Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
21 Cards in this Set
- Front
- Back
- 3rd side (hint)
|
Outsourcing |
Outsourcing involves employing an external organisation to provide services previously provided internally
Outsourced services do not represent a core competence of the organisation
Staff / resources may be transferred as part of an outsourcing deal |
|
|
|
Common areas where outsourcing may occur |
Estates and facilities management
IT support
Financial management and accounts
Call centres
Management of council housing stock
Community leisure centres
Payroll processing |
|
|
|
Outsourcing process |
Establish a clear strategy and objectives in relation to outsourcing
Identify potential areas of the business to outsource
Review each business area's current cost and performance
Identify costs which will be saved through outsourcing and those which won't
Determine expected improvements
Establish ways of measuring whether outsourcing achieves it's aims (only by clarifying exactly what outcomes are expected, can the success of the outsourcing protect be determined)
Select a supplier through tendering
Plan transition
Manage the contract
Measure achievement of KPIs and consistently review and manage performance
Carry out a re-selection at set intervals |
11 |
|
|
Advantages of outsourcing |
Cost control (many executive believe competitiveness and best value is gained through cost control; outsourcing may help this)
Capacity cost savings (fixed costs associated with provision of non-core functions can be substantially reduced)
Resource / capacity management (outsourcing releases the organisation to use resources and capacities in other areas)
Sharing of business risks (outsourcing passes some of the risks to an external body)
Currency and flexibility (outsourcing ensures the organisation remains up to date with technology and legislation, thus remaining flexible in the external environment)
Quality and standards (outsourcing often indicates a recognition that in-house functions are not operating to an acceptable standard)
Technology (outsourcing fulfils the need to move from legacy systems passed down over the years, to new technology platforms)
Difficulties (Areas of difficulty for the organisation may be more effectively handled if outsourced)
Knowledge resources (outsourcing solves the short-term non-availability of expertise to deal with problems / situations)
Reduction of costs (by buying into the economies of scale enjoyed by outsourcing organisations)
Asset management (assets no longer required may be sold to the outsourced service provider)
Capital management (capital funds can be made available to the organisation, as it does not have to supply resources to certain functions) |
|
|
|
Potential outsourcing problems (many will be avoided by following a proper commissioning process) |
Contract specification may be unclear or inadequate
Partner selected may turn out to be unsuitable
Cost reductions achieved are less than expected
Managing suppliers brings higher than anticipated extra costs
Reduced control over activities
Job insecurity may reduce staff morale
Outsourcing to developing countries may be seen as "exploitation"
Outsourcing may involve the provision of the service not being undertaken locally; this may conflict with local councils who want jobs to remain local to support the economy
Expertise may be transferred to external provider, so difficult to reverse decision
Information given to external provider may be less secure
Outsourcing does not create competitive advantage since competitors can buy the same service
Problems passed to external providers may persist
Focus is too much on the short term |
|
|
|
Issues to consider when deciding whether to outsource |
Associated costs of outsourcing (including managing the supplier contract over the period of the contract and renegotiating at the end of the agreed period)
In-house expertise
Access to specialist equipment
Resources available
Level of service required
Impact on staff
Size and base-location of contractor |
|
|
|
Sustainable commissioning and procurement |
A process by which organisations meet their needs for goods , services, works and utilities in away that achieves value for money on a whole life basis in terms of generating benefits not only to the organisation, but also to society and the economy, while minimising damage to the environment |
|
|
|
Sustainable commissioning and procurement criteria |
Price
Quality
Third-party consequences:
People (social) - such as inclusiveness, equalit, diversity, regeneration and integration
Planet (environmental) - Avoiding over-exploitation of scarce resources and addressing climate change
Profit (economic) - e.g. directing investment towards developing countries and fair trade providers, and creating jobs in regeneration areas |
|
|
|
How to manage the outsourcing contract |
Tightly-drawn service level agreements / contracts
Having clear strategic goals
Address any potential issues from the onset, getting buy-in from all levels of staff and clearly communicating proposals
Clearly outline expected standards |
|
|
|
Alternatives to outsourcing |
Strategic alliances (where two or more organisations share resources, typically combining complementary strengths , to pursue a strategic objective - e.g. reducing drug abuse - allowing organsations to learn from partners and develop competences that may be more widely exploited elsewhere)
Shared services (the convergence and streamlining of similar functions within an organisation, or across organisations - which should result in greater efficiency and less duplication or overlap between different agencies) e.g. Kent and Essex Police sharing back-office functions
Shared management (where two or more PSOs share elements of their management structure or individual managers / management teams) e.g. Bolsover and North East Derbyshire District Councils have a joint Chief Executive
Pooled budgets
Public private partnerships
Arm's length bodies
Joint ventures
Consortia
Mergers
Networks |
|
|
|
Examples of outsourcing |
Provision of translation and interpretation service to courts and tribunals throughout England (MOJ) awarded to Applied Language Solutions - lack of experience Maintenance of the London underground network (TfL) awarded to Metronet - spiralling costs, resulting in administration Recruitment, training and management of security staff for the 2012 Olympic and Paralympic games (LOGOC) awarded to G4S - unable to provide required number of staff Provision of back office services including IT, finance and HR / payroll (Somerset County Council, Avon and Somerset Police Authority and Taunton Deane Borough Council) awarded to Southwest One - contract too complicated, adversarial relationship, financial difficulties (supplier), inadequately resources client team, problems agreeing KPIs Council tax and business rates administration (Brent Council) extended to Capita - better collection rates, increased customer satisfaction, 91% of calls resolved at point of contact, strong partnership |
|
|
|
Innovation |
Innovation is a new idea, more effective device or process
Innovation can be viewed as the application of better solutions that meet new requirements, inarticulated needs, or existing market needs
This is accomplished through more effective products, processed, services, technologies or ideas that are readily available to markets, governments and society is accomplished through more effective products, processed, services, technologies or ideas that are readily available to markets, governments and society
Innovation in local government is about improving the lives of the people in our communities |
|
|
|
Advantages of innovation |
Improved quality of service / more effective service delivery
Increased speed of access to services
Greater efficiency / value for money
Stronger community engagement and representation |
|
|
|
Potential problems / barriers to innovation |
Failures in risk assessment and risk management (risks not evaluated properly at the outset / key decisions made with oversimplified information)
Overestimation of capacity (underestimation of significant demands on officer and member time during periods of major change / too many major projects taken on at the same time)
Lack of effective leadership or strategic input (lack of leadership and direction / ill - defined or unrealistic goals / unrealistic assessment of likely benefits)
Poor organisation and communication among senior officers (poor information sharing / ineffective project structure / insufficient officer resource / unclear roles and responsibilities)
Abcense / poor-quality project management
Inadequate reporting to members (delayed / incomplete / innacurate / restricted information / lack of challenge)
Failings in the use of external advice (advice not sought where needed / uncritical reliance on view of external advisors / partners / failure to challenge optimistic reports)
Poor management of contractual partnerships (poor practice in the appointment of contractors)
Poor procurement practice (poor procurement of goods and services / failure to ensure open competition and compliance with statutory requirements around tendering)
Bureaucratic culture (rules and tight prescription of how services should be run)
Risk aversion (failures are harder to explain and manage in the glare of public accountability - risk taking is discouraged as opposed to being rewarded)
Pace of change (public sector is typically not very responsive to change)
Lack of time to do anything other than cope with events
Lack of skills |
|
|
|
How to generate innovation |
Innovation requires an organisational culture that embraces creativity and encourages new ideas
There are six factors that are critical to creating this type of environment:
Organisational ambition
Openness to new ideas
An organisational structure that encourages collective responsibility (e.g. cross - cutting projects) and information sharing
Empowering staff and partners
Allowing space for creative thinking
Using information intelligently to identify trends and anomalies, which help to spark ideas and make options clearer |
|
|
|
Examples of innovation |
Leeds City Council - have a commercial team who provide expert professional support and advice as part of multi-disciplinary project teams at all stages of the project lifecycle for complex procurement and programmes of work)
Surrey County Council - have created a number of Local Authority Trading Companies (including Surrey Choices - day services and community support) in an attempt to generate income and develop commercial skills within the organisation
LB Hammersmith and Fulham - have taken a strategic approach to commercialisation, and ar a result now have a sahw and marketing plan and a greater understanding of the profit and loss made by each service. Staff are being trained and encouraged to cross-sell other services to customers (e.g. registrars offering details of the ceremonial rooms at the council)
NHS Direct (provides a telephone - based service for callers who describe symptoms and are advised on appropriate action)
Payment by results (encouraging competition)
Online tax self-assessment forms
ANPR
Police national computer
Croydon's virtual wards Waste bin sensors in Finland (save 40% of collection costs as a signal is sent only when pickup is needed, helping authorities to plan routes more accurately) |
|
|
|
Types of innovation |
Product / service (the introduction of a good or service that is new or which represents a significant improvement over its predecessors)
Process (the implementation of a new or significantly improved method of production)
Organisational (the application of a new organisational method or arrangement) |
|
|
|
Drivers of innovation |
Examples of innovation elsewhere
Rising expectations and changing needs
Efficiency targets and budgetary constraints
New initiatives
Poor performance or service failure
To capitalise on changes in technology
New partnerships and exposure to new ways of thinking |
|
|
|
How to manage / encourage innovation |
Identify areas where gaps between performance and aspiration are greatest as potential areas for innovation
Be willing to take on innovative approaches where incremental improvement may not deliver the results required
Assess the risks of innovation before proceeding
Options appraisal (compare costs and benefits against other improvement strategies)
Ensure that councillors / members, local communities and stakeholders are able to drive innovation by applying pressure to change, by contributing good ideas and by participating in the innovation process itself
Encourage staff across all service and support areas to consider innovative ways to improve performance
Review organisational structures to ensure that departmental silos and hierarchies do not inhibit the spread of innovative ideas
Review the organisational capacity to innovate and, in particular, the level of senior management and member commitment and expertise in change management and risk management
Help create a safe space for employees / authorities to share the lessons from failed innovations Greater decentralisation |
|
|
|
A PSI framework |
|
|
|
|
Critical success factors for a successful innovation project |
Secure support from senior management (have a champion if possible) Programme objectives must conform to the organisation's aims and objectives Check what resources will be required, and that the project has secured access to them Seek clarity in mission statements and goals Think strategically, and consider the project's wider implications Keep the implementation (decision making) team small Make the project appear exciting to participants Involve stakeholders as much as possible Seek regular feedback from participants Ensure positive coverage (publicise success, however small, particularly at early stages) Tolerate a certain level of error (allowing staff to innovate) Develop control mechanisms Manage documentation well Be dedicated and persistent Learn from mistakes and do not be afraid to change plans if necessary Implement quickly, to avoid losing focus and momentum |
|
