceAttribute

A

B

C

D

G

H

Importance/Performance Matrix Of Service

EXCESS?

APPROPRIATE?

IMPROVE?

URGENT ACTION?

Goo

dBa

d Low High

E

F

I

Importance For Customers

9

8

7

6

5

4

3

2

1

9 7 5 3 1

Perfo

rman

ce A

gain

st E

xpec

tatio

n

ServiceAttribute

A

B

C

D

G

H

Importance/Performance Matrix Of Service

EXCESS?

APPROPRIATE?

IMPROVE?

URGENT ACTION?

Goo

dBa

d Low High

E

F

I

Importance For Customers

Ref: Service Attribute

A Consistent Person Dealing With Query

B Time Taken To AnswerC Time Taken To Resolve Query

D Choice Of Payment MethodsE Range of Services

F Knowledgeable Staff

G Discounts For Prompt PaymentsH Quality of ServiceI Price

Performance vs customer value Process & Activity Cost Assessment

CloseCustomer A/c

Training

OpenCustomer A/c

Support &Control

ResolveCustomerProblem

Call CentreActivities

(£m)

Call Centre - Process Costs 2006/07

Call Centre Specific ActivitiesMakingCalls to

engineers6% Switchboard calls

2%

Idle time18%

Completing paperwork 30%

Wrap up time 15%

Serviceadvice

2%

Other6%

Making outgoing callsto customers

16%

Working time3%

Ringing time2%

SustainSustain

• Identify Opportunities for Improvement

• Analyse & understand their potential & feasibility

• Controlled Delivery & Release of Benefits

• Continuous Improvement

Challenge Workshop/GatewayC

PHASE 1IDENTIFY

PHASE 2ANALYSE

CPHASE 3DESIGN

PHASE 4DELIVER

PHASE 5SUSTAIN

Opportunity Prioritisation

‘Lean’ LocalGovernment

Techniques Tried & Tested in Local Government

Group Change Activities Into Packages Of Work Aligned To The Project Stage ModelGroup Change Activities Into Packages Of Work Aligned To The Project Stage Model

The Change Work Packages

Stage 0Readiness &

Rationale

Stage 1Initiation &

Business Case

Stage 2Build &

Configuration

Stage 3System & User

Testing

Stage 4Go Live

Preparation

Stage 5Bedding In

& Optimisation

Stage 6Project

Close Down

Project Brief

Project Initiation

Document

Ready For Test Certificate

Go Live Readiness Certificate

Go Live Sign Off

Certificate

Red Team Performance

Report

Work Package 0.3Organisational Readiness

Work Package 0.2Strategic Alignment

Work Package 0.1Stakeholder Engagement

Work Package 1.3Process Change & Training Analysis

Work Package 1.2Benefits Analysis

Work Package 1.1Solution Design Analysis

Work Package 2.3Operational Documentation

Work Package 2.2Benefits Realisation Framework

Work Package 2.1Configuration & Integration

Work Package 3.3Go Live Readiness Testing

Work Package 3.2Scenarios & Acceptance Testing

Work Package 3.1User Training

Work Package 4.1Go Live Support

Work Package 5.1Red Team Support

Go Live

Enabling Change – Key Work Packages by Project Stage

Copyright ©Hedra 2007

At each stage of the deployment lifecycle, certain work packages are specified to support the management of business change and make adoption of the new systems more effective.

Tony Blair7 July 1999

“People in the public sector are more rooted in the concept that if it’s always been done this way it must always be done this way than any other group of people I’ve ever come across…..It’s not that there aren’t many wonderful people now with a tremendous commitment to public service, but you try getting change in the public sector and public services – I bear the scars on my back after two years of government.”

1996 2007

Case Studies - Snapshots

Shared Service Investigation – Northamptonshire& CambridgeshireCounty Councils

Under our strategic partnership with Northamptonshire, Hedra were asked to investigate the potential for sharing HR services with one of Northants’ bordering counties, Cambridgeshire. The investigation took two forms:

Firstly a blueprint was developed to explore what a shared HR service would look like and identify potential costs and benefits

Secondly a more detailed investigation was conducted to test feasibility. The investigation found that Cambridgeshire’s HR systems had design limitations which restricted their scalability . Although this precluded current shared services, it did highlight the necessary changes to allow progress in future, and identified key tests for exploration with Northamptonshire’s other neighbours.

Shared Service Investigation – Northamptonshire& CambridgeshireCounty Councils

Under our strategic partnership with Northamptonshire, Hedra were asked to investigate the potential for sharing HR services with one of Northants’ bordering counties, Cambridgeshire. The investigation took two forms:

Firstly a blueprint was developed to explore what a shared HR service would look like and identify potential costs and benefits

Secondly a more detailed investigation was conducted to test feasibility. The investigation found that Cambridgeshire’s HR systems had design limitations which restricted their scalability . Although this precluded current shared services, it did highlight the necessary changes to allow progress in future, and identified key tests for exploration with Northamptonshire’s other neighbours.

Shared Services Evaluation for Scottish Councils

Hedra are currently working with Clackmannanshire, East Dunbartonshire, Falkirk, Perth & Kinross and Stirling Councils to develop a comprehensive business case for the sharing of Corporate Support services. The performance of current support services has been evaluated and benchmarked to assess the benefit potential. A shared services solution is currently being designed and other key project deliverables include:

• Exploration of the delivery models for shared services and evaluation of what functions it should cover and what should be excluded

• Appraisal of alternative delivery vehicles, for example, joint venture, outsourcing, managed service, local authority company

• Determining the costs benefit analysis for each participating authority and overall for moving to shared provision of support services to multiple agencies

• Advising on how the SSO solution should be implemented includinggovernance arrangements, project structure and a detailed project plan.

Shared Services Evaluation for Scottish Councils

Hedra are currently working with Clackmannanshire, East Dunbartonshire, Falkirk, Perth & Kinross and Stirling Councils to develop a comprehensive business case for the sharing of Corporate Support services. The performance of current support services has been evaluated and benchmarked to assess the benefit potential. A shared services solution is currently being designed and other key project deliverables include:

• Exploration of the delivery models for shared services and evaluation of what functions it should cover and what should be excluded

• Appraisal of alternative delivery vehicles, for example, joint venture, outsourcing, managed service, local authority company

• Determining the costs benefit analysis for each participating authority and overall for moving to shared provision of support services to multiple agencies

• Advising on how the SSO solution should be implemented includinggovernance arrangements, project structure and a detailed project plan.

Local Government Shared Services Agenda…

During 2006, the Home Office instigated a series of pilot implementation for the new Single Non-Emergency Number (SNEN) – a new telephone service designed to reduce the call volume pressure on emergency services by offering an alternate service hosted by Local Authorities to support elements of case work.Hedra (in partnership with a technology supplier) defined, designed and implemented this new service in a number of pilot areas. Whilst the technology solution was relatively easy, the complex network of organisations and inter-dependency of existing business processes represented one of the greatest challenges. We focussed on working across organisational boundaries to develop new business processes and manage senior stakeholders so that the new service could be launched in its first pilot stage.

Following the successful launch in four regional pilots, the project awaits decisions on how to take it forward pending the current Home Office review.

Piloting New Services: The Single Non-Emergency Number

Local Government – Piloting New Services…

As Northamptonshire seeks to drive efficiencies – social care provision is now a key focus area.

Hedra consultants are working with NCC commissioning staff as a blended team to transform the NCC’s commissioning strategy. This work has migrated NCC domiciliary care commissioning approach from a complex and fragmented supply base (66 vendors) to a strategically selected group of partners (7) capable of meeting the needs of the entire county.

Hedra has worked on this programme, from full strategy development – through to successful implementation

As well as yielding annual savings of £800K+, it is anticipated that customer service levels will improve. In addition, this reduction in vendors is allowing NCC to dramatically simplify internal processes, thus reducing the total acquisition cost (TAC) of care provision across the county.

Northamptonshire County Council (NCC) – Transforming Care Provision

Social Care Provision

Scottish Councils – Shared Services Requirements Five Councils in Scotland needed to improve the quality of their support services and at the same time realise financial savings. They saw collaboration as a possible solution but required specialist support from Hedra to develop a vision for shared services and high-level design supported by a comprehensive business case. Hedra Response

•Undertook a 5 month project with Clackmannanshire, East Dunbartonshire, Falkirk, Perth & Kinross and Stirling Councils to:

•Agree the vision, scope, operating model, governance arrangements and implementation plan for shared services

•Assess current performance of support services within each Council and agree the baseline position

•Set performance targets for the shared services organisation and determine resource requirements

•Deliver a consolidated and individual business cases for the 5 Councils setting out the financial case, customer and staff impact

Outcomes

•Shared Service Business Case assessment completed on time to councils satisfaction

•Shared services solution design (including best practice simplified, standardised processes) and business case in place

•Skills transferred to council staff

•Council employees, members consulted on shared services

•Politicians to meet in February to agree the way forward

Benefits

•Approved business benefits of more than £10million per annum signed off by heads of service across the 5 Councils

•Programme Governance arrangements in place

•Greater collaboration and sharing of expertise operating across the 5 councils

•Local performance improvement opportunities identified, prioritised and underway

Ca

se

Stu

dy

Surrey County Council – Delivering Shared Services Requirements Transformation of support services based on shared services delivery model and SAP software & delivery of tangible business benefits. Knowledge transfer on processes, systems and organisational design and benefit management . Integrate the transformation project with other 21st Century Council programmes Partnership Response •Directed and programme managed the support service transformation

•Developed and applied innovative approach to benefit realisation linked to a risk and reward model

•Worked closely with the Surrey Executive Board of officers and members

•Provided evidence of baseline benefit potential and identified opportunities for significant additional benefits Outcomes •Shared Service Centre operational with best practice end to end processes and SLA’s within 18 months

•Successful integration with other 21st Century Council programmes, Hedra consultants approach to programme and benefit management replicated on all projects

•Streamlined support services with refreshed policies, roles and responsibilities

•New Governance and performance management arrangements in place

•Cultural change achieved

Benefits •Approved business benefits of £50million signed off by heads of front-line and support services (benefit owners)

•Re-vitalised Programme Directing Board with clearly prioritised initiatives and rigorous project reporting and benefit management regime in place

• Continuous improvement programme bedded-in

Cas

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tud

y

Solihull MBC Requirements Solihull Metropolitan Borough Council appointed Hedra as their independent advisor to work with them to undertake a full ICT Service Review and provide an Improvement Plan that made recommendations about the redesign of the way the ICT service was arranged.. Hedra Response Hedra led the study which included:

•a client / server total cost of ownership benchmarking survey,

•a Help Desk benchmarking survey

•an ICT Service Overview and an assessment of best practice. In addition, We conducted a systems and process audit of production applications that identified the size, complexity and susceptibility to change of the Councils major applications.

Outcomes

•The key performance indicators derived during the review were compared against upper quartile organisations to identify both strengths and opportunities for alternative service provision

•Focus Groups were held with various groups of users to discuss the issues raised in the consult phase in order to ‘Challenge’ the method of service provision and discuss possible solutions

Benefits

•A recommended set of next steps describing alternative service options •A prioritized service improvement plan

Cas

e S

tud

y

Northamptonshire County Council Requirements The Council wanted a robust business case to support its plans to implement ERP processes and underpinning technology. The Council was using the Gateway process and wanted to ensure full stakeholder involvement and engagement and wanted to ensure that the business case passed the relevant Gates in the Gateway process. External scrutiny from the 4Ps (Public, Private, Partnerships, Programme) was a part of the process. Hedra Response Hedra designed a programme plan designed to build the business case. This was supported by a change management approach featuring a high degree of stakeholder engagement.

Outcomes

• Creation of an operating model to support the Council’s vision for finance, Human Resources and Procurement

•Production of a treasury Green Book compliant Business Case

•Production of 5-year transformation maps showing how the change in operating model would happen over time. This was related directly to the Council’s capacity and growing capability in organisational change management.

•A successful Gateway 1 external review

Benefits

•Approved Business Benefits signed up to by the Project Board

•Identification of transformation map activities to deliver benefits

•Recommended changes to project Governance accepted

Cas

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tudy

Oldham MBC Requirements The council’s finance vision for finance and procurement is aligned to their strategy of becoming an “excellent” Council. The council needed to change by transforming the Finance focus from transaction processing to decision support moving from being “book-keepers” to “Financial managers”. This requires significant change in process, people, organisation and technology. The Council wanted to create a Business Case and importantly a new operating model for the finance and procurement service. Hedra Response At Oldham MBC Hedra have recently completed a business case and benefits realisation plan to support the Council’s transformation of its Finance and Procurement functions. This work introduced the Council to the Hedra Benefit Scorecard approach, which identifies the change activities required to deliver business case benefits and assigns responsibility to benefit owners to deliver them.

Outcomes

• Creation of a best practice process model and operating model to support the Council’s vision for finance and procurement

•Production of a Business Case and a set of business benefit scorecards that identified business benefits and then laid out the activities required to deliver the benefits

•Production of a change management strategy that described the essential change management roles and planned change activity alongside the

Benefits

•Approved Business Benefits signed up to by the Project Board

•Identification and sign-up by Business Benefit holders

•Identification of change activities required to deliver benefits

•Recommended changes to project Governance accepted

Cas

e S

tud

y