Rod Matthews outlines how to accomplish one of the
hardest tasks given to senior IT management: responding positively
to downward financial pressure
"There's a whole range of issues about how you construct a
programme that has any chance of getting more IT for less money,"
says Rod Matthews, head of IS at Knowsley Council. “To achieve the
most economic programme, you must first know what the programme is,
what is expected, and what is possible before then negotiating the
best schedule with those affected.”
In an industry that has more must-dos than like-to-dos, cutting
out waste is essential. Any IT manager's focus should include roper
planning, effective resourcing as well as building trust through
demonstrable excellence in management.
Working for a large local authority, Matthews is faced with a
complex mix of IT, and a complex mix of demands made of IT.
"We have a broad range of competing demands and legislative
targets, some of which are clearly understood and planned some time
in advance and some where the priorities may be ambiguous or,
despite consultation and visioning, are not what I call 'whim'
priorities – sometimes the elected membership can have different
priorities from staff, such as councillors who want leisure centres
situated in their wards."
Matthews also knows that to achieve the wide range of
unprecedented development, he must ensure he is not following
supplier agendas.
"Sales-led expectations can depend more on the excellence of the
salesmen than the excellence of their products in our context, and
those sales-led expectations may be either over-exuberant or indeed
too constrained. Some salespeople will sell a corporate and even
multi-agency vision, often where there is no precedent or there are
barriers to fulfilment.
"Conversely some may attempt to sell a departmentalised
component that has little concept or preparation of the client, let
alone the system in a longer, wider vision. It is important
therefore to be clear where you see your organisation in the
future, and to have a detailed understanding of the interrelation
of all the components of your future before you start to direct
salespeople to pass your specification on to our developers."
As ever, it's critical, says Matthews, to get a grip on the
future if you want to get a grip on the present, though that is not
always easy.
"It's easy to suffer from indistinct long-term planning and end
up with a narrow, short-term focus, so building a vision programme
of five to 10 years is important, or you end up doing
sticking-plaster technology, which will almost certainly comes back
to haunt you in and needs a lot of costly and frustrating (to the
customer and the provider) remedial work."
But IT strategy is led – as it must be – by business
strategy.
"If business strategy is repeatedly changed, then you just jump
from strategy to strategy. Knowsley has always been very much
focused on at the moment. Our chief executive, for example, is very
keen on social inclusion, but like others has had to adapt to
prioritise meeting the government's 100% electronic service
delivery target before we return to strategies that are perhaps
more applicable to our borough. Managing the change from strategy
to strategy, redefining priorities and targets, and building the
best foundations for the combined strategies all absorb which is a
big strategy change for us."a good deal of effort."
Local authorities are also highly subject to central
government-imposed changes over which they have no control. The
deadline of delivering services electronically by next year is one
such imposed change. Another intangible still in debate is whether
regional government will get off the ground.
"We're in the demilitarised zone between Manchester and
Liverpool, but whether we end up in, say, a northwest region
running up to Cumbria, or a north-central region running east-west
through Lancashire and Yorkshire, would require different
structures and a focus on building different relationships."
There are also issues of local authority collegiate government,
where for economies of scale, and perhaps for the work from failing
authorities, certain local authorities may would become shared
'centres of excellence' providing a particular service to many
authorities, such as call centres or housing benefit.
"All this has to go into our strategic planning," says Matthews,
particularly with regional government and collegiate government
there are no certain answers as yet. Each potential change will
require further precedent and legislation to allow for the
potential redistribution of tasks – and funding – which means that
something as crucial as forward purchasing can become very
risky.
"If I bought a system that had a 10-year payback period, then
I'd have to think extremely carefully about it. And if I was paying
with borrowed money, then I'd have to be even more careful."
As ever, uncertainty will have to be paid for, and lack of
control has cost implications. But within the remit of what IT can
control, Matthews has a whole raft of target cost areas where he
can focus on getting the most IT for the least money.
Skills: Like most IT organisations, Knowsley
has a continual need to update its IT skills. But some skills are
not needed all the time, or in the same quantities all the time. So
overstaffing would be costly and wasteful.
"We get round this by having a bodyshop contract. We use an
on-demand IT skills supplier to sell us the extra skills we need as
and when."
Consumables: "The cost of consumables can be
very high. Until we stepped in with a maximising technology
approach and ongoing advice on methods and comparative costs, some
departments had accumulated more printers than people. Printing out
absorbs a tremendous amount of money, so we encourage users to read
from the screen, and do away with their printers.
"But weaning users off printing everything out is very
difficult.
"However, because this is a cultural efficiency strategy, it has
to be co-owned by the IT people (through providing effective
alternatives) and the finance managers, but most importantly the
users themselves."
IT procurement: "We have to look at our own
efficiencies. How do we commission services? What is our cost of
procurement? The later you procure the more it costs. What are our
service delivery options? There's no point trying to deliver some
things in-house – it would be pointless and expensive. So, for
example, our wide area network team is bought in, and we get a
higher standard from a market expert at a lower cost rather than
keeping it as an in-house service."
But whatever savings managed services and tactical outsourcing
can bring, remember you will need to do "very, very good outsource
at relationship management - that's a very important skill to
us".
Overarching all the individual areas of focus is one abiding
principle for Matthews. The essential skill is in knowing what your
costs are and where they are and when they are – knowing what each
activity costs, and why.
.
"It is all about process mapping and costing – understanding where
the costs fall. We have to be very clear where our labour is going
and what service or user it's attributed to. For example, we have
to know what it costs to run e-mail or a website, and it is
important for users to know and trust the baseline costs before
they have to choose whether they want a Mondeo or a Roll-Royce
service, do they want to pay more and get more, or pay less and get
less?"
Measuring IT costs accurately, in detail, including, crucially,
measuring the amount of time IT staff spent on activities and
users, was highly revealing.
"When we undertook our fundamental financial review we found
that we had a legacy of services being added to our portfolio
having been pilots, and without looking back at how we were funded,
It turned out that we were, for a couple of years, overcharging for
some services, and undercharging for others. For example, we were
making a disproportionate charge for web browsing, the cost of
which then inhibited the departments from allowing their staff to
use the service because they saw it as expensive to do, and then we
found we were undercharging for using the voice and data
networks.
"Correcting this into proper activity-based costing, and
breaking this down into charges based on use, has been one of the
key milestones in building the trust in us as managers whose
methods our customer recognise, and not some other species.
"By looking at what our IT staff were doing we got an
astonishing amount of data. We found that staff were delivering 20%
more activity than they were being paid for. We were doing a
tremendous amount of work for users for free. Time recording was
pivotal to give us an explicit understanding of what we are doing
for each user, and provided a meaningful justification for the
training and capacity-building in certain areas of our fast moving
business."
Benchmarking also helps Knowsley ensure that its IT costs are
healthy and comparable.
"We have a number of benchmarking processes, including those
from Socitm, which define 22 key performance indicators, such as
response time and percentage uptime. We also use the European Forum
for Quality Management -and Information Technology Infrastructure
Library (ITIL) models, which are is a tremendous team-building
experience, as well as periodic occasional reviews from local
government best value reviews, and external consultancy Gartner
reviews.
"These demonstrate our ability on a level playing field with any
other organisation (EFQM) any other IT organisation (ITIL) and any
other Public Sector IT teams (Socitm). This might appear belt and
braces, but we have converged these into one single performance
programme, so the costs of providing evidence are manageable. The
effect is significant in the trust that has come as a result of
being able to see the performance and quality for cost in
comparison against that of others."
IT costs in large, complex organisations, however, even when
well measured and compared, don't always usually fall into neat,
clearly defined silos.
"We have to understand where costs cross boundaries,
particularly across budget boundaries, and when they change because
of , say, new technology, or new ways of recovering costs when IT
is introduced.
"Seeing where costs cross boundaries can be key to what is, in
effect, process re-engineering. Knowsley’s CRM programme is a prime
example of this, where the costs of the customer contact centre are
affected by CRM, but actually reduce the costs of the benefits
service. Thus the customer contact centre should charge less to the
benefits service, and the benefits services should offer up the
savings. For both services then our recent work proves that their
costs would have been reduced and their efficiency at very least
maintained – we would be providing the same level of service with
less cost."
The search for broader synergies and ever greater efficiencies
is ongoing.
"We're looking at business information sharing upstream and
downstream. Local authorities deliver so many services, each of
which can be kicked off by a different user department, but which
often leads to another service being invoked, so business
information sharing will show us what demand is coming down the
line. We want to be able to intervene at a lower cost of service by
accurately predicting trends of usage. Tracking trends,
displacement of effort and migration is therefore important to
ensure that the departments involved are neither starved nor
overfunded.
"Knowsley is a pioneer – we're doing things that haven't been
done before. To be this we have to have the right vision. Plus, to
afford the entrepreneurship and a carefully reasoned and
risk-managed approach to funding the programmes, we have to squeeze
out as much cost as possible by right-sourcing, cutting waste and
ensuring that systems do what they say on the box."
Rod Matthews is head of IS at Knowsley Council