The private sector continues to weather the brunt of the storm with failed businesses, job losses and an unpredictable future. However, the public sector also faces its toughest challenges to date.

The world has changed. In October 2007, the Chancellor described an economy continuing to grow strongly and a Government meeting its strict fiscal rules whilst at the same time setting out priorities to support sustainable growth and prosperity. But by November 2008, in the wake of the worst global financial crisis for a genera¬tion, he announced a doubling of the national debt to fund a short-term boost to the economy in an attempt to reduce the depth and longevity of the current recession. And today in his budget statement he outlined further borrowing and increased support.

The private sector continues to weather the brunt of the storm with failed businesses, job losses and an unpredictable future. However, the public sector also faces its toughest challenges to date. Treasury’s Operational Efficiency Programme (OEP) represents a significant progression from the Gershon Efficiency Programme for CSR04. The efficiency savings required within the current Comprehensive Spending Review (CSR07) were raised in November by £5 billion to £35 billion, with a further £9bn savings identified in today’s budget for the CSR10 period. The number of those needing support to find work is rising quickly, just as the availability of jobs is in rapid decline. And the pace at which change is now required far exceeds normal public sector planning cycles.

Rising to the challenge will not be easy, not least due to the continuing uncertainties ahead, but collaborative procurement, improved back office efficiency, targeted service transformation and focussed delivery, must surely all play their part.

COLLABORATIVE PROCUREMENT

The public sector is faced with a procurement challenge on two fronts: The Comprehensive Spending Review and the Procurement Capability Review. On the surface, these programmes present, perhaps, conflicting targets for departments - both core and devolved. In reality, the programmes are complimentary but require closer linkage.

Some of the CSR07 procurement targets will be addressed via conventional levers, but others may require a more radical approach. The Gershon Programme has already harvested some of the efficiency opportunities. However, CSR07 is far more demanding and procurement can play a strategic role.

Government already has a collaborative procurement programme in train, led by the OGC, delivering significant efficiencies. However, it is likely that both the pace and impact (scope and influence) of this programme need to be increased. Many of the building blocks for the programme already exist - governance, data standards, Collaborative Category Boards, Programme Management – but departments individually need to adopt collaboration and the internal change that this will require to be effective. Each organisation should be looking to ensure that 100% of its third party expenditure is managed effectively. With finite resource and budget that may simply not be possible within a department.

Therefore, for tactical (commodity) procurement every potential use of pan government collaboration should be considered. Appropriate use of public sector buying organisations can free up the finite departmental resource to focus on core and strategic activity. Collaboration, in addition to making scarce resource go further, can lower supply risk, reduce the cost of procurement and enable innovative approaches. Benefit can be achieved by leveraging the public sector's buying power in key commodity groups (the public sector is one of the biggest purchasers of energy but to date has not fully consolidated its sourcing, although the OGC-led strategy for energy now influences 50% of public sector energy spend).

BACK-OFFICE AND IT EFFICIENCY

The public sector has been wrestling with back-office and IT efficiency for decades: the 80s saw basic automation of administrative processes, the 90s saw more ambitious integrated business and IT change programmes, and this decade has seen major growth in customer-centric integrated workflow and telephony solutions and the rise of the customer contact centre.

However, the maturity level is still low. Whilst the scale of the opportunity for improvement may indeed be as big as ever, the absence of low hanging fruit and the pressure to deliver real and timely cost efficiencies make the choice of path more challenging. In addition, citizen expectations (based on their other life experiences) increase over time creating additional pressure. So, what can the public sector do?

Review the applicability of Shared Services

Whilst good progress is being made in Shared Services across many areas of the public sector in the UK, now is the time to review plans and question whether the pace of change is fast enough and whether achievements to date are leading to tangible benefits.

Innovate and break down existing boundaries. Significant focus to date has been on traditional support functions such as finance and HR but the public sector has experience of the possible benefits from a Shared Services approach to areas beyond the traditional reach.

Ensure both the scope and pace are sufficiently ambitious. Consider additional external capacity and capability to challenge your plans and bolster programme management. Improve existing implementations by improving measurement, governance, incentive schemes and communicating results. Re-evaluate current programmes in light of the changed environment. Benchmark the performance of your Shared Services provider against key criteria, and develop improvement plans where needed.

Re-use existing IT assets

The pace at which technology is evolving, the rapidity with which new entrant off-the-shelf packages proliferate and the scale, complexity and bespoke nature of many of the long standing legacy systems present a unique challenge across government.

Attempts at wholesale upgrades have proven to be expensive and so far largely unsuccessful. Attempts to continually evolve these systems to incorporate new ideas also show diminishing returns.

The smart money is now focused on re-use of existing systems to continue to do the things they already do but also to augment these functions with additional add-ons which allow more user flexibility, support much greater cross functional working and provide a whole customer view. Where assets need to be replaced, consideration of package implementation using standard 'out-of-the-box' functionality will significantly reduce timescales and provide a much lower total cost of ownership.

SERVICE TRANSFORMATION

After many years of investment in IT, and with the socio-economic barriers to public access to IT at an all time low, the opportunities for major service transformation are both timely and necessary. The route to transformation has been debated for some time and the general themes of the next evolution are clear.

The citizen is now rightly at the heart of the solution - gone are the days of the 'departmental silo' - and services must be designed around the citizen, both within and across departments. Self service and self help are on the increase with growing access to, and appetite to use, suitably designed and secure internet-based solutions.

Applications should consider multi-channel mobile access as these are now the norm. Driving down unnecessary and avoidable customer contact is critical and will simultaneously improve customer service and reduce costs. Consolidation of websites and a rationalisation of contact centres will further advance the delivery of the above.

Whilst these themes are clear in principle, the enabling actions are less straightforward and incorporate a number of challenges, not least that: the breadth of the challenge is significant across all facets of every department; the pace of change is often too slow; and concerns continue around data security. So, if cross departmental services and citizen self services are to increase, then both the reality and the perception of data security will need to be tackled.

Apply lean principles

One-size-fits-all solutions requiring citizens to navigate a complex bureaucratic maze to obtain services simply does not cut it in today's 'on-demand' world. The challenge confronting government extends beyond improving service levels.

Restoring the confidence of citizens in their public institutions means demonstrating competence in carrying out the difficult task of governance in the 21st century and delivering citizens better value against increased expectations.

Recognising the magnitude of this challenge, forward-thinking government departments are applying innovations from the private sector to help improve the delivery and effectiveness of public services. They are paving the way forward, illustrating how the discipline of customer insight and experience can be adapted to the public sector to drive cost savings, deliver end-to-end improvements in servicing customers and inform the design of new initiatives and services.

Make IT agile

The time-honoured approach in the public sector of a year documenting detailed requirements, a year in procurement and several years in design, build and test is no longer capable of keeping pace with the changes required.

Departments or other public sector organisations, for example local authorities, providing identical services or back office functions need to collaborate to reduce both cost and time to availability.

The solution going forward will focus around the design of IT solutions which are delivered in achievable and extensible chunks, be that small bespoke features or off the shelf packages, the key will remain a focus on simple achievable steps which then enable programmes to effectively respond to changes in priorities and requirements.

FOCUSED DELIVERY

A rapidly changing job market driving up demand, renewed pressures on cost reductions and growing political uncertainty all impede effective reform. Moreover the pace at which change is required, the constant pressure to do more sooner, and for less, all have the potential to put successful delivery at significant risk.

Careful prioritisation and well focused innovative efforts around simple, flexible solutions which successfully leverage existing assets is the way forward. Where this is coupled with a disciplined approach and commensurate capacity of suitably skilled practitioners, results will flow.

Ruthlessly review programmes and projects to ensure correct focus. Validate whole life costs, the magnitude of the benefits, their continued relevance, and the timescales for realisation, and resist an overly prescriptive 'I've started so I'll finish' mentality.

Focus on simple steps which can take you quickly in the right direction then re-assess once you have delivered. Avoid embarking on programmes without the skills to be sure you can see it through to a successful conclusion. Don't be tempted to take short cuts. It is better to trim scope than quality. Many of the basic lessons of programme and project management are at risk of being overlooked in search of the 'heroic' solution.

CONCLUSION

The budget on 22nd April included further measures aimed at addressing the economic challenge, both globally and here in the UK. And whilst these measures place an increasing share of the burden on the public sector, the four elements listed above on procurement, efficiency, transformation and delivery remain as relevant as ever and will continue to play a major role.