Professional Documents
Culture Documents
www.government-
Jan Duffy
In This Report 1
Methodology ............................................................................................................................................. 1
S i t u a t i o n O ve r vi ew 2
Birmingham: The City ............................................................................................................................... 2
The Best Practices.................................................................................................................................... 6
Future Outlook 36
Essential Guidance 36
Actions to Consider................................................................................................................................... 36
Learn More 37
Related Research ..................................................................................................................................... 37
Relevant Reading ..................................................................................................................................... 38
P
1 Functional Scope of CST ............................................................................................................. 18
2 Delivery of Core CST Implementation .......................................................................................... 21
3 Key Cultural Change Issues......................................................................................................... 22
P
1 CHAMPS Phased Approach ........................................................................................................ 20
2 ROI Impact of CST....................................................................................................................... 26
3 Risk Impact of CST ...................................................................................................................... 27
4 Transformation Impact of CST ..................................................................................................... 28
5 Innovation Impact of CST............................................................................................................. 29
Methodology
This ProveIT case study explores the discrete but heavily interrelated
elements of Birmingham City Council's early transformation
achievements. This report focuses primarily on the formation of
Service Birmingham and the implementation of CST including the use
of SAP's suite of software applications to support integration of the
council's financial and operational performance management processes
into a single tool to deliver a step change in performance and more
effective decision-making.
SITUATION OVERVIEW
Birmingham provides over 20% of the jobs in the West Midlands and
every day nearly 200,000 people from the larger Birmingham
metropolitan area (population more than 2.5 million) commute to their
work from outside the city.
Paul Tilsley
Deputy Leader of Birmingham City Council
The council recognized that because of the size and complexity of the
initiative, moving the transformation agenda forward would benefit
from the formation of a partnership whereby both partners had a
vested interest in the overall outcome. Combining the business
transformation and ICT services in one contract would ensure a
cohesive approach and encourage suppliers to be flexible and
adaptable to the changing needs of the council. The services to be
included in the partnership would be negotiated as part of the contract
negotiations, but would be based on provision of the following two
groups of services:
● ICT services
● The partnership would be set up initially for a ten year period, with
an option to extend for an additional five years.
B id de r E va l uat i on
By the end of June 2004, following an initial evaluation, the cabinet
agreed to take two bidders to the next phase of evaluation to be
completed by the end of October 2005. This phase involved three
months of negotiation at the end of which both bidders submitted their
best and final offer (BAFO) submissions. The submissions were
scored by evaluation in the following areas:
● Achievable savings
A budget of £300,000 had been set aside to fund the proof of concept
projects and the results demonstrated that efficiency savings could be
achieved in line with the 15% target that had been established in the
business transformation vision. The final scope of business
transformation services would be based on a series of business cases to
be developed throughout the life of the partnership.
C a p it a Se le cte d t o Fo r m Se r vi c e B ir m ing ha m
In the council's opinion, the proposal submitted by Capita was
affordable, demonstrated stronger business transformation services,
and the joint venture model was in line with council objectives. The
"cultural" fit was deemed to be satisfactory and Capita committed to
creating 800 new jobs in Birmingham in addition to those in the joint
venture. Consequently, the council recommended that contract
negotiations with Capita commence.
S e rv ic e B ir m i ng ha m a nd IC T
Service Birmingham implemented major enhancements to the
council's ICT infrastructure, including a £2 million investment in a
new server estate. Transformation of the core IT service delivered to
council employees included implementation of a more resilient
network infrastructure, upgraded computer servers, consolidation of
core applications, and a desktop refresh program. Seven service desks
were consolidated into two and 550 applications rationalized to 150.
As a result, email speed has increased 500%, traffic has increased
30%, and reliability has increased significantly. The number of help
desk calls answered within 20 seconds increased from 40% to nearly
90%.
Implementation of CST
Considered to be integral to the council's efforts to save money and
invest in areas that would enable better services, at the outset the
overall aim of CST was to deliver £800 million in benefits for an
investment of £140 million over 10 years. Implementation of CST
involved a change to a shared-service delivery model and
implementation of Voyager, using SAP's software suite to support the
integration of the council's financial, procurement, and operational
performance management processes. Voyager went live on October
29, 2007, with a goal of delivering efficiency saving of £127 million
(£79 million cashable) by the end of March 2009.
B u s in ess C h an ge D ri ve r s
CST aimed to transform the following council processes:
● Procure to pay: The way in which the council procured and paid
for goods and services from third parties
● Finance: The way in which the council recorded and reported its
financial activities
Issues with the system constrained the council's ability to deliver best
value through procurement, resulting in missed opportunities to deliver
substantial cost reduction and fragmentation of the council's supply
base. Some examples of the issues:
F ina nce
The total number of staff within the finance function was
approximately 1,000. Each directorate had a dedicated finance team
reporting to directorate management and had a "dotted line"
relationship to the S151 officer (i.e., the officer with specific
responsibility for financial matters under the provisions of the 1972
Local Government Act). With the exception of a common revenue and
payments team managing most of the accounts receivable, accounts
payable, and payroll activities of the city, the finance teams provided
full finance support to their directorates.
Pr oc ur emen t
There was a need to deliver better value from the council's
procurement of its goods and service so that additional resources could
be freed up to provide for front-line service provision. In a series of
workshops in which the majority of directorates were represented, a
number of desirable outcomes (and associated measures) were
identified:
● Services and supplies fit for purpose and delivered at lowest total
cost (meet or exceed efficiency savings target over next three
years, £137 million, and customer satisfaction with contracts)
Process
Systems
Culture
● Reduced cost and effort associated with using and maintaining ICT
applications
Pr op ose d So lut io n
In order to address the challenges, the council proposed a future
operating model based on the following principles:
Sc ope
The scope of CST included procurement, payments, recording, and
control of finance transactions and performance management across all
directorates in the council:
The benefits review for CST came to completion in October 2007 and
in November a series of Benefits Deployment workshops were
delivered to explain the nature of each benefit to directorate managers,
confirm directorate allocations, and to formally handover realization
plans to nominated benefit owners.
I m p l ement a t i on A pp ro ac h
As the first in a series of nine work streams, CST provided a test bed
for future processes, tools, and techniques.
Pr og ra m Ma na ge me nt
In order to deliver the business transformation consistently across the
council, an integrated program management structure was established,
underpinned by corporate leadership from a senior responsible officer
(SRO) and a robust planning, tracking, and delivery methodology.
Specifically:
FIGURE 1
Transforming Organisations
Service
Transformation Proving
Strategic Transformation Common Creation Continuous Strategic
Visioning Shaping & Consolidation
Need Initiation Design & Improvement Outcome
& Transition
Planning Realisation
• What do we • Where do we want to • What is the new service/solution • Embedding the new
want to get to? and how will it operate? solution and stabilizing
transform • How are we going to • Creating the new service/solution the business
get there? and building supporting systems • Making sure the benefits
• Proving the new service/solution are achieved
works as designed and getting the
business ready to use it
SAP was selected as the ERP software to support CST, replacing some
90 systems. In addition to supporting future expansion (e.g.,
implementation of HR management) SAP was chosen for the
following reasons:
TABLE 2
In parallel with the design, build and test stages, the business planning
process was designed and was piloted by the Business Review Group
to deliver the 2008–2009 balanced budget based on council priorities.
In addition, the organization design was finalized and consultation
processes were initiated with unions and key stakeholders.
Go-live criteria were jointly developed with the council and BCC
Audit and were presented for approval to the CST Steering Group,
Efficiencies Board and Business Transformation Steering Group
The go-live decision was granted in October 2007 and the solution was
taken live on time and to budget to over 5,000 users. The first stage of
go live delivered the full process and technology solutions for Procure
to Pay (P2P), Service to Cash (S2C) and Record to Report (R2R) and
included the Project Accounting elements of the projects and programs
solution as well as the nonfinancial reporting frameworks (i.e.,
scorecards with measures linked to strategic objectives) for corporate
policy and delivery, as well as development and culture services.
Implementation Challenges
Glyn Evans told IDC Government Insights that overall, the completion
against key milestones was good with three SAP go-live dates
achieved on time, as planned. Training, organization design, and
stabilization of the P2P processes were the main overrunning areas, all
of which are now under control and coming to completion.
R e t u rn o n I n ve s t ment
IDC Government Insights mapped ROI to business objectives and cost
effectiveness, value to the enterprise, and/or value to the Department
mission.
B e nef i t s A c h ie ve me nt
● After taking into account inflation (to current year prices) and
agreed change requests and such, as of February 2009, CST had
achieved £400 million in savings and at the time of publication
was on target to achieve a total benefit of £883 million (of which
£541 million will be cashable) for a cost of £147 million, a better
return than originally anticipated. The full BTP is expected to
From the outset, the BTP, the Strategic Business Partnership, and the
implementation of CST were all based on achieving cashable benefits.
As this case study clearly demonstrates, Birmingham City Council has
achieved the benefits predicted for the implementation of CST.
P r ov eIT R O I I m pact o f C S T
IDC Government Insights considers the ROI impact of this project to
be at the very high end of the positive scale (see Figure 2).
FIGURE 2
ROI IMPACT
LOW HIGH
R is k
Risk includes the situational complexity of the technology (such as
implementation scale and legacy environment) and the implementation
complexity (cross-organizational governance, organizational culture,
and program planning and management).
P r ov eIT R is k I mpa ct o f C S T
IDC Government Insights assesses the risk impact to be high (see
Figure 3).
FIGURE 3
RISK IMPACT
LOW HIGH
The long-term implications are significant since CST was the first of
nine business transformation initiatives to be implemented, the lessons
learned will undoubtedly enhance the potential for success in the other
eight.
FIGURE 4
TRANSFORMATION IMPACT
LOW HIGH
In no va t ion
Innovation covers the solution's leveragability to gain value, including
scalability, repeatability, and replicability.
FIGURE 5
INNOVATION IMPACT
LOW HIGH
● Capture things that did not work, that could have been done better,
or that worked well
● Intended to focus on areas that are not relevant for future programs
● A commercial exercise
Ma n ag i ng E x pec t at ion s
A change program of this scope and scale is unlikely ever to be
introduced without encountering problems. Future programs need to
make this clear to both internal and external stakeholders in the run up
to implementation, be explicit about how such issues will be resolved
and establish and publicize communication channels with sufficient
capacity to deal with situations as they develop. When problems do
arise, a team needs to be in place that has the authority and capacity to
manage internal and external (including press) communications.
Re so ur c ing
It is not uncommon on major change programs to see the go-live date
as marking the culmination of the program and, apart from the
resolution of immediate issues in the aftermath, for the team to begin
to be wound down. CST has demonstrated that the true target should
be the end of stabilization and resource planning needs to take this into
account.
Pr og ra m Ma na ge me nt
Overall program management worked well. Progress was reported on a
weekly basis and on the whole, key controls and disciplines were
maintained effectively. In terms of improvement opportunities, the key
areas identified were:
There were many occasions during the lifetime of CST where Service
Birmingham consultants were fronting up events and program issues
with stakeholders when a council representative would have had more
impact and been more appropriate.
The experience from CST is that there were few occasions when
progress or recommendations were truly challenged in any of these
governance forums and the process appeared to disintegrate once the
solution went live. The program team must take responsibility for
maintaining focus on governance.
Communication
A number of myths arose very early in the life of the program. Firstly
because CST was the first business transformation program to exist, to
many people it was the city council's BTP, there was no awareness that
it was only the forerunner of other programs. Secondly, people thought
that CST equaled the whole of the efficiencies program, whereas it
was only part of the efficiencies program, albeit the major one. Neither
of these myths is true but they serve as a good example of one of the
major difficulties experienced throughout the life of the program —
communication and how hard it was and continues to be, to separate
the myths from reality.
The program team, the council, and Service Birmingham were all
unprepared for the press reaction immediately following go-live. There
is a clear lesson to be learned here.
S t a b i l iz a t io n
The stabilization phase reinforced the complexity of the council and
continued for longer than expected. Early in the stabilization phase, it
became apparent that the challenges of achieving stabilization in the
P2P process and also for the VSC had been significantly
Issue escalation and resolution could have worked better and still
remains a problem today, with a large number of issues awaiting
conclusion.
T ra i n in g
It was recognized at a very early stage that the volume of training
required posed a dilemma, not just in terms of numbers but also where
such a large amount of training could be delivered, that was easily
accessible to the whole of the city and close to the go-live date. But
due to the difficulties experienced with role mapping and the
consequential administrative difficulties, it became more of a problem
as the wrong people were trained and some people failed to be trained
at all. Over 10,500 training instances were delivered as part of the CST
program, excluding elearning, but this is far fewer than were originally
planned.
FUTURE OUTLOOK
Birmingham City Council continues with the implementation of the
business transformation strategy. The Customer First and Excellence
in People Management work streams are already underway, both
supported by Service Birmingham. The focus will increasingly be on
improving service while containing costs, using the shared services
model as a foundation and keeping in mind the human aspects of the
council's relationship with its citizens. As the potential for using
technology to overcome the challenges of fragmented processes,
multiple service agencies, and geographically dispersed facilities
increases, the local government ecosystem could undergo a change in
shape, size and inter-dependencies. Birmingham City Council will
continue to prepare itself to capitalize on this changing environment,
capitalizing on the development of the shared services center. The
business transformation strategy's support for Moving Birmingham
Forward will provide an excellent foundation.
ESSENTIAL GUIDANCE
Actions to Consider
The CST program must be viewed as a success. It was the first of the
council's planned transformation programs to go live, on time and
within budget. It is on track to realize the significant financial benefits
planned. New systems, processes, and staffing structures have been
implemented. The shared services concept is still gaining ground in
local government, but in the case of Birmingham City Council and
Service Birmingham, it has proven to be critical to achieving the
hoped for efficiency gains and related cost savings. IDC Government
Insights suggests that other governments (central and local) consider
the following actions in order to achieve a similar level of success to
that achieved by Birmingham City Council.
LEARN MORE
Related Research
Relevant Reading
Synopsis
"Birmingham City Council's vision for the future of the city described
in the report Moving Birmingham Forward published in 2005 required
service delivery at an extraordinary level of excellence. Achieving this
and responding to the business needs led the council to launch a far-
reaching business transformation program. Key to the successful
implementation of the business transformation program was the
formation of Service Birmingham, created as a public-private
partnership between Birmingham City Council and Capita Group PLC
along with several other partner organizations. The use of a fully
integrated suite of software applications such as that delivered by SAP
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