Presented at Smart Cities Summit 2010

Session background

With the government pushing for more sharing of services, several
regions have formed Local Authority Shared Service organisations to deliver
this.  However, the complicated nature of
Shared Services structures requires careful planning and design to ensure that
what is established will be effective in meeting its goals.  Our speaker will demonstrate what can be
achieved with a Shared Services arrangement between multiple councils and how they
made it work.

• Shared services as a means of
  improving community outcomes
• How can Shared Services help
  you achieve the Smart City vision?
• Aligning the Shared Services
  structure with organisational goals
• What can and should be shared?

Background – ensure there
is a common understanding of the terms:

• shared service - any internal
  or external service activity that is carried out jointly by 2 or more councils,

• CCO/CCTO - (as defined in the
  LG Act),

• back office versus front office
  services (internal services and activities versus external customer facing
  services and activities),

• LASS – Local Authority Shared
  Services Ltd – a consistent business model used by the Bay of Plenty, Waikato
  and (most of) the Manawatu-Wanganui regions. 
  Used to own, govern, drive, develop and host multiple shared services.   Currently being investigated by a fourth
  region.

• alternative shared service
  delivery scenarios – there are a range of delivery mechanisms to achieve shared
  services, from a simple, low cost series of agreements between consenting
  councils, through formal contracts between the councils (but still not forming
  a CCO), to creating a CCO. For a CCO, there are a number of different vehicles,
  each with pros and cons.  The main ones
  are co-op, trust, limited liability company, jv, and public private
  partnership.

Local Authority Shared
Services model (LASS)

In 2002, the councils in one region were investigating a number of
possible shared services and agreed there was a need for a vehicle that would:

• enable effective ownership,
  governance, management and hosting of a wide variety of shared services
• provide an incubator for
  developing potential shared services
• give commercial transparency
  such that private sector entities could “deal” with the vehicle
• enable councils to freely opt
  in or out of any specific service
• enable equal and cost effective
  ownership of the umbrella vehicle
• ensure buy-in by respective
  councils in the region
• ensure effective accountability
  and council control
• enable councils outside the
  region to join specific services.

We created a business model (since usually referred to as the LASS
model) to meet all of the above needs and it is now in operation in three
regions with a fourth considering it as an option.

Examples of shared services:

The best way
of demonstrating the above points is to look at a wide range of actual shared
services and discuss the benefits, impacts and lessons learnt on the way
through.  Note some of these shared
services are very successful while some have lapsed – and the reasons for these
are covered.

1 - common IT strategy:

what is the shared
service? – four
councils (including a regional council) have
been investigating a number of possible shared services, all largely IT
based.  Early on it rapidly became obvious
that the councils need to be reasonably aligned in terms of IT infrastructure,
major applications, desktop systems and support partners – this now well
underway.  Without this alignment, every
shared service opportunity was either impossible or would be very unwieldy to
operate.

While the shared services will be
operated as a series of standalone agreements, albeit under the overall
strategy, as and when they get complex the shared services vehicle (CCO) will
be considered again.  Consistent drive
and direction is provided by the four CEOs active involvement and sponsorship
of the investigations and decision making.

benefits? – in the short term, some of the
councils are getting benefits already through sharing the cost of updating /
developing their IT strategic plans.

In the medium to long term on an
ongoing basis, all councils expect to obtain benefits through more standardised
IT infrastructure and joint purchasing, then more importantly through the
ability to share applications, support, training, backup etc – through a number
of shared IT services. 

impacts? – to varying degrees each council
will make better use of its IT infrastructure. 

Initially community outcomes will not
really be impacted but indirectly there will be some benefits from management
spending less (duplicated) time on IT strategy and related implementation
decisions, IT services should be delivered more efficiently, possibly longer
support hours and reduced back up costs.

Alignment with each councils
organisational goals is ensured through the proactive involvement and drive of
the four CEOs in the shared service development.

smartcity? – starting to manage and deliver
shared IT services is a major transformation for any logical group of councils.  While much of the transformation will be in
the IT infrastructure area or backroom, benefits will flow through to
communities and users over a period of time.

2 – shared library system

what is the shared service? – three councils have been
sharing  a common library software
application, hosted by one of the councils. 
Communication links were improved, a larger dedicated server was
purchased and SLAs agreed between the three using councils and the one council
hosting and managing the application.

As the service was managed via
various agreements and joint user teams, no entity was created and a CCO was
not required.  Costs are shared according
to their agreements.

benefits? – in the short term, one council
needing to replace its library software got considerable immediate benefits.

In the medium term on an ongoing
basis, all the councils have been receiving benefits through reduced
management, support and backup costs. 
There was also improved support between the councils through being able
to backup key staff positions and share training.

impacts? – each council has been making
better use of its IT infrastructure. 

Initially community outcomes were not
really impacted but indirectly there was some benefits from management spending
less (replicated) time on selection and ongoing management of the application.

Alignment with each councils
organisational goals is ensured through the proactive involvement and drive of
the key users in the service level agreement development and ongoing operation.

smartcity? – sharing (instead of replicating)
high cost IT infrastructure is a sign of a smart city IT services - and to
achieve it is a major transformation for any logical group of councils. 

3 – common GIS platform

what is the shared service? – all of the councils in a  region, including the regional council, have
agreed a common GIS platform and application. 
This recognises that increasingly councils need to share information,
and that GIS resources (technology and people) are expensive to maintain.  Initially the shared service is the agreement
but in the medium and longer term the councils expect to start sharing
applications and information (plus expertise and training).

A shared services vehicle is already in place
with a number of widely differing shared services being hosted so there is a
mature sharing and governing environment.

benefits? – in the short term, some of the
councils are getting benefits already through sharing the cost of investigating
upgrading their various GIS applications.

In the medium to long term on an
ongoing basis, all councils expect to obtain benefits through more standardised
GIS infrastructure and joint purchasing, sharing information/ data gathering
and then more importantly through the ability to share applications, support,
training, backup  as well as the
expertise to really drive the GIS applications well. 

impacts? – each council expects to make
considerable better use of its GIS infrastructure, data capture and analysis /
reporting. 

Initially community outcomes will not
really be impacted but indirectly there will be some benefits from management
spending less (replicated) time on GIS strategy and related management
decisions, and put more effort into using its wider pool of information to
better plan and manage the wider environment. 
Long term these latter objectives will be realised more fully.

Alignment with each councils
organisational goals is ensured through the proactive involvement and drive of
all of the CEOs in the shared service development.

smartcity? – sharing the major spatial
information management infrastructure and resource across multiple councils
instead of replicating the effort and cost is a major transformation.  Benefits will flow through to communities and
users over a period of time.

4 - common insurance
purchasing

what is the shared service? – all of the councils in two
regions combined to tender out most of their insurable risks.  While this is just joint purchasing, it was
driven through the existing shared service vehicles in each region working
together.

The shared services vehicles already in place
with a number of widely differing shared services being hosted so there is a
mature sharing and governing environment but more importantly, a high degree of
ownership and drive.

benefits? – in the short term and on an
ongoing basis, all of the councils are receiving significant benefits through
reduced costs of insurance.  There is
also significantly less replicated time in dealing with insurance each year to ensure
rates are still competitive.

Risks are also being more
comprehensively identified and managed.

impacts? – primarily seen as reduced costs
of insurance and less time replicated by management.

Initially community outcomes are
not really impacted but indirectly there will be some benefits from management
spending less (replicated) time on insurance issues.

Alignment with each councils
organisational goals is ensured through the proactive involvement and drive of
all of the CEOs in the shared service vehicles and overseeing every shared
service.

smartcity? – working together effectively
across multiple regions and delivery considerable savings is a transformation
for any group of councils. 

5 - common resource
management

what is the shared service? – two regional councils are
working together with a view to jointly managing a major environmental
resource. 

benefits? – in the short term, savings are
expected in terms of developing policy. 

In the medium term and on an
ongoing basis, both councils expect to deliver a better service to their
communities through monitoring and managing the resource, as well as delivering
a consistent service to resource consent applicants and consent holders across
both regions.

Sharing scarce expertise as well
as sharing information and monitoring tasks will also deliver considerable
benefits to both regions.

impacts? – while infrastructure is not
impacted, this is an innovative approach to a fundamental environment
management issue.

Community outcomes will be improved
over time through more consistent management of the resource.

Alignment with each councils
organisational goals is being ensured through the proactive involvement of the
CEOs.

smartcity? – combining across regions to
deliver common services is a major transformation for those regions which will
flow through to communities and users over a period of time.

Lessons learnt from a wide
range of shared services?

There are a number of lessons that have been learnt the hard way,
through forming a number of shared services and CCOs:

It is essential to get multiple layers of managers and staff on
board right from the start, to communicate regularly at all levels from junior
staff to Councillors and to be realistic about timeframes to achieve
change. 

It is also essential to not “threaten” jobs, to work with all
involved managers and staff to make change happen, and to have working parties
driven by champions backed up by supportive management including the CEO’s
explicit support.

Experience shows it is best to focus on low hanging fruit first to
get runs on the board and quick wins under your belt while avoiding potholes
(so to speak).

It will never work well if there is no driver or champion for the
shared service; and/or no strong backing by management as well as explicitly
from the CEOs. 

There are practical problems in creating a common service when
existing contracts for services (that are to be shared) across councils expire
on different dates and there is a reluctance and probable financial penalty for
some councils to break contracts. 

When a shared service has been successfully formed, it is essential
to pay attention to the ongoing governance, funding, management and practical
operating aspects once the early euphoria has worn off. 

The most successfully operated shared services are those run by a
“service advisory group” made up of the key staff / managers who used to
operate the individual service equivalents in each council previously.

Recognise the need for competent project management when forming a
shared service of any complexity, with multiple parties, multiple users,
critical timelines and a critical audience. 
Recognise the need for consistent governance across multiple shared
service arrangements. 

It is easy to share common support or administrative (back office)
services as they don’t directly affect external customer service delivery
standards and they are not usually visible to elected officials.  Such services are the prerogative of the CEO
and it should be up to the CEO to determine the most efficient way to deliver
them.

Sharing front office services is more challenging for the reverse of
the reasons above – and has the potential to provide greater benefits and also
to go wrong faster.  It is still worth
exploring but needs more careful attention to the feasibility study,
communications, project management and change management.  Managing the political issues is another
exercise again!