Outsourcing, has in the last decade, taken on an almost religious zeal among believers. Nowhere is this more apparent than in the public sector. In the 1990s local authorities had to begin market testing to define whether services would be better provided by external suppliers. But in outsourcing, all organisations can be at risk of throwing the baby out with the bath water. There are, however, notable success stories from the world of outsourcing, but Lancashire County Council is an example of successfully measuring the value of the services it offers and discovering that outsourcing is not the best option.

Bill Brown and Dave Dickens, director of ICT and assistant director of ICT respectively, have spearheaded an IT revolution at the council. A revolution that has saved the organisation money and improved services, they have gained recognition throughout the industry and Dickens made it into the CIO 100 last year. By benchmarking ICT services and costs, Lancashire has retained the bulk of services in house and as a result improved the services it offers. It began this process in 1998 with a rolling programme of continual improvement based on benchmarking different part of its ICT services. Benchmarking is now part of the long term performance management of Lancashire County Council, one of England’s largest county councils, serving 1.1 million people. Despite its size, Lancashire has achieved a top rating from the Audit Commission.

“As long as we are seen to compete, then people felt we were providing a better service back to the county,” says Brown. But he is quick to point out, “We are not obsessively in-sourced, printing is supplied by external providers, for example. We work exceedingly closely with the private sector, with partnerships with HP, Oracle and Vodafone.”

Dickens adds, “The reality is that outsourcing is always an option, but there is no point outsourcing if the in-house operation can match the performance of an external private sector provider. Simply making the change to outsourcing costs money, so there is no business case if the in-house operation is matching the performance of the peer group.”

Measuring services was just the beginning. With the numbers in front of it, Lancashire had to not only to renew its IT, but also instigate a change of working culture. Together Brown and Dickens have achieved a threefold change at their Preston head office and across the county. “People got into routines that had to be challenged,” Brown says.

Dickens adds, “We started a culture change to make sure our staff met new ways of working and we had to change internally. This led the whole organisation to be more efficient.” His department begin by challenging the issue of staff sickness, which had been a problem, not only in their department, but across the entire Lancashire County Council. “We have 220 staff, and you only need some long-term sickness to cause a major problem,” Dickens said. They tackled the problem from a number of fronts including, a well-being programme, as managers they took measures to manage stress and even created a programme to ensure staff take exercise. “It wasn’t to dictate, but to explain what sickness means to the organisation.” In the ICT department sickness for the 2006 to 2007 dropped to 5.5 days per full-time employee.

By far the most successful initiative was a change in how staff take and use their annual holiday allowance. In a move that’s genius in its simplicity, Dickens and Brown allowed their staff to book four days as late notification days. “This takes the pressure off,” both the staff members who may have issues at home with children who are ill or deliveries, and the organisation as they retain a motivated and healthy staff. “Anyone with six months of no sickness get a half day of extra leave,” as an extra inducement, Brown says. This scheme has now gone across the entire council.

As well as improving the holiday system, Brown and Dickens have carried out staff surveys and can now report that employee satisfaction is high.

Compass, a management consulting company, has acted like an independent actuary to Lancashire, measuring the organisation’s IT spending and performance. “Their role is to measure performance and to advise, but they do not supply other services,” Brown says of why Lancashire is happy working with the Guildford-based organisation. “You don’t ask Oracle what database to use!”

Compass regularly compares Lancashire ICT services with those in the financial sector in the UK, Germany and Canada. Financial companies are used as the bellwhether because they are “cited as requiring exceptional availability and reliability,” a spokesperson for Compass says. Compass measures the performance by operational procedures of the organisation because these are independent of the industrial sector or location. “An internal benchmark is of limited value. The value comes from an external perspective and comparison across sectors and even countries,” Dickens says.

Lancashire has now had a seven-year relationship with Compass, which continues as a rolling contract. Last year Compass carried out an analysis of the desktop support provided by the Lancashire ICT team. As well as using Compass, Lancashire uses Socitm to measure its services against other local authorities.
Looking back to the very first analysis of its services Compass carried out, Dickens says they, as was expected, discovered weaknesses. “It showed us where we needed to improve, and we learnt those lessons.”

Using the information on how it measured up, the ICT team created a dashboard so that all staff members can see the department’s performance. The dashboard, on an intranet page, shows the 24 key performance indicators for the ICT department and draws on 80 metrics.

Lancashire County Council ICT has three key priorities: customer access through self-service; face-to-face and telephone contact; efficiency; and information security.

Internally the ICT department produces a service catalogue of what it provides to the organisation, including application hosting, customer service desk, networks, mobile, professional services and desktop support. It not only tells the organisation the services on offer, but how to reduce ICT costs. As well as helping departments reduce their individual costs, Brown and Dickens have reduced the authority’s ICT costs, standardising PCs and desktops through an e-auction that saved £750,000. Brown points out that these are the results you can show to your financial director and not only show a saving, but also an improvement in service.

Local authorities are under increasing pressure to be greener, as part of their social responsibility. Again, the duo, both long-termers at the authority, have grasped the nettle. Printers have been reduced from 40 to four in the Preston HQ, each is networked and requires the user to swipe their log in card to print. This has reduced the cost of staff ordering their own printer cartridges and the amount of printing. “It alters behaviour: people used to default to colour, which is two-thirds dearer. Now people default to double-sided greyscale,” Dickens says.

Part of the success story at Lancashire is down to the system that Brown and Dickens operate within. The Lancashire authority has fixed elections, every four years, with the next one coming in May 2009. “Whoever gets in power produces a corporate strategy for the next term,” Dickens explains. “We produce an IT strategy that flows into that corporate strategy.” The Labour party has dominated control of the authority in recent years, but things could be about to change.

Turning its reputation for drastic cuts to public services on its head, the Conservative party is saying that if it won power in Lancashire it would spend more than the incumbent authority.

Whichever party runs the north western county, Brown and Dickens are busy with a business transformation project that will keep them focused until 2011. Currently the authority has offices throughout Lancashire, but this will be transformed to three important service hubs in the North, East and South of the county, which will provide the citizens with access to Lancashire services. Already the ICT team has enabled a webcam based call centre service for citizens to talk face-to-face, but remotely, with Lancashire council staff. Self-service through the internet has also been a major priority, both to reduce costs and to improve access to their services. “Ninety-eight per cent of the county population live two miles from a library,” Dickens says.