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Collaboration needed to drive IT in Finland’s local government

Finland's local government organisations need to improve their IT operations if they are to cut costs and become more efficient. Formailsed roles and collaboration with other authorities would help.

IT is no longer just a support function; it is a key element for organisations in today’s digital market. But while private companies are embracing this change, IT in local government still lags behind – and Finland, with more than 310 self-governing municipalities, is no exception.

According to academic research from the department of information technology at the University of Jyväskylä, deeper collaboration is required to address this shortfall.

“If we generalise, ICT in small and medium-size municipalities [in Finland] is fragmented, co-operation is limited, and the need for collaboration networks and help from outside operators is apparent,” said Harri Hyvönen in his doctoral dissertation Alignment and leadership in ICT strategies of private and public organisations, published in August 2015.

He noted that many municipalities lack long-term, strategic thinking and even functional descriptions for IT architecture. It is a world apart from international companies, including Nokia, where Hyvönen has built his IT career. For his dissertation, he conducted several interviews with both public and private organisations, and the picture painted is not rosy.

“IT resources are very thinly spread in municipalities,” said Hyvönen. “Only about one-third of the municipalities I visited had some kind of role equivalent to a CIO or IT head. Some municipalities didn’t have any dedicated IT personnel.”

Many Finnish municipalities invest less than 1% of their budget on ICT compared with private companies that invest about 4%, he added. Furthermore, most of the ICT budget in municipalities goes on purchasing and maintaining equipment and user licenses, leaving the IT development budget closer to 0.2%.

Even if the IT budget is sufficient, Hyvönen found the decision-makers in local governments don’t often have enough IT knowledge or experience in IT procurement. “Municipalities need a uniform ICT management model to ensure they are doing the correct things the right way,” he said.

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250 local governments, one major IT provider

But while the change is slow, it is happening. Hyvönen said he believes both efficiency and cost benefits can be achieved with consolidated ICT systems and strong collaboration networks. An example of the progress being made is the limited IT services company Kuntien Tiera, which is owned by Finnish municipalities. It was formed in 2010 to develop ICT services for the local government and help reduce IT related costs.

“Finnish municipalities spend €1bn on IT procurement every year and we want to make savings,” said Tiera managing director Jyrki Halttunen. “We work with our customers to find improvements by changing operational models, harmonising IT systems, process re-development and so on.”

While there are other Finnish IT companies owned by municipalities – examples can also be found internationally, such as Denmark’s Kombit – with ownership split between more than 250 local government players and covering 53% of the country’s population, Tiera is the largest.

And progress is being made. Among Tiera’s achievements are the introduction of advanced enterprise resource planning systems, as well as a mobile system for homecare workers where work schedules, routes and reporting are handled through a smartphone. According to Halttunen, the mobile system, which has so far been implemented by 75 municipalities in Finland, can increase the time spent with customers from 38% to 70%.

While similar systems are used in other countries, what sets Tiera’s mobile system apart is its door-locking functionality. Instead of wasting time visiting an office to collect and return keys, homecare workers can lock and unlock doors with their phone and a PIN code.

Amazon for municipalities

The company has also ventured into e-commerce. “We are building a web store for ICT products, a local Amazon for municipalities,” Halttunen said. “The most advanced online stores globally are on the consumer side, but the public sector cannot use them as they need to go through the correct tendering process. We have done the tendering for a whole web store so that all of our customer municipalities can buy everything directly from there without any limitations.”

The web store will be one the largest in Finland and is being built by Nordic IT infrastructure company Atea, explained Halttunen. Its catalogue will cover IT products from servers and workstations, to tablets and software. The basic idea is simple: bigger volumes mean lower prices. According to Tiera, the web store prices will be 10-20% cheaper compared with municipalities buying the products independently.

“Our web store is based on continuous automated tendering. Sixty of the main providers will update their prices online every hour,” said Halttunen. “The providers can see the prices of their competitors so it is a very transparent system which, to my understanding, hasn’t been used anywhere else in the European Union public sector.”

Tiera’s web store is also expected to speed up other procurement steps. All necessary installations are done according to the municipality’s needs before the products are shipped, which means they can be sent directly, removing the step of going through the municipality’s own IT people.

Government intervention

While Halttunen isn’t aware of similar web store initiatives elsewhere, slightly different approaches can be found in the UK. The G-Cloud framework and its Digital Marketplace have raised plenty of international interest by bringing cloud-based and pre-approved IT services within easy reach of the public sector. In essence, this makes the Digital Marketplace an online store which offers IT services such as infrastructure, platform and software as a service, as well as consultancy services for the public sector.

However, while G-Cloud was launched in 2012 to bring efficiency and cost benefits to public IT procurement, two-thirds of local councils have yet to use it and adoption is a challenge well-acknowledged by Tiera.

“Finland has close to 320 municipalities and all of them have on average 130 different IT applications and systems. In a city the size of Helsinki there can be more than 800 systems,” Halttunen said. “[Municipalities] have bought their systems separately and have different procurement cycles. It will take time to harmonise these systems as all old [IT] investments need to be depreciated before a municipality can invest in a new one.”

Similarly, Hyvönen noted that while Tiera is a welcome step towards a real collaboration network, municipalities need to be willing to embrace the change

“Many municipalities said in the study that they operate according to the laws and regulations,” he said. “I believe laws and regulations should be used to drive public IT systems forward, then there would at least be some kind of requirement to harmonise them. It is a hard measure, but there has been talk about these things for many years and there is still much to achieve.”

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