Reducing the cost base

In tough times, the frequent recourse of hard-pressed management in local authorities is to top-slice departmental budgets, perhaps with some ring-fencing of sensitive areas. The problem with this is it impacts morale across the organisation, puts customers on the look-out for falls in service quality, and above all focuses staff attention on maintaining services as they are.

There is an alternative, which is to recognise that the Council of the Future will be very different to that of today, not least in having a much smaller cost base, and to start making immediate progress towards the new model. It’s possible to maintain or even improve service quality on a smaller budget -but only by doing things differently.

So how can you make cost savings that will improve customer service?

Hold all information electronically

This has many benefits:

• It enables destruction of about 90% of paper files, with most of the remainder relegated to low-cost off-site storage.
• It releases office space — typically about 20% — generating revenue savings (and, potentially, capital receipts) if rationalised into complete floors or buildings.
• It enables smart, flexible and home working, since employees are no longer constrained by access to paper documents.
• It enables all customer-facing staff, wherever located, to access relevant files to answer customer enquiries, eg a social worker on a visit to a service user, a revenues and benefits adviser working from home.
• It reduces time spent looking for information - some estimates put this as high as 20%. What if this could be translated into reduced head-counts?
• It enables a wider range of services to be offered on-line on the website. Once authenticated, customers can access information which is personal to them or to their circumstances.

Ensure that the website works right first time, every time

This differs from many current websites in many ways:

• It encourages online customer self-service. Every transaction handled in this way saves a minimum of £5, which over, say, half a million transactions, typical for a medium sized organisation, amounts to £2.5 million annually.
• It becomes the single source of information. Get the website right, and it becomes the single definitive source of information for everyone. Hence, a massive reduction in duplication (no separate system for the contact centre for example).
• It becomes fully integrated with service-specific systems such as those for environmental health, social care and libraries, enabling visitors to make enquiries, requests or bookings directly without employee intervention. This also gives rise to significant savings in employee costs for individual services.
• It focuses on the customer experience, responding in the way that customers expect, not just reflecting how the service provider thinks. It may even use social media technology to solicit users to contribute content and feedback on the services that they receive.

Be much more effective in using resources

There are many facets to this. Some savings flow from reducing the amount of office space required, through electronic document management. Larger savings in office accommodation come from introducing smart and mobile working, enabled in turn by electronic information management. By allowing employees to work at home, on site, or with customers, they become significantly more productive, and spend less time in the office. This leads to a reduction in the numbers of desks provided for employees - typically reducing the desk count (and hence floor space) by 30%.

A likely radical change is a move away from using employed staff, paid by time worked, to contracted staff paid by achieving agreed outcomes. This is happening already, with reports of dramatic reductions in directly employed staff, and an increase in ‘portfolio workers’ - people who work from home, on a contract basis, serving one or more employer.

Allied to this is a move away from current ways of measuring performance - usually based on process measures, such as volumes of cases, lengths of time to process cases, instances of process incidents (eg of bed-blocking in hospitals) - towards outcome-focused measures, which better reflect the value to the customer of the service or activity.

Realise the intended benefits

Organisations often embark on major programmes of change but fail to generate the savings promised in the business case. Benefits realisation is not easy. The levels of saving achieved depend on reducing employee numbers, selling off, or disposing of, property, abandoning paper, and dramatically changing working practices and organisational cultures. None of these is easy. Success demands strong leadership.

Manage information as the key asset

Public service organisations will recognise information rather than people, plant or property as their key asset, and will manage it accordingly. Information will be secure, accurate and held once (not multiple instances of the same data in different services or different applications).

In future, the loss of an office (through flood, fire or other major event) will have relatively minor impact, because employees will be able to work from home, or from any other location. Transport problems, extreme weather or epidemics which prevent them from being able to travel will have less impact than at present. Even disruptions to the financial systems will have relatively minor impact in the short term. However, a failure in the council’s information systems, even for a few minutes, will bring the work of the council to a halt, and be immediately apparent to the outside world.

The website will be the pivotal element in this new world — the organisation’s ‘shop window’. It is the delivery channel for services to the majority of customers, and to many people the website will be the service.

Website design will focus on the customer journey, not the organisation’s internal processes. Customer needs will dictate information content, not what the service provider has to say. Remember, too, that, as transaction volumes increase, unit costs of web delivery decline significantly, whilst other channel unit costs remain constant.

Self-assessment will be the norm. Already in social care, benefits, grant eligibility, planning guidance and many other areas it reduces the demand for staff effort, and empowers customers.

Apply systems thinking to every process. It is not just about cutting out waste, but is about putting the customer first, and asking, ‘What value does every part of the process add?’ If it does not add value, get rid of it. We need to banish excuses such as: “We’ve always kept a photocopy of the application” and “The section manager has to approve all applications. No, he’s never rejected any”.

Other potential savings

The five areas mentioned so far are by no means the only way forward, though they are essential first steps. Shared services, more effective outsourcing and greening the organisation can all contribute major savings and potentially improve customer service.

How Socitm Consulting can help

• Readiness assessment and stakeholder engagement
• Business, customer, information and ICT strategy development
• EDRM programme management
• Estates rationalisation support
• Home, mobile and flexible working
• Web & intranet improvement
• Front to back integration
• Business process improvement
• KPIs, benchmarking and performance management
• Benefits realisation
• Information assurance

For more information or to discuss your requirements, please call us on 0845 450 0904 or use our online contact form.