COST AND BENEFITS OF SIMPLIFYING AND HARMONIZING BUSINESS PRACTICES AT THE COUNTRY LEVEL UNITAR SEMINAR – February 22, 2012 Christian Schornich - Consultant

Mandate for Study  GA Resolution 62/208:  Calls for harmonization and simplification of business practices in the areas of human resources management, finance, administration, procurement, travel and ICT.  GA Resolution 64/289:  Requests the Secretary-General to brief the Economic and Social Council regularly on progress made and challenges encountered in the simplification and harmonization of business practices.  ECOSOC Resolution E/2011/L.35:  Urges the UN system organizations to identify and accelerate the implementation of initiatives promising the highest return from simplification and harmonization.

Scope of Analysis  Review the organizational and financial feasibility of identified best practices in the area of simplification and harmonization of business operations services.  Take stock of experience and lessons learned in the current initiatives of harmonizing business operations services at the country level.  Identify reported evidence of increased operational and cost efficiency of harmonized business practices at the country level.  Make specific recommendations for accelerating the reform process in the area of business operations regarding both high quality and cost efficient service delivery.

Methodology  Desk review and analysis of reform initiatives and the progress of related inter-agency working mechanisms in the areas of business operations affecting the country level.  Web-based survey targeting all programme countries informing on the status of harmonization and simplification of business practices at the country level (common premises, common services, quantification of costs and potential savings).  Cost-benefit analysis framework comparing the provision of business operations services through three different business models (individual agency provision, inter-agency harmonization of business practices, and establishment of One UN Business Center.)

Stock Taking Procurement Finance Human Resources Areas Administration ICT Common Premises Common Services UNDG JFBO - Network Fiduciary Management Oversight Group HACT Advisory Committee Ref Group on Common Services Task Team on Common Premises CEB Delivering as One HLCM Procurement Network Human Resources Network Finance and Budget Network ICT Reference Group Albania Cape Verde Uruguay Tanzania Pakistan Mozambique Rwanda Viet Nam DOCO CEB Secretariat Updates, Country-led and Independent Evaluation

Stock Taking – UN Working Mechanisms  Services in the area of business operations at the country level characterized by a high degree of functional similarity.  Agency-specific regulations and rules would not prevent the harmonization of business practices at the level of policies and procedures.  Simplification and harmonization of business practices could yield significant efficiency gains and cost reductions.  Through the coordinated approach by the UNDG and HLCM, progress has been made in the coordination and harmonization efforts in several areas of business operations.  Functional areas are organized through separated working mechanisms. No integrated change management strategy.

Stock Taking – DaO Countries  Delivering as One- and other selected programme countries have made progress at the level of implementing a package of basic common services and developing solutions to joint operational modalities.  Best practices include the establishment of common premises, piloting common ICT infrastructure and harmonization of procurement management.  Selected Delivering as One-Countries have shown very limited success in providing evidence for sustainable efficiency gains and cost savings in the area of business operations.  Significant coordination efforts in harmonization have not yet been met by any quantifiable impact in quality gains or cost reductions.

Stock Taking – Preliminary Conclusion  Coordination mechanisms lack an integrated and results-oriented strategy to ensure high-quality and cost efficient business operations services at the country level.  Efforts to harmonize and simplify business practices have been prioritized with relatively little information on the coordination costs, real efficiency gains and longer-term financial impact at the country level.  Limited experience and information available on quantifiable gains for individual agencies at the country level. UNCT engagement.  Reform efforts have at large been carefully avoiding any analysis of an organizational reform of the UN at the country level.

Business Models  Individual agency provision:  Minimum coordination costs  Management control  Agency-specific business solutions  Limited economies of scale-effect  No cost sharing of necessary assets and services  No cost saving potential through staff reductions. Agency A Procurement Finance Human Resources ICT Admin Agency B Procurement Finance Human Resources ICT Admin Agency C Procurement Finance Human Resources ICT Admin UNCT OMT ….

Business Models  Inter-agency harmonization of business practices:  Cost sharing opportunities  Economies of scale-effect  Process cost reduction  Very high coordination costs  Limited direct management control  Very long lead-times  Efficiency gains not directly leading to real cost reductions. Agency A Procurement Finance Human Resources ICT Admin Agency B Procurement Finance Human Resources ICT Admin Agency C Procurement Finance Human Resources ICT Admin UNCT OMT (Common Services Mgmt.) ….

Business Models  One UN Business Center:  Significant savings potential  Economies of scale-effect  Process cost reduction  Efficiency gains directly impacting operating costs  Streamlining of business services  Limited direct management control  Change of organizational structures  Different personnel requirements. Business Center Procurement Human Resources ICT Admin UNCT …. OMT Agency A Finance Agency B Finance Agency B Finance

Global Survey – Selected Trends  Selected trends based on submissions from currently 68 programme countries.  Apart from building management, co-location to common premises does in most cases not lead to any increased harmonization of business practices.  71.6% of all countries have established common Long-term Agreements (LTA), however only for a limited number of potential services.  The majority of established common services are related to medical services (68.5%), security services (91%), travel services (74%), cleaning services (60.7%) and internet provision (52.8%).  The majority of established common services are not based on an inter-agency MOU or a cost-benefit analysis.

Global Survey – Selected Trends What has been preventing the UNCT in your country from further harmonizing business practices in the different areas of business operations ? Lack of agency commitment:52.4% Lack of UNCT support and guidance:15.5% Lack of RC support and guidance: 2.4% Different rules policies and procedures:90.5% Lack of resources:50 % Lack of OMT capacity:21.4% The UNCT did not see any benefit that could be derived from sharing business operations functions:13.1%

Global Survey – Selected Trends  53.9% of submitting programme countries stated that their UNCT has not achieved any quantifiable cost savings through the harmonization of business practices in operations.  The trend analysis confirms a limited coordination and management capacity at the country level for the effective harmonization of business practices.  Quality and cost efficiency of business operation services as a basis for effective programme delivery are not prioritized by a majority of programme countries.  The trend analysis confirms the lack of an integrated reform strategy and a system-wide coordinated change management approach.

Thank you!