LG NSW – Regional Collaboration and Shared Services April 2015 Donna Galvin, Executive Manager, WBC Strategic Alliance.

LG NSW – Regional Collaboration and Shared ServicesApril 2015

Donna Galvin, Executive Manager, WBC Strategic Alliance

the provision of a service by one part of an

organization or group where that service had

previously been found in more than one part

of the organization or group. Thus the funding

and resourcing of the service is shared and

the providing department effectively becomes an

internal service provider. The key is the idea

of 'sharing' within an organization or group.(wikepedia)

What is currently done BY many….

In the future is done by ONE…..

….FOR many…………

1. MODELEntity – options and best fit for us

Governance arrangements

Funding

Location

CEO – role & appointment

Board – role & decision making

GM Advisory Group

2. SERVICE SELECTION & BUSINESS CASE

•Future state of operating model – vision/purpose, objectives

•Methodology for service analysis and selection

•High level analysis – first cut

•Detailed business case – ROI, Service Level agreements and cost of services

What MODEL ?

- Voluntary (Alliances – non binding)- Legal entity

- Corporation- Cooperative- Company limited by guarantee- Incorporated Associations- Joint venture

- Regional organisations (ROCs)- Joint production (eg rates processing)- Outsourcing- Council Controlled Organisations (New Zealand

model)- County councils

JV Alliance Members’ Agreement

CabonneShire

Council

BlayneyShire

Council

CentralTablelands

Water

WellingtonShire

Council

New MemberCouncil/

RuralCouncil

New MemberCouncil/

RuralCouncil

THE ENTITY – NAME TO BE CONFIRMED

Guarantee of $10 per Member Council

Board of Directors

Chief Executive Officer (CEO)

Shared Services Deliveryand Procurement

General Managers’Advisory Council

Appointed by MemberCouncils under JV Alliance

Members’ Agreement

• One Director to be appointed by each Member Council, preferably Mayors.• Ability to appoint up to 2 independent, external directors

Appointed by the Board

Joint Organisations

Voluntary versus binding? Formal (legal) versus informal? Optimum number of partners? “Like” minded council partners?

Depends on what you want to share and the level of relationship and trust that will carry

the strategy forward

Relevance of the service/function to the member organisations and other councils

Financial and Efficiency gains to be achieved Human Resources required to provide the

service or function and any potential industrial implications

Risk Analysis Capacity improvement to the member councils Asset consolidation/reduction (eg. shared IT &

communications infrastructure) Community and geographic considerations.

VISION: Enhance the capability and capacity of participant organisations to deliver efficient, effective public services

PURPOSE: Deliver sustainable, cost effective, quality public and support services through a commercially focused cooperative business model

STRATEGIC OBJECTIVES:1.Release operational efficiencies through formal collaboration on service delivery2.Release operational efficiencies by leveraging operational assets, fleet and machinery3.Attract, retain and develop employees to meet key skills areas4.Re-use operational efficiencies to meet identified gaps in service provision

SHARED SERVICES INC??

1. Cost benefit analysis establishes case for change2. Meets identified capability and capacity gaps3. Enhances ability to attract and retain key skills4. Utilises standard systems/process5. Operations and benefits can leverage further

through increased scale and scope6. There are existing shared arrangements7. There is limited consequential impact on other

services8. Preserves community employment in key areas9. Service delivery is an established political priority

• Using the design principles we selected 20 functions in 3 service groups for analysis:

• Strategic and support services (34.4 EFT)– Financial management, accounts

payable/receivable, payroll, HR, ICT (support and infrastructure) asset and fleet management, contract and tender management

• Specialist Services (8.2 EFT)– Development assessment, PCA, Public health and

inspections and design• Direct Field Services- (70.7EFT) - water supply and water treatment, road

construction and maintenance

• Current functional structure of 3 councils

• FTE – position descriptions

• Cost of FTE

• Assets data, including utilisation, asset life, depreciation

• Financial data – income and expenditure, debt exposure, LTFP

• Performance data (hands up who has this??)

Efficiency savings were identified in the 3 service groups by centralising functions and having staff specialise.

The efficiencies come from specialisation and represent “part positions”. Therefore all the functions in a service group would have to “move” otherwise efficiencies won’t be achieved…..this is going to be our greatest challenge. One arm, one leg, …..

Currently assessing the ROI for the large change that would be required to make those efficiency savings

The estimated savings is in context of maintaining current EFT levels. There is additional opportunity if the strategy included reduction in EFT………BUT, is there an appetite for this at the moment? And what impact would that have on service levels?

Does the Alliance group have the scale for Shared Services……OR do we need additional partners?

The next step is detailed business case – we have established the case for change.

We need much more detail on current cost of service delivery vs proposed model……….to be sure that service delivery costs will be lower through a shared service model.

Councils seldom have a clear picture on how well they are performing prior to the proposed changes which means they cannot properly determine how change

will effect their performance before and after the change

(Brian Dollery – review of NESAC)

All of the following are achievable but require a high level of leadership , management and determination……..

Industrial relations – moving staff to a company structure? Moving staff to a different location?

Governance arrangements of the new entity – need a binding commitment to “buy” services from the new entity for a period

Establishment and operating costs – the ROI may be 3 – 5 years - the councils need initial funding to manage the transition and fund the entity

The future model for regional cooperation ?Joint Organisations

Strong and sustained leadership and commitment from all partners

On regional collaboration………….

Embrace regional cooperation and do something with your neighbours or broader LG community

Pick your partners well

Work on trust and relationship first before tackling major change or transformation

Define your shared vision for collaboration

Resource it, drive it and get some early wins……..

On Shared Services………..

Ensure all partners are clear on the what shared services means , what the potential benefits might be (start with the end in mind)

Base your decisions on a sound business case for change that MUST include your ROI and clearly identifies that service delivery will be more efficient and effective than it currently is

You will need strong sustained leadership and commitment – this is long term transformational change – it is not a soft option to avoid amalgamation

Provide the resources to make it happen and manage the change

Identify and manage enablers not necessarily in your control eg Industrial, the Act, legal status, technology platforms etc

A number of factors can limit the ambition of local government to realise the full savings potential of moving to a shared service model – the biggest obstacles are often political.

(Deloittes 2010)

…“nice” is not enough.