UNDG Business Operations The BOS framework Advanced Business Operations Training Kabul, Afghanistan November 2014.

Results Matrix Content for the Results matrix directly drawn from the Operations Analysis; Baseline Assessment - existing Business Solutions (incl. Common Services to be continued; Needs and Requirements Analysis - new Business Solutions (incl. Common Services) and KPI’s; Cost Benefit Analysis - prioritization of proposed business solutions.

Based on Human and Fin Resources Its ok to do just 1-2 outcomes ! Scope Results Matrix could have max 6-7 “Pillars”, for each thematic area in Business Operations. Pillar 1: Common Procurement Pillar 2: Common Human Resources Pillar 3: Common ICT Pillar 4: Common Logistics and Transport Pillar 5: Common Administration Pillar 6: Common Finance Pillar 7: Common Security Based on Human and Fin Resources Its ok to do just 1-2 outcomes !

Outcomes and Outputs for the BoS Outcome statement Each pillar - one high level outcome statement Outcome statement- reflects the intended result of that operational support services over the five year period. Output statement Each outcome statement is sub-divided (“broken down”) into max 3-5 sub-components called “Outputs” Outputs together are needed to make that outcome come true .

Template Log Frame

Template Log Frame

Results Narrative The narrative describes shortly in words the context of the issue the harmonization is to address and the intent of the outcome, and how the outcome results in solutions addressing the issue. Recommended length of the narrative is 0,5-1 page per outcome. The Baseline Assessment, Needs Analysis and Requirements Analysis and Cost Benefit Analysis in chapter 2 provide the focus for the narrative, describing the intended result of the proposed business solution.

The BoS document Total BoS = 15-20 pages max Introduction – 1 page Signatory page – 1 page Operational analysis results Baseline Analysis results (existing services) - 2-3 pages Needs Analysis (new services) - 2-3 pages Cost Benefit Analysis- 1 page BoS- Scope of services (prioritized list of services)- 1 page Results framework- narrative outcomes & outputs – 4-5 pages Budget BoS (outcome & output level)- 0,5 page Governance – 1 page Monitoring, Evaluation and Reporting – 0,5 page Appendix A: Results Framework tables

Business Operations Strategy (BOS): Monitoring, Evaluation, Reporting Purpose Have a common understanding of RBM Can explain and apply RBM concepts to both programme and operations results frameworks

Rationale for BO M&E Framework Accountability – request of member states (QCPR) …to further harmonize business operations and pursue higher quality, more effective, and cost-efficient support services in all programme countries, and to report on concrete achievements by end 2014 Respond to country support needs Standardized Key Performance Indicators (KPIs) to measure progress in business operations (BO) harmonization Nearly 2 in 3 BOS country pilots had none [BOS Survey 2013] Support regular reporting of progress against baseline, aligned with UNDAF Ensure stakeholder engagement Buy-in, ownership of UNDG agencies, UNCTs 1. Accountability TCPR resolutions have long stressed the need for United Nations development entities to achieve and uphold the highest levels of accountability when supporting partner countries in pursuing national development outcomes These reinforced by ECOSOC Development Cooperation Forum that discussed actions to improve mutual accountability at global, regional and national levels AND the Paris Declaration indicators and related targets include accountability expectations from both national governments and donors. For the purpose of the UNDAF, mutual accountability is interpreted to mean the respective accountability of parties working together toward shared outcomes. This notion of respective accountability reflects the fact that accountability is not fungible and must, in the final analysis, be attached to a specific actor. Many stakeholders contribute to UNDAF outcomes and each one of them is accountable for its contribution. [Note: Fungible - Interchangeable, returnable, or easily replaced] 2. National Ownership TCPR 62/208, “each country must take primary responsibility for its own development and …the role of national policies and development strategies cannot be overemphasized in the achievement of sustainable development”. To maximize national ownership and sovereignty, programmes and projects of the United Nations must be based on national priorities, strategies and local needs. They complement national efforts. Impact and higher level results are predominantly owned by national actors with the United Nations contributing to these results. A key aim of RBM is to ensure that national ownership goes beyond a few select persons to include as many diverse stakeholders as possible. For this reason, M&E activities and the findings, recommendations and lessons learned should be fully owned by those responsible for the results and those who can make use of them. 3. Inclusiveness (or stakeholder engagement) A strong RBM process aims to engage stakeholders (including government institutions at national, sub-national and local levels, as well as civil society organizations and communities themselves) in thinking as openly and creatively as possible about what they want to achieve while encouraging them to organize themselves to achieve what they have agreed upon, including establishing a process to monitor and evaluate progress and use the information to improve performance. Engagement of all relevant stakeholders in all stages of the programming process maximizes the contribution that the United Nations system can make, through the UNDAF, to the national development process. IN conjunction with a HRBA, one cannot expect rights-holders to be responsible for results and indicators they do not help define, negotiate or agree upon. Stakeholder analysis should consider the mandate and interest of various partners.

Why is this important? Member states are asking for efficiency Every donor raises it at every meeting Not only our word for it– but figures Appears to not only be about savings but the ability to tell constituents that the UN is efficient Funding is getting linked to it. So, key for all organizations Solid programmes need good back office operations

Purpose Enable UNCTs, OMTs to Enable UN System (UNDG) to Plan, monitor, report, and evaluate progress of BO harmonization Use best practice key performance indicators (KPIs) Demonstrate the value of business operations harmonization for the delivery of development results Enable UN System (UNDG) to Report at the global level about the quality, effectiveness, and efficiency of common business operations. In line with indicator frameworks for QCPR and SOPs for Delivering as One.

Why important now? UNCTs struggling to demonstrate measurable results in highly competitive market Made complex in multi-stakeholder programme and operations situations and increasing focus on policy and advocacy changes UN has long claimed that: Risks Credibility, Country Partner expectations, Donor fatigue Time to show Harmonized business solutions will  Secure sizeable, sustainable savings and efficiency gains, will  Contribute to development results

The capability of producing a desired result Efficiency: Effectiveness: The capability of producing a desired result Efficiency: The extent to which time, effort, and funds are well-used to produce a desired result. It is measured by the ratio of output to input. Quality: An assessment about the extent to which a result meets established standards. Source: Common UN Procurement at the Country Level, UNDG and HLCM.

How was it developed? Stage 1. Stock-Taking (June-Sept 2013) UN ME systems in support of BO and 12 BOS country pilots   Stage 2. Review of Industry Practices (Sept-Dec, 2013) Learn from approaches, trends outside UN. Stage 3 (Jan-May 2014) Synthesis to prepare ME framework Who involved? UNDG Reference Group on Common Services UN Development Operations Coordination Office CEB Secretariat HLCM Procurement Network Operations managers from BOS pilot countries. Stage 1 was a stock-taking of UN ME systems in support of Business Operations, including 13 country pilots that have implemented a Business Operations Strategy (BOS) since January 2012. A recent survey of BOS pilot countries highlighted several important lessons that have been incorporated in this ME framework : - The need for standardized key performance indicators (KPIs) (The survey found that nearly 60 percent of BOS pilot countries have not defined KPIs against which to monitor and measure performance); - The availability of practical examples of both business operations results and indicators; - Clear guidance about the calculation of indicators, their requirements and limitations; and - Alignment of monitoring and reporting responsibilities and processes with those for the UNDAF.   Stage 2 was an analysis of major approaches and trends for monitoring business operations performance in private and public spheres outside the UN that are relevant to UN practice. Stage 3 involved the synthesis of these findings to prepare this ME framework. It was developed in consultation with multiple stakeholders including: UNDG Reference Group on Common Services UN Development Operations Coordination Office CEB Secretariat HLCM Procurement Network Operations managers from BOS pilot countries. References: Monitoring and Evaluation Framework for UN Business Operations Harmonization at Country Level, Stock Take Report, 28 September, 2013. Alex MacKenzie MDC. UN Business Operations Strategy Survey Report, UNDG, November 2013. Monitoring and Evaluation Framework for UN Business Operations Harmonization at Country Level, Industrial Practice Report, 08 November, 2013. Alex MacKenzie MDC.

Structure of Framework Main document w. 3 sections 1. Introduction Answers… why, who are users, how to use it? 2. Results and Indicator Framework  Provides required and optional results and indicators, and rationale 3. Management Arrangements  Explains information needs at different levels, accountabilities, monitoring and reporting mechanisms, tools, evaluation framework Annex  Offers indicator definitions, calculations and required sources of data

The Framework: Key principle UNCTs, OMTs have flexibility to choose which of 7 business operations areas to work on Based on operations analysis and country factors Once agreed, for each business operations area Minimum set of required results and KPIs, driven by QCPR strategic goals Broader set of optional results and indicators to tailor country frameworks to country situations Standardization enables aggregation of quantitative results from country to global levels  Quality assurance and Accountability

Also… ME framework applicable to all countries where UNCT wants savings from common services and harmonized business solutions Use of this framework does not require a Business Operations Strategy (BOS) (…but most effective when paired with a BOS, due to availability of baselines) This framework is applicable to all countries where the UN has a programme and operations presence, and where the UNCT seeks to find savings and reduce transaction costs from common services and harmonized business solutions.   Results and indicators related to Business Operations Harmonization should be included in the Annual Work Plan of the country Operations Management Team (OMT). Use of this framework does not require a Business Operations Strategy (BOS), but it will be most effective when paired with a BOS. This is because a BOS includes a baseline analysis of spending on major categories of goods and services which facilitates the calculation and comparison of key performance indicators over time.

KPIs..? Performance Indicator - The quantitative or qualitative basis by which results are assessed Key Performance Indicator - A performance indicator that is critical for monitoring the performance of a strategic objective or outcome important to the growth of the organization Normally 4 to 10 KPIs Driven by overall strategic goals Provide visibility into the performance of individuals, teams, departments and organizations Enable decision-makers to take action

QCPR Indicators

Results and KPIs (p6) BOH Areas Required result KPI Optional result Indicator 1. Management process 2 3 2.Procurement 4 5 3. Human resources   6 10 4. ICT 9 5. Finance 6. Common Premises 1 7. Admin. Services TOTAL 11 30 39 …from Industrial Practice Report, A. MacKenzie. KPIs… Performance Indicator - A generic term encompassing the quantitative or qualitative basis by which objectives are established and performance is assessed. It helps quantify the achievement of result. Key Performance Indicator - An indicator that is considered key for monitoring the performance of a strategic objective, outcome, or key result area important to the growth of the organization overall. KPIs make objectives quantifiable providing visibility into the performance of individuals, teams, departments and organizations and enabling decision-makers to take action in achieving the desired outcomes. Typically, monitored and communicated through dashboards, scorecards, and other forms of performance reports . KPI Institute Sept 2013. In the private sector, KPIs are tailor-made to the specific business and are adjusted frequently as business conditions change. Industry practice warns against using too many metrics and to focus on a manageable set linked directly to what drives value, usually between four and ten measures are likely to be key for most companies. When KPIs change, the rationale for the change, how and when data will be reported must be communicated transparently.   This affirms that finding from the Stock-Take report that the ME framework for business operations harmonization at country level should include a minimum set of key performance indicators that are required, driven by overall strategic goals, and a broader set of optional results and indicators that can be used to tailor their frameworks to specific country situations. Scorecards and other performance monitoring tools and their KPIs should be aligned with strategies and objectives McKinsey & Company, Building the Healthy Corporation, August 2005. Price Waterhouse Coopers, Guide to KPIs, 2013. 5. See also: Cronin, G., Measuring strategic progress: Choosing and using KPIs, Accountancy Ireland, 2007.

Management of BOH Output Mgmt2 The UNCT and OMT apply good practices for effective leadership and mgmt of harmonized BO p7, p30   2.a No. Good BO practices applied at country level out of 10 [scored] Consolidates 10 good practices: » Leadership » Working arrangements » Incentives » Analysis and Evidence

Good Management Practices: Self-assessed by OMT, score out of 10 1. OMT chaired by a Head of Agency 2. An OMT capacity assessment conducted and skills development plan prepared 3. A baseline analysis of spending on major categories of goods and services 4. A cost-benefit analysis for proposed common business solutions conducted 5. Priorities for common business operations agreed by the UNCT 6. The OMT has approved work plan with links to UNDAF results 7. OMT task teams with lead agencies and responsible for specific OMT results 8. OMT matters and regular progress reports a standing item for UNCT meetings 9. Summary of annual BO progress, KPI included in RCAR 10. PAS process for OMT includes responsibilities for BOH

Effective Procurement By [yr] collaborative procurement services achieve est. cost-savings of $x USD p8-9, p32 1.a Estimated savings [USD] through collaborative procurement   Measures savings from discounts from collaborative procurement by UN agencies. Collaborative Procurement Contracts or long term agreements (LTA) utilised or concluded through the efforts of two or more UN Agencies Equated with terms: (1) Common Procurement (2) Harmonized Procurement

Procurement savings calculation (Annex)  Calculation and Target For each good or service covered by collaborative procurement  Savings = (A – A+1) x V [all figures in USD]  Where: A is the unit cost of the good or service in the baseline year in USD A+1 is the unit cost of the good or service under the LTA in USD V is the volume of the good or service procured in the year.   Calculated annually, for each year of LTA Savings for programme cycle are sum of savings from each year under LTA Target determined by OMT, based on procurement estimates or from BOS CBA  Data Source - Baseline of procurement volume and spending for each good and service targeted for collaborative procurement [USD]  - Annual update of procurement volume and spending using collaborative procurement procedures [USD] See: (1) HLCM-UNDG, Common UN Procurement at the Country Level, 2012, 3.3.  (2) UNDG, Guidance note on developing UN Business Operations Strategy (BOS), DRAFT, Ch2.  (3) HLCM Procurement Network, UN Collaborative Procurement Log.

Efficient Procurement By [yr] collaborative procurement reduces transaction costs p10, p33 3.a Estimated transaction costs avoided [USD] from use of collaborative procurement   Must have activity-based costing at of standard procurement action with and without an LTA.

Procurement Output Proc5. Common LTAs assessed and established for agreed categories of goods and services p9, p36 5.b Value of POs raised against common LTAs and contracts [USD] Most frequently used method to secure cost reductions and efficiency gains

LTAs work! Finding from HLCM survey of OMTs 2011

Efficient HR management By [yr] the efficiency of human resources management is improved p11, p38    1.a Average times to fill vacancies through common recruitment processes  

Quality Admin. Services By [yr] the quality of common services is improved p17, p38 4.a % Common services assessed as meeting minimum service standards agreed in MOU and provider contract.   Good example from Viet Nam – Ask clients directly!

Monitoring and Reporting (1) Micro level: UNCT and OMT Step 1. Routine monitoring and reviews against OMT work plan  Chairs of OMT Task Teams accountable to Chair OMT to implement specific activities under OMT work plan.   Step 2. OMT annual review and report  OMT chair accountable to RC and UNCT to implement agreed priorities and work plan for BOH Step 3. UNCT Annual Review  The RC, UNCT accountable for achievement of BO results Define expected results and targets for Business Operations harmonization Monitor and provide management feedback and guidance to OMT Report on KPIs in RCAR and UNDAF Annual Results Report a) Micro level: UNCT and OMT   Step 1. Routine monitoring and reviews against OMT work plan  Chairs of OMT Task Teams are accountable to the Chair of the OMT to implement specific activities under the overall OMT work plan. Normally, the work of the OMT is delegated to Task Teams responsible for specific business operations areas. The OMT and its Task Teams meet regularly to share information, highlight implementation progress and constraints against planned outputs and activities in the OMT work plan, and identify key issues for attention of the UNCT and country partners. Step 2. OMT annual review and report  The OMT chair is accountable to the RC and UNCT to implement the agreed priorities and work plan for business operations harmonization at country level. Once per year, the OMT assesses progress towards expected BOH outcomes from their OMT work plan, linked to QCPR indicators. The OMT annual report describes actual outputs or the results of major activities delivered against those in work plan and progress towards achievement of the outcomes. Where possible the OMT will use evidence and feedback from internal and external customers to show how BOH results are contributing to expected UNDAF results. The results of the OMT annual review are reported to the UNCT and feed into the preparation of the OMT work plan for the following year. Step 3. UNCT Annual Review  The RC and UNCT are accountable for the achievement of business operations results at country level. The RC and UNCT define expected results and targets for Business Operations at the country level. They monitor and provide management feedback and guidance to the OMT throughout the year. As a part of the UNCT’s annual review, the OMT provides input to the Resident Coordinator’s Annual Report (RCAR) and UNDAF Annual Results Report (as appropriate). The results of the UNCT annual review are used to finalize the OMT work plan for the following year. A selection of indicators from the OMT work plan are included in the RCAR, annually. The choice of indicators is for decision by the UNCT and OMT, depending on the specific business operations areas targeted by the UNCT and OMT. Where available, the following 6 KPIs are strongly recommended:

Ethiopia-BOS Results Frameworks In your groups… Choose 2 business operations areas [procurement plus one other] Review the results frameworks and discuss… 1. Linkage with the business operations analysis - How transparent, logical? 2. Quality of results and indicators - how SMART? 3. Identify up to 3 results and indicators that can be strengthened