Resources – Strategic Compass Exercise

Rather than approach this exercise on the basis of the council’s departmental structure, a functional cross service approach has been taken to looking at our major support services.

Individual strategic compasses have been prepared for the following functional areas

  • Human Resources
  • Finance
  • Information Technology
  • Property

Looking across the authority and including service contracts with Serco and Capita it is estimated that approximately £30m is spent on the delivery of these support functions. Putting these support functions in context, the council owns 2,070 property assets, employs 18,400 full time equivalent staff and operates with an annual budget of £1.074bn.

Summarising the individual strategic compasses, performance in each of these service areas is relatively high compared to other authorities. There is a limited amount of reliable comparative data available on the costs of these services because of the varied organisational structures and accounting arrangements in different authorities. However, the limited information that is available does suggest our costs in HR and property are not out of step with other councils, whilst for IT and finance the available evidence suggests units costs are below average.

Having said this we believe there is much more that can be done to improve these services still further and to deliver further efficiencies to support front line services.

We have implemented the SAP Enterprise Resource Planning system with the aim of providing better management information to managers,providing a platform for the standardisation and stream lining of processes and as a result producing efficiency savings.

With the Way We work programme we are not only aiming to avoid the rising costs of operating from unsuitable and/ or decaying office stock, but are aiming to establish the building and IT infrastructure to enable efficient and flexible delivery of support services.

With these building blocks in place it is now possible to consider the next phase of this progression ie the bringing together of these support functions to achieve economies of scale, and to ensure consistent service quality across the authority. New ways of working and new IT solutions will enable us to move in this direction without losing the advantages of our current devolved approach, which has enabled deliverers of these functions to have a close understanding of service needs.

Service: HR

Service Outcome: to ensure there are strategies, policies, advice and practices that support the business of the County Council

High

Performance

Low Cost

Supporting Evidence:

Context
  • Contributing to keeping the council tax down
-The County Council employs 31,000 staff (18,400 full time equivalents)
Two thirds of those are based in schools. The pay bill last year was close
to £600m). Ensuring that we employ the best people, that we realise their
full potential and that we effectively mange their performance is crucial
  • Attracting, developing and retaining staff in a competitive marketplace
- Hertfordshire has high employment levels. We are on the borders of
London with good transport links and 25% of the county’s working
population commute. The high cost of living (particularly housing_
adversely affects our ability to recruit and retain staff. We are operating in
the context of national skill shortages , particularly for qualified social
workers, occupational therapists, teachers, planners, civil engineers.
  • Supporting change (for whatever reason) in the organisation
There are a number of major organisational change projects which require
high levels of HR support – in particular, SHARP, The Way We Work,
Growth and Change, establishment of Partnership Trusts
  • The need to work with the times (modernising agenda)
- The impact of technology on the way we work, the development of
flexible working practices etc all require significant HR contribution
Performance information:
  • Performance indicators – Upper quartile performer on all equalities and absence management BVPIs
- % of top 5% of earners that are women
- % of top 5% of earners form ethnic and back minority communities
- % of employees retiring early
- % of employers with a declared disability
- Working days lost due to sickness absence (8.08 p.a)
  • National awards
- 2003 HR Excellence Award
- 2003 Personnel Today Innovation in Recruitment and Retention Award
(In competition with public and private sector)
- 2004 Local Government Personnel Department of the Year
- 2005 Well Being Award
- 2005 Employee Benefits Award – Best voluntary benefits scheme
  • Improving recruitment and retention statistics – Staff turnover has reduced from over 18% to 13.9% over the last three years and is now below the public/private sector average of 15.7%. Vacancy levels have reduced across all national skill shortage areas.
  • Innovation e.g. Manpower. Ground breaking partnership, on line recruitment (around 60% of all applications now coming via web). Control of temp agency market with significant cost reductions. Overall savings on 1st Manpower contract were in the region of £2.5m.

Cost information:
There are no like for like comparative costs available – we have tried to gather information via visits in the BV review and benchmarking clubs but organisations account for services differently.
The Manpower contract was subject to a tender exercise as are contracts for Learning and Development, ‘Care Well’ and other services we buy in from time to time. This ensures services are market tested. Our employment package includes a raft of voluntary (free to HCC) benefits to staff. Our move to single status had a number of cost balancing features and according to press reports we seem to have done well by comparison to others.
Trend analysis:
  • The Best Value review in 2003
  • Major awards spread over 3 years – see above
  • Contracts – eg Manpower have targets for service improvement and cost savings over next 5 years, with a further £3m of savings predicted for the second contract.
  • Different market place offerings which present opportunities for further change – eg Shared Service Centres

Service Aim:
  • Improve performance within HR
  • Lower costs
  • Create greater flexibility within the service and for services
  • Improve performance of the organisation

Delivery Strategy:
  • Centralise HR services – survey of other counties currently showing this is a national trend
  • Create an HR Shared Service Centre – increase efficiency / reduce costs
  • Work with partners (including outsourced activities)
  • Industry research suggests that there are potentially significant savings generated by moving to the models of delivery we are suggesting.

Service: Finance

Service Outcome: Delivering effective financial support services to the council

High

Performance

Low Cost

Supporting Evidence:

Context
The functional area covered by this analysis includes the varied roles of delivering strategic financial / policy development, financial advice and decision support, accounting and stewardship, transactional services and a range of specialist services re tax & insurance.
External factors impacting on the function include:-
  • The Gershon agenda re efficiency in back office services, transactional services and the drive to explore benefits of shared support services.
  • The evolving requirements of the CPA use of resources assessment, and Whole of Government Accounts requirements.
  • The impact of the growing role of partnerships – leading to more complex monitoring, reporting and stewardship arrangements – eg re JCPB, children’s trusts and Herts Forward
Across the council roughly £11m is spent on these services with £4m of this relating to the transactional services supplied by Serco. Around 150 staff are directly employed in these services.
Performance information:
Given the range of activities encompassed in this function it is difficult to single out a small range of indicators to consider, but the following evidence has been taken into consideration.
Previous CPA score for use of resources was 4 out of 4.
The District Auditor’s comments in the annual management Letter that financial administration is generally sound.
All major financial reporting deadlines are met.
In area of VAT and Income Tax, unlike many authorities eg tax we have avoided any major financial penalties arising from tax errors
Because of focus on other priorities, our performance in meeting the BVPI for prompt payment has remained static for 3 years and we are now in the lower quartile of performance for this indicator.
There is also a perception that the time lags involved in producing budget monitoring reports are too long – being 6 – 8 weeks after month end.
Although the limited available comparators indicate that the function is performing relatively well compared to other authorities, there are areas of weakness and opportunities to make substantial improvements in the added value that the function brings.
Cost information:
The latest detailed cost comparators available for the function indicate that the costs of accountancy services in the council per £1,000 of turnover are approximately 20% lower than the county average. Source: (IPF Accountancy Benchmarking 2002/3).
At a more detailed level the analysis indicated relatively high costs in CSF and ACS and relatively low costs for the corporate centre – this is a reflection of HCC’s decentralised structure and the high degree of devolution within these areas.
With regard to the transactional services provided by Serco previous year’s benchmarking has indicated relatively high cost for these services, but with the recent renegotiation of contract and opportunities that SAP has offered to rationalise these processes it is expected that our costs for these services will now fall well below the average. Comparative statistics on this will not be available until next year.
Trend analysis:
On the transactional side of the function the aim is to drive out further efficiencies through working with Serco through the Continuous Improvement Team.
Service Aim:
In other service areas the aim is to increase resources devoted to forward looking decision support and management accounting. This is to be delivered within existing resources.
Reduced cost of high volume transactions processes.
Improved decision support both in terms of linking unit cost data to performance data and supporting business case development.
Greater consistency of service for all departments – re policies & procedures, financial training and decision support.
These key aims will be reviewed once the current CPA use of resources round is complete and once we have the finding of our current internal review of our services using the CIPFA Financial Management Model are complete.
Delivery Strategy:
We will explore how the shared service concept can be applied to our finance function both internally and with partners.
We will build on the work of the SHARP BPR team to standardise approaches not just to SAP but to all our activities.
Resources tied up in backward looking reporting and stewardship activity will be reduced with the help of SAP.
The resources implications will become clearer once we have agreed the actions in response to CPA Use of Resource findings.

Strategic Compass - IT

High Performance High Performance


The report outlines a service that is performing well at competitive cost. The service is targeted to further improve performance whilst driving down overall unit costs.

Context

Commercial Services provides Information Technology Services through the management of both Corporate Systems solutions and Corporate Infrastructure delivery. Key Issues are as follows:-

  1. Development and implementation of Shared Services concept to improve Hertfordshire’s use of resources building upon the successful introduction of an SAP Enterprise Resources System. This will be a key strand in achieving Gershon efficiencies for the County. Move to greater centralized use/ better coordination of resources was central theme of Professor J Ward Cranfield report in August 2004.
  2. To support the organization in achieving its property rationalization and improved working environment/practices project “The Way We Work”. Through the introduction of improved Information Communications Technology across all new sites.
  3. Establishment of a new Customer Services Centre contract with Vertex.
  4. The introduction of the Electronic Social Care Record for Children, Schools and Families/Adult Care departments to provide efficient and up to date access to electronic case file information across the county for those staff who are authorized to access it.
  5. Driving up interactions with the county by electronic means such as the web-site (HertsDirect) to realize efficiencies - whilst retaining availability of other channels where that is the citizens preferred mode of interaction.
  6. Working with District, Health and other agencies to maximize use of resources and improving access to quality services for the citizens of Hertfordshire
  7. A property portfolio that requires extensive networking over many administrative centers. The move to rationalize that portfolio through the Way We Work programme will provide the opportunity to further improve our network infrastructure.

Performance Information

  1. Hertfordshire introduced the first cross authority Customer Services Centre and associated technology within local government along with partners Capita in 1999. Every week our customer service centre handles around 20,000 calls about every aspect of the council's services. Satisfaction ratings show that 96% of people rate staff at the customer service centre as helpful and 95% are satisfied with the way their call was handled.
  2. Hertfordshire ICT achieved top mark of any authority in the Audit of Best Value Review processes in 2001 ( Service GOOD and WILL improve)
  3. External reports from CranfieldUniversity continue to assess Hertfordshire as leading the field in use of IT in local government (August 2004)
  4. Hertfordshire provides access to IT for all staff who require it to perform their jobs with 5,500 PCs across the authority (excluding schools) all of which are renewed on a three year rolling programme.
  5. Hertfordshire achieved Government targets for Electronic Government (IEG) One year ahead of schedule (Dec 2004).
  6. Hertfordshire has been consistently recognized as among the leading local authority web-sites by Society of IT Managers. It was among a handful of authorities to be the first to achieve “transactional” status for its web-site. Thousands of people also log onto our website every week. More than 20% of parents are now applying for their children's school place online, there are more than 15,000 visits a month to our online recruitment website, and last year 150,000 library renewals and reservations were completed online.
  7. Acknowledged by SAP to have implemented the largest local authority ERP solution of its type at the time of project SHARP (2004)
  8. HertsDirect Website consistently meets / exceeds 99% availability target to public.
  9. Maintaining ICT skill levels across the authority continues to present a challenge to us. Although there have been some examples of good practice in some departments (e.g. European Computer Driver License roll-out in Libraries) our use of ICT can still at times be limited by the training needs of out staff.

Cost Information

  1. Hertfordshire spends circa £13m per annum on ICT.
  2. Life cycle costs for PC (including support) were externally benchmarked and negotiated to best practice levels with introduction of ITnet (now Serco) contract in 2001.
  3. A further benchmarking exercise for PC and midrange computing services was undertaken in December 2004 by Gartner Inc (leading independent consultancy in this field) who found that the contract continued to be competitive - £658k (20.2%) lower than the peer group average.
  4. Unitcosts for telecommunications (i.e. telephone services) have continued to be managed down year on year since the favorable bench marking findings of the 2001 Best Value Review. HCC are currently concluding negotiations with BT that will additionally provide further savings (2006/07) of £300k per annum against current spend.

2004/5 / 2005/6 / 2006/7 / 2007/8 / 2008/9
425 / 1,451 / 2,510 / 2,800 / 2,900
  1. SHARP (SAP ERP) programme included the following business case savings which are on target to date:-
  1. Value of key contracts.

SERCO PC Contract - £900k per Quarter – expires May 07
Serco Managed Service Contract - £3.4m pa – expires end Mar 2009
Logica SAP implementation and Support - £1.3m -

Trend Analysis

  • Service delivery is increasingly reliant on ICT. What started as automation of back-end processes back in the 1970’s has evolved through to today’s scenario where even front line services such as delivery social care are reliant on electronic information systems for effective management and recent innovations such as mobile technologies for improvements in quality and efficiency of service delivery. There is no sign that this trend will change. Continuing ICT development is critical to improving the way we deliver services.
  • Hertfordshire’s citizens have one of the highest ratios of PC’s per head in the country. Recent evidence also shows that this is now translating into the highest levels of broadband usage per head of population for the UK (after a slow start in rural areas). The citizens of Hertfordshire expect to do business with us in this way.
  • Hertfordshire has led the field in web applications such as Schools Admissions on-line. The numbers of citizens choosing to do business with us in this way is increasing year on year. 4,900 applications on-line already this year as of 29th September 2005.
  • The range of solutions in key areas is beginning to shake out with key suppliers winning increasingly more business and with smaller companies either going to the wall or subject to takeover. For example recent , Oracle and SAP domination of Finance/HR market. This trend is set to continue.
  • Central Government is becoming increasingly prescriptive in the choice of solutions for local government and other agencies. Witness for example the establishment of NHS spine (to be used as info sharing mechanism with Social Care). There is some suggestion that even areas such as Schools Finance systems may be negotiated and rolled out nationally in the not too distant future.

Service Aim