Jef Loos, Head of Research, Europe, at Whitelane Research confirmed that HP came top of the government sector for one simple reason: “It has the best people working in that sector and therefore the best understanding of the needs and requirements. It means HP is better able to come up with ideas of how to solve its customers’ problems.”
The Business Value Exchange interviewed Patrick Urkens, Director of Public Sector & Health, North Europe, HP Enterprise Services, for his perspective on why outsourcing is invaluable to public services. And also for comment on why HP is succeeding in an arena that is characterised by exploding data volumes, digital disruption and the new norm of operating uncertainty.
Chiefly, he said, outsourcing helps organisations refocus on their core business when other things are changing fast. “Trends that are keeping CxOs and top civil servants and politicians awake at night are shrinking budgets, implementing a citizen-centric service and government focus on public value. Power is moving closer to the citizen and this requires a fundamental shift in traditional government structures”.
Urkens’ comments were supported by the key findings of the survey that found cost reduction (63%) and focussing on the core business (56%) were the major preoccupations among respondents. Putting the citizen or customer at the heart of the organisation is a sure way of achieving these objectives; and a trusted third party supplier can enable the organization to change by outsourcing non-core business.
The way government departments and ministries function changes radically when you put the citizen in the middle, Urkens confirms. Instead of hitting them with the same set of questions multiple times, you just need to ask them the one time. In Flemish circles, this is encapsulated in the maxim required of civil servants and designers of services: “Don’t ask what you already know”.
And the 2020 deadline of having every single public service offered to citizens digitally and, effectively, 24×7, has really focussed leaders’ minds in both IT and business departments. Workers and taxpayers who cannot afford time out to go to the town hall to make applications or perform transactions, can simply hop online.
The citizen-centric shift calls for two things: sharing data and creating authentic sources of data. “Government services effectively consist of many different industries from tax collection to real estate to health and so this is a broad and far-reaching exercise”, he notes. Critically the decision has to be made who, within government, owns different sets of data, and is responsible for keeping them updated.
Thus a student applying for a loan won’t have to explain their marital status, tax code and address again and again, or ‘feed the machine’, as Urkens puts it. “This sort of duplication on their part upsets the citizen more as they get accustomed to – and expect – a digital way of working, “ he says.
The second trend flowing from this shift towards citizen-centric government is the move towards open data. There is a lot of data out there that allows the community to do creative stuff. Governments are looking outside their organisations at different models for doing things, including public-private partnerships, or risk-sharing models for procurement.
All these shifts are a lot to handle for any government. “The pervasiveness of data, driven the Internet of Things, plus citizens’ desire to access and interact with data in an anytime, anyplace anywhere basis is a tough call for those in government. That’s why we’re seeing increase in people wishing to outsource various aspects of their operations to a trusted third party” explains Urkens.
“A strategic partner can enable a ministry or business to focus on the top and bottom lines better, letting them concentrate on the business and retain customers or citizen trust”. However, outsourcing always requires the business to step back from micro-management and there are three different levels of comfort zone that Urkens identifies.
The first is infrastructure: here the business or department outsources the hardware and software that runs the physical processing of tasks. Second is applications, or the software that captures and implements processes; third and final are the business processes. This is the arena that digital is disrupting as organisations seek better models of interacting with customers.
Business processes underpin an organisation’s core activity; whether debt collecting, doing payroll or collating clinical data, these activities are “very close to a business’s heart”, says Urkens. Clients are opting for mix ‘n’ match of these outsourcing elements.
Clients are also getting smarter in developing measures of outsourcing that monitor the success of such deals and partnerships. In the past measurement used to be by service level agreements, or SLAs, confirms Urkens. Now it is more likely to be value-related benchmarks encapsulated in key performance indicators – KPIs.
Innovation is more frequently appearing on the value-add wish list
that clients look to their outsourcing partners to help deliver. Again, defining this is tricky, and measuring even harder but innovation falls into three categories. “They want to do the same stuff but better, they want to do more for less, and they want outside-the-box thinking” summarises Urkens.
He gives an example of how HP helped the Flemish Government collect taxes on real estates better. “We built the Flemish Fiscal Platform and this means we collect more data sources and so no potential taxpayer gets overlooked; there is a lot a more reporting to ensure that everyone who is eligible pays”.
Another example is the Food Agency in Belgium, which monitors the quality of the food chain through to consumption. Should a member of the public fall ill after eating a steak at a restaurant, it’s possible to trace back to the animal, the pastures where it was reared and the abattoir to check for any systemic problem with food quality.
Whatever the format, as the outsourcing sector matures, so passing part or all of their IT operations to a ‘safe pair of hands’ is a user preference corroborated by Whitelane’s research. And as the survey confirms, the biggest driver across all territories surveyed is the desire for businesses, both public and private sectors, to focus on their core business.
The public sector outsourcing market is still heavily concentrated in the UK where about 75% of all European deals are done, explained Loos. However he anticipates growth will continue in other European territories, driven primarily by a growing complexity accompanying digital that civil servants will no longer be able to handle in-house.
And the barriers to outsourcing that have to date deterred outsourcing outside the UK, namely the issue of transferring staff to vendor organisations, may be resolved by other means. In particular, Loos expects the formation of joint ventures between public and private sectors as seen currently in the transportation sector, to be a vehicle for future IT outsourcing deals.