Following last week's news in George Osborne's Autumn statement that further reductions in expenditure (initially by 1%, but growing to 2%) are on the cards, I wondered, what would be the most effective way to work out how to deliver more with less from a public sector organisation?
The standard answer used to be "business process reengineering" and now it seems to be "outsource" - as evidenced by the current One Barnet programme (and Barnet is not unique here). But I think there is a third way - invest!
Adding value to business processes
There is no shortage of data available within these organisations, whether this comes from ERP systems (SAP, Oracle, home-grown or other), data warehouses or forecast demographic data. But what systems and processes exist to turn this into useful information - outside of overworked planners sitting at overworked PC's crafting complex excel models - that can in turn add value to business processes?
Harnessing the value in data
Surely we should be able to harness all this data and do something meaningful with it that would allow our public servants to predict where they can get the biggest bang for their buck. These are the types of questions that they need to answer:
How can we align and optimise outcomes with limited resources?
How do we contain the growing costs of service delivery?
How do we maximise the mission impact of budgets and realign resources to adjust to shifting priorities?
How can we integrate budgets, costs, and performance objectives and results for better visibility and control?
How can we increase operational efficiency and productivity?
How do we provide more transparency and accountability to the public?
Increasingly, organisations of all types are creating planning models for short, medium and long-term planning that are based on all types of drivers such as headcount, units sold, services delivered. These are no longer stand-alone models created by planners sitting in isolated planning departments next to the chief executive's office. Instead, they are fully integrated with real data taken from operational systems and adjusted on a monthly basis to reflect reality as it attempts to derail all our assumptions. And most importantly, the models are owned by the teams who have the responsibility to deliver the products and services. By taking feedback from the operational systems, the assumptions can be challenged, tweaked or even scrapped completely. This is the only way that a robust forecasting solution can develop - despite what some management consultants might have you believe!
So - how can this help in the public sector?
For a start, the process of operating this type of model really starts to show how costs are linked to output. And by performing 'what-if' scenario planning, organisations can see what would happen if they reduced inputs (i.e. costs), changed resource allocation or had the ability to manage the level of demand (i.e. outputs).
By spending less time reacting and more time analysing and planning, organisations can line up the correct resources, focus these limited resources in the right places and in turn increase efficiency. Outsourcing organisations will perform part of this task in order to achieve the savings that they are committed to, but in contrast to outsourcing, by doing this in-house, organisations can increase the understanding and control of processes.
Invest in the right place and the benefits will come
The first step is to produce a business case on the costs and benefits, both quantitative and qualitative, for an integrated planning, forecasting and reporting solution. Take this step and you may be surprised by the result.