LG NSW – Regional Collaboration and Shared Services April 2015 Donna Galvin, Executive Manager, WBC Strategic Alliance

 the provision of a service by one part of an organization or group where that service had previously been found in more than one part of the organization or group. Thus the funding and resourcing of the service is shared and the providing department effectively becomes an internal service provider. The key is the idea of 'sharing' within an organization or group.(wikepedia)

 What is currently done BY many….  In the future is done by ONE…..  ….FOR many…………

1. MODEL  Entity – options and best fit for us  Governance arrangements  Funding  Location  CEO – role & appointment  Board – role & decision making  GM Advisory Group 2. SERVICE SELECTION & BUSINESS CASE Future state of operating model – vision/purpose, objectives Methodology for service analysis and selection High level analysis – first cut Detailed business case – ROI, Service Level agreements and cost of services

What MODEL ?

- Voluntary (Alliances – non binding) - Legal entity -Corporation -Cooperative -Company limited by guarantee -Incorporated Associations -Joint venture - Regional organisations (ROCs) - Joint production (eg rates processing) - Outsourcing - Council Controlled Organisations (New Zealand model) - County councils

JV Alliance Members’ Agreement Cabonne Shire Council Blayney Shire Council Central Tablelands Water Wellington Shire Council New Member Council/ Rural Council New Member Council/ Rural Council THE ENTITY – NAME TO BE CONFIRMED Guarantee of $10 per Member Council Board of Directors Chief Executive Officer (CEO) Shared Services Delivery and Procurement General Managers’ Advisory Council Appointed by Member Councils under JV Alliance Members’ Agreement One Director to be appointed by each Member Council, preferably Mayors. Ability to appoint up to 2 independent, external directors Appointed by the Board Joint Organisations

 Voluntary versus binding?  Formal (legal) versus informal?  Optimum number of partners?  “Like” minded council partners? Depends on what you want to share and the level of relationship and trust that will carry the strategy forward

 Relevance of the service/function to the member organisations and other councils  Financial and Efficiency gains to be achieved  Human Resources required to provide the service or function and any potential industrial implications  Risk Analysis  Capacity improvement to the member councils  Asset consolidation/reduction (eg. shared IT & communications infrastructure)  Community and geographic considerations.

VISION:Enhance the capability and capacity of participant organisations to deliver efficient, effective public services PURPOSE:Deliver sustainable, cost effective, quality public and support services through a commercially focused cooperative business model STRATEGIC OBJECTIVES: 1.Release operational efficiencies through formal collaboration on service delivery 2.Release operational efficiencies by leveraging operational assets, fleet and machinery 3.Attract, retain and develop employees to meet key skills areas 4.Re-use operational efficiencies to meet identified gaps in service provision SHARED SERVICES INC??

1. Cost benefit analysis establishes case for change 2. Meets identified capability and capacity gaps 3. Enhances ability to attract and retain key skills 4. Utilises standard systems/process 5. Operations and benefits can leverage further through increased scale and scope 6. There are existing shared arrangements 7. There is limited consequential impact on other services 8. Preserves community employment in key areas 9. Service delivery is an established political priority

Using the design principles we selected 20 functions in 3 service groups for analysis: Strategic and support services (34.4 EFT) – Financial management, accounts payable/receivable, payroll, HR, ICT (support and infrastructure) asset and fleet management, contract and tender management Specialist Services (8.2 EFT) – Development assessment, PCA, Public health and inspections and design Direct Field Services- (70.7EFT) - water supply and water treatment, road construction and maintenance

Current functional structure of 3 councils FTE – position descriptions Cost of FTE Assets data, including utilisation, asset life, depreciation Financial data – income and expenditure, debt exposure, LTFP Performance data (hands up who has this??)

 Efficiency savings were identified in the 3 service groups by centralising functions and having staff specialise.  The efficiencies come from specialisation and represent “part positions”. Therefore all the functions in a service group would have to “move” otherwise efficiencies won’t be achieved…..this is going to be our greatest challenge. One arm, one leg, …..  Currently assessing the ROI for the large change that would be required to make those efficiency savings  The estimated savings is in context of maintaining current EFT levels. There is additional opportunity if the strategy included reduction in EFT………BUT, is there an appetite for this at the moment? And what impact would that have on service levels?

 Does the Alliance group have the scale for Shared Services……OR do we need additional partners?  The next step is detailed business case – we have established the case for change.  We need much more detail on current cost of service delivery vs proposed model……….to be sure that service delivery costs will be lower through a shared service model. Councils seldom have a clear picture on how well they are performing prior to the proposed changes which means they cannot properly determine how change will effect their performance before and after the change (Brian Dollery – review of NESAC)

All of the following are achievable but require a high level of leadership, management and determination……..  Industrial relations – moving staff to a company structure? Moving staff to a different location?  Governance arrangements of the new entity – need a binding commitment to “buy” services from the new entity for a period  Establishment and operating costs – the ROI may be 3 – 5 years - the councils need initial funding to manage the transition and fund the entity  The future model for regional cooperation ?Joint Organisations  Strong and sustained leadership and commitment from all partners

On regional collaboration………….  Embrace regional cooperation and do something with your neighbours or broader LG community  Pick your partners well  Work on trust and relationship first before tackling major change or transformation  Define your shared vision for collaboration  Resource it, drive it and get some early wins……..

 On Shared Services………..  Ensure all partners are clear on the what shared services means, what the potential benefits might be (start with the end in mind)  Base your decisions on a sound business case for change that MUST include your ROI and clearly identifies that service delivery will be more efficient and effective than it currently is  You will need strong sustained leadership and commitment – this is long term transformational change – it is not a soft option to avoid amalgamation  Provide the resources to make it happen and manage the change  Identify and manage enablers not necessarily in your control eg Industrial, the Act, legal status, technology platforms etc

A number of factors can limit the ambition of local government to realise the full savings potential of moving to a shared service model – the biggest obstacles are often political. (Deloittes 2010) …“nice” is not enough.