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December 2009, Government Insights #GITD03R9 Government Insights: European Government Technology Decision Support: Market Overview

Best Practices: CHAMPS and Service Birmingham Key to City 's Corporate Services Transformation — A ProveIT Case Study

E u r o p e a n G o v e r n m e n t T e c h n o l o g y D e c i s i o n S u p p o r t

MARKET OVERVIEW #GITD03R9

Jan Duf fy

GOVERNMENT INS IG H TS O PIN ION

Birmingham City Council's vision for the future of the city described in the report Moving Birmingham Forward published in 2005 required service delivery at an extraordinary level of excellence. Achieving this and responding to the business needs led the council to launch a far-reaching business transformation program. Key to the successful implementation of the business transformation program was the formation of Service Birmingham, created as a public-private partnership between Birmingham City Council and Capita Group PLC, along with several other partner organizations. A 10-year, £475 million contract to deliver IT transformation was signed in April 2006. Some of the achievements described in this case study are:

● Corporate Services Transformation (CST) was successfully implemented. CST is considered to be integral to the council's efforts to save money and invest in areas that would enable better services. Implementation of CST involved a change to a shared-service delivery model and implementation of Voyager, using SAP's software suite to support the integration of the council's financial, procurement, and operational performance management processes.

● Birmingham City Council achieved the benefits predicted for the implementation of CST. The Business Transformation Program (BTP), the Strategic Business Partnership, and implementation of CST were all based on achieving cashable benefits. CST is on track to achieve £860 million in benefits over 10 years, of which £518 million will be cashable.

● Service Birmingham successfully replaced existing ICT service delivery mechanisms and provided business transformation experience and delivery services. Council employees work alongside Service Birmingham employees in a seamless team environment; all parties have a vested interest in the success of all other parties. The CST implementation was guided using CHAMPS, a new project management process that was developed jointly by Birmingham City Council with Service Birmingham to support end-to-end transformation initiatives in the public sector.

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#GITD03R9 ©2009 Government Insights, an IDC Company

T A B L E O F C O N T E N T S

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In This Report 1 Methodology ............................................................................................................................................. 1 Situat ion Overview 2 Birmingham: The City ............................................................................................................................... 2 The Best Practices.................................................................................................................................... 6 Future Out look 36

Essential Guidance 36 Actions to Consider................................................................................................................................... 36 Learn More 37 Related Research..................................................................................................................................... 37 Relevant Reading ..................................................................................................................................... 38

©2009 Government Insights, an IDC Company #GITD03R9

L I S T O F T A B L E S

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1 Functional Scope of CST ............................................................................................................. 18

2 Delivery of Core CST Implementation.......................................................................................... 21

3 Key Cultural Change Issues......................................................................................................... 22

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L I S T O F F I G U R E S

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1 CHAMPS Phased Approach ........................................................................................................ 20

2 ROI Impact of CST....................................................................................................................... 26

3 Risk Impact of CST ...................................................................................................................... 27

4 Transformation Impact of CST ..................................................................................................... 28

5 Innovation Impact of CST............................................................................................................. 29

©2009 Government Insights, an IDC Company #GITD03R9 Page 1

IN THI S REPO RT

This ProveIT case study explores the following discrete but heavily interrelated elements of Birmingham City Council's early transformation achievements:

● Formation of Service Birmingham to replace existing ICT service delivery mechanisms and provide business transformation experience and delivery services

● Adoption of BTP as the overarching, holistic plan to support and facilitate Birmingham City Council's vision for the future of the city — Moving Birmingham Forward — published in 2005

● Successful implementation of CST as the first of nine work streams in the overall BTP

This report focuses primarily on the formation of Service Birmingham and the implementation of CST, including the use of SAP's suite of software applications to support integration of the council's financial and operational performance management processes into a single tool to deliver a step change in performance and more effective decision-making.

M e t h o d o l o g y

In a ProveIT case study, IDC Government Insights analysts examine a stated business issue in a government organization and the IT approach taken to address it. The study then specifically analyzes the ROI, risk, transformation, and innovation involved in the adoption of the solution. ROI looks at the operational costs and business value of the solution. Risk covers the situational complexity of the technology and the execution of the solution. Transformation covers the impact on the delivery of the government or government department's mission and business processes. Innovation involves leveraging best practices for scalability, repeatability, and replicability.

This ProveIT case study explores the discrete but heavily interrelated elements of Birmingham City Council's early transformation achievements. This report focuses primarily on the formation of Service Birmingham and the implementation of CST including the use of SAP's suite of software applications to support integration of the council's financial and operational performance management processes into a single tool to deliver a step change in performance and more effective decision-making.

IDC Government Insights would like to thank the following people from Birmingham City Council for taking the time to provide input to this ProveIT case study: Karen Bridges, head of business change development; Glyn Evans, corporate director of business change; Rachel Musson, assistant director of accountancy service; Jean Robb,

Page 2 #GITD03R9 ©2009 Government Insights, an IDC Company

assistant director of shared services; and Jackie Woollam, head of business change effectiveness, business change.

SI TUA TION O V ERVI EW

B i r m i n g h a m : T h e C i t y

Birmingham is the U.K.'s second-largest city, with around 1 million residents and covering 267.8 square kilometers. The population continues to grow and is projected to reach more than 1.1 million by 2026. The population is young and culturally diverse, with a higher proportion of residents under than 35 years than the English average.

Birmingham provides over 20% of the jobs in the West Midlands and every day nearly 200,000 people from the larger Birmingham metropolitan area (population more than 2.5 million) commute to their work from outside the city.

Birmingham's economic prosperity was originally built on manufacturing, but economic changes in the 1970s and 1980s led to a massive loss of manufacturing business and jobs. Manufacturing remains important to the city, but Birmingham has also developed a substantial business and financial services sector through the transformation and growth of the city center.

Moving Birmingham Forward

In 2005, the Birmingham City Council published its vision for the future of the city in a report entitled Moving Birmingham Forward. The vision of Birmingham is for it to be a city known nationally and internationally as a place to invest and visit, live, and work. Birmingham is a growing city, where more and more people would want to live and work, a smart city that values knowledge and uses it creatively.

The council recognized that the vision would be realized in a world in which public services would need to be more suited to the requirements and preferences of service users. Users of public services would have higher expectations of services and want better information about standards and performance.

The council's vision committed to making it simpler for people to contact public services and to get information and advice. New information technologies would be exploited for the benefit of the city, bringing together private, public, and voluntary sector organizations.

Through the vision, the council committed to achieving a standard of public service that would be the highest in the U.K. Partnerships, both within the public sector and among the public sector, private, and voluntary organizations, would become important and public services would increasingly be delivered by partner organizations.


Supporting Birmingham City Council's vision for the future of the city required service delivery at an extraordinary level of excellence. Achieving this and responding to the above business needs required the council to transform service delivery. The council needed to make a leap forward in the way it operated in order to become best in class. Processes needed to be faster, more accurate, responsive to customers' needs, and cheaper to deliver, making best use of modern technology.

Business Transformation Vision

"If the public sector is to rise to the challenge of improving services in the face of growing demand and decreasing central government assistance, councils must adopt a policy of radical transformation rather than piecemeal change. The easy pickings of efficiency have now been harvested and it's only by a deeper commitment to change that we can all deliver the bigger savings we must make."

Paul Tilsley Deputy Leader of Birmingham City Council

The council was committed to making better use of existing resources, relieving taxpayers of increasing pressure to pay more, and envisaged a coordinated 10-year business change program that would achieve step changes in service delivery. The council generally referred to this as business transformation.

When deciding on the transformational approach, it was important for council to consider potential constraints and challenges (i.e., availability of relevant skills and experience, managerial capacity to support the change process, and existing organizational models). It was also important to consider the best use of ICT.

The multiplicity of traditional contractual arrangements covering ICT hardware, software, and services were difficult to manage and hampered the council's ability to leverage the investments being made in ICT. Many of these contracts were due to expire in December 2005 and the council was legally obliged to retender them because the value exceeded £100,000.

Formation of Business Transformation Strategic Partnership

The Birmingham Council planned to launch the most ambitious and far-reaching business transformation program of its kind. The program was designed to transform the way the council delivers services to its citizens and covered all aspects of the council's interaction with people who live, learn, and work in or visit the city. Successful transformation would require redesigned business processes supported by a robust integrated ICT infrastructure.


The council considered the following options to deliver these services:

● Renewal of existing ICT contracts. The council had determined that it was not receiving full value from the existing ICT contracts. They were not delivering an integrated ICT service and a more "joined-up" service might be better. Fortuitously, many of the existing ICT contacts were due for renewal.

● An ICT-only partnership. This would deliver an integrated ICT service, but was considered unlikely to deliver the return on investment (ROI) that could be made through business transformation supported by ICT.

● Ad hoc consultancy to support business transformation. This would help deliver the business transformation agenda but would not provide a long-term relationship with a partner that understood the needs of the council and would be committed to delivering successful outcomes. It would also imply a different means of delivery for ICT that may not support business transformation to the fullest extent.

● A partnership including business transformation and ICT on a non-exclusive basis. This option would present an opportunity for the council to procure an integrated set of services and would support the delivery of business transformation, providing integrated ICT services that fully support the transformation agenda.

The council recognized that because of the size and complexity of the initiative, moving the transformation agenda forward would benefit from the formation of a partnership whereby both partners had a vested interest in the overall outcome. Combining the business transformation and ICT services in one contract would ensure a cohesive approach and encourage suppliers to be flexible and adaptable to the changing needs of the council. The services to be included in the partnership would be negotiated as part of the contract negotiations, but would be based on provision of the following two groups of services:

● ICT services

● Business transformation services


Scope of ICT Services

The council agreed that any decision to transfer a service to the partnership should be supported by a solid business case. The potential scope included all ICT services to all directorates and schools as well as other service areas that operated as a traded service. Some areas would be transferred to the successful bidder to manage from day one. The remainder would be assessed at a later date. The total value of the contracts was about £30 million. A rough split for Day 1 indicated that:

● £16 million in services would be transferred to the partnership.

● £10 million in services would be available to the partner on a non-exclusive basis.

● £24 million in services would be excluded from the partnership.

Scope of Business Transformation Services

The following nine programs were established under a single overarching BTP seeking to realize £1.6 billion of cashable benefits over 10 years:

● CST: Implementing tools and procedures to help staff work more effectively and improve delivery, focused on finance, procurement, and management information

● Customer First: Helping the council to provide world-class standards of customer service, aiming to increase the customer satisfaction rating to a minimum of 85%

● Excellence in People Management: Transforming the way the council supports employees and managers, underpinning future ways of working

● Excellence in Information Management: Extending the value of the council's information

● Working for the Future: Entailing 21st century office accommodation and new ways of working

● Adults and Communities Transformation: Improving the way social care is provided for citizens

● Children, Young People and Families Transformation: Improving the health and well-being of children in Birmingham

● Housing Services Transformation: Delivering more efficient, customer-focused housing services that meet the criteria set out by the audit commission, delivering real improvements for customers

● Environment: Helping to deliver the council's commitment to reducing the city's carbon footprint by 60% by 2026


T h e B e s t P r a c t i c e s

The council developed and adopted an overarching, holistic business transformation plan to support and facilitate the Moving Birmingham Forward agenda. Key to the successful implementation of the business transformation plan was the formation of Service Birmingham to replace existing ICT service delivery mechanisms and provide business transformation experience and delivery services. Service Birmingham was critical to the successful completion of CST (i.e., procurement, finance, and performance management transformation through back-office shared services). Service Birmingham was critical to the development of a shared services center that would also support the transformation of front-office services. This report focuses primarily on the formation of Service Birmingham and the implementation of CST.

It is important to keep in mind that CST is one of nine work streams defined by the BTP and was the first to be implemented. A number of best practices surfaced and many lessons were learned during the CST implementation. These lessons will be valuable for Birmingham as it proceeds with implementing other work streams and also valuable for other governments and government agencies that are embarking on transformation initiatives.

Formation of Service Birmingham

On February 4, 2004, the cabinet agreed to place a notice in the Official Journal of the European Union (OJEU) inviting tenders for the proposed strategic partnership and to send a prequalification questionnaire (PQQ) and invitation to submit an outline proposal (ISOP) to all interested companies. A shortlist of these companies would be issued with an invitation to negotiate (ITN).

Ten tenders were received in response to the OJEU notice. Following a detailed evaluation and approval by the Strategic Partnership Steering Group, a shortlist of four consortia/alliances (bidders) was developed.

Invitat ion to Negotiate

The ITN was developed based on the principle of establishing a long-term partnership between the council and the successful bidder. Innovative ways of service delivery were actively sought on the following basis:

● The primary focus of the partnership would be to support a business transformation program to assist the council in realizing its strategic priorities.

● The partner would assist in the business transformation program in areas where the council was unable to resource the activity in-house, or where it would bring significant added value.

● There was a range of possibilities for the structure of the partnership. Decisions about this would be made by the council


based on the proposals received, but in any event would ensure that the council retained overall control.

● Discussions would focus on the ICT services listed in the ITN. However, the council could add other services later following completion of separate business cases.

● Services would be included in the partnership on a phased basis, and, with the exception of services that are currently outsourced, these would be negotiated on a case-to-case basis.

● All business transformation activity would depend on the development of a business case, and the process for this would be agreed jointly between the council and the partner.

● The partnership would be output driven with performance targets to be met.

● The method of funding would be decided on a case-to-case basis. The critical determinant would be whether action and investment through partnership would deliver better value for money than other options.

● A client function would be developed in order to provide proper oversight of the partnership.

● The partnership would be set up initially for a ten year period, with an option to extend for an additional five years.

At the time, Glyn Evans, corporate director of business change, Birmingham City Council, said, "The incremental partnership is seen as quite attractive as it means the partner has a greater incentive. We are developing a process which looks at the business case for each area of the project. … There is no real example of best practice for business transformation projects in the public sector, so the council will be pragmatic in its approach. … We are approaching this with no preconceptions, parts [of the transformation program] may be kept in-house, as a partnership, or fully outsourced. We are asking providers for experience about business transformation, and doing a parallel exercise ourselves to work out our priorities."

Bidder Evaluation

By the end of June 2004, following an initial evaluation, the cabinet agreed to take two bidders to the next phase of evaluation to be completed by the end of October 2005. This phase involved three months of negotiation at the end of which both bidders submitted their best and final offer (BAFO) submissions. The submissions were scored by evaluation in the following areas:

● Business transformation — To assess the capability to assist the council to deliver its vision and corporate plan

● ICT — To assess the role in delivering the ICT service


● Employment — To assess employment models

● Commercial and financial — To assess how the council and the partnership would work together including commercial, legal, contractual, and performance issues and affordability of proposals

● Viability — To assess the overall package to ensure that the proposals for each stream linked together and to assess the cultural fit with the council

The following criteria were considered during the initial evaluation process and also during negotiations:

● Effectiveness of the proposed approach to supporting delivery of the council plan

● Affordability of the bid

● Achievable savings

● Ability of bidder to deliver improved ICT and business transformation services

● Cultural "fit" and ability and willingness to work in partnership with the council

● Workable employment models

● Creation of new jobs in Birmingham

To facilitate evaluation of each bidder's transformation ability, the Business Transformation Group (BTG) commissioned an external consulting firm (Deloitte) to develop outline business cases (OBCs) for a number of priority areas. In order to evaluate how well they would work with the council as well as actual delivery capabilities, the two final bidders were asked to complete a small scale "proof of concept" transformation project, funded by the council, based on the OBCs.

A budget of £300,000 had been set aside to fund the proof of concept projects and the results demonstrated that efficiency savings could be achieved in line with the 15% target that had been established in the business transformation vision. The final scope of business transformation services would be based on a series of business cases to be developed throughout the life of the partnership.

Capita Selected to Form Service Birmingham

In the council's opinion, the proposal submitted by Capita was affordable, demonstrated stronger business transformation services, and the joint venture model was in line with council objectives. The "cultural" fit was deemed to be satisfactory and Capita committed to creating 800 new jobs in Birmingham in addition to those in the joint venture. Consequently, the council recommended that contract negotiations with Capita commence.


Ultimately, Service Birmingham was created as a public-private partnership between Birmingham City Council and Capita Group PLC, along with several other partner organizations. A 10-year, £475 million contract to deliver IT transformation was signed in April 2006. Governance arrangements were put in place for business transformation programs to be proposed and implemented.

The Service Birmingham agreement included changes involving 500 staff from the council's business solutions and IT division into the new venture. To defuse potential objections, employees were offered a choice in the way they would be transferred. They could opt for a secondment to Service Birmingham or take the more traditional transfer of undertakings (protection of employment) regulations (TUPE) route if they wished. The majority elected for secondment and therefore continued to be employees of the council.

Communication with council employees was vital to Service Birmingham success — staff members were consulted from the planning phase onwards. Service Birmingham used a variety of communications methods including email, newsletters, intranet, and informal forums and question times. On a more formal basis, Service Birmingham Board Members (representing Capita and Birmingham City Council) held monthly meetings as well as a quarterly strategic board meeting.

Service Birmingham and ICT

Service Birmingham implemented major enhancements to the council's ICT infrastructure, including a £2 million investment in a new server estate. Transformation of the core IT service delivered to council employees included implementation of a more resilient network infrastructure, upgraded computer servers, consolidation of core applications, and a desktop refresh program. Seven service desks were consolidated into two and 550 applications rationalized to 150. As a result, email speed has increased 500%, traffic has increased 30%, and reliability has increased significantly. The number of help desk calls answered within 20 seconds increased from 40% to nearly 90%.

A Birmingham City Council Enterprise license made almost the entire SAP product set available, including the SAP Business Suite (finance, human resources and Procurement, and customer relationship management), its integration platform Netweaver and a host of independent software applications from SAP partners. Together, these would support standardized management and business processes such as "service to cash" and "procure to pay" along with a range of standardized reporting and integration processes. Use of SAP applications was expected to contribute significantly to a savings of £100 million per year through a 15% increase in productivity over a five-year period.


Service Birmingham and Business Transformation

As the council's Strategic Partner, Service Birmingham was a major contributor to the delivery of Business Transformation and worked alongside the council to identify opportunities for service improvements. The CST program (described in detail in this report) was selected as the first work stream of the Business Transformation program to be delivered using the shared services model and supported by Service Birmingham and the council. Implementation of the other eight work streams would follow later.

In a comment to the press (www.egovmonitor.com/node/18075/print) Glyn Evans said, "The council's initial driver had been to find a supplier of technology and associated services. But what developed was much more radical. A partnership that — while including IT service delivery — would make supporting the council's ambitious plans for radical service improvements its main goal."

Implementation of CST

Considered to be integral to the council's efforts to save money and invest in areas that would enable better services, at the outset the overall aim of CST was to deliver £800 million in benefits for an investment of £140 million over 10 years. Implementation of CST involved a change to a shared-service delivery model and implementation of Voyager, using SAP's software suite to support the integration of the council's financial, procurement, and operational performance management processes. Voyager went live on October 29, 2007, with a goal of delivering efficiency saving of £127 million (£79 million cashable) by the end of March 2009.

Business Change Drivers

CST aimed to transform the following council processes:

● Procure to pay: The way in which the council procured and paid for goods and services from third parties

● Finance: The way in which the council recorded and reported its financial activities

● Performance management: The way key management information was provided to decision makers

Procurement and Payments

Birmingham City Council was spending some £900 million a year on goods and services from over 20,000 third-party suppliers, generating more than 807,000 invoices (taking feeder files into account the number of physical invoices received was approximately 550,000). Over 40% of the 550,000 invoices were issued by just 1% of suppliers (those selling over £500,000 a year to the council every year).


At the opposite end of the spectrum, the council was spending £18 million with 17,000 suppliers selling less than £5,000 to the council every year. The large volume of invoices and suppliers meant the council was spending significant time and money on administrative work, diverting attention and resources from other more valuable procurement activities.

Issues with the system constrained the council's ability to deliver best value through procurement, resulting in missed opportunities to deliver substantial cost reduction and fragmentation of the council's supply base. Some examples of the issues:

● Limited use of purchase orders (only 32% of invoices associated with a purchase order) despite council policy that all purchases must be supported by a purchase order. Consequently, data was not available to support the analysis of spend patterns or effective management of compliance to corporate contracts.

● Low levels of compliance with corporate negotiated contracts. Groups within the council either knowingly or otherwise chose to use suppliers other than the preferred corporate supplier in many cases.

● High levels of non-compliance with existing procurement contracts and processes.

● Due to resource constraints, Corporate Procurement Services staff members were not sufficiently involved in strategic decision-making on how the council used and managed its supply requirements.

Finance

The total number of staff within the finance function was approximately 1,000. Each directorate had a dedicated finance team reporting to directorate management and had a "dotted line" relationship to the S151 officer (i.e., the officer with specific responsibility for financial matters under the provisions of the 1972 Local Government Act). With the exception of a common revenue and payments team managing most of the accounts receivable, accounts payable, and payroll activities of the city, the finance teams provided full finance support to their directorates.

Many of the finance processes were manually intensive, with much duplication of effort across directorates, resulting in inconsistent processes and limited control. Also, specialist skills were dispersed across directorates, resulting in limited flexibility to allocate these resources to the areas of greatest need, and through the lack of critical mass, a higher-than-necessary level of expenditure on external expertise. Finance faced a number of significant challenges:

● Operational processes, while providing overall regulatory compliance, were generally fragmented and inefficient and required a high degree of manual intervention.


● The underlying systems that supported the processes were neither user friendly nor integrated, and did not provide the needed levels of flexibility.

● The generation and reconciliation of reports was an arduous task and detracted from the real value added activities of providing analysis and insight for members and managers.

● The relative autonomy of the directorates had resulted in an environment of sub-optimal and narrowly focused solutions that might solve a specific problem, but generally failed to take account of the "bigger picture" for the council as a whole.

● The prioritization of directorate needs over council-wide considerations, combined with a climate of poor enforcement, led to poor process compliance that exacerbated the problems of inefficiency and non-value added activities.

Performance Management

Management information was incomplete, difficult to access, and inconsistent; it was costly to prepare, with more time spent on sourcing and collation than analysis and insight. This compromised the quality and timeliness of decision-making and the council's ability to manage service outcomes and productivity. To move toward optimizing council performance, the council needed to build on these foundations by addressing key areas that presented the greatest potential for improvement:

● Joined-up performance management. The performance management framework being used served external reporting requirements. Links between financial and performance reporting needed to be strengthened and performance measures needed to be extended from external business value performance indicators to include more measures to explain what was driving performance. The existing framework was directorate specific and did not support a joined-up approach to delivering services across directorates or in conjunction with partners.

● Focus on performance. Significant integration existed between financial and service priorities in setting the council budget. However, the tools being used were unable to unite day-to-day operational management and financial management. There was an absence of relevant, timely and accurate management information needed to enable managers to focus on improving outcomes, value for money and productivity.

● Data accessibility and reliability. A myriad of information management systems and collation, consolidation and analytical processes existed. The preparation of management information was constrained by the tools available, resulting in manual, inefficient and untimely reporting. People did not have easy access to the information needed to do their jobs and spent much more time


sourcing relevant information than generating relevant insight. There were weaknesses in interpretation, policy and definitions.

● Accountability and incentives. There were few rewards for positive performance and limited sanctions or accountability when objectives were not met.

● Alignment. The framework was not sufficiently detailed to support performance management and service improvement at the operational level so the council's drive for productivity and value for money was compromised. Significant benefits could be achieved through a clear corporate focus on performance improvement and a formal framework that linked strategic, operational, and individual objectives.

Information, Communications, and Technology

Approximately 150 applications supported the functional areas of procurement, finance, and performance management. The existing systems landscape was considered to be a major barrier to successful transformation of CST and adoption of the new operating model. Responsibility for ICT decisions had historically been devolved to individual directorates. This resulted in a complex and fragmented portfolio of ICT systems and infrastructure, particularly:

● Duplication of investment across directorates, where similar functions were supported by different systems, essentially supporting the same tasks and containing similar but incompatible information

● Development of individual systems to solve particular business problems, resulting in over 150 individual applications supporting finance and procurement processes

● Duplication of data entry, exacerbated by the duplication of systems and lack of systems integration, resulting in multiple conflicting sources of data, in particular:

○ Customer information dispersed across more than 20 systems (of which 10 were related to debt-management)

○ Supplier information spread across more than 30 systems

○ Property and other assets appearing in more than 15 systems

○ Limited communication across systems

As a result, much time was wasted rekeying information into multiple systems, and trying to reconcile conflicting data from different systems. This approach resulted in a broad range of incompatible solutions and created substantial barriers to the provision of management information and therefore effective council management.


Business Need

A number of service related outcomes were identified across the functional areas.

Procurement

There was a need to deliver better value from the council's procurement of its goods and service so that additional resources could be freed up to provide for front-line service provision. In a series of workshops in which the majority of directorates were represented, a number of desirable outcomes (and associated measures) were identified:

● Procurement viewed as a desirable place to work within the council (employee satisfaction — percentage of procurement employees rating job satisfaction as good)

● Easy to use, standard, yet flexible procurement processes supported by appropriate systems (percentage of spend through approved procurement processes)

● People aware of and use the appropriate procurement processes (percentage of spend through approved procurement processes)

● People have a clear understanding of roles, responsibilities, and accountabilities within the procurement process (percentage of spend through approved procurement processes and percentage of spend-off contract)

● Services and supplies fit for purpose and delivered at lowest total cost (meet or exceed efficiency savings target over next three years, £137 million, and customer satisfaction with contracts)

● Timely and accurate information to support informed decision making (number of FTEs manually manipulating data)

● Delivering equalities, environment, and SME commitments (percentage of contracts achieving SME participation targets)

● High satisfaction level from all customers (Customer satisfaction — percentage of customers rating procurement support as good)

● Adherence to contracts that meet BCC needs (percentage of spend-off contract)

● Procurement staff recognized as experts and involved where they can add value (number of requests for procurement support/involvement)


Finance

The finance organization considered the CIPFA financial model as a template to determine measurable outcomes for the finance function. These included:

● The finance organization would continue to refresh the skills required to analyze financial and business issues on behalf of all its customers

● The finance organization would have a performance management culture and framework aligned to BCC objectives

● There would be compliance with internal controls

● A value for money culture would be embedded in the organization

● Achievement of a CPA use of resources score of four

● A stepped approach in accordance with BCC stated aims

Performance Management

The council was facing increasing external regulatory scrutiny of its ability to manage performance and needed to demonstrate a high level of competency in this area. It established ambitious targets for improvement and a fundamental change in the quality of its financial and service performance management would be required if it were to meet its objectives. Some of the changes required to meet its objectives:

Process

● Decisions supported by better access to higher quality Management Information (MI) (timely, relevant, accurate)

● Management information collated, consolidated and reported efficiently in a Reporting Service Centre (RSC)

● Performance management processes that would allow a more agile approach to resource allocation

Systems

● A single reporting system that would present "one version of the truth" — common access to key performance management information across the council

● A disciplined and consistent approach to data quality, policies, definitions and standards


People

● A clear distinction between centralized information management (RSC) and decentralized or local business partnering and decision support

● Incentives and individual accountability for performance, monitored through the performance management framework

Culture

● A culture dedicated to achieving service outcome efficiency, productivity, and value for money

● A culture of faster decision making and agility enabled by MI transparency and accessibility

● Individuals and teams who would understand the council's strategy and that their objectives were aligned to the strategy

Information, Communication, and Technology

Over 90 of the existing 150 applications were potential candidates for conversion to a new ERP solution. This would be supported by standard tools for document management, integration middleware (systems that run the programs and data), and archiving and Internet access. An integrated ERP system would:

● Enable the optimization of end-to-end processes

● Break down functional silos

● Ensure a single version of the truth

● Reduce time spent reconciling data across multiple systems

● Rationalize the number of locations where master file data is stored (such as suppliers and customers)

● Establish an effective platform for provision of consistent and timely management information

● Sustain the delivery of proposed benefits

The ICT applications were based on the following key principles:

● Increased accessibility of information whilst maintaining security and control over this information

● Optimized end to end business processes, with improved information flow between existing functions

● Reduced cost and effort associated with using and maintaining ICT applications


● A single version of the truth. A consistent accurate source of information that can be relied upon by the business

Proposed Solution

In order to address the challenges, the council proposed a future operating model based on the following principles:

● Processes. More integrated processes that would overcome functional silos, whereby standards, best practices and resources would be shared across all departments at a reduced cost, delivering more consistent outputs.

● Culture. One that rewards good performance and penalizes non-compliance with council policies.

● Performance measurement. Measures that allow business performance, cost and productivity drivers to be measured on a regular basis, resulting in better business control and more timely and effective decision-making.

● Systems. An integrated enterprise resource planning (ERP) system that enables closer integration of processes, and data warehousing (DW) that would provide timely and accessible management information.

Scope

The scope of CST included procurement, payments, recording, and control of finance transactions and performance management across all directorates in the council:

● Procure-to-pay transformation would impact all staff involved in any procurement and/or payments activity. This was anticipated to be approximately 1,200 staff using the existing ordering system, all CPS staff (approximately 70 staff), and a further 400–500 staff in the directorates.

● Finance transformation focused on the recording of financial transactions across all Directorates, regardless of whether finance staff or other staff performed them.

● Performance management transformation would provide managers with the information and tools to support the management of corporate and directorates in business planning, insight, and decision support.

The functional scope of CST is outlined in Table 1.


T A B L E 1

F u n c t i o n a l S c o p e o f C S T

Procurement Finance Performance Management Strategic and performance management

General ledger update and maintenance Strategic planning and budgeting

Strategic sourcing and contracting Accounts receivable Forecasting Tactical sourcing and contracting Accounts payable Initiative coordination and management Ad hoc buying Asset management Information management and standard

reporting Contract management Financial and management accounting Ad hoc reporting Business support Cash management and short-term

cashflow forecasting Accountability and alignment

Purchase ordering Project accounting Business performance management and insight

Inventory management

Source: IDC Government Insights, 2009

Planned Investment According to Birmingham City Council, CST was originally planned at a total cost of £141 million over ten years, but accommodation of inflation to 2008–2009 prices and such, resulted in an increase to £144.5 million.

Benefits Realizat ion

CST was initiated to address a series of business and cultural challenges and to deliver £860 million of benefits (£518 million cashable) over 10 years; these targets have since been revised to £883 million of benefits (£541 million cashable). There were two key objectives for benefits delivery:

● Balance the budget over the ten-year time horizon

● Provide funding for the other planned transformation programs

CST's benefits realization team provided support to the process work streams, the council and to the Benefits Realization Board (BRB) to define, monitor, and realize the benefits documented in the revised business case. Weekly meetings with the BRB focused on a detailed review of every benefit and this led to a series of approved changes to increase and reallocate benefits between process work streams as issues arose.

The benefits review for CST came to completion in October 2007 and in November a series of Benefits Deployment workshops were delivered to explain the nature of each benefit to directorate managers, confirm directorate allocations, and to formally handover realization plans to nominated benefit owners.


The benefits team remained on the program through the first quarter of 2008, delivering additional value realization benefits and assuring compliance with the agreed actions and plans to deliver the 2007–2008 targets. In March 2008, the team concluded the work with the production of a benefits handover pack documenting their work in detail including realization plans, benefit owners, and ongoing risks for the council to manage.

Implementation Approach

As the first in a series of nine work streams, CST provided a test bed for future processes, tools, and techniques.

Program Management

In order to deliver the business transformation consistently across the council, an integrated program management structure was established, underpinned by corporate leadership from a senior responsible officer (SRO) and a robust planning, tracking, and delivery methodology. Specifically:

● An integrated governance structure ensured that functions and work streams across the program communicated regularly on issues, risks and dependencies (internal to CST)

● A center of excellence for business transformation was established to provide quality support, methodology development, and training, and a PMO function. A PMO was established for CST to oversee the development and use of the following:

○ Business transformation methodology (CHAMPS): A Web-based framework that encompasses the entire business transformation journey, from identifying the business need, to achieving the desired outcomes

○ Quality management framework: Designed to enforce delivery and quality standards across the program and to reduce risk and to ensure consistency and excellence of transformation delivery

Business Transformation Methodology (CHAMPS)

CHAMPS, a business transformation methodology developed by Birmingham City Council with Service Birmingham specifically for the public sector, was used to manage CST. Since CHAMPS was still under development at the time CST was being implemented, the team continued to develop and refine the methodology over the lifetime of the transformation initiative.

The methodology focused on citizen services, cultural change, and efficiency gains and was designed to support the "modernizing government" agenda. CHAMPS was developed with empathy toward a political environment, where it is essential to balance increased demands from citizens against public sector efficiencies and the modernizing government agenda.


CHAMPS covers the end-to-end delivery life cycle of a business transformation program and includes all aspects of change for process, organization, and technology. In conversation with IDC Government Insights, Glyn Evans expressed his view that the CST implementation had benefited tremendously from the use of CHAMPS because it offered a commonsense approach, addresses important questions, and addresses important issues as the project progressed (see Figure 1).

F I G U R E 1

C H A M P S P h a s e d A p p r o a c h

StrategicNeed Visioning

Phase 3 Phase 4 Phase 5 Phase 6 Phase 7

Identifying & Planning Transformation

Transforming Services Realising Benefits

Programme & Project Management

TransformationShaping

& Planning

CommonDesign

ServiceCreation

&Realisation

Proving&

TransitionConsolidation Continuous

ImprovementStrategicOutcome

TransformationInitiation

InitiatingChange

Phase 2Phase 1Phase 0

Transforming Organisations

• What do we want to transform

• Where do we want to get to?

• How are we going to get there?

• What is the new service/solution and how will it operate?

• Creating the new service/solution and building supporting systems

• Proving the new service/solution works as designed and getting the business ready to use it

• Embedding the new solution and stabilizing the business

• Making sure the benefits are achieved







& Planning

CommonDesign

ServiceCreation

&Realisation

Proving&




InitiatingChange









& Planning

CommonDesign

ServiceCreation

&Realisation

Proving&




InitiatingChange



• What do we want to transform

• Where do we want to get to?

• How are we going to get there?

• What is the new service/solution and how will it operate?

• Creating the new service/solution and building supporting systems

• Proving the new service/solution works as designed and getting the business ready to use it

• Embedding the new solution and stabilizing the business

• Making sure the benefits are achieved

Source: Service Birmingham/IDC Government Insights, 2009

SAP Selected as ERP System Supplier

SAP was selected as the ERP software to support CST, replacing some 90 systems. In addition to supporting future expansion (e.g., implementation of HR management) SAP was chosen for the following reasons:

● SAP was already being used to support core finance and procurement activities

● Skilled SAP Service Birmingham resources already existed

● SAP was widely used by local authorities and leading organizations


Implementation Timeline

CST was planned as an 18-month program with a project team comprising 80 council resources drawn from across finance and procurement functions and a similar number of Service Birmingham resources (see Table 2).

T A B L E 2

D e l i v e r y o f C o r e C S T I m p l e m e n t a t i o n

Phase Commencing Completion Duration (Working Weeks) Mobilization July 3, 2006 July 28, 2006 4 Program definition July 31, 2006 September 29, 2006 9 Common design October 2, 2006 February 16, 2007 19 Service creation and realization

February 19, 2007 August 31, 2007 28

Proving and transitioning

September 3, 2007 October 26, 2007 8

Systems go live October 29, 2007 Consolidation and continuous improvement

October 29, 2007 Ongoing


Following completion of the design stage, detailed design, and build work for the business processes and enabling SAP solution commenced — along with user training, business engagement, and program communications. This work continued through the summer of 2007 and business acceptance testing began in late August continuing through September in the lead up to the planned go live on October 29, 2007.

In parallel with the design, build and test stages, the business planning process was designed and was piloted by the Business Review Group to deliver the 2008–2009 balanced budget based on council priorities. In addition, the organization design was finalized and consultation processes were initiated with unions and key stakeholders.

Behavioral and Cultural Change Program

Council recognized that CST would only succeed with extensive behavioral and cultural changes. A commitment was made to work with the council to build the skills needed to address identified key cultural change issues (see Table 3).


T A B L E 3

K e y C u l t u r a l C h a n g e I s s u e s

Cultural Challenge Leadership Action Lack of trust and empathy between corporate functions and directorates

• Ensure there is a shared vision and start to develop a corporate identify

• Build trust "It's OK not to be compliant" with existing council processes and policies

• Communicate processes and policies and ensure they are clearly understood

• Reward good performance and address noncompliance issues proactively

Operational focus not in line with the customer view of service

• Align business responsibilities with end-to-end business process

• Prompt decision making that will support a better service for the customer

Skepticism about the council's ability to transform • Build awareness of the council's transformation ambition and ensure leaders support the transformation

• Make behavioral change a reality


In conversation with IDC/GI, Glyn Evans emphasized the need for communication, "It is critical for senior managers to communicate with staff directly. It can also help to second staff into transformation teams, or temporarily into areas undergoing transformation. When people are exposed to the benefits of service transformation, they become a credible advocate and help to 'spread the word'. Sometimes it is beneficial to use technologies like streaming video online, or Web-chats and discussion forums to support communication efforts.

Engaging council members can be difficult. Complexity, weight of material and often parochialism (encouraged by the cabinet model of government) are real challenges to transformation leaders. There is a need to be mindful of the political cycle, and the need to engage members from across the political spectrum and at all levels."

A variety of tools and methods were adopted to help people embrace the change and to recognize it as a business change program and not just about technology. Endorsement by senior management helped to overcome resistance, program managers made presentations to more than 50 corporate management teams, more than 4000 CDs endorsing the tools, techniques and methodology were produced and distributed in two different runs with relevant updates. The CDs also included positive messages and quotations for the CEO, the deputy leader of council and several directors.

Production System and Go-Live

Go-live criteria were jointly developed with the council and BCC Audit and were presented for approval to the CST Steering Group, Efficiencies Board and Business Transformation Steering Group


(BTSG). The criteria set out a number of key dimensions for consideration with measures and a red, amber, green (RAG) status for each. CST presented the status against each of the criteria with mitigating actions and plans for criteria not showing a green status. At this time, it became apparent that further consultation would be required with unions and key stakeholders, and implementation and benefits realization plans for the organization design were modified accordingly.

The go-live decision was granted in October 2007 and the solution was taken live on time and to budget to over 5,000 users. The first stage of go live delivered the full process and technology solutions for Procure to Pay (P2P), Service to Cash (S2C) and Record to Report (R2R) and included the Project Accounting elements of the projects and programs solution as well as the nonfinancial reporting frameworks (i.e., scorecards with measures linked to strategic objectives) for corporate policy and delivery, as well as development and culture services.

Implementation Challenges

Glyn Evans told IDC Government Insights that overall, the completion against key milestones was good with three SAP go-live dates achieved on time, as planned. Training, organization design, and stabilization of the P2P processes were the main overrunning areas, all of which are now under control and coming to completion.

Progress on the achievement of outcomes was slower than for scope delivery, this is to be expected. Behavioral and cultural changes are typically required for outcomes to change and these take time to embed. For example, there were some challenges in ensuring compliance with new processes and adapting to the new ways of working at all levels across the council. Delivery of such a large-scale program proved to be challenging in a number of ways, for example:

● Additional training was required, consequently access to training resources and facilities were extended until the end of the year for the first users.

● A number of system interfaces were deferred for delivery post go-live, as part of a risk mitigation strategy agreed during the summer, consequently design build and testing continued into 2008.

● Consultation for organization design continued to be a challenging and protracted process. As a result, implementation was deferred until early in 2008.

● The stabilization phase brought all the usual challenges associated with a large system implementation, and the various project and user groups worked together to address issues arising and support compliance with the new solution. Floorwalkers were deployed in targeted areas to support users on the ground and provide reminder training as required.


● From a systems perspective, early in the stabilization phase it became apparent that the challenges of achieving stabilization in some of the processes had been significantly underestimated. A combination of resource availability (partly driven by the late running OD) and resource capability drove the need for significant additional support during the first quarter of 2008.

● Users and council suppliers took much longer than planned to become familiar with the additional disciplines that upgraded procure-to-pay processes had brought. Specifically the consistent use of purchase order numbers by suppliers, the handling of price and quantity variances both by Central Payments and authorizers in directorates, disciplines of running maintenance processes in Voyager to clear price and quantity variances, and understanding the difference between 'rejecting' and 'referring' an invoice were cause for concern. All these issues led to a growing backlog of invoices for approval out in directorates and invoices blocked for payment in Central Payments.

Achievement of Business Value

In assessing the CST initiative, IDC Government Insights examined and evaluated the Impact on ROI, risk transformation, and innovation. IDC Government Insights assessed the impact of the solution on each of these critical areas and this report provides an analysis to assist other government organizations as they pursue similar goals.

A dispassionate assessment of CST would have to conclude that in terms of the outcomes achieved it has been a successful program; it went live on time, to budget and is on target to deliver the promised benefits. However, the internal and external perception was initially (and to a large though diminishing extent remains) that the program was failing to deliver, based primarily upon the significant and highly visible problems that occurred with invoice processing in the period November 2007–March 2008. These problems are now almost wholly historic but have a residual impact on the perception of other business transformation programs and significant effort will be required in order to restore confidence.

Return on Investment

IDC Government Insights mapped ROI to business objectives and cost effectiveness, value to the enterprise, and/or value to the Department mission.


Birmingham City Council took a thorough, detailed approach to benefits realization. Rigorously building business cases meant the program was resourced from the bottom-up, building on evidence and experience on the ground. Hence, the many work packages that made up the larger program were richly specified and planned. According to Glyn Evans, that was one of the "hidden benefits of having a sound methodology". A rigorous governance process was put in place for the BTP and applied to the CST implementation. Some of the governance practices:

● The Efficiencies Board and the Procurement Cabinet Committee formally reviewed and approved the business case for the CST program, including details of anticipated benefits.

● Each benefit was signed off by a senior city council officer on behalf of the organization.

● The Benefits Realization Board reviewed the benefits to ensure that it was achievable before each one was signed off.

● In most instances, responsibility for actually achieving the benefits was assigned to deployment champions and business owners in each directorate as part of the deployment phase.

Achievement of in-year CST-related savings was reviewed as part of the council's corporate budget monitoring process and via specific reports to the coordinating overview and scrutiny (finance and performance sub-) committee.

Benefits Targets

The overall benefits target after change controls and revisions for CST was £860 million (cumulative) over 10 years, of which £518 million will be cashable (cumulative), since revised to £883 million of total benefit (£541 million cashable). The in-year target for 2008–2009 was £57 million.

● Planned program costs: £144.5 million (including inflation etc., without depreciation), since revised to £147 million

● Planned program benefits: £860 million (now) over 10 years, of which £518 million will be cashable, since revised to £883 million of total benefit (£541 million cashable)

● Planned program payback: three years

Benefits Achievement

● After taking into account inflation (to current year prices) and agreed change requests and such, as of February 2009, CST had achieved £400 million in savings and at the time of publication was on target to achieve a total benefit of £883 million (of which £541 million will be cashable) for a cost of £147 million, a better return than originally anticipated. The full BTP is expected to


deliver £1.6 billion of cashable savings based on an investment of £676 million.

Over 60% of the cashable savings will arise from improved procurement and payment practices and procedures. However, the program does include a review of the organizational structure of the finance and procurement communities, to ensure that it can take advantage of the new ways of working made possible by the introduction of new technology.

From the outset, the BTP, the Strategic Business Partnership, and the implementation of CST were all based on achieving cashable benefits. As this case study clearly demonstrates, Birmingham City Council has achieved the benefits predicted for the implementation of CST.

ProveIT ROI Impact of CST

IDC Government Insights considers the ROI impact of this project to be at the very high end of the positive scale (see Figure 2).

F I G U R E 2

R O I I m p a c t o f C S T

LOW HIGH

ROI IMPACT

LOW HIGH

ROI IMPACT

LOW HIGH

ROI IMPACT


Risk

Risk includes the situational complexity of the technology (such as implementation scale and legacy environment) and the implementation complexity (cross-organizational governance, organizational culture, and program planning and management).

This was the largest business transformation project undertaken by any local government in the U.K. There were a number of risks, many of them outlined earlier in this report. From a technological perspective, the main risk was the failure to allow existing ICT contracts again, which were vital to the current ICT services. This could have occurred if the partnership negotiation had failed. The partnership negotiations were, however, successful.

The risk then shifted to the complexity associated with the kaleidoscopic effect of multiple simultaneous major changes. Although introducing a higher level of simplicity in the longer term, the changes presented a high degree of risk in an environment that was


dependent on the continued operation of these back-office systems. For example, the council was:

● Replacing current applications — The complexity of simultaneously replacing multiple mission-critical applications was extremely high

● Introducing entirely new processes enabled by new technology solutions — The risk of "process breakage" was a serious consideration throughout the CST implementation

● Introducing a new operating and delivery model — The partnership was new and Service Birmingham as yet unproven

● Making organizational changes — Moving staff to Service Birmingham

Undertaking the business transformation process was high risk. It was the most ambitious and far-reaching initiative of its type to be undertaken by any local municipality; there were no good examples to learn from. CST was designed to replace many of the council's mission-critical processes, using a new delivery capability (Service Birmingham) and a newly designed and implemented applications infrastructure.

Although SAP and a number of the other technologies were known to the council and to Capita (the lead partner in Service Birmingham), the applications were of new design, the organizational structure had been changed, and processes had been redesigned. This constituted an environment that was very different from the predecessor environment. It must be said that although there were some teething problems, the council and its partners resolved the issues leading to an implementation that is considered to be a success.

ProveIT Risk Impact of CST

IDC Government Insights assesses the risk impact to be high (see Figure 3).

F I G U R E 3

R i s k I m p a c t o f C S T

LOW HIGH

RISK IMPACT

LOW HIGH

RISK IMPACT

LOW HIGH

RISK IMPACT



Transformation

Transformation includes the impact on the delivery of a department's mission, business processes, and lessons learned.

First, it is important to speak to the formation of Service Birmingham, which brought business transformation experience to the council and a new IT-delivery capability. The decision to seek out a strategic partner was well thought through and the outcome speaks for itself. As the council continues to implement the remaining work streams of the business transformation initiative, the partnership and the council will benefit from the lessons learned in every prior work stream implementation.

The CST implementation has had a significant impact on the delivery of the council's mission. Business processes were streamlined, compliance was improved, service to the citizens was enhanced, and costs were reduced. All in all, procurement, finance, and performance management have achieved many of the transformational targets established at the outset of the initiative.

The long-term implications are significant since CST was the first of nine business transformation initiatives to be implemented, the lessons learned will undoubtedly enhance the potential for success in the other eight.

ProveIT Transformation Impact of CST

Because much of the effect of the CST implementation is foundational and back-office related, IDC Government Insights places the CST implementation at the higher end of the transformation impact scale, but not right at the top (see Figure 4).

F I G U R E 4

T r a n s f o r m a t i o n I m p a c t o f C S T

LOW HIGH

TRANSFORMATION IMPACT

LOW HIGH


LOW HIGH



Innovation

Innovation covers the solution's leveragability to gain value, including scalability, repeatability, and replicability.

The CST implementation was guided using CHAMPS, a new project management process that was developed by Birmingham City Council


with Service Birmingham and refined as the implementation progressed. CHAMPS was designed by the public sector for the public sector and is compatible with other methodologies such as PRINCE2. CHAMPS supports end-to-end transformation and the methodology are available for use by other public sector organizations. It will, of course, be used to support the implementation of the remaining eight work streams in the Birmingham business transformation initiative.

As a strategic public/private partnership that supports both the business transformation activities and the IT service delivery, the arrangement between council and Service Birmingham is innovative. Council employees work alongside Service Birmingham employees in a seamless team environment. All parties have a vested interest in the success of all other parties. This is what a partnership should represent.

ProveIT Innovation Impact of CST

IDC Government Insights places the implementation of CST, particularly the CHAMPS business transformation methodology and the formation of Service Birmingham at the higher end of the innovation impact scale (see Figure 5).

F I G U R E 5

I n n o v a t i o n I m p a c t o f C S T

LOW HIGH

INNOVATION IMPACT

LOW HIGH

INNOVATION IMPACT

LOW HIGH

INNOVATION IMPACT


Lessons Learned from CST Delivery

CST was the first of Birmingham City Council's Business Transformation initiatives to be implemented and as such, was "on the front line" in terms of the usual challenges associated with major change efforts. In this context, while lessons can certainly be learned from CST, the results were positive overall, with most managers and staff in the council significantly more aware of the challenges transformational change brings, and the implications on people and processes than before the program began. This awareness and the overall CST experience will stand future programs such as customer first and excellence in people management in good stead in terms of change readiness.


The council made a commitment to capturing lessons learned in order to:

● Capture things that did not work, that could have been done better, or that worked well

● Construct ideas about how things could be improved in the future, and what not to do in the future

● Make full use of hindsight

● Provide input into the other transformation programs

Council agreed that the lessons learned process was not:

● Intended to focus on areas that are not relevant for future programs

● An opportunity to reopen CST design or challenge CST benefits

● A commercial exercise

The CST program is one of nine transformation programs being delivered by Birmingham City Council in partnership with Service Birmingham. The revised IT and processes associated with the program went live on October 29, 2007, with the associated organizational structure being phased in over the period January–July 2008.

It should be acknowledged that as CST was the first Birmingham City Council BTP to be delivered in the shared services model, much of the business transformation methodology evolved as the program developed.

Through the course of the program a number of lessons were learned about the best way to deliver a major change program such as CST, involving a new IT solution, associated changes to processes and procedures and new staff organization. Some of the lessons learned are described below:

Managing Expectations

A change program of this scope and scale is unlikely ever to be introduced without encountering problems. Future programs need to make this clear to both internal and external stakeholders in the run up to implementation, be explicit about how such issues will be resolved and establish and publicize communication channels with sufficient capacity to deal with situations as they develop. When problems do arise, a team needs to be in place that has the authority and capacity to manage internal and external (including press) communications.

Engagement With Stakeholders

Many within the council feel that while there was significant information available concerning CST, there was insufficient opportunity to engage and influence the program. Future programs


should establish appropriate mechanisms to enable all stakeholder groups to raise concerns and issues and to have visibility that these are being addressed. However, it must be stressed that any tendency to pull back from the delivery of program benefits that such arrangements may encourage would need to be countered by the program team.

Resourcing

It is not uncommon on major change programs to see the go-live date as marking the culmination of the program and, apart from the resolution of immediate issues in the aftermath, for the team to begin to be wound down. CST has demonstrated that the true target should be the end of stabilization and resource planning needs to take this into account.

Program Implementation

Through a combination of factors — many beyond its control or only obvious with the benefit of hindsight — the program went live with the new processes and information systems many months before the new organizational design was implemented. This meant both that certain crucial aspects of the new structure were not in place to provide support and that many staff were expected to handle new ways of working while their own future was uncertain, a situation compounded by the concurrent pay and grading review. While the differing natures of the transformation programs make it unwise to generalize, there is a strong argument that the default position should be to implement the organizational structure in advance of the systems and processes, with interim arrangements in place to address any problems that this may cause.

Program Management

Overall program management worked well. Progress was reported on a weekly basis and on the whole, key controls and disciplines were maintained effectively. In terms of improvement opportunities, the key areas identified were:

● Quality principal role. On reflection, it would have been valuable in a program of the scale and complexity of CST to maintain a quality principal as part of the management team. Maintaining the balance between controls and disciplines with pragmatism and delivery is always a healthy tension on programs and on reflection, the additional focus and challenge brought by this role would have been helpful particularly in the early stages where design decisions were being taken and documented formally.

● Sign off of design documentation. CST had a complete set of design documentation and change requests and other key documents were catalogued. However, the sign-off process for key documents ran quite late and led to tensions between process owners and the program. Post go-live there were a number of discussions around design decisions taken and the extent to which these were signed off and some additional discipline in this area would have been helpful in hindsight.


Stakeholder Management

Overall stakeholder management was satisfactory for CST. Stakeholder management was good and more effective on the whole than program communications although both were sufficient to assure delivery of the benefits case and on-time, on-budget delivery of the solution.

It would be fair to say the program management team was primarily committed to on time delivery of the core solution and realization of program benefits and as such, CST stakeholder engagement was not always prioritized as highly as it might have been. Engagement, like communication, is a two-way process and there is a clear difference between communication and engagement, but this distinction was not clear enough during the program.

Ownership and Leadership of Stakeholder Management

Communications and stakeholder management are inextricably linked and as such, the communications lead should also be responsible for stakeholder management and be a key member of the program management team.

Stakeholder engagement should be the primary role of the program sponsor and should account for a high proportion of his/her time dedicated to the program. The council's program director should take responsibility for delivery freeing up the sponsor to ensure stakeholders are properly engaged and managed. This division of responsibility between the program sponsor and program director was not always easy to maintain on CST but overall results were still positive.

Ultimately, the level of engagement stakeholders at all levels have with the transformation program rests with the council. The program team should certainly lead and deliver much of the planned activities to inform, educate and engage stakeholders, and it should also report on progress (quantitatively and qualitatively) to the program board, but the overall strategy and plans for stakeholder engagement must be owned by the council.

There were many occasions during the lifetime of CST where Service Birmingham consultants were fronting up events and program issues with stakeholders when a council representative would have had more impact and been more appropriate.

Relationship With Cabinet Members, Trade Unions, and the Press

These three groups in particular had considerable interest in, and influence over the success of CST. Given their degree of influence, earlier involvement and more proactive engagement with these groups would have been valuable. Specific examples include:

● Joint program and council engagement with the relevant cabinet members earlier in the development and trialing of the new


business planning process could have made delivery of the work stream and ultimately the 2008–2009 business plan, considerably less challenging.

● Similarly, a strategy of earlier active engagement with trade unions as part of the organization design work stream may have preempted the section 188 consultation process and reduced delays in moving to the new structure.

● Finally, a more proactive engagement of the local press that leaned into solid relationships in both the city and Service Birmingham Press Offices would have enabled the messages around the additional challenges faced in the P2P process to be more effectively managed post go-live.

Program Team Relationships With Senior Managers

One of the success stories of CST is the quality of relationships enjoyed between program team members (Service Birmingham, its partners, and council secondees), and senior managers and staff across the council. The common design process was challenging in this regard, but once the realization phase began and the realities of CST become more apparent engagement improved on both sides and relationships remain strong today despite the inevitable strains of a major change effort.

Encouraging Maximum Use of the New System and Processes

Time and attention maybe needed to bring the system into full use, to embed the changes to processes and ways of working to fully optimize the system and reap the full benefits and to continue to change the culture of the organization. At Birmingham, there were a number of issues that required attention because of the potential impact on CST and on the next programs to be delivered (i.e., customer first and excellence in people management).

● A way to encourage "getting it right first time" is needed.

● There needs to be clarity around those areas that are confusing.

● Changes to the culture of the organization must continue to encourage change and improve compliance needed to maximize the benefits linked to the transformation programs.

● It is important to build on the expertise gained during the initial implementation and utilize this fully in subsequent transformation programs.

● It is important to ensure confidence in the system being implemented.


Governance

Within the business transformation methodology, there is a specific governance process for all programs to follow. However, from a sponsor and senior stakeholders/program management perspective, this was overcomplicated with multiple overlapping officer groups and endless reporting requirements representing a significant management overhead on the program.

The experience from CST is that there were few occasions when progress or recommendations were truly challenged in any of these governance forums and the process appeared to disintegrate once the solution went live. The program team must take responsibility for maintaining focus on governance.

Communication

A number of myths arose very early in the life of the program. Firstly because CST was the first business transformation program to exist, to many people it was the city council's BTP, there was no awareness that it was only the forerunner of other programs. Secondly, people thought that CST equaled the whole of the efficiencies program, whereas it was only part of the efficiencies program, albeit the major one. Neither of these myths is true but they serve as a good example of one of the major difficulties experienced throughout the life of the program — communication and how hard it was and continues to be, to separate the myths from reality.

Many different channels were used to communicate: presentations, one-to-one sessions, newsletters, events (large and small/informal and formal) and emails. It is recognized that some of the communication were jargon ridden and were too technical.

Communication needs to be two-way. While there is a need for the communicator to know their audience and use this knowledge to prepare communication materials and channels, there is also a requirement on the recipient to be prepared to listen to the messages. Because we had failed to engage, there was little understanding about why CST was happening and also during the time of the CST program, there were a number of distractions. This meant that the organization was not really willing or ready to listen to the communications being delivered. However, there were many comments made that it was very difficult for people to communicate with the program team and the program team failed to listen.

The program team, the council, and Service Birmingham were all unprepared for the press reaction immediately following go-live. There is a clear lesson to be learned here.

Stabil ization

The stabilization phase reinforced the complexity of the council and continued for longer than expected. Early in the stabilization phase, it became apparent that the challenges of achieving stabilization in the P2P process and also for the VSC had been significantly


underestimated. One reason for this was because the implementation of the new systems and processes brought to light ways of working that were not only inconsistent with council financial procedures but also unknown, so these were unaccounted for in the CST solution. Secondly, there was an expectation that fewer resources would be needed in the stabilization phase, which was overly optimistic.

Where things are not going as expected, we must be prepared to acknowledge this, and have contingencies prepared in advance to deal with problems. It is better to react in a way that has been well thought through rather than respond instantly without really understanding the implications of what is proposed.

Issue escalation and resolution could have worked better and still remains a problem today, with a large number of issues awaiting conclusion.

Training

It was recognized at a very early stage that the volume of training required posed a dilemma, not just in terms of numbers but also where such a large amount of training could be delivered, that was easily accessible to the whole of the city and close to the go-live date. But due to the difficulties experienced with role mapping and the consequential administrative difficulties, it became more of a problem as the wrong people were trained and some people failed to be trained at all. Over 10,500 training instances were delivered as part of the CST program, excluding elearning, but this is far fewer than were originally planned.

Initially, obtaining training places relied solely on role mapping which was not understood by the council and the program team failed to explain clearly, why it needed to be done and how vital it was. We were unable to ensure that managers felt the need to be sufficiently engaged with the process which caused the difficulties of getting the right people, on the right training at the right time, which subsequently led to the poor take up of training places and the need to extend training provision.

It was always intended that training would be delivered based on the future organization structure and new system roles. When the new structure was delayed, this contributed to the confusion. However, once people did understand the process, and improvements were made to the scheduling and administration of the training, significant progress was made, albeit too late to achieve as much training as anticipated prior to go-live. Earlier involvement of directorate training staff would have helped to identify how to achieve better training administration and consequently better attendance.

Summary of Lessons Learned

Fundamentally, the CST program must be viewed as a success. It was the first of the council's planned transformation programs to go live on time and to budget; it is on track to realize the significant financial


benefits planned; and new systems, processes, and staffing structures have been implemented.

FUTUR E OUTLOOK

Birmingham City Council continues with the implementation of the business transformation strategy. The Customer First and Excellence in People Management work streams are already underway, both supported by Service Birmingham. The focus will increasingly be on improving service while containing costs, using the shared services model as a foundation and keeping in mind the human aspects of the council's relationship with its citizens. As the potential for using technology to overcome the challenges of fragmented processes, multiple service agencies, and geographically dispersed facilities increases, the local government ecosystem could undergo a change in shape, size and inter-dependencies. Birmingham City Council will continue to prepare itself to capitalize on this changing environment, capitalizing on the development of the shared services center. The business transformation strategy's support for Moving Birmingham Forward will provide an excellent foundation.

ESSENTIAL GUIDANCE

A c t i o n s t o C o n s i d e r

The CST program must be viewed as a success. It was the first of the council's planned transformation programs to go live, on time and within budget. It is on track to realize the significant financial benefits planned. New systems, processes, and staffing structures have been implemented. The shared services concept is still gaining ground in local government, but in the case of Birmingham City Council and Service Birmingham, it has proven to be critical to achieving the hoped for efficiency gains and related cost savings. IDC Government Insights suggests that other governments (central and local) consider the following actions in order to achieve a similar level of success to that achieved by Birmingham City Council.

● Develop the overarching architecture that will guide and inform each individual project as they are undertaken. In the case of Birmingham City Council, the business transformation strategy responded to the needs of the council's political agenda for moving Birmingham forward. It was a plan that spoke to the operational requirements driven by a visionary strategy. Without an overarching agenda or architecture, the result could be likened to building a house one room at a time with no plan or commitment to what it might look like when finished.

● Carefully consider the need for a partner, be self-aware about the strengths and weaknesses of your resources and capabilities. In Birmingham Council's situation, the number and type of resources needed to fulfill a transformational agenda while running the business simply did not exist. Experience had shown


that managing a multiplicity of IT contracts was difficult and did not drive the required benefits. This suggested that contracting for IT delivery was a good idea. The need for support to implement the strategic and cultural change was apparent and the linkage between IT and the business unquestionable, a decision was taken therefore to seek a strategic partner that could provide support on all counts. This may also be the right strategy for your organization.

● Consider using a transformational methodology to guide and inform your process. CHAMPS covers the end-to-end delivery life cycle of a business transformation program, beginning with determining the need for transformation and formulating strategic outcomes and benefits. This is the real beginning and should be part of the methodology. Too often, organizations begin with designing the system and processes without critical analysis of what the business might look like in the future.

● Plan the benefits realization program at the outset. Potential benefits will dissipate if there is no formal plan to identify and then to harvest them. Birmingham established the Benefits Realization Board to ensure the achievement of benefits progressed according to plan, and that timely decisions and actions were taken to enable the delivery of the benefits.

LEARN MORE

R e l a t e d R e s e a r c h

● Best Practices: Performance Management at DWP's Jobcentre Plus: A ProveIT Case Study (GI #GITD02R9, September 2009)

● Citizen Engagement: Engaging the Not So Easily Engaged (GI #GITD52R9, July 2009)

● Invitation to Comment on EU ICT Standardization Policy: Deadline September 15, 2009 (GI #GIPP52R9, July 2009)

● PwC: Successful Technology Implementation — It's About People (GI #GI216750, January 2009)

● Western Europe, Government Sector, Case and Records Management Solutions: IT Spending Forecast, 2007–2012 (GI #GIPP03Q, December 2008)

● U.K. Home Office Recommends Funding PDAs For All Frontline Officers (GI #GIPP53Q, November 2008)

● Developing and Maintaining Service Level Agreements in the Public Sector Organization (GI #GITD02Q, October 2008)

● Western Europe, Government Sector Pulse, April to June 2008 (GI #GIPP52Q, October 2008)


● Mobile and Remote Working Adopted by Wiltshire Police Force: Improving Police Visibility (GI #GIPP02Q, September 2008)

● Western Europe, Government Sector, 2007 IT Strategy and Decision-Making Process: An IDC and Government Insights Survey (GI #GIPP10P, May 2008)

● Western European Government Sector IT Security Adoption and Investment Plans — An IDC Survey (GI #GIPP01Q, April 2008)

● Western Europe, Government Sector Pulse, January–March 2008 (GI #GIPP51Q, April 2008)

● IDC and Government Insights, European Vertical Market Survey 2007: Methodology (GI #GIPP07P, March 2008)

R e l e v a n t R e a d i n g

● The following reports are available at http://www.birmingham.gov.uk/democracy/Pages/Index.aspx

○ Business Transformation Strategic Partnership — Issue of Invitation to Negotiate, October 2004

○ Taking Birmingham Forward, Community Strategy for Birmingham 2005–2010, Consultation Draft Final, March 2005

● Managing Transformation. Front Office Shared Services, May 2008. (http://www.idea.gov.uk/idk/aio/8341252)

● Service Birmingham (http://www.Birmingham.gov.uk)

S y n o p s i s

A ProveIT case study assesses an IT solution that has been implemented by a government or by a government department. This case study presents IDC Government Insight's analysis of Birmingham City Council's back-office services transformation journey. The IDC Government Insights methodology supports a comparable, consistent, and independent impact assessment and comments on the project's ROI, risk, innovation, and transformation impact.

"Birmingham City Council's vision for the future of the city described in the report Moving Birmingham Forward published in 2005 required service delivery at an extraordinary level of excellence. Achieving this and responding to the business needs led the council to launch a far-reaching business transformation program. Key to the successful implementation of the business transformation program was the formation of Service Birmingham, created as a public-private partnership between Birmingham City Council and Capita Group PLC along with several other partner organizations. The use of a fully integrated suite of software applications such as that delivered by SAP


was fundamental to delivering corporate services transformation and providing a successful foundation for the Council's broader transformation project," said Jan Duffy, research director, IDC Government Insights EMEA.

C o p y r i g h t N o t i c e

Copyright 2009 Government Insights, an IDC company. Reproduction without written permission is completely forbidden. External Publication of Government Insights Information and Data: Any Government Insights information that is to be used in advertising, press releases, or promotional materials requires prior written approval from the appropriate Government Insights Vice President. A draft of the proposed document should accompany any such request. Government Insights reserves the right to deny approval of external usage for any reason.

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