Scottish Government

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EFFICIENT GOVERNMENT FUND

Stage 1 application - expression of interest

Part 1: Summary Table

Part 2: Background and Context.

Background.

Over the past 3 years, the Grampian Joint Public Sector ICT Sub-Group has met on a number of occasions to consider opportunities for public sector organisations to work more closely together and what the potential benefits might be. The group concluded that there would be significant immediate benefits arising from the development of a common/shared ICT infrastructure that will service the needs of each individual organisation while facilitating future aspects of joined-up working, to the benefit of the regional community.

The Stage 1 application in this document (re-submission) refers to the establishment of that common/shared ICT infrastructure. This Narrative Bid, for information, puts this bid into the context of a wider future vision that the ICT Sub-Group has developed and will be exploring further with other sub-groups within the overall Joint Public Sector Group.

Overall Objectives

Achievement of the principles of the Efficient Government programme will demand significant change to current support and administrative services. In recent years the application of new technology has delivered many process efficiencies within organisations, but opportunities for further improvement will be primarily through the integration and sharing of technologies and support services across public sector organisations. In addition to further efficiencies, this will bring real changes to the way in which frontline support services are delivered to the public. A single, shared ICT infrastructure, operating across a 'region' will be fundamental to the implementation of significant inter-organisation business process change in other areas.

The initial priority of the Grampian Joint Public Sector ICT Sub-Group is therefore the development of a common/shared ICT infrastructure that will service the needs of each individual organisation while facilitating future aspects of joined-up working, to the benefit of the regional community.

The longer-term vision is one of integrated services for local people with a proactive, customer-oriented approach that will deal with ALL their issues at a single point of contact. Integration will extend to many areas of service provision, eliminating duplication and significantly reducing operational and training costs. Such change could lead to a regional budget provision and organisation for the support of a range of local services.

Essential Elements

The initial project relates to the ICT infrastructure with the creation of a single data centre with common data storage, servers and communications network.

This can be best explained through the concept of the 'Pyramid of Opportunity' that explains the major steps towards the radical change that this project will bring.

The pyramid represents a ground upwards view of the various elements of the ICT Infrastructure showing their relative difficulties in terms of potential integration and sharing. At the base is the technological infrastructure foundation (the servers, routers, cabling, etc.) where the greatest degree of common requirements and shared protocols may be found. At the apex are both the organisation specific services that are unlikely to benefit from integration and also the common CRM solution that will be complex to achieve but where the rewards would be the full achievement of the goals of the Efficient Government programme.

The project to achieve full integration would replicate the building of the Pyramid.

The first phase, for which this "stage 1" bid has been submitted, will lead towards the creation of a common data centre and electronic data storage repository. Common telecommunications networks (voice and data) will also be investigated and implemented in accordance with the long-term vision. Migration plans will be developed for each organisation to close their own operations and move them to the new data centre. Initially, the functions that will be moved across will be the commodity type IT services such as file and print services, e-mail, web-hosting, authentication, telephony and network management. Further migration will take place as part of the business process changes within step 3. As common telecommunications facilities are established, all public sector employees within Grampian will have common telephone and e-mail systems, facilitating further business process integration.

The management and governance arrangements for this shared infrastructure would be established early on (see Step 2).

As part of STEP 1 there will be an early need to create a framework for ICT decision making and governance to be adopted by each participating organisation. This might start with the commencement of joint projects and the sharing of scarce specialist resources, but early on it is likely that the management of the shared infrastructure would have to be undertaken by a common body rather than by individual public sector organisations. This might require new organisational arrangements, perhaps with a strategic private sector partnership.

Further benefits can be realised if the base ICT infrastructure is expanded to allow the sharing of common back-office systems coupled with sharing and restructuring of the relevant support departments and business processes (Finance, HR, Payroll etc). The public sector support-unit leaders will drive the necessary change, remodelling and re-engineering their processes to take advantage of the opportunity offered by the new ICT infrastructure.

Steps 1, 2 and 3 are largely concerned with arrangements for back office services. At the apex of the pyramid, there are opportunities to develop shared front-line services which directly interface with citizens and other end-users. Agreeing a shared approach to these services will be more difficult due to the different characteristics and needs of participating organisations. One example, however, would be the introduction of a common Citizen Relationship Management System. This would be a significant achievement for the public sector organisations within Grampian and the people served by them. The implementation of such a system would be complemented by a common (telephony) Call Centre where a single telephone number would gain access to a service co-ordinator that could accept queries and service requests across public sector organisations. The system would be replicated across each service interface channel (i.e. web, telephone, e-mail, mobile communication) such that the citizen can expect a comprehensive service, no matter how they wish to communicate with the regional public sector organisation.

Implementation.

The Joint Public Sector ICT Sub-Group considers that there are 3 key implementation phases for this vision:

1. The establishment of a base shared ICT infrastructure (the subject of the Stage 1 bid to the Efficient Government Fund). The resourcing, management and governance arrangements for any shared organisation would be put in place at this stage.
2. The establishment of shared back-office services which build on and take advantage of the shared ICT infrastructure.
3. The establishment, where appropriate, of shared frontline citizen support services.

The focus of activities to date has largely been around (1).

Prior to each phase of the project, there will be significant preparatory work and detailed analysis required, and an understanding of current arrangements, costs, service levels and forward plans. In particular, agreement and support from business-unit leaders will be required and agreed requirements drawn up for organisations to align to shared common systems and business processes.

External specialists would be contracted to assist with this work. An additional output would be a framework for future ICT decision making and spend that would be adopted by each of the participating partners.

Compelling Reasons

The local partners had been engaged in the Community Planning process for some time and had therefore worked methodically towards a joint view that the time was now right to make the step change that this project would entail.

The project will require substantial funding. While the partners are keen to participate and in any case would be committing funding to it, the additional funding and profile of the Efficient Government programme will greatly increase the chances of success for this initiative.

While it is only possible at this time to estimate what the costs and benefits will be, it's clear that this vision is fully aligned with the Efficient Government programme.

The creation of an integrated ICT infrastructure is a key strategic starting point. If this change does not happen then the vision of integrated public service will be significantly more difficult to achieve.

Benefits

There are both direct benefits and added benefits that a project of this nature will bring.

Efficiency savings will accrue from two sources:

The actual costs and savings are to be identified following a 'Discovery' phase where detailed information will be gathered on the current partner infrastructures. This information will be utilised to plan the new purpose-built data centre and identify which technologies will be reusable and which will need to be replaced. It is through this phase of work that the real costs and savings will be identified.

The integration of business processes across the public sector will lead to improved service delivery to the citizens of Grampian. Through electronic data integration it can be ensured that citizens are not asked repetitively for the same information and can be communicated with proactively, with all their public services offered through a single point of contact. Similarly, citizen access to electronic service delivery via web portals will be enabled through common authentication facilities. The real benefits will be to these citizens who will receive significantly enhanced services funded through efficiency savings.

Further benefits which are of significance are:

1. Disaster Recovery ( DR)
   Rather than several public sector organisations making separate and independent arrangements for disaster recovery, the establishment of a shared ICT infrastructure allows DR facilities and provisions to be shared as well. This will both reduce costs and provide a level of disaster recovery that would otherwise probably be difficult to fund.
2. Teleworking /Flexible Working Options.
   The set up of the new ICT infrastructure could be adapted to allow for a higher proportion of teleworking and other flexible working options. This would allow employees to work from home or other 'offices' connected to the network. This would not need to be specific to a single organisation. New network links would allow all public service employees more flexible access to the network and ICT-based services, across Grampian.
3. Single Communications Infrastructure.

All employees within the public sector would be connected via the same telephone and e-mail systems facilitating greater inter-working and collaboration.

Justification of Cost Savings

Through the operation of a shared infrastructure, specialist consultants have identified that substantial savings are achievable for this type of project. Mindful of such savings current "actuals" for each of the participants have been identified (Table A) and a cashflow table for the establishment of a common ICT infrastructure together with continuing operational costs has been prepared (Table B). These tables are the basis of the headline costs/savings outlined on page 2 of this submission.

It should be noted that it is thought unlikely that all participants would attempt to transfer to a common ICT infrastructure at the same time. In reality, a likely scenario is that the participants would form 3 separate tranches and would convert at approximately 1-year intervals. Tables A and B are based on suggested tranches of:

An example of the adoption of large-scale joint ICT inter-working is an innovative solution from Australia is the "G5" Councils on-line solution. This relates to a 10 year business transformation relationship that had a "Go Live" date of March 15 ^th 2004. This initiative attracted £54 million private sector funding offered in a 10-year PPP deal. The savings are expected to be between £120M and £140M over 10 years between the 5 Councils. This represents available savings of between 4 and 5% of budget per annum.

The initial envisaged project described in this bid could develop into a wider project of this nature.

The "G5" Syndicate Business case is already delivering significant savings in a number of areas:

High Level Benefits

• 5% improvement in the efficiency of development approvals
• 1% efficiency improvement for half of all computer facing workforce
• Exceeding the 1-2% productivity savings targeted from integrated applications c.f. disparate systems
• 0.5% reduction in corporate overhead
• 30% improvement in the efficiency of purchasing processes
• 20% efficiency improvement in financial reporting
• 10 to 20% improvement in the efficiency in HR administration
• 40% reductions in call centre activity through the use of integrated CRM & Asset Management System and workflow

Other Benefits

• 25% reduction in inventory management effort
• 10% reduction in asset maintenance costs
• 20% reduction in contract management effort
• 10% reduction in plant and fleet and materials costs
• 10% reduction in property management work effort
• 5% reduction off the value of purchases
• 50% reduction in bank reconciliation work effort
• 20% reduction in cycle time in regulation processes
• 20% reduction in financial reporting work effort
• 25% reduction in accounts receivable work effort
• 20% reduction in cycle times in accounts payable processes
• 20% reduction in records management and processing

The detailed work planned for Phase 2 will help clarify the benefits achievable by the "Grampian Public Partnership".

The following tables give some indicative savings based on what will be achievable in the early phases of the project. The evidence from the "G5 Syndicate" suggests that there is the potential in later phases for significantly more savings.

Commitment of Partners

The partners have been working together for over two years, investigating a number of different potential project areas where inter-working would be beneficial. The resultant bid has the support of all the partners highlighted earlier.

There are however some constraints placed on full participation through the need for certain organisations to adhere to national initiatives and regulations that have the potential to conflict with a regional scheme.

At present the participants can be categorised as follows:

a. Those for whom there is no known reason why they could/should not participate in full joint working/networking:
Local Authorities: Aberdeen City, Aberdeenshire, Moray.
Higher Education: RGU, Aberdeen University, Aberdeen College.

b. Those for whom there is no known reason why they could/should not participate in full joint working/networking but who are unable to commit because their future is under discussion/unknown:

Grampian Fire and Rescue.

c. Those whose existing operational policies and/or national strategies have the potential to conflict to a significant level with regional joint working/networking:
Grampian Police - Government Secure Classification Scheme.

(Note: Due to national NHS initiatives, NHS Grampian has indicated that they are unable to participate at this time.)

Value Added Tax

Higher Education ( HE) and Further Education ( FE) institutions have charitable status and are not therefore able to fully reclaim VAT charged on services supplied. It is possible that the delivery of shared services is best achieved through the establishment of a Special Purpose Vehicle ( SPV) (e.g. Company limited by guarantee) with staff transferred to that SPV. Services supplied by those staff to HE and FE institutions would, however, immediately be subject to VAT. Effectively, therefore, under any such arrangements HE and FE institutions must achieve 17.5% efficiency gains on the use of staff resources simply to "stand still".

This is a significant barrier to participation for HE and FE institutions and erodes the potential benefits that can be achieved. The Joint Public Sector ICT Sub-Group would welcome some assistance in resolving this issue.

TABLE A

CURRENT ANNUAL CAPITAL

CURRENT ANNUAL REVENUE

TABLE B

GRAMPIAN PUBLIC PARTNERSHIP CASHFLOW

STAGE 1 BID (RESUBMISSION) ('000s)