Newcastle City Council

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Newcastle City Council

When Newcastle City Council identified that it needed help with change and developing skills, Fujitsu offered them a complete consultancy and technical refresh.

The Challenge

One of the key business issues across all local authorities is the immense agenda for change, with pressure coming from both central government and customers. Newcastle City Council identified that it needed help with managing change and developing skills. Specifically, the Council knew that it could not sustain its approach to the procurement of IT, as managing its own mainframe systems and applications was no longer viable. It had in-house expertise, which would not in future be needed, but it did not have the necessary replacement skills. The Council was also keenly aware of its past poor performance.

In 2002, the Council decided to look for a managed service supplier. During the procurement process, it became clear that the traditional outsourcing model was not addressing the issue of risk transfer. In particular, the Council did not want to buy short term consultancy services, it was more interested in long term knowledge and skills transfer into the Council, as well as reducing procurement risk exposure.

The Council decided to investigate alternatives and, as it did so, it further developed its vision. This involved restructuring the authority and establishing a new organisation called City Service, to be totally focused on delivering core services to both internal and external customers. The aim was to be in the upper quartile of local authorities for high performance and low cost and to create the capacity to modernise the authority.

A different model for seeking external support emerged. Called the transformational partnership, this model would enable the Council to share risk with an equally committed partner to fulfil the City Service vision. Such a partnership would focus on designing and procuring the most appropriate hardware and software, the best organisational structures and systems and the most effective processes and procedures to deliver modernised best value services.

The Solution

The Council completed its own Transformation Programme Plan to deliver its vision at the end of April 2003. It invited tenders in May 2003 for a partner to help procure the right technology and to provide skills to support the programme, while assisting in the management of risk throughout. A short list of two was quickly reached and detailed negotiations began. One of the major characteristics of the Newcastle approach to change is that, from the beginning, the Council ensured buy-in from all its employees. Meetings where stakeholders, including union representatives, were invited to challenge the two short listed suppliers were an intrinsic part of the tender process.

Fujitsu proposed to deliver a complete consultancy service and technical refresh in conjunction with two partners: Deloitte, which would take particular responsibility for cultural change; and Meritec, which has specific business and project implementation expertise.

Fujitsu was made preferred bidder in October and the contract, which incorporates a ten year business plan, was signed in early December. The first three years embody a process of transformation, in which the Council migrates from its mainframe onto a completely new infrastructure with the latest enabling technology.

Ray Ward, Programme Director, is responsible for the City Service department of 650, which delivers a range of core services including ICT and Customer Services, and is leading the programme. "Despite the fact that the contract is both extensive and innovative, the tender process was incredibly quick" he said. "We needed speed and we got it via the use of the Government catalogue approach. Fujitsu also guaranteed a maximum price so we can manage our exposure to risk."

"we are not just expecting our partners to 'do it to us', we will deliver this programme together."

Newcastle plans to introduce many new lines of technology, such as document management and workflow, and extend existing ones such as the Customer Relationship Management (CRM) and telephony applications. There will be new systems for human resources and payroll, revenues and benefits, housing, the works department and a new payment engine. More customer service centres will open as well as a new contact centre. The aim during the first three years is to make savings to reinvest in technology that supports the business vision. Then the emphasis moves to performance, with a ten year improvement programme designed to accrue savings.

The Benefits

The Council expects a 25% increase in efficiency leading to an overall £37m saving. The savings will come from automation and headcount reduction within City Service. Before the contract was awarded the Council discussed its plans with the unions and agreed a policy of redeployment and severance.

The Transformation Programme includes the introduction of new customer service centres and a contact centre. The Council will gradually move people from the back office to customer facing roles. "Working with Fujitsu and its partners we are beginning to reconfigure the way we operate" explained Ray Ward. "We have a history of looking inwards and being process focused; it is time for us to look outward and focus on customers." The contract will enable the Council to redesign its processes so that it has integrated CRM and document management systems. These will allow staff to track customer queries, service requests and complaints.

The Council will be able to accept and process service requests electronically; this will change the entire way it operates. Internal customers will benefit too. New applications will enable leave and training requests and expenses claims to be submitted electronically and employees will be able to update their own personnel data files.

Contractual payments are linked to the delivery of clearly scoped work packages and the Council also has the flexibility to develop the contract if its plans change. The partnership will be able to act on new decisions very quickly. "The contract runs for three years and things will change - we needed the flexibility to reflect that in our arrangements with Fujitsu" commented Ray Ward.

"With Fujitsu’s support we have a new approach to modernising local government; it's all about making sense of modernising for customers. A lot of authorities have been forced into compliance because the Government is driving reform. We’re determined not simply to comply; we want to add value. We are moving beyond compliance to customer commitment. Newcastle felt its technology and culture left it behind other authorities. Catching up is not an option, we need to leap past whilst managing risk effectively. Our minimum aim is to be in the top 25% of councils in the next three years whilst cutting costs by 25%; with Fujitsu’s help we can achieve that."

The Implementation

The Council had done a lot of preparatory work on the type of server and desktop architecture it required. It had also established what new applications were needed and budgets had been identified. Newcastle developed a procurement protocol for its partners to identify suppliers, match capabilities to the statement of requirements and present data to the Council so that it could make informed decisions. Each project will be implemented once it has been approved by the Transformation Programme Board.

The process between agreeing preferred bidder status to the signing of the contract took less than six weeks, largely because of the close working relationship between all partners. The first milestone, to review the Transformation Programme by late January 2004 to ensure that the levels of resourcing were correct and clarify interdependencies, was achieved on time.

According to Ray Ward, what makes this model different is the commitment that the Council is making. "We have created a new governance structure to ensure that the Council has the capacity to support the partnership work. We are determined to learn and have spent nine months building our capacity to deliver on our side of contract. We have made a big investment ourselves; we are not just expecting our partners to 'do it to us', we will deliver this programme together." Shared resourcing will play a key role. The Council and Fujitsu will share project office accommodation and develop business cases together. The contract includes open book accounting and all members of the consortium will be represented on the Transformation Programme Board.

All parties are looking beyond the immediate contract at potential commercial opportunities for the partnership. These might include intellectual copyright. "As we go along we want to capture the things that create value" said Ray Ward. "There is an emotional engagement between the partners that we know is going to be hugely beneficial for all of us in the future."

The Expertise

"The Council wanted to work with a trusted partner with specific technological expertise and the ability to make a difference from day one," said Ray Ward. "Fujitsu has the reputation, the market knowledge and a willingness to share risk with us. For example, Fujitsu assured us that if we did not migrate from the old mainframe in the planned timescale they would underwrite the risk. That was one of the key deciding factors because it allows risk to be managed more effectively across the Programme. If we need to keep one application on the mainframe for longer than anticipated thenwe have that option. We also worked to improve leverage with suppliers. Through Fujitsu, we benefit from purchasing power. Newcastle is a medium sized organisation but even large councils do not have such power. The range of added value offered by Fujitsu and its partners could not be matched. What's clear is that we are in this together, we have even set up a shared information portal with Fujitsu."

"Fujitsu has the reputation, the market knowledge and a willingness to share risk with us."