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