How to embrace change and innovate

The public sector is often wrongly portrayed as inefficient and lacking innovation. This is an unfair characterisation. After 10 years of austerity, central and local governments have had to become entrepreneurial and innovative in order to function and deliver essential public services. At Nottinghamshire County Council (NCC), we have driven efficiencies in back-office processes and shifted services online, enabling us to invest in public services. This has meant taking risks, trying new approaches and embracing new technologies.

Given the impact of the pandemic on public funding, the challenge continues. But now we have a framework that we can use to drive further efficiencies and innovation. Daunting though it may seem to even attempt to identify further efficiencies without compromising service delivery, there are common lessons that can be applied to most organisations.

We are continuously examining how to run the business of a large county council. Key to this is re-evaluating the back office, which is often overlooked in terms of its significance. At NCC, the back office is the foundation of our organisation; our business processes are built on it. Looking at our back-office functions in the round helps us to understand where we can drive efficiencies and innovation, so that more resources can be focused on essential frontline services for children and adults. We have become adept at identifying the areas where we can re-engineer a process using technology, often triggered by two important factors: removing duplication and enabling teams to pull data all the way through the system, so that the same information is available to everyone.

Our recruitment process is now predominantly online. Candidate data is input once, so it can be pulled all the way through the recruitment and employment systems to corporate payroll, in a seamless process that avoids duplicate data entry.

To improve this process further, we are also developing an employee passport. We are looking at the employee journey to ensure that their information stays with them during their time with NCC, from recruitment through to when they might transfer internally or receive a promotion. In the past, that would have required new records to be created. This approach will give us and the employee access to a single digital record.

The same thinking is applied to our interaction with suppliers and the general public. Customers are more demanding than ever and are using many more channels to do their business and access information. Residents of Nottinghamshire are no different. For this reason, we developed the MyNotts app, which allows locals immediate access to the most popular council services while on the move.

From a supplier perspective, we recognise that NCC is one of the largest employers in the region and a significant contributor to the local economy, so we have improved our processes to ensure that our suppliers are paid on time. In our most recent analysis of accounts payable, we achieved 96.4% of on-time payment of undisputed invoices.

Rather than relying on external providers to drive change for us, we have deliberately taken some work in-house. This has given us more control and flexibility over the way that we implement and evolve processes, as well as increasing our ability to respond at speed.

For example, when there was an incidence of flooding, we needed to respond quickly to help communities and businesses deal with the damage. We switched on an emergency flooding service, bringing together various teams, including the emergency planning department, the customer service centre and the business services centre. Emergency planning identified the badly affected areas and laid out the criteria for flood support funding. The customer service centre designed an online form that could be passed on to us, so accounts payable could make payments the same day or the next.

This was possible because we shifted the ownership of employee services and all financial transactions in-house, rather than outsourcing them. We developed a shared service centre to manage employee services and all financial transactions, such as debt recovery, accounts payable and reconciliation. This had the added benefit of integrating functions from the finance department into the business service centre, streamlining processes and driving resource efficiencies.

The business service centre now also oversees pension administration for local government pensions in Nottinghamshire. Having this single integrated view of all transactions has allowed us to integrate data to get a clear overview of the business and see where we can make improvements by optimising processes.

We are also prepared to take risks to simplify processes and drive efficiencies that make more resources available for essential services. For example, we make upfront payments to suppliers in return for greater discounts. But more importantly, we have challenged mindsets around supplier relationships.

I started my career with NCC in IT. At the time, “you never got fired for buying IBM” was a well-worn refrain. Certain vendors have become well established in the public sector and perhaps this has led to predictability in terms of how organisations choose to deploy and manage their software. Understandably, there has been a reluctance to break up established relationships for fear that it might disrupt public services.

Now, though, with vendors placing ever greater emphasis on shifting customers to the cloud, we felt that it was time to take a different path in terms of our approach. We use the SAP accounting platform for our core enterprise resource planning (ERP) applications – HR, finance, etc. Rather than moving to its cloud offering, we decided to use support services from an independent third-party support provider, Rimini Street. Although this challenges the norm when it comes to relationships with IT vendors, who would attempt to suggest moving to third-party support is a risky move, it has provided us with significant benefits.

It immediately delivered savings of 50% on the annual fees that we would normally pay the vendor to support our SAP applications. More importantly, it freed up additional budget and resources to address pressing requirements for the business. Furthermore, it means that our stable ERP applications can be supported by Rimini Street for a minimum of 15 years from the contract date, which puts us in control of our IT strategy and allows us to plan our roadmap in line with the needs of the organisation.

This enabled us to focus on initiatives that have been important to the organisation, such as rolling out laptops to all employees before the pandemic struck. Consequently, when we moved to remote working, there was minimal disruption and we had real flexibility in how we responded to the situation. We also had the resources to deploy Microsoft Teams, which has had a very positive effect in enabling all employees and council representatives to understand the benefits of online working.

We recognised early on that it is important to take risks in the knowledge that they may not always work, but adopting this approach does allow you to explore new ways of working. An important element of this is also ensuring that you develop trusting relationships with your suppliers. Working with Rimini Street, we have learned new ways to optimise our existing ERP applications and minimise disruption as we look to integrate new technologies with our core back-office processes. For this to work, your suppliers really need to demonstrate an understanding of your organisation, how it works and what is needed to ensure that services are not affected by any changes that you plan to make to your IT systems.

As such a large entity, it is understandable that processes can be complex. In the past, teams have not always collaborated effectively. Going back to the core principle of re-engineering processes, we are always looking for ways to encourage teams to break down silos and work together.

Now, our corporate payroll and recruitment departments work together on a seamless handover, from the recruitment process to registering new employees on the payroll system. Not only does this improve processes, it also addresses the significant headcount reductions that we have faced in the past 10 years. Having smaller teams means that they have had to work together to deliver services. Thanks to the technology we have, they can get more done. The key is identifying where the overlaps are, providing the right training to ensure that staff are comfortable taking on new challenges and offering sufficient support to minimise disruption.

As we began to move back-office systems online, employees started to recognise the value of online services in simplifying processes, enabling quicker response times and making their jobs easier. An added benefit is that we are now seeing recommendations for innovation and process improvements coming from employees across the board.

This has been accelerated by the pandemic because it has made the teams think differently about how they work and collaborate. Fostering this mindset of embracing change and empowering employees to recommend innovation is vitally important, as frontline staff are much closer to the public and can quickly see how to improve processes.

Our priority is to train staff to become multi-skilled, so they are comfortable using online systems. Reduced headcount means that there will be an expectation to take on other job functions – again, this is in part looking at process improvements. In one instance, our security and authorisation team in the competency centre is now handling work around security for the administration of pensions.

Ultimately, NCC is continuously looking at ways to drive process improvement, which translates into benefits for public services. That could be efficiencies to free up resources or simplification of ways of working to improve collaboration. It centres around the need to look carefully and with real honesty at processes to cut out duplication and ensure data is available consistently throughout the organisation. In one sense, this does require a risk-taking mindset, because you must be prepared to challenge received wisdom about how processes work.

However, this mindset stretches further to the suppliers you work with, the way you contract and how you are prepared to use technology. It helps if you take greater control of your systems and bring them in-house, so you have control over your decision-making processes and priorities. With this control, there is far greater freedom to take risks, because you have the time and resources to plan properly and execute them in line with your organisational needs.

The ICAEW Library & Information Service provides full text access to leading business, finance and management journals. Further reading on innovation within the public sector is available through the articles below.