Public Sector Research Centre

The road ahead for public service delivery Delivering on the customer promise*

21447_Global.indd 1 30/10/07 14:18:57 ForewordAbout PricewaterhouseCoopers and Key Government/ 01 Public Sector contacts

‘The public sector is, collectively, the world’s largest service provider. Any incremental improvement in public services positively impacts millions of people. The first step to ‘delivering the customer promise’ is to know your customers and their needs.’

Wim Oosterom

Public sector leaders around the world money is a core concern today. This is share know-how and identify emerging face a common set of challenges if prompting the public sector to explore trends in best practice amongst these their services are to meet the increased new sustainable models for service organisations, as well as drawing on expectations of their ‘customers’ – both delivery – models that can improve developments in the private sector from citizens and businesses. However, customer experience and outcomes which public sector organisations may be our experience shows that while the through enhanced service levels at the able to benefit. These insights inform the challenges may be consistent, the ways same or reduced cost. The solution lies following paper. in which they are being confronted, in developing customer-centric models and the results that are being achieved, that draw inspiration from the relative Marking the launch of our ‘Public Sector vary considerably. success with which the private sector has Research Centre’ (www.psrc-pwc.com), addressed this situation, and that put the a focus for our global public sector One common challenge faced by customer at the heart of service design know-how, this paper brings together every organisation is how to service its and service delivery. our own ‘connected thinking’ on how the customers better. The public sector is public sector can respond to changing no exception. Traditionally, it has been While the public sector does not choose customer expectations. Because these seen as a passive vehicle for executing its customers, the fact that it is required responses will inevitably vary according social policy mandated by legislation. to service them and their diverse to context, we are not seeking to define Increasingly, however, accustomed to requirements is another factor driving solutions. However, as an advisor to public enhanced service delivery from the private the need for new service delivery models. sector organisations around the world, sector, citizens/businesses view the public To deliver on the customer promise, we have drawn on our own experience, sector as another provider of ‘services’ public sector organisations must build as well as on the views of public sector – services for which they pay taxes. ‘connected government’, seamlessly stakeholders, to identify five key enablers aligning multiple government departments for delivering on the customer promise. To address this, the public sector must with customer journey needs. find ways of improving the efficiency The ‘customer promise’ is part of the We hope that this paper provides readers and effectiveness of its service delivery. inherent agenda of governance for the with a stimulating foundation for debate This means providing value for money by public sector and sets out the standard and further investigation. improving quality of service (accessibility of service that government is required to for all and satisfactory customer provide to its customers. experiences and outcomes), and reducing the costs involved in providing As one of the world’s largest globally those services. integrated professional services organisations, we act for governments at Because the need for a customer- all levels (international, national, state and Wim Oosterom oriented focus coincides with tightening local). The strength of our global network Global Government Leader government budgets, providing value for means that we are uniquely positioned to

The Public Sector Research Centre is PricewaterhouseCoopers’ centre for insights and research into best practice in government and the public sector, including the interface between the public and private sectors. The Centre has a particular focus on how to achieve the delivery of better public services, both nationally and internationally.

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Page 01 Executive summary 2

The burning platform

02 Drivers for change 8

Getting it right

03 Understand your customer: ‘Customer is king’ in the public sector too 14

04 Pull down the walls: Agency silos to give way to connected government 22

05 Empower: Build capacity to deliver results 28

06 Realise benefits: Customer-centric models to deliver the customer promise 40

07 Continuously improve: Innovate to sustain benefits 52

Conclusion

08 Delivering on the customer promise 60

09 PricewaterhouseCoopers and Key Government/Public Sector contacts 62

PricewaterhouseCoopers Delivering on the customer promise 1

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‘Government has to fit the rhythm of life of the people.’

Jean-François Copé, Minister – Budget and Administrative Reform, France

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Meeting customer expectations calls for a customer-centric approach – one that is built upon integration between public sector agencies and that leverages technology and, where relevant, private sector expertise to develop new public service delivery models.

Reforms in the public sector aimed There are many initiatives already at improving service delivery have underway which demonstrate how, in Five key strategic received considerable focus during the right circumstances, effective public enablers for delivering on the last decade. Global trends service delivery models can be developed the customer promise such as rising customer expectations, by combining the complementary budgetary constraints, global competition capabilities and cultures of the public for investment, public and private sectors. Technology can sector reform programmes and changing also be a key enabler. The development demographics have transformed the of customer-centric models calls for environment in which the public sector customer insight, looking at customers’ 1 Understand your customer operates. This, in turn, has broken wants and needs (both demographic ’Customer-centricity’ down old constraints and created new and attitudinal), in a holistic manner – opportunities. Fundamental to the distinguishing means and ends, focusing demand for better public services are on improved customer journeys and the heightened expectations of citizens measurable benefits, and understanding the strategic risks associated with various – expectations that transcend economic Pull down the walls status, geographies and the different service delivery models. 2 ‘Connected government’ methods of funding, managing and delivering these services. Through our work with the public sector organisations across the world that Driven by these changing expectations, have successfully embarked upon such the public sector is increasingly required transformations, we have charted a to redefine its role, strengthen its certain consistency of approach. This 3 Empower your institution customer focus and build integrated paper is based upon our experience ‘Build capacity’ service delivery models. If they are to of working with these organisations, realise the desired benefits, these models supported by interviews with public must be based on meeting customer sector leaders. The core message is that needs more efficiently and more effectively. ‘Delivering on the customer promise’ is based upon five key strategic enablers: Realise benefits This means keeping the customer’s 4 1 Understand your customer – ‘Deliver the promise’ needs at the core of every decision, ‘Customer-centricity’ from strategy formulation and design through to execution. Government 2 Pull down the walls – process re-engineering is often ‘Connected government’ needed to put in place improved, 3 Empower your institution – value-for-money processes that will Continuously improve ‘Build capacity’ 5 ‘Innovate’ reduce waste and duplication, producing an effective ‘customer journey’ (the experiences a customer has when interacting with service providers).

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‘The importance of 4 Realise benefits through appropriate the drive towards enhanced service models – ‘Deliver the promise’ delivery. One of the core requirements deploying a modern for any customer-centric strategy is 5 Continuously improve – ‘Innovate’ customer insight. In-depth knowledge client-centric approach about the customer can be drawn from in public services is Throughout this paper, which is closely various sources of data - demographic, structured around each of these five behavioural, needs-based and generally well accepted enablers, we explain the common trends attitudinal. Once assembled, this data in the public sector and and challenges facing public sector is built into a joined-up ‘big picture’ organisations, as well as using ‘real of customer segments, providing a has become a goal. It’s world’ examples to illustrate the diverse foundation for the creation of multiple ways in which they are responding. service delivery channels aligned a question of country The purpose is to provide readers with customer journey needs. Other competitiveness and with a broad-brush template for public core elements in a customer-centric sector reform aimed at enhancing strategy include the setting of service attractiveness – civil service delivery. There are no instant standards that reflect customer- servants are sensible solutions available - and no single oriented measures, the creation correct approach. and empowerment of ‘customer to that. The challenges champions’ at different levels in the 1 Customer-centricity organisation, and the implementation today reside in how you of processes which ensure that For the public sector, the provision customer insight becomes the driver achieve that across all of customer-centric services is no for continuous improvement in service simple task. A number of significant departments. It is also delivery. This enables the creation of challenges need to be overcome. multiple delivery channels, as well as a continuous change Services must be delivered on a the alignment of service delivery with wide scale. Customer journeys often customer journeys. process.’ interface with several different public M. Wiseler, Ministre de la Fonction Publique sector agencies. Diversity issues must et de la Réforme Administrative, be addressed to take into account 2 Connected government Ministre des Travaux Publics, Grand-Duchy of Luxembourg, January 2007 the unique attributes and channel Almost all public and private sector preferences of individual customers. organisations have hierarchical And a detailed understanding of structures. Within these structures, the costs involved in providing independent vertical units (or ‘silos’) these services must be developed. are a common feature, necessary for Customer-centricity will often also administrative purposes. Removing need to take account of internal agency silos, and creating connected customers – the public sector agencies government, does not necessarily imply that have to be integrated as part of wholesale government restructuring.

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It does, however, call for the alignment • People/Capacity/Training (focusing on ‘If governments of a common customer-centric the internal capacity-building that is vision with objectives, outcomes, needed to manage the transformation, do not succeed information and process flows. In managing talent and training public- different organisations, key factors sector people to respond to changing in enhancing the involved in the drive to build connected customer needs) competitiveness of government will include building visible Culture (change management leadership at a strategic level, setting • the public employer throughout the organisation is the common goals (service standards) for key to a successful customer- in the labour market, connected government, focusing on the centric strategy). front end (where services are actually the possibilities for delivered), breaking down intra-agency silos before moving to dismantle inter- 4 Deliver the promise recruiting highly- agency silos and putting in place an To deliver the customer promise, the qualified personnel enabling policy and legal framework. overall goals of public service delivery must be clearly understood. These to public organisations 3 Build capacity are quality of service (the accessibility, will diminish timeliness and calibre of service levels); Delivering effective public services cost of service (the drive towards value dramatically.’ calls for multi-level transformation for money); and customer segmentation OECD ‘Public sector – an employer of choice’ – changing the way public sector (the need for different service channels Report on the competitive public employment organisations think and act, how project by Kirsi Aijaila. and service offerings based on they view their roles, and how they comprehensive customer insight). The share information between agencies, first step towards delivering the promise with businesses and with their is to clearly define the role of the public customers. Five elements are integral sector organisation – whether this to building this capacity: be policy-maker, regulator or service • Strategy (performance improvement provider. This calls for close scrutiny and process reform, aided by of the division between its ‘sovereign’ technology) function (implementing policy) and its ‘non-core’ function (undertaking Leadership (securing the • activities which in some cases could understanding and support of top- be handled equally well, or better, by level leadership) third parties). Careful evaluation of how • Organisational design (creating technology will help to meet overall goals empowered institutions responsible is needed, with eGovernment being for a pan-government focus on recognised as an increasingly essential customer-centricity and connected medium for service delivery. government)

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The use of collaborative partnerships best practices from other organisations (whether Public-Private Partnerships, (in both the public and private sectors) Public-Voluntary Sector Partnerships, to drive innovation. Benchmarking shared services or outsourcing) should can play a useful part in this process, be carefully considered. Where any helping organisations to understand of these are selected, assiduous risk which aspects of their service delivery management is a priority, achieved through will benefit from innovation, as well as clearly-defined goals, fixed time-frames, how best to document and adopt continuous performance monitoring, risk new approaches. sharing, flexible partnership agreements, expectation management and awareness of any challenges arising from ethical Structure of the paper impacts. This paper is divided into two sections. 5 Innovate Section I defines what we refer to as ‘The burning platform’ (ie the reasons driving Innovation and continuous the need for a change in the nature of improvement are essential to the public service delivery). sustainability of public sector Section II presents the approaches public transformation. However, some public sector leaders need to consider when sector organisations have resisted addressing the challenges they face in making public service delivery efficient the concept of innovation, believing and effective – ‘Getting it right’. Within that it is more relevant to the private each section, chapters conclude with sector. There has sometimes been a short ‘Nutshell’ summaries of key perception that, because the public messages, signposting readers through sector was not operating in the same the paper. competitive environment, it was therefore not subject to the bottom- line criteria for success or failure which drive private sector innovation. With this clearly no longer the case, public sector organisations need to capture

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21447_Global.indd 7 30/10/07 14:19:01 The burning platform 02 Drivers for change

‘The reality of the public sector today is that it is assessed by the efficiency of its service delivery. No longer is the effectiveness of the public sector measured by the revenue it generates or the employment it provides...’

R Chandrashekhar, Additional Secretary, eGovernance, Government of India

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Driven by growing customer expectations, the efficiency and effectiveness of public service delivery are increasingly seen as key metrics of public sector performance. Addressing this issue is therefore a stated priority in most countries.

Many countries have undertaken public • Experience – Personalisation of sector reforms to improve the quality of service is necessary to ensure that Ipsos MORI Findings – UK public service delivery. However, while the customers’ experiences are on a par Findings of the research conducted by demand for better services is a common with what they are used to receiving Ipsos MORI Social Research Institute on factor, the spectrum of expectation varies from the private sector. customer services include: from country to country. Hoped-for 1. Despite real improvements having been improvements in customer experience and Why focus on service delivery? made, customer services may still be outcomes span seven key areas: Customer awareness lagging expectations • Speed – The time taken to deliver Citizens today are more aware of their 2. People are keen to be treated by the State as customers a service should be the shortest rights, have better access to information possible for both the customer on public services and consequently 3. Customer expectations include Speed and the organisation delivering have higher expectations of service and Authenticity. They expect services the service, right first time to be personalised to more diverse life- levels. Because they have become styles, allowing Flexibility and Choice. accustomed to capable private sector • Engagement – The manner in which organisations providing high levels of Ben Page services are delivered should be seen Chaiman Ipsos MORI Research Institute customisation and other benefits, they as customer-centric (ie participatory are not prepared to accept that public and trustworthy with the customer’s sector organisations are incapable of needs at the core) improving their own service delivery. • Responsive – There should be an They also expect a positive customer ‘intelligent’ mechanism in place to experience and better returns on the address any variation in meeting taxes they pay. Further, a number of service levels and to drive changes in countries have empowered citizens with the service delivery organisation ‘Right to Information’ legislation leading to heightened awareness about customer Value – The customer needs to believe • rights and, consequently, customer service. that the service delivery mechanism is cost effective, and value is driven by Budgetary constraints customer outcomes, not organisational processes Reduced budgets for investing in public sector service delivery are the result of • Integration – The service delivery various factors. Higher budgetary mechanism should be integrated. allocations towards pensions, education There should be no ‘wrong door’ policy and health1 in many countries are for the customer undoubtedly one of these factors. At the same time, it is becoming increasingly • Choice – There should be multiple difficult for many governments to fund the channels for service delivery, so that public sector by increasing taxes – partly customers can have ‘channels of because of resistance to this route, and choice’, depending on specific needs partly because, in a globalised society, at specific times

1 Serving the 21st Century citizen: The Global Perspective

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many of the people/businesses who pay Greater accountability and transparency the bulk of these taxes are more mobile The heightened role of the media and than ever before. social activism have combined to create greater demand for accountability and Tightening budgets and the need for transparency. However, the issue of value for money with respect to tax accountability is particularly complicated payments by citizens/businesses are for the public sector. When things go forcing governments to address the wrong for public sector organisations, it issue of public service delivery. In can often make front-page news – instantly many countries, changes have been transforming a management issue into introduced, aimed at ensuring that a political problem. The figure opposite the public sector performs under presents findings from the World Bank on two key metrics: (a) quality of service the status of public sector effectiveness, – accessibility for all and satisfactory where accountability and transparency customer experiences and outcomes, are both important measures. The study and (b) cost of service, leading to underscores the need for most nations to ‘value for money’. do a lot more to address this critical design element of effective service delivery.

Figure 1: Drivers for change Drive for competitiveness Attracting investment to fund economic growth is a priority for most countries.

Changing Increasingly, investment fund managers Demographics regard the efficiency of the public sector

Public sector as one of the factors in evaluating the reform agenda investment destination. In this context, the cost of doing business becomes Global competition for investments an important measure of public sector efficiency. Ensuring reduced cost calls

Budgetary constraints for a balanced approach which is aligned both to the needs of the customer and to realising greater efficiencies in service Customer awareness delivery. Thus, global competition for ‘investments’ as a means for economic PricewaterhouseCoopers growth is also driving the agenda for reforms in public service delivery.

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Figure 2: Government Effectiveness Benchmarking

0th - 10th percentile

10th - 25th percentile

25th - 50th percentile

50th - 75th percentile

75th - 90th percentile

90th - 100th percentile

World Bank: Worldwide Governance Indicators Country Snapshot, 2005

Public sector reform agenda (see chart opposite). This will, over time, Many governments, especially those in result in reduced working-age populations, the least developed and developing placing greater pressure upon smaller countries, face a common need to meet numbers to produce the wealth needed the United Nation’s Millennium to support living standards. It is also Development Goals2. The achievement already adding significantly to the costs of Millennium Development Goals is closely related to the effective delivery Figure 3: Average life expectancy in years of public services. This necessitates Hong Kong improved public sector performance. Japan Consequently, many of the funding Sweden programmes of multilateral and bilateral Switzerland institutions are contingent upon these Canada governments’ willingness to modernise Greece their public sector service delivery UK capabilities. USA

Czech Republic

Changing demographics Indonesia

Governments in many countries, especially Russia developed ones, need to respond to the India impact of changing demographic trends – Years 55 60 65 70 75 80 85 in particular the rise in ageing populations PricewaterhouseCoopers3

2 The United Nation’s eight Millennium Development Goals (MDGs) range from halving extreme poverty to halting the spread of HIV/AIDS and providing universal primary education, all by the target date of 2015. 3 PricewaterhouseCoopers – ‘Key trends in Human Capital: A global perspective’, 2006.

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associated with caring and providing for old-age dependency groups. In a nutshell

A number of common challenges requires Higher life expectancy in existing the public sector to re-assess its role in mature economies is a reward for public service delivery. They are: economic success but, equally, a threat to the future sustainability • Changing demographic profiles and of that success. increasing customer expectations of the public sector

As we explain in the next section, • Citizens and users of public services fundamental to the public sector’s are now more aware of their rights response to these change drivers and – with the heightened media and social activism – demanding greater will be an evaluation of its roles as a accountability and transparency ‘policy maker’, a ‘regulator’ and a ‘provider’ of public service. • Already under pressure to deliver, the public sector is also facing budgetary Greater clarity over each of these constraints, with higher taxes often no roles would help to pave the way to longer an option organisational transformation and changes to core business processes. • Externally, there is global competition among various economies – developed It would also result in the development and developing – to attract investment of service delivery approaches and and this is compounded by the public models that forge partnerships with the sector reform agenda being prioritised private and the voluntary sectors, by most governments drawing on their complementary capabilities and cultures.

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21447_Global.indd 13 30/10/07 14:19:07 Getting it right Understand your customer: ‘Customer 03 is king’ in the public sector too

‘The Government will only come to full fruition through major organisational change in administration, and by equipping civil servants with the right skills. This is a long road; it will take time, it will take persistence, and on this road there is a very important signpost. It reads: eGovernment is not about technology, it is about people; it is about putting the citizen in the centre.’

Viviane Reding, Commissioner for Information, Society and Media, European Commission Speech given at Ministerial eGovernment Conference 2005

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Customer focus is often challenged by public sector cultures, hierarchical organisational structures and differing agency priorities. Overcoming these challenges means aligning agency priorities to customer requirements to deliver a customer-centric strategy.

Private sector organisations seek to The public sector is increasingly differentiate themselves by providing their expected to run itself effectively, Customer is king customers with unique and personalised efficiently and in a customer-centric Six key elements of a experiences. More than ever before, ‘the manner, importing key private sector customer-centric strategy customer is king’ and the same dictum concepts where appropriate – and this applies to public sector organisations as means aligning every action/strategy Using customer insight to they seek to provide enhanced services towards a meaningful customer 1 inform effective customer in return for taxpayers’ ‘investments’. experience. While the customer must sit segmentation at the centre of service-delivery strategy, Our experience shows that public sector the preferred implementation approach organisations are rising to the challenge needs to take into account the ways in of offering each citizen a better customer which public sector organisations are Creating multiple delivery experience. For example, some countries structured. In particular, hierarchical, 2 channels have adopted a ‘customer champions’ ‘siloed’ structures can present a major approach, while others undertake challenge to the delivery of customer- specific customer satisfaction surveys to centric services across all agencies assess the performance of their public within an organisation. sector organisations. However, they Aligning service delivery to often face some significant additional To become truly customer-centric, public 3 customer journeys challenges – notably their scale, which sector organisations need first and means that customer ‘journeys’ interface foremost to gear their cultures towards with various agencies, as well as the serving the customer. That means aligning need to deal with people as individuals agency and customer priorities. It means possessing unique attributes, degrees of understanding the complexity of different 4 Setting service standards need, different channel preferences and customer groups and providing them complex living environments. with a choice of channels and interfaces via a demand-driven model – the more Although these pressures have always customers that there are, the more channels they tend to use according to been a fact of life for public sector Creating and empowering the level of support and guidance they organisations, they have increased 5 customer champions significantly in recent years. As a result, need. It means addressing agency silos so one-size-fits-all models for service that customers can be served effectively delivery are being phased out and new through a single point of contact. And models introduced. it means using truly customer-centric metrics to motivate staff. Continuous improvement 6 through customer feedback

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Based on our experience of helping mechanisms in place for the handling The Google philosophy: Focus on the user and all else will follow public sector organisations across the and escalation of problems as they world to move towards best practice, we are identified. From its inception, Google has focused believe that a customer-centric strategy on providing the best user experience should incorporate the six elements In the public sector, in contrast to possible. While many companies claim identified on the previous page. to put their customers first, few are the private sector, it is crucial to able to resist the temptation to make understand the nature of the policy small sacrifices to increase shareholder 1 Using customer insight outcomes required – as well as the value. Google has steadfastly refused to to inform effective customer customer outcomes. Unlike the make any change that does not offer a private sector, where the organisation benefit to the users. By always placing segmentation the interests of the user first, Google has is at liberty to define its customer One of the common qualities of built the most loyal audience on the web. segments, the public sector is required And that growth has come not through successful private-sector organisations to service numerous diversified TV ad campaigns, but through word of is that they understand their customers. customer segments. It is therefore mouth from one satisfied user to another. In order to serve them as effectively essential to develop clear policies to Google Website: Corporate Information as possible, they segment their meet the needs of each segment. customer-bases according to various factors including demographic profile, The needs of these various segments age and economic status. This can be quite distinct and will be segmentation helps them to provide driven by multiple factors, including more personalised services. This is demographic attributes such as age, driven, to a large extent, by the fact that education, income and more attitudinal these organisations share a common factors such as beliefs, values and objective – delivering profit to their willingness/ability to engage with shareholders. Satisfied customers are government. Understanding them cheaper to serve, easier to deal with all is critical to the development and and more likely to keep coming back. implementation of a customer-centric Unfortunately, the public sector does service delivery strategy. Another not always have a common unifying challenge the public sector faces is objective – instead, a number of that, unlike the private sector, where different objectives will tend to exist at customers are treated differently intra-agency levels. according to their capacity to pay for services, the public sector is Another important aspect of effective required to satisfy the rights of its service delivery is to understand the entire customer base – equally and to needs of citizens where the rectification acceptable standards. There needs and/or understanding of their problems to be a clear strategy for ensuring the is concerned. There should be inclusion of all the segments of society

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that must be served. This subject is multiple delivery channels. Each of these Putting the customer upfront – highly topical. For example, in the will vary significantly, depending on Department for Constitutional Affairs, UK UK, the Disability Rights Commission the nature of the public service that is (DRC) recently put organisations from being provided – whether transactional One example of customer-centric public across the public sector on notice after (passport services, utilities or land sector strategy is the initiative of the UK’s publishing the names of more than 60 records, for example), or closer to the Department for Constitutional Affairs (DCA), responsible in government for public authorities which had failed to services provided in health, education upholding justice, rights and democracy. produce a disability equality scheme. and law enforcement. The government and public sector team from PricewaterhouseCoopers 3 Aligning service delivery with supported the DCA Director of Strategy 2 Creating multiple delivery in developing a consumer strategy for channels customer journey (needs) four areas of the civil justice system. The Customer-centric organisations that approach involved working with 3,500 Communication between an organisation court files, undertaking 40 focus groups are considered to be highly responsive and its customers has always been the involving 300 members of the public foundation of good customer service. gain the trust and loyalty of their and conducting personal interviews But today, customers expect customer customers. Other considerations with140 members of the public and legal service to be accessible anytime, typically include: profession. In addition, a consumer experience survey was carried out among anyplace – and by whatever means of • Organising delivery units around 2,016 members of the public. Outcomes communication they prefer. Developing customer segments of this work included publication of a a real understanding of what customers preliminary report on proposals for a new want from the public sector creates • Designing the service delivery process law covering relationship breakdown, an opportunity for providing services from the customers’ point of view, and a consultation paper on debt. Based upon feedback received, the DCA and using ‘co-creation’ (a new form through channels that will best respond stated in its five-year strategy document to their needs. Channels are a means of value creation where value is published in December 2004, that ‘we for public sector organisations to deliver co-created by the organisation and have for the first time talked directly to services to citizens and for citizens to the customer). Examples of how this users and potential users of our services access government through a variety of is achieved are through responding to find out what they think’. communication and delivery methods (for to customer feedback and the Government and Public Secor - Customer- example, post, telephone, face-to-face, involvement of customer segments centric public services online, mobile, digital television, fax and in the development of services to kiosks). The delivery of services may be achieve customer-centric outcomes either directly through government or • Incorporating technology into the indirectly through intermediaries, such service delivery process as voluntary organisations. In designing a channel strategy, care should be • Differentiating service to customers taken not to force customers in any based on their needs and preferences one direction. Because of the diversity of their customer base, public sector organisations need to focus on creating

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Setting and measuring • Charging cross-functional teams – (financial and non-financial service standards – Canada with finding innovative ‘connected’ metrics used to quantify objectives solutions to customer problems that reflect the strategic performance There are two predominant methods of an organisation). used by the Governments of Ontario • Offering a service guarantee with set and Alberta in Canada for setting and and clear performance standards To this end, it is important to measuring service standards. establish service levels appropriate to • Creating contingency plans for The first approach to setting and each customer and his/her request. possible failure points measuring service standards focuses For certain routine requests, many on the operational aspects of service customers prefer an automatic, but delivery. This is the approach used • Deploying technologies to route by the Government of Ontario where callers to the most appropriate easy-to-obtain and accurate response, standards exist for everything from the service whereas the same customer faced with maximum number of times a telephone complex transactions demands a more should ring before a call is answered to • Understanding customers’ personal, relationship-based approach. the length of time a client should wait in expectations of the experience for Organisations which are adept at line at a service counter. This method each contact channel. uses the public‘s service expectations balancing service levels for a variety of as measured in ‘Citizen’s First’ to both customers study information requests, establish and meet performance targets. 4 Setting service standards notify frequently-recurring requests and analyse the degree of personal The second method uses the measure Greater customer awareness has response required for each category of client satisfaction to determine how resulted in a demand for more successful the organisation is at meeting of request. They also track customer accountability and transparency, the needs of its clients. The Service outcomes and feed these back into forcing public sector organisations Alberta model, for example, sets service the system. standards for each of the main drivers of to respond in a positive manner. service satisfaction, namely timeliness, One of the ways in which this can 5 Creating and empowering courtesy, knowledge, fairness and be achieved is through the passing outcome. From there, the percentage of customer champions of legislation setting out the customer’s citizens who express satisfaction with each of these drivers is measured, and right to information and service For most organisations, the the overall level of success is calculated. standards that are mandated by law. strengthening of customer relationships (A Policy Framework for Service Improvement in the This provides positive evidence of is a key challenge. By creating and Government of Canada Service and Innovation Sector, the public sector’s desire to place Treasury Board of Canada Secretariat June 2000) empowering ‘customer champions’, its customers in a central position. organisations can address this Setting, measuring and enforcing challenge in two key ways: firstly, at a customer-centric service standards for strategic level, by the establishment public services and agencies enables of a high-profile customer champion the evaluation of the public sector leadership role that focuses on on customer metrics which have not the customer, and secondly, at the hitherto formed part of public sector level of the front-line interface with Key Performance Indicators (KPIs) the customer. This approach is

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being followed in some government A common view of the public sector departments where officers act as a first is that it is predominantly internally Monitoring and benchmarking the Dutch building (and housing) inspection point of contact for telephone enquiries, focused, with front-line personnel departments’ service delivery requests, and complaints, helping to tending to reinforce this perception deliver courteous and efficient service, through their customer interactions. The Dutch building (and housing) providing comprehensive information inspection departments monitor and Accordingly, the quality of customer- and advice, and referring more complex benchmark customer satisfaction levels facing staff is critical. These are enquiries to the relevant departments. for the services provided. the front-line customer champions – the people who will foster a positive For every customer at each stage of the Having a specific and senior process the customer satisfaction is appointment whose job it is to take a customer experience by thinking widely monitored by survery using an internet holistic view of the customer (as well about each customer’s needs. application with the results scored along as the intermediaries through which It is therefore essential that they should two axes - customer satisfaction and services often reach the customer), understand the importance customer value. In terms of delivering the ‘customer promise’ it is crucial the helps to ensure that the customer’s of their role, as well as being provided with excellent customer- service delivers customer satisfaction perspective is represented when for those aspects customers value the orientation skills. key decisions are made and policies most. The internet application is an developed. Naturally, the appointment efficient and client orientated tool which of this customer champion leadership 6 Continuous improvement makes it possible to continuously monitor role needs to be accompanied through customer feedback service delivery. Analysis clearly shows by clearly defined management that customer satisfaction in the initial Customer feedback is a powerful tool, stages highly correlates with customer responsibilities, as well as by the not only for understanding customers’ satisfaction and perceptions of overall empowerment needed to make things experience and satisfaction with public value later on. happen on the front-line. services, but also for developing Balancing their understanding of building strategies to improve those services. In terms of what happens at the regulations and customer priorities assist Although under-utilised in the past, the building (and housing) inspection customer interface, customer feedback from both customers and departments identify service gaps and preferences change over time and front-line staff can help to ensure that implement performance improvement. therefore many public sector workers service improvement strategies focus view their association with a customer on those areas that will make the most as a continually evolving relationship. difference to customers. Canada’s All points of customer contact ‘Citizens First’ initiative illustrates how contribute to this relationship, whether this can work in practice (see p21). face-to-face, call centre, internet and web- or paper-based correspondence. Because each of these contacts delivers information or services, it is necessary to connect them so the organisation can present a single face to the customer.

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Other ways of achieving improvement Table 1: Does your organisation Government of the Grand-Duchy through customer feedback include: of Luxembourg, Continuous provide customer-centric services? consultation process • Distinguishing the organisation 1 Do you have clarity on your customers’ through compelling customer As a means of improving relationships needs and preferences? service and support between stakeholders, tripartite consultation can be particularly effective. • Employing feedback and 2 Is access to your organisation and information straightforward? In Luxembourg, this process (bringing measurement systems to better together employer, labour and public understand and serve customers authority representatives) was developed 3 Is the customer dealing with numerous in response to the country’s iron • Personalising the organisation-to- hand-offs and with too many and steel crisis. There, the law of 24 customer relationship agencies to solve the enquiry? December 1977 institutionalised a ‘Tripartite Coordination Committee’, to • Proclaiming customer satisfaction as 4 Is the customer getting effective be convened if the economic and social the organisation’s top priority support from your organisation? situation deteriorated. Over the years, a number of sectoral tripartite agreements • Engaging all customers in the were negotiated. The tripartite system 5 Are those customers with specialist feedback process through effective rapidly developed from an effective crisis needs getting the right support? management tool into a consultation use of surveys mechanism that systematically seeks 6 What are the first-time resolution rates? consensual solutions to economic and • Augmenting customer feedback social problems that do not necessarily with other pertinent measurements 7 Is your organistion leveraging efficiency constitute a crisis. and analysis to redeploy to front-line services? This form of tripartite consultation is not • Motivating employees to embrace restricted to Luxembourg. In Ireland and 8 Are the employees motivated and the Netherlands, for instance, comparable customer satisfaction and customer equipped with the right tools for models were set up during the 1980s. outcome responsibilities. delivering an excellent service? The questions listed alongside are intended to provide a reality-check 9 Is your customer service function fit for – helping public sector organisations to the future challenge? understand how prepared they are to provide the customer-centric services 10 Do you have the capability to track the that their customers increasingly require. benefits of change?

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In a nutshell Canada’s ‘Citizens First’ initiative

• Customer focus is often challenged In April 1998, the President of the Treasury by public sector culture, hierarchical Board presented to Parliament the organisational structures and differing government’s new ‘outside-in’ citizen- public sector priorities centred approach to Government of • Agency priorities need to be aligned Canada service delivery. The Canadian to customer requirements to deliver a Centre for Management Development’s customer-centric strategy Citizen-Centred Service Network, composed of 220 senior service • Key elements of a customer-centric delivery officials from the three orders strategy include: of government in Canada, produced the 1 Using customer insight to inform ‘Citizens First’ report. This documented effective customer segmentation Canadians’ expectations of, satisfaction with and priorities for service improvement. 2 Using multiple delivery channels Through ‘Citizens First’, Canadians 3 Aligning service delivery to indicated that they want: customer life-cycle a) Improved access to government 4 Setting service standards services; and 5 Creating and empowering b) Improved service delivery customer champions performance.

6 Continuously improving through In the Autumn of 1998, they created customer feedback the Assistant Deputy Minister Advisory Committee on Service and Innovation (ACSI) to help develop a citizen-centred service strategy for the Government of Canada that would respond to citizen needs. Using research into good practices in the public sector, the sub-committee developed its approach to the continuous improvement of Government of Canada service quality. Currently, departments and agencies have implemented client surveys to measure client satisfaction and much work has been undertaken to develop service standards. The Service Improvement Initiative facilitates this work by establishing an overall strategy for the Government of Canada, including individual departmental Service Improvement plans, to respond to citizen priorities for improving service delivery.

(Government of Canada: A policy framework for service improvement)

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‘Integrated and coordinated government is of fundamental importance since it holds the key to unlocking effectiveness and efficiency in service delivery. It has the potential to remove unnecessary duplication and improve the use of scarce resources… it also contributes to better communications in highly-complex organisations.’

Geraldine Fraser-Moleketi, Minister of Public Service and Administration (South Africa)

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Connected government is not just about ‘government restructuring’. It also calls for the implementation of a common vision, supported by integrated objectives, outcomes, information and process flows.

In May 2006, PricewaterhouseCoopers not necessarily sit comfortably with the Figure 4: and the Economic Intelligence Unit (EIU) collaboration and commitment which Department-centric vs Customer-centric conducted a survey of 252 financial constitute the baseline for customer- services executives4. When asked to centricity. Making the transition is no Department-Centric Approach identify key obstacles standing in the easy task. When seeking to break down way of becoming more customer-centric, hierarchical structures, the emphasis respondents pointed to lack of data- should be on how to make agency Customer sharing across products, business units silos more networked, rather than and customer channels due to various abandoning them altogether. This means structural and technology challenges. addressing the silos which exist within Intermediaries As a result, their customers were required individual public sector organisations to resubmit the same information to the and the following section describes the organisation on multiple occasions. importance of integrating public sector Department 5 Department 4 Department 3 Department 2 Department 1 agencies – that is to say, the concept

This issue is no less of a concern in the of ‘connected government’. It further Fragmented value public sector. In a report commissioned provides a strategy that can be by the UK Chancellor of the Exchequer, followed in order to realise connected and published in December 2006, government, based on our experience Sir David Varney highlighted the need of working with public sector organisations. Departmental Support to transform customer service delivery Intermediaries in government, saying, ‘it is often the Integrating public sector agencies: most vulnerable citizens who have to ‘Connected government’ do the most joining-up between the TRANSFORMATION public service islands and much of it Figure 4 sets out what is involved in integrating public sector agencies to could be avoided with more collaborative Customer-Centric Approach service delivery’. This report makes deliver customer-centric services. recommendations for strengthening Connected government means the Customer public service delivery in the UK, seamless integration, or joining up, of including developing a Change of various agencies to provide services Circumstances service over the next few which are aligned to the complete years, starting with bereavement, birth customer journey – and not to the dictates of agency silos. It does not mean and change of address. Interface complete government restructuring. But Dept 1 Dept 5 Fragmented value it does mean adopting an integrated Many public sector organisations are approach for information and process Dept 2 Dept 4 predominantly hierarchical in structure. flow at the back end and front end to help Dept 3 This means that, to an extent, there can enhance the effectiveness and efficiency be a disproportionate focus on keeping of service delivery. control of resources and defending individual ‘territories’. This approach does Source: Adapted from PricewaterhouseCoopers study for a G2B business portal in India

4 PricewaterhouseCoopers report: ‘Winning the battle for growth: Building the customer-centric financial institution’, 2006

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Key elements of A good example of this approach is the 1 Visible leadership at a concept of Large Taxpayer Units (LTUs)5 strategic level strategy for a connected The classic LTU monitors large taxpayers government exclusively through registration, tax Embedded siloed structures sit accounting, collections, auditing, and at the heart of many public sector taxpayer service provision covering more organisations. This means that than one type of tax. It allows multiple attempting to introduce integration in public sector agencies to come together these organisations is a complex and Visible leadership at a to service customers, blurring the agency demanding exercise. If connected 1 strategic level silos without affecting agency structures. government initiatives are to LTUs have facilitated major tax policy succeed, it is essential to have robust reforms, such as adoption of VAT, as commitment to change at the highest well as the reform of administrative organisational level. If they are to take procedures, including implementation the appropriate decisions needed to Common goals for a of self-assessment, modern auditing, guide their organisations through the 2 connected government electronic filing of tax statements, and the planned transformation, leaders must – service standards functional organisation of work. fully understand what is meant by They have been established in different ‘eliminating agency silos – both internal forms in around 50 countries worldwide. and external’. Committed top-level leadership ensures clarity of goals. It needs to be recognised that, because In moving to connected government, Focus on front end of it is necessary to first of all secure the pace and order of change are both 3 public service delivery the support and buy-in of various key factors. The optimal route is to start stakeholders, ‘reform by stealth’ is not with understanding customer needs an option when one is attempting to – redesigning the front office to interact make fundamental changes in customer effectively with the customer and service delivery. realigning the back office to effectively Breaking down deliver through the front office, before 4 intra-departmental silos attempting to address the integration of 2 Common goals for a connected individual agencies. government – service standards If a number of government agencies Building connected government are to be involved in service delivery in an integrated manner, the need We believe that a successful connected for common service standards is Enabling regulatory and government strategy should be founded paramount. Implementing and adhering 5 legal framework on the following five elements: to specified service standards enables

5 The Challenges of Tax Reform in a Global Economy, Andrew Young School Annual Conference on Public Finance Issues, 2004 Georgia State University

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the seamless integration of various The integration of front-line services has Service Ontario – Breaking down the government agencies by ensuring a visible impact on the customer and traditional silos dynamic and uniform information also aids the rapid realisation of benefits. and process flows, as well as better These quick wins play an important part Canada has been a pioneer in customer journeys. in maintaining top leadership support for experimenting with new organisational change initiatives. structures that break down traditional silos. A number of provinces have 3 Focus on the front end of created new ‘retail organisations’ 4 Breaking down which have assumed responsibility for public service delivery – quick transactional services. wins and visible improvement intra-agency silos Service Ontario is a project geared to Internal efficiencies are realised by Achieving the ultimate objective of providing routine government information connected government takes time. The reengineering government processes and services to the public in convenient process through which this takes place in line with the overall objective of and user-friendly ways. The goal is to have driver and vehicle licences, outdoor should therefore be seen as incremental connected government. As part of the next step following integration of front- cards, health cards, and replies to – not dramatic. Bearing in mind the general enquiries delivered through a line service delivery, it is important for relentless pressure they are under to variety of channels, including publicly- meet customer expectations, public the public sector to eliminate intra- accessible terminals, via telephone, the sector organisations should focus agency silos (for example, in many internet, mall, and over-the-counter. countries, there are multiple agencies first on improving front-end service (Ontario’s New I&IT Strategy – A new delivery capabilities, before tackling responsible for direct taxes and indirect Governance and Management Model Article back-end processes. This is where taxes, although the customer base by D Scott Campbell in Canadian Government Executive Magazine Issue 4, 2000) technology can play the role of an is the same for each). Naturally, this enabler, by ‘allowing things to happen’, challenge gets compounded when inter- facilitating connected government agency silos are being broken down through improved data sharing and at the same time. Strategic leadership collaboration in service delivery. In the plays an important role in mediating UK, the ‘Transformational Government and resolving the issues that arise – Enabled by Technology’ strategy, during inter-departmental public service published in 2005, provides a good delivery integration. example of how this works in practice. The strategy sets out how the effective 5 Enabling regulatory and use of technology in delivering services legal framework designed around the needs of citizens Information-sharing capabilities and businesses can make a real must be put in place. But it needs difference to people’s lives. to be understood that the sharing of data across the public sector is

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no small undertaking. ‘Territorial’ Integrated deliverer of services – In a nutshell E-Biz, India resistance is likely. Legacy technology interfaces and privacy laws can inhibit The vision of E-Biz is to transform connected government. And upfront • Connected government is not just India’s business environment. This is investment may be needed to ensure about government restructuring. to be achieved by providing efficient, that processes are reengineered It also calls for the implementation convenient, transparent and integrated of a common vision, supported satisfactorily. This is why an enabling electronic services to investors, industries by integrated objectives, outcomes, and businesses across all forms and regulatory and legislative framework, information and process flows procedures, approvals, clearances and together with supporting budgets for permissions, reporting, filing, payments cross-agency transformation, have • Technology plays a key role in this integration. However, while and compliances throughout the industry an important part to play. Budgeting lifecycle. Central to what E-Biz looks the integration of technology is to achieve is a radical shift in service issues will inevitably arise, particularly challenging, it is often easier than the delivery to business communities – from so where departments are being integration of hearts and minds department-centric to customer-centric. asked to fund new cross-agency The initial stage of the project envisages initiatives. Recognising that there can • Key elements for a connected government strategy should include: the integrated delivery of 25 services be inevitable time and cost overruns, provided by 14 central, provincial and 1 Visible leadership at a local governments. as well as over-optimistic expectations, many governments (in, for example, strategic level the UK, the Philippines, Sri Lanka, 2 Common goals for connected Turkey, Korea, Ireland and France) government – and common use some form of central contingency service standards fund to support specific cross-agency 3 Focus on front end of public projects. service delivery – achieve quick wins and visible improvements At some point, for all organisations, transition to connected government 4 Break down intra-agency silos before starting to break means balancing the backlash from down cross-agency silos forced change with the slow process of making old systems redundant through 5 Put enabling regulatory and legal the introduction of more efficient frameworks in place alternatives.

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‘For our part, we must make sure that the people we employ have deeply embedded professional skills. The Professional Skills for Government agenda is the key to our strategy here.’

Sir Gus O’Donnell, Cabinet Secretary and Head of the Home Civil Service, UK

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Public sector organisations today are under increasing pressure to deliver an increasingly broad and complex range of services – from motor licences and land records, to health, education and municipal services – in a manner that is timely, efficient, economical, equitable, transparent and corruption-free.

Delivering effective public services In terms of maturity, albeit not exclusively, requires transformation at multiple levels reforms in industrialised countries Empower your Institution – the way public sector organisations are focused on welfare and social Five key elements in behave, how they view their roles, and services and in developing countries building capacity how they share information between on capital expenditure and government departments, with businesses and with administration7. their customers. On its own, change in the policy and regulatory framework will In terms of trends, broadly speaking, Developing a clear strategy not achieve the desired results. the 1970s saw equal employment 1 opportunity and affirmative action; Despite their importance in promoting 1980s the introduction of privatisation; development and other reforms, 1990s the development of quasi- capacity-building reforms have not markets and separation of policy and received the sustained attention they implementation in government; and in the 2 Leadership commitment deserve6. Process and organisational 2000s a focus on outcomes and applying change are also needed, both within a ‘whole-of-government’ approach8. individual agencies and across public sector organisations, with the objective However, even allowing for these of empowering civil servants – as well variations in maturity and trends, a Organisational and process as institutions – with the right tools for number of common factors for success 3 design ensuring customer-centricity. emerge that require a strategic and comprehensive approach to capacity- The ways in which public sector building. As the OECD, Government of organisations create empowered the Future, says in part; ‘The challenge institutions will be grounded in their own to government is moving away from Technology local political, fiscal and operational opportunistic reform toward more 4 environments. This means that there strategic reform’. will be a variety of approaches. At the same time, because innovation and experimentation are key elements of public services reform, different levels 5 People and culture of maturity and trends will be apparent in different parts of the world – and at different points in time.

6 United Nations Research Institute for Social Development – ‘Public Sector Restructuring: The Institutional and Social Effects of Fiscal, Managerial and Capacity-Building Reforms’ - 2000 7 United Nations Research Institute for Social Development – ‘Public Sector Restructuring: The Institutional and Social Effects of Fiscal, Managerial and Capacity-Building Reforms’ - 2000 8 CAPAM 2006 Biennial Conference – Presentation from Lynelle Briggs, Australian Public Sector Commissioner, on Fashion and fads in public sector reform.

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‘The question for Technology enhancement is often Instilling this empowerment is perhaps identified as the principal engine for doing the most critical challenge facing policy-makers is this. But this overlooks the key challenge the public sector in its drive towards – how to align institutions and people so customer-centric service delivery. In where to draw the as to deliver customer-centric services. many public sector organisations, despite boundary and position a strong appetite for improvement and In addition, as public services become willingness to change, existing staff the right incentives more complex and customers become members lack the confidence or know- and structures for the more demanding, there is a growing risk how needed to develop new models for that employees are not trained in the service delivery. And this same lack of efficient provision of skills and supported in developing the expertise, combined with the scale of public services.’ fundamental competencies that they many public services organisations, need in order to respond to changing also acts as an obstacle when it comes Lynelle Briggs, Australian Public Services circumstances. to the implementation of new service Commissioner delivery models. This situation is aggravated by budgetary constraints, which can result in too Various factors contribute to the scale of much attention being focused on the this challenge. Activities in public sector process of change and under-investment organisations are often divided into in HR matters such as competency hierarchical silos, which can sometimes development, career planning, rewards create ‘territorial’ mindsets. Any changes and training (all factors that underpin the to the people agenda will typically take a cultural change required in adopting new long time to put into effect. And, all too working practices so that they become often, the focus for any change initiative sustainable for the organisation). will be on the front-office, meaning that the back-office is not aligned with It should be recognised that customer- the new strategy. As outlined above, centric services cannot be provided or the skills and competencies needed to sustained without both structural (systems manage the challenges of customer- and processes) and cultural/behavioural centric organisations are sometimes in changes taking place. For example, short supply and communication and the mere deployment of trained front- incentives – both essential to efforts to office workers will not, of itself, improve break down resistance to change - are customer interaction. They must also be not always given sufficient prominence. empowered to take decisions that will help to improve customer satisfaction9.

9 The Work Foundation – ‘Public Value Research’, 2006

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Addressing the various factors needed to Better regulation create empowered institutions to deliver Aligning institutions to strategy – key to Legal frameworks can constrain public delivering results – India public services calls for a comprehensive sector organisations as they seek to approach to capacity-building. undertake the transformation needed to Maharashtra, India, with Mumbai as its This means focusing on the following: deliver on the customer promise. But they capital, is one of the economic engines of India’s growth. In the last three years, • Developing a clear strategy can also be strong drivers of change. European Directives, for example, impact the state has reorganised its sales tax department to ensure improved services Ensuring commitment from • on national laws in Member States, and for its 1m-plus customers. Early successes the leadership this has a knock-on effect for public have flowed, in part, from ‘key changes in sector organisations, businesses and the organisational culture and attitudinal • Organisational and process design citizens within these countries. behaviour of the department’s hierarchy’. There were extensive stakeholder • Technology discussions, training programmes and The reduction of the administrative regular communication on the ongoing • People and culture. burden through better regulation is changes to define the process as now considered to be a key instrument for envisaged. A strong business case for 1 Developing a clear strategy enabling efficiency improvement in public change was then prepared. services. The European Commission has Policy-making embarked on a major reform programme One major innovation involved a shift towards a cross-geography organisational Comprehensively explaining the benefit with its 27 member states to measure of change – and its effect on the structure. This enabled a complete change and reduce the administrative burden for in departmental outlook. This has made the people that work in public sector businesses, citizens and within the department more aligned to the needs of organisations – is a fundamental issue public sector. its customers, by moving the mindset from within the boundaries of public sector ‘confrontational’ to ‘facilitative’. transformation. Relating to the changing Long-term planning role of the public sector in society and B C Khatau, IAS, Commissioner of the Sales also to the shifting roles of citizens/ With ever-changing customer Tax Department, businesses and their influence on the expectations driving public sector policy-making process, the goals set by transformation, it is imperative for every policy-makers and the instruments used public sector organisation to set about in the policy-making process can both be identifying – and planning for – future important parts of the capacity-building trends in customer service requirements. strategy. A properly-aligned policy, which Such planning supports public sector takes full account of the people issues bodies as they seek to balance the involved (eg specific people and change tension between their obligations as management strategies), will lay a strong enforcers or providers of last resort with foundation for all subsequent initiatives – the imperative to deliver value for money helping to create empowered institutions, services to the majority of citizens. changing organisational cultures and People development strategies must also aligning roles to skills. be put in place as they are key to ensuring that the necessary capabilities

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‘Strategy is about for delivering these new services are department future capabilities in three operating throughout the organisation. thematic areas – leadership, strategy making choices. and delivery - highlighting the need for The essence of 2 Ensuring commitment from stronger departmental boards, better leadership connection between strategy and delivery strategy is choosing and improved management of people10. Involvement of senior management Leaders of public sector organisations to perform activities In the private sector, there has long been need to recognise this issue by becoming differently.’ a focus on good corporate governance more involved in service design and and, in particular, the way in which top delivery. This will also help set the Michael Porter – Academic focused on management is involved in informing ‘tone from the top’, demonstrating how strategic management the strategy decision-making of the success will be judged and rewarded board, as well as being responsible from the cultural and capacity-building for strategy implementation. But in the perspectives, as well as from a process  public sector, senior personnel in central perspective. This would provide a more government often tend to focus much of strategic ‘helicopter’ view of the overall their efforts on policymaking in response capacity-building process, helping to to political decision-making, delegating ensure the effectiveness and deliverability responsibility for implementing these of reform. policies and failing to take into account the end impact on ‘customer experience’ Thought should be given to strengthening during their design. The governance public sector governance to better challenge for public sector organisations balance the dual challenge of delivering is therefore to align and clearly define performance and compliance. While responsibility for setting policy and strong leadership is obviously important, commissioning of services and the front-line staff and employees throughout implementation and delivery of the same. the organisation must also be supplied with the various skill-sets they need to Often where there is a disconnect do their jobs effectively (for example, between the policy and delivery arms by providing line managers with the of some public sector organisations, capabilities they need to assist in project the consequence is that policy is managing change initiatives). developed without proper consideration of how, on implementation, it will Decision-making impact service delivery. This is borne Decision-making in the public sector out in the UK experience of capability can often be distinguished by two reviews, introduced to provide honest key attributes – the complexity of the and robust assessments of government decision-making process (especially when

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decisions impact a number of different Some public sector organisations have Aligning institution to agencies) and, in some organisations, addressed this situation by putting in customer-centric strategy a level of hesitation amongst public place institutional structures designed to Office of Management Assessment, sector employees where taking empower customer-centricity. One such National Institutes of Health, USA ownership of a decision is concerned. example is the Institute of Citizen-Centred In 1993, President Clinton issued an executive Anecdotal experience suggests that in Services in Canada. Canadian public order challenging Federal agencies to improve any large organisation, public or private, sector leaders attach a high premium customer service. The order tasked agencies organisational scale and complexity can to understanding citizens’ preferences to understand the customers’ needs and then breed a ‘not invented here’ mentality. At regarding service access channels, collaborate with front-line employees to align the delivery organisation to customer-centric the same time, the hierarchical aspects desired levels of quality and cost. This service delivery. The goal of this customer- of such large organisations encourage has had a significant impact on Canadian centric approach was to adopt a realistic, people to ‘cover their backs’, while service improvement initiatives, leading achievable strategy for improving customer the layers of escalation can mean that to the development of channel strategies service through organisational realignment ownership of any issue is lost. designed to encourage customers to and leadership commitment at the National Institute of Health. ‘Setting Customer Service access particular kinds of services in Standards’ requires Federal agencies to: In some public sector organisations, particular ways. This, in turn, provides the there may be a necessarily high level of basis for service-level guarantees and • Identify customers who are, or should be, served by the agency emphasis placed on the process through predictable cost structures, meaning that which decisions are taken, particularly in these organisations have the information • Survey customers to determine the they need to steer customers towards the quality of services expected and their the fields of regulation or enforcement. As level of satisfaction a consequence, because decisions may lower-cost channels, whilst still meeting need to pass through multiple levels of their needs. • Benchmark the delivery organisation’s performance against the best in business hierarchy, delays in implementation can sometimes be unavoidable. Government process improvement, • Align the organisation’s service standards to the customer-centric 21st century technology and process strategy and measure results against this innovations are often grafted onto 3 Organisational and • Survey front-line employees on barriers process design outdated bureaucracies, which lock in to, and ideas for, matching the best in the high costs of integration, and risk business Structure creating pockets of effective service • Provide customers with choices in both In some countries, the public sector was delivery, rather than facilitating an the sources of service and the means specifically designed to be hierarchical integrated approach across the public of delivery and tightly controlled. This means that, sector. Overcoming the challenges of • Make information, services, and if structures are to be transformed, linking front and back office activities feedback systems easily accessible fundamental changes will often need to more effectively can be greatly assisted • Provide means to address customer be made to governance models. Changes by technology – but this alone does not feedback; and in competencies may also need to be overcome the challenge of balancing • Provide feedback to customers on the introduced at various levels within the vertical and horizontal working to deliver improvements that are being made. organisation. a more outward-looking approach in (Customer Service Plan, Office of Management tune with the flexibility required of the Assessment, National Institutes of Health)

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organisation. How this is done depends identified with the privatisation of public Finland Tax Authority – using CRM to improve service on the maturity and local circumstances corporations lay in achieving efficiencies of each organisation, but an important that can derive from processing customer The Finnish taxation system is one element is establishing a well-networked cases right the first time, thereby avoiding example of a public sector organisation matrix organisation that empowers unnecessary and time-consuming providing customer-centric services. people to experiment and innovate, rework. In the utility sector, following the Finland has developed a tax administration system with advanced while at the same time retaining introduction of competition, reductions user-friendliness for its citizens. Over appropriate levels of accountability of workflow of up to 40% were achieved 70% of tax payers receive pre-filled (ie and risk management. through re-engineering processes to pro-active) tax proposals from the tax simplify and reduce the level of errors authority and, where no changes need and exceptions. For the large transaction to be made, the documents need not Empowering people involves be returned. If changes are needed, reengineering the processes and elements of public service, for example these can be entered by hand on the tax systems within which public sector tax collection, benefit awards and proposal form and sent to the local tax employees operate. The re-engineering pensions administration, this continues to office before the deadline. For salaried of processes in the public sector is an be a significant area of challenge. employees, employers can send annual notifications electronically directly from important condition for the realisation their local payroll systems to the tax of benefits, as well as for achieving the This is particularly true in projects where database. Not only is this electronic data objective of developing customer-centric the initial phases of transformation focus transfer more convenient for the taxpayer, service delivery. For example, in India, on providing eServices. The issues it also creates real savings (time and cost) computerisation of land records was underlying re-engineering should not for the service providers. initiated over 30 years ago. However, be underestimated. It is very difficult to for some time, this did not result in any turn staff-intensive and paper-based Danish Technological Institute report systems into automatic digital systems. to the European Commission - visible improvement in service (in terms ‘European good practices back-office of reducing the time taken to obtain a This can be a major issue where the reorganisation’, 2004 certificate of record of right or mutation). re-engineering is entrusted to the very More recently, the focus has been on staff whose roles will be threatened by changing the underlying processes. This the transformation. This combines with has dramatically reduced the time taken the systems integration challenge to to issue certificates (from seven days to complicate the delivery to stakeholders just one or two hours). of integrated services.

Process 4 Technology Underpinning a well-networked matrix Technology is not a solution in itself organisation requires re-engineering The delivery of effective public processes to enable and equip the services cannot be achieved via various departments and people technology alone. Nor can it be involved in service delivery to meet achieved simply by imposing a policy immediate customer demands and and regulatory framework. It requires develop performance improvements and wider transformation. Research has efficiencies. One of the major challenges

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identified that piecemeal changes objectives, combined with technology, were found to deliver little benefit helps to ensure the delivery of improved Measuring performance with respect to customer satisfaction– Canada – rather, the key features of organising customer services. to improve performance in high In August 2005, the Institute for performing organisations are around 1) The benefits of technology cannot Citizen-Centred Services (ICCS) was Structure – decentralising, delayering be fully realised without re-engineering incorporated as a non-profit organisation and more project-based working; 2) the wider processes involved in in Canada. It is made up of leaders in service delivery and information Processes – investment in technology, delivering a service. Desired changes technology from municipal, provincial communications and new human in the quality of service delivery and federal public sectors across resource practices; and 3) Boundaries – cannot be achieved simply by applying Canada. ICCS is mandated to serve as outsourcing and alliances/partnerships11. technology to inefficient processes. a centre of expertise and a champion For example, in the context of customer- for citizen-centred service quality centricity, this means aligning technology, throughout the public sector. The agency 5 People and culture uses a Common Measurements Tool process, organisation, and people issues (CMT), currently available for public Skills and talent management in all action/strategy towards providing a sector organisations to measure client meaningful customer experience. Reform of public services to deliver satisfaction and to identify specific customer-centric services can only priorities for improving performance. However, while technology should be achieved with the commitment of be used primarily as an enabler of a highly-motivated, flexible, diverse Further, a secure and confidential benchmarking service based on the transformation, we see an increasing and skilled workforce, capable of CMT client-survey results, enables number of public sector leaders trusting providing high-quality, personalised public-sector organisations to compare in it as a universal panacea for aligning public services. If they are to implement their performance against others in the public sector service delivery with innovative service delivery models, same business-line and to identify best customer needs. This overlooks the fact people require new skills. For instance, practices. To provide additional help, there is a database repository of leading that, in the world of technology-enabled the implementation of collaborative practices in citizen-centred public service, there is still no substitute for ‘old- partnerships for public service delivery sector service delivery at all levels of fashioned qualities’, such as courtesy, requires public sector employees to be government. friendliness and caring. An important proficient in skills such as mediation, aspect from the perspective of the negotiation, contract management, risk Institute for Citizen-Centred Services citizen is the relevance and engagement analysis and strategic planning. Similarly, (ICCS), Government of Canada with which services are delivered. This in the case of eServices (as evidenced is particularly true for social services by the failure or significant overruns where personal contact is essential. and delays on a number of large scale Organisations that create distinctive technology programmes), government service cultures are more likely to employees need to have a robust attract a wider pool of candidates from understanding of technology if people who are genuinely inspired by the organisation’s service ideals. Their level of commitment to the organisation’s

11 Professor Andrew Pettigrew, Warwick Business School – ‘Organising to improve company performance’, February 1999

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they are to be expected to implement Irrespective of how much the public Making Culture Change Happen – USA new IT initiatives. This requirement to sector intends to outsource or take generate new skills comes at a time assistance from outside agencies, there When William Bratton was appointed police in most economies when there is should be a minimum capacity within the commissioner of New York City in 1994, undersupply of the necessary highly organisation to handle new initiatives. turf wars over jurisdiction and funding were rife, promotion bore little relationship skilled people to support this change This is vital if management of these to performance, and crime was out of and when significant numbers of skilled new models of service delivery is to be control. Yet in less than two years, and people in the public sector are retiring12. in any way sustainable. In recruiting to without an increase in his budget, Bratton This requires the public sector to take a meet these challenges, public service turned New York into the safest large city focused approach to talent management, employers need to:13 in the nation. And the NYPD was only the latest of five law-enforcement agencies from recruitment through training and Bratton had turned around. In each case, development, to appropriate reward and • Understand why people want to he succeeded in record time despite limited good management. work in public services and focus on resources, a de-motivated staff, opposition effective job design that recognises the from powerful vested interests, and an organization wedded to the status quo. One of the barriers to effective service motivations of potential recruits (other Bratton’s turnarounds demonstrate what delivery is the lack of requisite skills. than through pay) the authors call ‘tipping point leadership.’ Compounding this, there may be no Attract staff with the right skill-sets by The theory of tipping points, which has progressive career path available to • its roots in epidemiology, hinges on the building a positive, modern image of employees, meaning that they are unlikely insight that in any organization, fundamental public services, with strong branding of changes can occur quickly when the beliefs to be motivated in what they do. Making the service values and ethos and energies of a critical mass of people the public sector a preferred workplace create an epidemic movement toward an can be a powerful driver for public • Collaborate with other employers idea. Bratton begins by overcoming the sector empowerment and competency, cognitive hurdles that block companies to attract and retain staff and avoid encouraging motivated individuals to from recognizing the need for radical ‘fishing in the same pool’, making the change. He puts managers face-to-face with join – and remain with – the organisation. best use of a strong field of candidates operational problems. Next, he manages Public sector organisations have to and reducing pay escalation around limitations on funds, manpower, or compete with the private sector. This equipment by concentrating resources on means creating environments in which • Retain skills in the workforce and use the areas that are most in need of change the brightest and best of each generation individual skill-sets effectively. For and that have the biggest possible payoffs. example, offering structured career He meanwhile solves the motivation problem want to work in public service. Staff by singling out key influencers – people must not be denied the opportunity to progression, flexible working, use of with disproportionate power due to their demonstrate their potential and should support workers and secondments. connections or persuasive abilities. Finally, be given sufficient responsibility at an he closes off potentially fatal resistance from As part of the process of grooming early stage. Incentives must be provided powerful opponents. internal talent to manage transformation, for innovation, collaborative working it is important to ensure that these and excellent service delivery. Also, – Extract from the Article: Tipping Point personnel are alert to the targets that Leadership, Harvard Business Review, indicators need to be defined to measure have been set for service delivery. All April 2003 the performance of all employees so that too often, these targets are centrally systems are meritocratic.

12 PricewaterhouseCoopers – ‘The crisis in Federal Government succession planning’, 2006 13 Cabinet Office – Pay and Workforce Reform policy, 2006

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imposed, inadequately understood and, in transforming age-old institutions, ‘The truth is we have consequently, often unachievable. A practices and mindsets. It is extremely report launched in September 2005 by important therefore, for decision-makers, a common desire to the Social Market Foundation argued at the highest political levels, to ensure that the government’s approach to that planned transformations of public improve the (public) setting targets needed to be radically service delivery are underpinned by a services we offer. reassessed. It highlighted the realistic roadmap for implementation. government’s haphazard approach to But that’s not really data collection, the setting of targets Culture the issue. The issue is without evidence and the designing In many vertically-structured of targets which were vulnerable to organisations, individual employees how we do it?’ manipulation by public sector staff. may have little incentive to change Tony Blair, Prime Minister’s speech on Public their behaviours. This is because Service Reform – June 2006 Change management incentives such as promotion, salary  The use of innovative models alone increments, responsibility and increased does not guarantee the effectiveness authority are often not solely linked to or efficiency of public service performance, but may be time-based delivery. Change management is as well. Addressing these barriers to a vital component of public sector cultural change is an important issue transformation and critical to the success – particularly so with public sector pay of the model. and benefits representing over 15% of GDP in most countries and with Change management, in the context of structural problems often reinforced the public sector, is all about how the through centralised decision making transition from traditional approaches to driving collective bargaining. The people modern and adaptive processes is to be who work in the public services are its managed in the context of continuously most critical asset and they will not be evolving challenges and customer deployed effectively if pay structures responses. are not appropriate. It is critical to have the right processes in place to get the Far-reaching public sector reforms can right answers. Decisions around paying sometimes be introduced together in and managing the people in public one package (for example, following service are most likely to be right and the election of a new government). In reflect local market conditions if they these situations, what are fundamentally are made by those managers closest to 14 politically-motivated, decisions may the service being delivered (ie those fail to take into account the scale of who understand the service and are the challenges that will be involved accountable for it).

14 PricewaterhouseCoopers – ‘Connecting Public Sector Pay to Service Delivery*’, April 2006

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‘I believe that Culture change is essential if a decisive shift in practice and makes management skills and specialist it easier to put a marker down for when organisations should expertise within the organisation are to change will happen, it can also increase be enhanced. This means empowering resistance to change and reduce the be membership individuals so that they are prepared to likelihood of a successful outcome. communities because assume more responsibility, take more Many public sector leaders, especially risks, and use their initiative to get things in developing economies believe that, I believe organisations done. instead of attempting to implement a ‘big are not things, bang’ transformation, organisations need Culture change in government, especially to view change as an incremental and they are the people in the context of connected government, continuous process – one which builds who run them.’ introduces new sets of competencies buy-in and commitment on an ongoing as additional challenges arise. basis. Recent research suggests that Charles Handy – ‘Strategy and Business Existing competencies (such as policy the ‘tipping point’ for change may not Interview’, 1995 formulation, budgetary control and other be reached for some time. Given these traditional government duties) may need lead times, investment in any change to be supplemented by other skills such programme should be viewed as an as contract management, risk allocation ongoing process. As part of this, it is and management, forging collaborative important to ensure that there is some partnerships, strategic thinking at senior incentive for existing staff/managers and middle management level and team- to participate in whatever new service building. For example, where public- delivery models are introduced. This private partnerships are being introduced, means including them, from the outset, public sector teams will require additional in the new change process. Incentive capabilities if they are to manage these schemes need to be designed around relationships effectively. Building such the specific issues raised by each new competencies is an important element of project, and developed locally, to have culture-change strategy and requires a most impact. significant focus on ongoing training. When introducing good practices Incentivise change from either the private sector or other When designing new service delivery public sector examples, it is important models, there may sometimes be an not only to transfer the processes and implicit assumption that everything technology learning, but also to bring needs to be changed. Under these in and tailor appropriate practices to circumstances, ‘completely’ new manage the impact on employees, processes and systems are designed, through an effective and flexible human independent of legacy structures. While resources strategy. There needs to this has its attractions, in that it provides be greater acceptance of the benefits

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that can be realised by bringing private sector employees and private sector In a nutshell skills into the public sector. This calls Key pillars for building capacity to deliver for an understanding of the ways in customer-centric public services are: which private sector expertise will fit into a public sector environment. For • Strategy example, the retail sector does not > policy-making have the same pay structure (or terms and conditions) for check-out staff as > long-term planning it does for management. The leading • Leadership retailers are high performing and > involvement of senior recognised to be ‘good employers’. management Through effective incentives (for example career management based on skills > understanding and support from acquired, individual and team bonuses, political leadership rigorous performance evaluations and • Organisational and process design flexible working), retailers generally > Creating empowered institutions pay people fairly and provide good responsible for pan-government training and development. Provided that focus on ensuring ‘customer opportunities such as these are taken centricity’ and ‘connected government’ into consideration, valuable knowledge • Technology transfer should be achieved – not least in how best to incentivise public sector > An enabler of transformation personnel throughout the transformation – not an end in itself process. • People and culture

> Internal capacity-building important for managing transformation

> Focus on talent management

> Training to respond to changing customer needs

> Incentive schemes tailored to the specific requirements of each change programme

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‘Collaboration is the key to the next generation of service delivery. The major challenge in collaborative service delivery models does not lie in contracting, but in changing the mindset of service providers. They need to see their relationship with customers as a partnership that begins with service design and carries through the entire service delivery cycle.’

Jeff Kalpan, Founder and Director of the Open ePolicy Group, and primary author of its ‘Roadmap for Open ICT Ecosystems.’

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The exceptional corporations have come to grips with the tension between outsourcing and what they do in-house – as General Electric’s Jack Welch put it: ‘You shouldn’t have in your back office what’s in somebody’s else’s front office.’ Public sector organisations need to bear this in mind as they contemplate the introduction of new models for service delivery. Throughout this paper, we have focused on service their customers efficiently and ‘We must understand the fact that public sector transformation effectively by building competencies is all about ‘delivering on the customer in their core functions, while using how to partner with promise’. As we have discussed, this technology and/or partnerships to deliver means using the right public service non-core functions. the private sector. delivery model to achieve two fundamental Governments cannot goals: (a) quality of service (meaning For public sector organisations, ‘make vs accessibility for all and satisfactory buy’ decisions on the implementation of bear all the burdens customer outcomes); and (b) cost of new delivery models should be grounded of development; service, leading to ‘value for money’. in clear assessments of overall aims and objectives (best defined in terms of the public-private- Fundamental to the design of a targeted outcomes). Detailed knowledge partnership model customer-centric service delivery model of the relative abilities of the public, will be the recognition by the public sector private and (in some countries) voluntary is a way to create that, essentially, governments undertake sectors is also needed to ensure that two principal types of activities. These customer-centric service delivery can be development. consist of ‘Sovereign’ activities – functions assured. This calls for an understanding Governments can which only the government can perform of market capacity and appetite, both (defence and foreign affairs, policy of which will play a key part in creating learn a lot from the development and regulation, for example) a competitive environment in which private sector.’ and ‘Non-core’ activities - functions which innovative new delivery approaches can the government is undertaking, perhaps be developed. Judy Rogers, City Manager – Vancouver by default, which could be handled equally well by third parties (service delivery, The ‘make vs buy’ decision also for example). requires the public sector to assess its internal capacity and capability in hitherto This recognition needs to be followed often underdeveloped areas such as by the design of a service delivery procurement and contract management model that allows the public sector to ensure that it is in a position to to concentrate on its core functions successfully implement the chosen (the definition of which will vary in model. different environments), while working with third parties where appropriate to undertake non-core activities. This thought process is akin to the ‘make vs buy’ decisions that the private sector has been taking for many years. Most successful corporations today

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delivery of social services is concerned, Andalusian Regional Government – Adopting the right model for Customer oriented modernisation process service delivery technology should be viewed as an enabler of engagement – the public is At this stage, it is important to note that The Andalusian Autonomous community increasingly looking for human contact. is a vast region comprising 8 provinces not all alternative service delivery models and more than 750 municipalities with a can be applied across the board by every The vital point is that services should population of 7.5 million inhabitants. public sector organisation. Country- have all the ingredients of consistency, The Andalusian Regional Government specific factors, such as the legislative clarity and transparency, while has pursued the development, assisted framework, political environment and continuing to maintain a strong sense of by PwC specialists, of e-administration as a tool to get a more modern, flexible structure of government decision- relevance and engagement (the two key and participative administration. In making, can have a significant impact differentiators of public service, and of effect, to put in place administration on innovations in service delivery. service more generally). based on customer centricity and Additionally, issue-specific factors will supported by multiple delivery channels. When designing new customer-centric need to be taken into consideration when To do this, it set about redefining service delivery models, public sector identifying the models which will be best its strategy – comparing it with best organisations should evaluate the ways practices elsewhere and inviting active suited to existing conditions (for example, in which each of the following can deliver shareholder involvement in the planned level playing-field issues apply in some the required benefits: transformation. countries which prevent governments The most relevant aspects of its new from differentiating between the private Technology-enabled services (eServices) strategy include: and voluntary sectors). The use of collaborative partnerships – involving public officials from different It also needs to be recognised that, – these include: regional ministries in order to secure as public sector organisations start to pan-organisational committment redefine service delivery models, they • Shared services – Clear and concise methodology and will face challenges and dilemmas arising • Public-Private Partnerships (PPPs) work plans from having to deal with a series of – Internal and external communication contradictions. These include: • Outsourcing strategies to ensure that citizens were informed and motivation and change • Efficiency vs tailored personal service • Public-Voluntary Sector Partnerships management in the Andalusian public (PVSPs). administration was sustained • Consistency of delivery vs modifications needed for specific The principal characteristics of each of – A steering committee was established circumstances, geographies and/or these are discussed below: to continousily monitor the different ethnic groups initiatives and evaluate results 1 eServices As a result, this strategy involved the • Functionality of delivery vs relevant creation of a new model to assure and engaging services. The internet provides an opportunity for efficient service customer delivery taking delivering high-quality public services These contradictions can be especially into consideration client segmentation, at a relatively low cost, with minimum setting of customer standards, the pronounced where technology change is disruption to existing public sector development of a training programme being introduced. In particular where the for ‘customer service’ public servants organisational structures. There is a and the promotion of a results-oriented culture.

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caveat, however. Governments should be of circumstances, for example) to be The French National Electronic Medical wary of digital exclusion – creating a gap delivered from one point online, they Record Project between those with internet access and integrate service delivery mechanisms those without. which were previously the preserve of ‘With the DMP, we are not so much individual agencies. interested in the major technological innovations that will be introduced than Properly implemented, e-channels in providing French citizens and health will provide automated processes for Clearly, eServices have the potential to professionals with value added services streamlining services and delivering add significant value to the delivery of based on this innovative program’ » (Xavier Bertrand, former French information without the need for more core public policy and services and the achievement of the quality and cost of Minister of Health, in a speech delivered expensive interactions. They can give December 4th 2006). service goals outlined above. However, customers real flexibility in how, when and obvious as it may sound, it should be The genesis of the DMP, the French where they access services, as well as remembered that their benefits will not be National Electronic Medical Record enabling other, more traditional channels realised unless customers actually make Project, confirms an in-depth evolutionary (eg face-to-face) to focus on adding trend within the French Public use of them. Especially in developing value to citizens/businesses by providing Administration, described as ‘the victory countries, there will be challenges of the client’. support and guidance – instead of having involved in ensuring that this happens. Not only will patients and health to cope with large volumes of requests for Additionally, some public services basic information. professionals be the main beneficiaries (personal health and social services, for of the future DMP System, they were also example) cannot be substantially e- the principal driver behind the program’s eServices, provided via one-stop, citizen- enabled, so this route will not be suitable initiation almost 2 years ago now. (a 2006 facing service centres, can provide a for all situations. opinion poll showed that 86% of French citizens are in favour of an Electronic solution to the challenges raised by Medical Record). siloed agency structures. By enabling a The following table highlights some wide variety of government services and Instead of a traditional in-depth examples where the use of eServices transformation of public health system interactions (passport applications, road has enhanced government service implemented without any consultation with tax renewals, tax returns and change delivery levels. its beneficiaries and health professionals, the DMP program aims to involve both users and suppliers of medical information Table 2: Evaluating Government Service in the remodelling of national medical Country Type of government Number of days to Number of days records. The objective is to implement a program subsidised by the State, but application process before ICT to process after operated by health professionals and application ICT application patients, for their own benefit. Brazil Registration of 29 Several days 20-30 minutes per The limit of the project lies in the documents document, one day for necessary involvement of health business licenses professionals and patients. Without their co-operation all efforts by the Chile Taxes online 25 days 12 hours administration would be ineffective.

India, Land registration 7-15 days 5 minutes Andhra Pradesh

Source: Evaluating Government Service: A customers’ Perspective of e-Government (Subhajyoti Ray and V.Venkata Rao, India Institute of Management, Ahmedabad)

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Public-Private Partnerships (PPPs) Making shared services succeed 2 Collaborative partnerships – Shared-Service Team in UK Shared services The need to improve infrastructure and service delivery in many sectors, Instead of having their various The UK government, as part of its central including health, transport, social housing departments devolve activities over drive for efficiency following the Gershon and education, is seen as a necessary Review, is working to an overall plan for a number of offices, shared service precondition for successful economic realising the benefits of shared services. If centres allow organisations to centralise growth. However, governments have HR and Finance alone were implemented and standardise repetitive, transaction- optimally (according to the Shared limited financial resources to devote based processes. By consolidating and Services Forum and Advisory Group, to increased capital expenditure for simplifying these processes, they help the body which advises on the benefits improving public services, as well as of shared services to public sector to ensure that services can be delivered restrictions on their ability to raise debt. departments, as well as to the provider as efficiently as possible. This need and private sectors), the savings potential not apply solely to the centralisation of of this transformation is estimated at up back-office functions (such as HR, IT In order to bridge the gap between to £40bn over 10 years. To support this the cost of infrastructure and services process, a central Shared Service Team and Finance). Middle- and front-office has been created. Focusing initially on HR functions can also benefit. needed, the resources which are available, and Finance, the Shared Service Team and to ensure that infrastructure/services is examining, together with public sector are delivered as efficiently and cost- Shared service centres can help to ensure organisations, services which can feasibly effectively as possible, PPPs have that high-volume services are delivered be shared to make efficiency savings, established themselves as a fast-growing become more effective and improve competitively – in terms of cost, quality and element of public sector procurement in the employee and user experience. To timeliness. By doing so, they also enable help plan and understand the potential many countries. public sector organisations to focus hard- for shared services across the public services, nine sectors have been identified pressed resources squarely on their main The term ‘PPP’ means different things in order to deliver the level of detail objectives – providing high quality and required for each one. The sectors are value-for-money services. Because internal to different people. For many, it includes Health, Education, Home Office (including customers should expect to receive high- a number of different forms of delivery Police), Local Government, the rest of quality service and adherence to defined – from contractual-based approaches Central Government, Families, Defence, (including PFI in the UK), to much looser Revenue and Works & Pensions. Each service levels in the same way as external partnering-based solutions. These can sector is preparing a ‘Sector Plan’ with customers, shared service centres can the assistance of the Shared Service also help to crystallise the entire concept be capital intensive and service-‘lite’, or Team. Sector plans will detail features of of customer-centricity (through internal capital-‘lite’ and service intensive. the sector; the objectives to be achieved service level agreements). through sharing; a blueprint of the future PPP procurement is, of course, only one of shared service organisations (including a transition plan); expected benefits and It should be remembered, however, that several options for procuring infrastructure investments required and the risks and while shared services can reduce the and services. Careful consideration must issues that might arise. number of personnel needed to fulfil therefore be given to whether a particular certain agency responsibilities, their project is suited to a PPP structure, and to successful execution calls for a high level whether there is strong political support of management oversight. (and the enabling legal framework) for a PPP solution.

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In our discussions with public sector core (transactional) activities. In some National Health Services, UK – Shared leaders, the principal reason given for situations, the private sector will have services deliver tangible benefits using PPPs is that, where the project deeper and wider experience of enhancing is suitable, these structures can deliver performance in the delivery of non-core PricewaterhouseCoopers advised the better value for money (in both quality activities. By facilitating contributions from Department of Health (DoH) on a joint and cost) than alternative solutions. All the private sector at the right points in the venture with a private sector provider for the provision (via a shared-services arguments for and against PPPs should process, the public sector can improve infrastructure) of back-office finance be considered within the context of that the quality of service delivery, while also and accounting services to NHS Trusts. overriding objective. freeing up resources to focus on sovereign Effective from April 2005, the JV assumed activities. In addition, the agility of the responsibility for a customer base of NHS private sector in deploying resources and organisations and DoH agencies. The The use of PPPs raises a number of deal, which sets five-year market share complex issues, the solutions to which accelerating processes can help to put in and revenue targets for the JV, constitutes are often project- or country-specific. place service delivery mechanisms that a key component of the DoH’s response Past studies, including a study by are in tune with customers’ needs. to the recent Gershon Efficiency Review. PricewaterhouseCoopers15 have indicated This PPP offers NHS organisations the benefits of guaranteed cost savings, that there are considerable benefits PPPs do not necessarily represent a reduced capital expenditure and ‘best available. These benefits can include the panacea for the public sector. Indeed, in class’ services. It is estimated that, by appropriate allocation of risks between a poorly-developed PPP project can outsourcing these finance and accounting the public and private sector, the adoption prove to be much worse than a poorly- functions to the JV, some £250 million will of a whole lifecycle cost approach, developed conventional procurement. be saved over 10 years (to be reinvested into front-line patient care). The JV’s name introduction of private sector skills and Having committed to a PPP, the public – ‘NHS Shared Business Services Ltd’ innovation and a focus on outputs and sector will typically be bound to the – indicates the government’s belief that benefits delivered against agreed service project for a long period (often 20- shared services may eventually extend standards. plus years) and the inflexibility of these beyond core finance and accounting structures generally makes termination functions. Work is already underway to optimise and extend the range of However, governments should remain extremely costly. With that caveat, services currently available. Third-party mindful of the challenges involved however, experience has shown that feedback on this initiative is encouraging. – in particular, around the availability of real benefits can be achieved through A UBS Investment Research report is appropriate capacity and skills in both the properly-structured PPP agreements. ‘very optimistic’ about the future of NHS Shared Business Services, saying: ‘We public and private sectors, the resources believe that the [joint venture] will be the that will be required throughout the PPP Outsourcing most compelling for the Trusts. The Trusts procurement process and the relative Outsourcing facilitates the transferral of essentially face three options: 1) they can inflexibility of these long-term structures. existing business functions (or complete opt to do it for themselves…; 2) they can go to another 3rd party – but this would be service provision) to a third-party provider, subjected to the 9-12 month government As discussed earlier in this chapter, enabling these outside resources to procurement process; or 3) they can sign most government functions (even in perform activities which were previously up with the [joint venture]. We believe the apparently core areas such as Defence) handled in-house. It can often involve JV will provide the most cost-competitive consist of a mix of sovereign and non- the management and/or day-to-day option to the Trusts, becoming the most attractive option.’

15 PPP in Practice: New Approaches to PPP delivery, 2005

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execution of an entire business function from all outsourcing initiatives can range by a third-party service provider. One of from 25% to as much as 50%. These outsourcing’s most significant benefits findings underscore the importance is the fact that it can help public sector of in-depth planning (including clarity organisations to intensify their focus on the objectives and outputs and the on core competencies (their sovereign preparation of a thorough cost-benefit functions), while allowing other providers analysis) on outsourcing deals to ensure to carry out functions in which they that they deliver their full potential. have proven in-depth capabilities. Other benefits can include reduced According to a recent cost, improved performance, enhanced PricewaterhouseCoopers survey18 of flexibility (making fixed costs variable, public and private sector organisations for example), the avoidance of capital there is an overwhelming consensus in expenditure and providing access to favour of the fact that, provided they are best practice. properly managed, outsourcing/strategic partnerships do help organisations to The use of outsourcing is already achieve targeted benefits. Respondents widespread – and expected to grow to the survey identified such benefits rapidly. In a 2005 paper16, the OECD as improvements in services, cost estimated that 20% of all employment savings/price stability and enhanced in the US, Australia and Canada, as well customer satisfaction levels. At the same as the 15 member states of the EU prior time, respondents identified a number to enlargement, could ‘potentially be of challenges, attention to which would affected’ by the international outsourcing significantly improve the efficiency of of service activities. outsourcing arrangements. These included:

Outsourcing and contracting-out for the • The need for contracts to contain delivery of services can, however, present clearer requirement specifications significant challenges. These include The fact that costs are often the need for public sector organisations • underestimated when preparing the to measure performance, administer business case contracts, manage relationships with the third-party provider and determine • The need for greater flexibility – appropriate levels of responsibility/ contracts must anticipate the likelihood accountability. These factors can of change (70% of respondents’ themselves translate into high costs contracts needed to be changed for government agencies. Forrester during their lifespans) Research17 estimates that failure rates

16 Potential Offshoring of ICT/ Intensive using occupations, April 2005, OECD Working Party on the Information Economy 17 How to succeed in outsourcing through strengthened governance 18 PricewaterhouseCoopers: ‘Signed. Sealed. Delivered?’, 2007

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• The need for more collaborative Partnerships between public and voluntary ‘We will respond to relationships to be established sector organisations allow ‘profit’ to be with suppliers reinvested in service delivery and/or in citizens’ diversified the surrounding community, instead of The need for more proactive • being distributed to the shareholders of needs, not only by performance monitoring by the commercial entities. And the involvement public sector providing existing of voluntary sector organisations in public • The importance of striking a balance service delivery is becoming increasingly administrative between value-for-money pressures prevalent. In 1980 (according to a recent services but also and incentives that encourage report by the Ash Institute for Democratic innovation by the supplier. Governance and Innovation at the John by establishing ‘new F. Kennedy School of Government at 19 public management’ Public-Voluntary Sector Partnerships Harvard University ) the overwhelming (PVSPs) majority of social services in Great Britain in collaboration was delivered by government agencies Voluntary sector and non-governmental – with just 14% being provided by private with citizens.’ organisations (NGOs) can play a supportive firms or voluntary organisations. Less than role to the public and private sectors, as Hiroshi Nakada, Mayor of Yokohama, Japan two decades later, NGOs were providing well as holding out potential for innovation 40% of social services. Meanwhile, in the and improvement in service delivery. developing world, more than 15% of all This is largely because voluntary sector overseas aid is now channelled through organisations/NGOs differ from the public NGOs and voluntary sector organisations. and private sector organisations in two fundamental ways. First, their raison d’être is to increase the supply of public good and Managing risks in partnerships enhance the welfare of citizens. Secondly, Public sector organisations across the they often have a distinct information world are facing up to the challenge of advantage over government agencies meeting customer expectations with and, to an extent, over businesses. the help of innovative partnerships – a Because they work very closely with the key component of which is the blurring beneficiaries of their services, NGOs and of boundaries between the public and voluntary-sector organisations will typically private sectors. These partnerships have a comprehensive understanding of may be within government (in the form the challenges faced by citizens – as well of shared services and eServices), or as the optimal ways in which solutions with the private sector (in the form of can be delivered. PPPs or outsourcing arrangements) or with the voluntary sector. The effective management of relationships in these partnerships is key to their success.

19 Government by Network. The New Public Management Imperative, A Joint Study by Deloitte Research and the Ash Institute for Democratic Governance and Innovation at the John F. Kennedy School of Government at Harvard University

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To ensure that collaborative service delivery performance standards (all broken lights Public and private agencies unite to fight killer disease models realise the maximum benefits, the had to be fixed within 10 days of being public sector should take account of the reported, otherwise a daily financial penalty ‘‘Tuberculosis and Malaria’ is a following factors: would be levied). However, because no-one groundbreaking public-private tracked how long it was taking to repair the partnership set up in 2001 to help poorer lights, the city hall had no idea whether the countries tackle pandemics that kill more Clear goals and time-frames than six million people every year. As of Where any private sector involvement standards were actually being met. This July 2006, The Global Fund has approved in public service delivery is envisaged situation is far from unique. A recent OECD total payments of US$5.5 billion via (whether through a PPP or outsourcing), survey found that an overwhelming majority almost 400 grants to 132 countries – of it is essential to establish unequivocal of public sector authorities did not use which almost half has actually been performance-based measures to evaluate disbursed. Coordinated from Geneva, milestones, at which point certain clear The Global Fund ensures that this money goals are to have been achieved. These the progress of public-private sector goes straight to the front line in the battle should be focused on final outcomes and collaborations, and the recent PwC survey against disease by paying it direct to time-frames, leaving the manner in which produced similar findings. countries applying for grants, leaving work is to be performed at the discretion them free to design programmes that suit their own local needs. of each of the parties to the agreement. Risk allocation and management In other words, the focus should be on The sharing of both financial and The Global Fund represents a close the ends, not the means. For example, performance risk can be one of the biggest partnership between the public and the decision should not be whether to advantages to flow from collaborations private sectors. ‘Instead of creating a hugely expensive international outsource or not. Instead, it should be with the private sector. PPPs, for example, infrastructure, we contract private- whether or not outsourcing will help to are designed so that risks are allocated to sector Local Fund Agents (LFAs) in improve service levels, reduce costs and/or the party best equipped to manage them. each of our 132 countries to assess, boost revenues. And, if this is the case, the However, both public sector organisations monitor and review the programmes at public sector organisation should ensure and private sector operators should take a local level,’ explains Jon Lidén, head of communications for The Global Fund. that the service provider has the flexibility care not to promote or accept inappropriate ‘About 95% of our funds come from to determine how best to achieve the risk transfer. It should be remembered that governments. Without rigorous assurance targeted benefits. the ultimate success of any collaborative that the grants are being used effectively, model will depend on the fairness with we cannot disburse the funds. So our which risks have been allocated. independent, private-sector LFAs are an Performance measurement/monitoring integral part of our architecture.’ Even if the desired outcomes have been clearly defined, public-private sector Risk transfer should in no way imply a Many observers believe that the Global Fund initiative provides a template that relationships will be unlikely to provide complete shift of the burden from the other public-private partnerships on the the required benefits unless there is public to the private sector. The public world stage may choose to follow in the continuous performance monitoring sector needs to recognise the difference future. through well-defined performance criteria. between optimal and maximum risk

(Global Annual Review 2006, PwC) For example, when New York City tried to transfer. If the latter is attempted, problems move to a performance-based contract will almost inevitably arise. For example, with its streetlight maintenance contractor, when the State of Kansas privatised its it established a number of exacting child welfare system20 nearly all financial

20 Ask Institute for Democratic Governance and Innovation – ‘Government by Network’.

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and performance risk was initially effectiveness), a gap can open out between transferred to the contractors (all of which what can realistically be delivered, and Managing risks were non-profit organisations). A number of what cannot. The following initiatives can and partnerships these organisations were unable to bear the prove helpful when it comes to bridging this financial penalties imposed by the contract expectation gap: and were eventually forced to declare Designing a clear communications themselves bankrupt. • Clear and strategy that reaches out to all 1 measurable goals stakeholders Flexibility in the relationship An essential quality for any successful • Communicating quantitative partnership is its ability to adapt to change service-level definitions – both in terms of the relationship itself and • Ensuring that strategies are based Independent performance the work that has to be done. Especially 2 on the maxim ‘Under promise, measurement in the case of long-term partnerships, over deliver.’ strict adherence to the clauses of the contract may act as a barrier to successful Social impact implementation (by failing to take account Opposition to new service delivery models of wider changes in the surrounding often arises where they are perceived to Risk allocation and political, economic and social environment). exclude the very citizens that they were 3 management The priority for both parties is to maintain designed to benefit (for example, where a constant focus on the targeted eServices are used as a model for service outcomes for the project throughout the delivery in digitally-divided societies). contract’s lifespan. The public sector Such ‘myopic planning’ can be avoided. also needs to recognise at the outset For example, Singapore – itself a leader in 4 Flexibility that change is increasingly an inevitable the provision of eServices – has addressed part of a contract’s life, and this needs this issue by setting up customer-service to be addressed in terms of contractual centres for citizens who may be illiterate, flexibility, as well as a mature approach to low income and without access to relationship management with the the internet. service provider. 5 Expectation management

Expectation management For the public sector, the management of stakeholders’ expectations can represent a significant challenge. Because these Social impact challenge expectations are frequently based on 6 perceptions of what best practice should be (rather than on quantitative measures of responsiveness, efficiency and

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Flexibility drives successful In a nutshell partnerships – India • To be able to define the appropriate eSampark in Chandigarh, India offers service delivery model, the overall goals citizens a convenient ‘one-stop-shop’ of public service delivery should be for 11 government services ranging from clearly articulated in terms of: payment of taxes and water bills, to bus > Quality of service (accessibility, passes, birth registration and passport timeliness and service levels) applications – accessible online and > Cost of service, leading finally to through seven e-Sampark Centres. The ‘value for money’ initiative serves over a 100,000 people every month and the satisfaction rate has > The suitability of different service been upwards of 80%. delivery channels for different customer segments This successful outcome, according • The first step towards developing to Vivek Atray, Director – Information the right service delivery model is for Technology, Tourism, Technical Education the public sector to clearly define the and Science & Technology, Chandigarh role it intends to play (ie policy maker, Admsinitration, can be attributed to the regulator or service provider) ‘structuring of the project on a win-win basis’. • Critical success factors for building the right model include: The ‘Build-Own-Operate-Transfer’ > Evaluating how technology can help projects catered for clear service- the organisation to achieve its overall level agreements and establishing goals monitoring mechanisms combining > Recognising that eServices are an the most appropriate allocation of risk essential medium for service delivery with sufficient incentives for all project partners to safeguard sustainability. > Understanding the ways in Services provided through the centres are which different collaborative free to the citizens, but there is flexibility partnerships (shared services, PPPs, within the model to introduce charges outsourcing and PVSPs) and increase the range of services over can deliver targeted outcomes time. The high level of satisfaction, as > Managing risks in collaborative reported through the built-in feedback partnerships through and improvement mechanism, was – clearly defined goals instrumental in gaining the project and time-frames national recognition in the form of a ‘Golden Peacock’ award. – continuous performance monitoring through well defined (Taken from Global Annual Review 2006, PwC) performance criteria – risk sharing – introducing flexibility – managing stakeholder expectations – addressing social impact challenges

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‘It is all about innovation – the little ideas that can lead to big changes in the way we get access to the sort of public services we rely on in our daily lives?’

By Paul Boateng, formerly Chief secretary to the Treasury, Britain

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For public sector organisations, changes in customer preferences and expectations are continuous. Radical one-time change to improve service delivery is unlikely to be sustainable in any long-term solution. What is required is an institutional culture that allows for continuous improvement. By learning from good practices across the private and public sectors and listening to its customers, the public sector will be in a position to continuously deliver on the customer promise.

Reforms in public sector agencies Innovation – the key to the public aimed at improving the efficiency and sector’s ability to continuously RAISING THE BAR effectiveness of service delivery are often deliver on its customer promise ‘BEST PRACTICES’ driven by factors that are external to the Ask the CEO of any large and successful agency, such as changing regulatory Harvesting of best practices should be requirements and budgetary constraints. company what is expected to drive used to continuously redefine the public Reforms resulting from these external the organisation’s future growth and sector’s vision of success and measure drivers generally constitute what we term innovation is likely to be one of the top how the public sector is performing against those benchmarks radical or one-time reform. Our review of three responses. For private sector successful models suggests that while organisations, innovation is a critical one-time reform can achieve instant determinant of competitiveness, results, these will be neither sustainable investment, profitability and overall nor capable of delivering in the long market positioning. In fact, most term, unless they are underpinned by successful private sector organisations INNOVATE innovation and continuous improvement. are structured specifically to promote and encourage the innovation needed to make continuous improvements to the Continuously adopt new models of The term ‘innovation’ in the context of services they provide. service delivery that provide choices, the public sector needs to be carefully build trust and reduce costs. Essentially, understood. Innovation in the public this means providing what customers sector does not always imply the creation The public sector’s capacity for want, how and when they want it, to of a new means of service delivery, or innovation is not in doubt. However, achieve optimum customer outcomes the development of new technologies/ there is sometimes a perception that, systems to improve efficiency or because public sector organisations effectiveness. Innovation, as we refer to do not operate in the same competitive it in this paper, is an approach that public environment as the private sector, they are not subject to the same bottom-line sector agencies can use to modify (by EVALUATE introducing incremental change) existing criteria for success and failure which systems and processes, or introduce drive private sector innovation21. new (significant) changes to processes Continuous and third-party evaluation and systems that will drive efficiency As this paper has shown, this perception of the extent to which customer and effectiveness on an ongoing and is no longer valid for a variety of expectations are being met is not only necessary to validate the success of sustainable basis. The end result reasons, including increased customer a service delivery approach, but more can be product/service innovation or awareness, higher political imperatives for importantly, to bring customers into the social innovation. The availability of performance and the need for international public sector ecosystems that allow for funding and the deployment of specific competitiveness. Accordingly, the starting continuous improvement. innovation ‘teams’ within public sector point needs to be the development of a organisations will both be key to culture/mindset that espouses continuous sustaining these initiatives. improvement as a strategic objective. Carefully monitored and regularly

21 NAO report: ACHIEVING INNOVATION IN CENTRAL GOVERNMENT ORGANIZATIONS: DETAILED RESEARCH FINDINGS, REPORT BY THE COMPTROLLER AND AUDITOR GENERAL, HC 1447-ii Session 2005-2006, 25th July 2006.

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adjusted target setting by the leadership vanguard of public sector reform may will be integral to the development of not be there tomorrow. In fact, if one this mindset, providing the impetus observes changes in the UN e-Readiness for continuous improvement efforts Index, which measures the maturity of throughout the organisation. governments in the area of eServices provision, one finds increasingly dramatic Innovation plays a significant role in shifts in position taking place over the boosting productivity, and this directly last three years. affects the effectiveness of public service delivery, in terms of enhancing (a) quality In their search for new models for of service – accessibility, timeliness and effective public service delivery, we service levels and (b) cost of service, foresee public sector organisations leading finally to ‘value for money’. increasingly benchmarking themselves against best practice in other countries, According to a recent publication as well as against best practice in the by the UK’s National Audit Office, private sector. Our experience suggests which scrutinises public spending on that, by using their knowledge of behalf of parliament, if it was possible developments elsewhere, public sector to achieve even small increases organisations can continuously improve in government sector productivity their own service delivery models – not continuously over a period of years, by trial and error, but by selecting proven then potentially large-scale improvements examples of best practice from around might be obtained in the resources the world. available for public services. A study in 2004 estimated that, for the UK, We believe that some of the best results gains over 10 years could amount to are delivered when benchmarking is £16 billion if public sector productivity not restricted to rigid sectoral confines. grew by 5% in that period, and £47 billion This helps to introduce new sets of if it grew by 15%. The extent and success business rules which might otherwise of innovation would be a determining be considered unsuitable for a given factor in achieving such increases. situation/set of conditions. There is increasing evidence to show that new Harvesting best practices models of service delivery can be drawn from completely unrelated sectors. There is increasing evidence to show Many logistics and project management that, with such rapid progress towards practices have come from the military, best practice being achieved by public for instance. Similarly, public sector sector organisations around the world, organisations tasked with delivering the countries which are today in the large-scale education programmes might

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usefully benchmark against what has In this respect, key questions that ‘The most important been achieved by some of the IT training the public sector needs to consider institutes in India, which now have over include: external factor 3,000 centres across 25 states. • Is this an organisation/country that influencing the we aspire to emulate? For benchmarking to be useful, the development of public sector needs to ask itself three • Is there any third-party evidence nominated innovations key questions: to support the success claimed by the organisation/country that we is working with 1 What is it that we are propose to benchmark against? attempting to innovate? other government • Are the rules and legislation under Benchmarking should be used to which services are delivered similar organisations.’ highlight optimum models for delivering to our own? National Audit Office, UK study on Innovations better customer services. It should not in Central Government Organisations be used to answer questions such as 3 How do we document ‘what kind of organisational structures best practices? exist’? Benchmarking’s purpose Depending upon the purpose of the is to show how organisations have benchmarking (ie whether it is to be structured themselves so as to improve focused on outcomes or processes), the quality and value for money of their the method through which it takes service delivery. It should focus on: place will have significant implications • Impact – How have the – both in terms of cost, and in terms of customers benefited? effectiveness. Primary benchmarking (where data is collected specifically • Outcome – What should the service for the purposes of the organisation) levels be? is often the most elaborate and • Process – How can we meet our accurate option. However, it is often desired service levels? not the most cost-effective, owing to the significant preparation that needs • Inputs – What were the prerequisites to take place. For that reason, it may for success? make sense to use it principally in the validation of secondary research 2 Whom can we learn from? (which can be conducted via the internet, or through other means). The relevance and usefulness of benchmarking information is very much dependent upon the availability and comparability of suitable data.

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To help shed light on the ways in which initiatives. This can mean that insufficient Monitoring and evaluation – Singapore Feedback Unit civic leaders are working towards attention is focused on their long-term continuous innovation, in early 2006, viability. For example, by some estimates, The Unit holds forums and dialogue PricewaterhouseCoopers launched its 80% of eServices initiatives are unable sessions, as well as producing ‘Cities of the Future’ research project. to keep to budget, time or objectives22. Focusing on the strategic agenda publications to encourage continuous To ensure that their projects do not fail, citizen feedback. Its website is linked of tomorrow, this project included public sector organisations need to to the eCitizen portal, Singapore’s G2C interviews with over 50 senior leaders (government-to-citizen) one-stop shop. in politics and administration in various engage with their customers through open The Feedback Unit has a one-stop big cities around the world. Through this government (transparency, accessibility feedback form that can be accessed process, we have formed a community and responsiveness are the watchwords). from the eCitizen portal. On this form, of public sector leaders, all keen to share In doing so, they will build trust amongst the citizen can specify which ministry to send feedback to, or leave it blank and information and learn from each other in a their customers, and this will play a vital allow the Feedback Unit to divert the number of areas of common interest. By part in ensuring that projects prove to message. Each ministry/department has establishing this informal and fellowship be sustainable over the long term. The a quality service manager with a toll-free based network, we are hoping to introduction of appropriate regulation, line for complaints/ feedback. The internal encourage and facilitate an environment guidelines and legislation will help to database tracks when the feedback in which best practice around the world ensure that this happens. is received and when the feedback is can be documented and learned from. given. Through its website and Feedback Quarterly newsletters, the Feedback Unit According to an OECD23 report on also publishes responses to feedback that Monitoring modernising government, 90% of OECD are relevant to a wider audience. The sustainable delivery of benefits is countries have a Freedom of Information (The key to Increasing Transparency in driven by continuous efforts to identify Act, and an ombudsman office. And over e-Government Deployments’ APDIP e-Note improvement opportunities. Improvement 50% of them have customer-service 3/2005) is relative – future performance based standards. Nor are these initiatives against past or present performance. To restricted solely to developed countries. realise benefits through such interventions, Developing countries such as India there has to be a continuous monitoring have promulgated Right to Information programme that provides stakeholders Acts (RTIA) that help to build open in the public sector with regular updates on progress (or lack thereof) in the governments. An associated impact of achievement of the envisaged results. such initiatives is that they force the public sector to come up with new models of service delivery that are consistent with Performance evaluation the requirements of the legislation. In the If innovation arises from a process through case of India, the RTIA is forcing the public which the public sector continuously sector to define service standards, as well listens to its customers, it is likely to as focusing much more on eServices as be sustainable. All too often, however, an alternative means of service delivery to innovation and new models for service meet these standards. delivery are driven by crises or one-off

22 ICT Policies and e-Strategies in the Asia-Pacific., A critical Assessment of the way Forward 23 MODERNIZING GOVERNMENT: THE WAY FORWARD – ISBN 92-64-01049-1-@ OECD 2005

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One of our principal themes in this paper – collect even basic data on levels Customer and government is that the public sector may be able of customer satisfaction, customer Transformation Index – Bahrain to learn some useful lessons from the experience, customer outcomes or private sector. Rising demand for better customer loyalty. In May 2006, To gauge the benefits of its new eServices standards of governance in the private PricewaterhouseCoopers undertook a model, the Kingdom of Bahrain 2010 sector have spurred initiatives aimed study of customer satisfaction in private lays special emphasis on measuring the 24 Customer and Government Transformation at improving disclosure and corporate sector financial institutions . Only 60% Index. governance, as well as frequent guidance of those questioned said that their firm and oversight from regulators. Increased regularly collected data on customer This index measures the efficacy of media scrutiny of government and its satisfaction levels, notwithstanding the fact customer-centric service delivery through effectiveness are part of this same trend. that this metric is acknowledged to be the customer feedback on quality of services, best indicator of customer-friendliness. And accessibility and usage of government One way in which governments far fewer collected data on customer loyalty services, usage of online services, and efficiency of service delivery. To can respond is through improved levels, commonly regarded as an even performance and, more importantly, drive and measure productivity gains, better predictor of customer spending than the Index measures the beneficial through the development of systems that levels of satisfaction. impact of transforming government provide the media with the transparency practices, including assessing increases it needs to judge public servants across Once innovation is on the agenda, it is in government’s capacity to deliver various standards (the above-mentioned important to include a wide spectrum of services, boost productivity, and speed OECD report found that over 75% of views and stakeholders in its development. up the process by which grievances are redressed. OECD countries have standards of Co-design, co-decision-making, behaviour for public servants). As part co-production and co-evaluation all of this strategy, the ability to provide imply the involvement of different people independently-assessed evidence of at different stages in the development increased customer experience and of a new initiative. Staff and end-user outcomes will be extremely persuasive. participation should be integral to any innovation process from the design phase Customer feedback (via effective onwards. It is important to remember measurement metrics for customer, that the design phase of any project supplier and collaborator satisfaction) involves setting standards/performance is often one of the most neglected criteria and, if customers are included in areas of public service delivery. For this process, it will help to ensure their public sector organisations, the lack satisfaction with subsequent service of customer feedback can be a source delivery. Co-decision making and of major operational risk, as well as co-production contribute towards the severely hindering their continuous sustainability of innovation initiatives by learning capabilities. encouraging citizens to see themselves as ‘owners’ of whatever changes are The reality is that too few organisations introduced. Co-production helps to make – in either the public or the private sector the production process more visible and

24 Winning the battle for growth: Building the customer-centric financial institution

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therefore more understandable. Similarly, Innovative Service Design co-evaluation through surveys and In a nutshell – The Netherlands interactive programmes is an important tool for ensuring the initial success and onward • Continuous improvement is key An initiative introduced by the Rotterdam sustainability of innovation. to the sustainability of government and Rijnmond police force provides an transformation example of the benefits that flow from involving a wide range of stakeholders in • Innovation in the public sector is the innovation process. Towards sustainable innovation different from innovation in the private sector – it is not about filing patents, The development and implementation Innovation and continuous improvement but about continuous incremental of ICT for re-engineering the issuing and are both key to the sustainability of change processing of police tickets was strongly government transformation. In this driven by staff. This included 3,500 police respect, the harvesting of best practices • Innovation is the key to the officers, 35 administrative police staff and a public sector’s ability to from the public and private sectors number of staff from the public prosecution continuously deliver on its agency. The case description reports that will play a vital role. By introducing customer promise. ‘…on one hand, involving these parties led benchmarking programmes, the public to development of a good product and on sector will be able to identify innovation • Harvest best practices the other it created support for the project.’ (benchmarking) to drive innovation. initiatives which have already delivered (Making Quality sustainable : Co-Design, value, as well as gaining insights into > Look within and beyond Co-decide, Co-produce and Co-evaluate how best to introduce these initiatives (private sector) – www.4qconference.org) and adapt them to their own needs. As > Look beyond own sector new initiatives are developed, benefits realisation planning will provide a baseline > Look beyond boundaries from which to assess their success (by • For benchmarking three setting clear milestones for the delivery questions need to be asked: of expected benefits). And, from the outset, regular customer evaluation > What to innovate? and independent feedback will enable > Where to learn from? public sector organisations to include their stakeholders in the development > How to document and adopt? of initiatives which result in continuous • Need for regular customer improvement. evaluation and independent feedback key to institutionalising learning and improvement

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21447_Global.indd 59 30/10/07 14:22:18 Conclusion 08 Delivering on the customer promise

‘To improve services we need to understand more about customers’ experience of using government’s services. Governments tend to have lots of information on transactions between the customer and the service provider, but little on customers’ real experience of us.’

Alexis Cleveland, Chief Executive of the Pension Service UK

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More important than choosing the appropriate model for public service delivery, or increasing awareness around the realisation of benefits for citizens, is the task of undertaking the actual transformation. One of the biggest challenges demanding attention is the ‘ambition challenge’ – attempting to achieve more than is believed possible, given the constraints of structure, capacity of people, public sector culture and finances.

As this paper has shown, there is no • Empowering to deliver – building the single ‘correct’ approach for undertaking capacity to deliver in public sector the transformation of public sector organisations (and in their people) service delivery. Although there are a Delivering the promise – building number of common trends, as well as a • customer-centric models and number of common challenges faced by managing risks public sector organisations around the world, the responses will vary depending • Ensuring continuous innovation – on individual contexts. innovating by harvesting best practices and using customer feedback to However, these responses do share in sustain benefits. common the need to focus on delivering A key theme running throughout this paper better customer journeys for citizens, is that, for public sector organisations thereby ensuring that they can achieve to effect successful transformations, better outcomes from their interactions they need to address each of these five with the public sector. They also share elements in a cohesive and balanced the need to provide a value-for-money way, rather than adopting a piecemeal solution, redefining the role of the public approach to change initiatives. sector in society, leveraging private sector best practices and expertise and using technology as a key enabler Public sector transformation is a of change. challenge. But it is one that must be addressed. We hope this paper has highlighted the scope of the challenge, For all public sector organisations, the and the issues that need to be considered, priorities should be: as well as the range of approaches • Getting the focus right – understanding available in order to successfully deliver that the ‘customer is king’ in the public on the customer promise. sector too

• Pulling down the walls – agency silos must give way to connected government

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21447_Global.indd 61 30/10/07 14:22:37 About PricewaterhouseCoopers and Key 09 Government/Public Sector contacts

If you would like to discuss any of the issues raised in this document in more detail, please speak to your usual contact at PricewaterhouseCoopers, or call one of the following:

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PricewaterhouseCoopers Editorial team Wim Oosterom Nilaya Varma Philippe Pierre Partner – Global Government Leader Director Partner – Public Sector The Netherlands India Luxembourg [email protected] [email protected] [email protected] +31 20 568 1623 +91 124 4620 562 +352 49 4848 4313

Neel Ratan Charles Lloyd Roger de Montfort Partner – Performance Improvement and Partner – Public Sector Research Centre Partner – Government and Public Sector Leader eGovernment United Kingdom United Kingdom India [email protected] [email protected] [email protected] +44 20 7804 5130 +44 20 7213 2522 +91 124 4620 540

Public Sector Research Centre PricewaterhouseCoopers’ Public Sector Our goal is to stimulate informed debate For more information, go to: Research Centre provides insights and on public services and make effective, www.psrc-pwc.com research into best practice in government practical contributions on a wide range of Alternatively, contact the Centre’s and the public sector, including the issues including: Director – Nick Jones interface between the public and private Delivering customer-centric services [email protected], sectors. Our evidence-based research • +44 20 7213 1593 enables a collaborative exchange of • Making public service markets work views on key public sector issues. This draws on the perspectives of public • Delivering public services cost- sector organisations themselves, our effectively own global network of professionals (with • Increasing transparency and day-to-day experience of the challenges accountability facing the public sector), leading think tanks and academics. • Delivering sustainable development • Building public sector capabilities The Centre has a particular focus on how to achieve the more effective delivery of better public services and infrastructure, both nationally and internationally.

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21447_Global.indd 63 30/10/07 14:22:42 About 09 PricewaterhouseCoopers and Key Government/Public Sector contacts

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