Draft Outline Business Case Document · contracts. The ICT strategy will move to a multi-sourced approach where different elements of the service are purchased through contracts with

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Draft Outline Business Case Document

Project Name Project UnITy (Kingston-Sutton Shared ICT Service)

Project Initiator Mike Fogaty (Kingston), Nicky Wilkins (Sutton)

Project Sponsors Roy Thompson, Director of Place & Regeneration (Kingston)

Daniel Ratchford, Strategic Director Environment & Leisure (Sutton)

RBK Directorate

LBS Group

Place & Regeneration

Environment & Leisure

Proposed Start April 2011

Proposed End March 2013

Project Status (Draft or approved)

Draft Matrix Score 88

Business Plan Link Sutton ICT Strategy: http://intranet/CHttpHandler.ashx?id=13131&p=0

Approval to Proceed Pending

Project Owner / Executive Head

Peter Dewsbury / Nicky Wilkins (Sutton), Mike Fogaty (Kingston)

Date

24- Mar-2011

Version no. Detail Issued Date Author 0.1 Initial Draft N/A Peter Dewsbury

0.2 Kingston material added N/A Mike Fogaty

0.3 Consolidated Full Draft (still some gaps)

N/A Peter Dewsbury / Mike Fogaty

0.4 Incorporated new data, feedback from initial soundings and refinement of financial model

24th Feb 2011 Peter Dewsbury

0.5 Minor edits for CMT release 25th Feb 2011 Peter Dewsbury / Mike Fogaty

0.6 Incorporated initial feedback from Cllr Drage to prepare for ET

28th Feb 2011 Peter Dewsbury

0.7 Incorporated CMT and ET feedback 8th Mar 2011 Peter Dewsbury / Nicky Wilkins

0.8 Minor clarifications 12th Mar 2011 Peter Dewsbury

0.9 Clarification of timelines and associated financial re-profiling

21st Mar 2011 Peter Dewsbury / Mike Fogaty

1.0 Finalised for Executive 24th Mar 2011 Peter Dewsbury

1 STRATEGIC CONTEXT

All public and private sector organisations need to be capable of adapting to changing economic fortunes, new policies and legislation and the needs of their customers. However local government is uniquely placed in having responsibility to its citizens to develop and support the local community together with our local partners and central government. We are now in a period of significant change with an emphasis on developing society through greater community empowerment and individual involvement in decision making, personalised budgets in social care, the opening up of public services through shared services, working

Agenda Item 10Page 197

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with charities, social enterprises and the private sector to provide better value for money. All of this against a backcloth of severe financial constraint and increasing demand for many services. ICT has a key role to play in facilitating and supporting many of the changes taking place. Customers now expect the public sector to provide the same ease of access, self-service and personalisation of services as delivered by the private sector. This includes Social Media as well as the more traditional channels. ICT needs to be focused and flexible to meet the changing nature and shape of local service provision in the next few years and be in a position to drive down transaction costs to contain the costs of rising demand and also deliver real financial savings. While local government is going through unprecedented change, something similar is also happening within the ICT industry. For years each local authority has planned, developed implemented and maintained its own ICT solutions to meet service requirements. This approach has led to fragmented and expensive service delivery with little standardisation of approach across councils. New technologies, the need to drive down costs and improve services have opened up the opportunity to have a common, secure and flexible ICT infrastructure that is available across the public sector. This is referred to as ‘cloud computing’ and is set to transform the way councils procure ICT services including telecommunications, data centre capacity, applications and desktop services. ICT will be provided as a utility service. This is the fundamental thrust of the National ICT Strategy. The approach will change the way ICT is purchased with infrastructure and applications being bought on a service basis. There will be opportunities to buy on a pay as you go arrangement including just paying for the storage and capacity of bandwidth used. The focus will be on sharing common services to a defined standard across the public sector with dramatic reductions in costs. The approach will have a significant impact on the strategy, shape, skills and management of ICT within councils. Over the next 3-5 years it will mean a move away from local solutions delivered by council ICT staff to the procurement of shared services through public/private contracts. The ICT strategy will move to a multi-sourced approach where different elements of the service are purchased through contracts with different suppliers. Council ICT teams will retain a core skills base around strategy, procurement and contract management, enterprise architecture and service relationship management. The traditional ICT operational function will fade over time but, given councils tend to have 200-300 applications to support, it will take longer for ‘software as a service’ to make a full impact. The next 3-5 years will be a challenging period of change for ICT services. Sutton and Kingston would benefit from facing the challenge together. The starting point is that there is a significant amount of common ground on which to build:

• The technical strategy for both councils is very similar with a focus on further virtualisation of the server estate and the delivery/expansion of technology to support flexible /smart working arrangements

• Both councils are heavily reliant on Microsoft technology but with plans to investigate other options and the licensing flexibility to do so

• Virgin Media provide the telecommunications infrastructure to both councils

• Work at Kingston on Citrix and VOIP telephony could be imported to Sutton and, similarly, the project management and enterprise architecture disciplines at Sutton would benefit Kingston

• Both councils are lean and would benchmark favourably against comparators on a cost

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basis. Both councils have a cost reduction programme in place for ICT services

• Both councils are exploring the opportunities from ‘cloud computing’, in conjunction with Merton, Richmond and Wandsworth, through a proof of concept project funded by Capital Ambition

• Both services are pursuing the implementation of best practice through ITIL

• There are some applications that would be open to ‘instance’ management o Agresso o HR/payroll shared system o MS Exchange for email

• Both councils are looking at how to deliver a flexible ICT service to cope with the changes with the NHS and GP consortia, council services being shared with different partner organisations, working closely with colleges and universities and sharing arrangements and procurement with a number of neighbouring councils

Inevitably there are some key differences in approach that would need to be addressed if a shared service is adopted:

• Sutton has a traded approach to some services eg. project management where Kingston does not

• Applications development and support is provided through a corporate team at Kingston whereas it is a largely devolved function at Sutton

• Kingston has Business Partners to manage the relationship with services but Sutton does not have this role

These are not seen as insurmountable differences and would not hinder a shared services approach.

2 EXECUTIVE SUMMARY:

This Outline Business Case (OBC) has been produced to document the scope, scale, potential benefits and costs associated with creating a shared ICT service for Royal Borough of Kingston upon Thames and London Borough of Sutton. It has been prepared to provide sufficient assurance that this is the correct direction of travel and that a joint head of ICT for the two boroughs should be recruited to take forward the delivery of the proposed shared service. The creation of a shared ICT service will:

• increase the resilience of the service to both boroughs (creating a single service with approximately 60 staff)

• improve and broaden the range of services offered from ICT to both boroughs (for example project management for Kingston and effective Business Relationship Mangers for Sutton)

• strengthen the position of the service in preparation for upcoming changes to ICT service delivery and further efficiency pressures

• work within the existing overall budget envelope and efficiency plans (or deliver a modest reduction in cost against these plans)

• create a platform for sharing of other Council services in future

• strengthen the position of both Councils in any future negotiations with managed service providers and create a more attractive platform for potential outsourcing of some or all of the ICT service – the principal alternative course of action open to the boroughs.


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The proposed strategy is divided into five phases: § Phase A: Appoint Joint Head of ICT and prepare detailed proposals for approval During Phase A the shared Head of ICT (the Executive Head of ICT) will focus on developing detailed proposals for the integration of ICT services at Sutton and Kingston into a single shared service. This will include work to define the Target Operating Model, legal structure and the outline of a shared ICT strategy. The Executive Head of ICT will report back to the officer and member management groups at both boroughs with these detailed proposals and seek approval to implement. Providing for the uplift in salary to reflect the expanded responsibility this will deliver a direct shared saving of up to £60k per annum over the employment of heads of ICT for each borough.

§ § Phase B: Create delivery vehicle and appoint Service Managers Providing the detailed proposals are agreed, the phase B will focus on creating the legal structure for the shared service, appointment of the service management positions that report to the Executive Head of ICT and completion of the shared ICT strategy.

§ Phase C: Roll services and staff into delivery vehicle This phase will not focus on realising savings, but on creating the contractual arrangements with staff and suppliers that act as a platform for Phase D. It is expected that this will include some staff currently based outside of the ICT service at both boroughs e.g. website management teams.

§ Phase D: Integrate services The activities in Phase C will bring together the individual borough teams to a consolidated, standardised, robust and cost efficient method of service provision. Some ICT cost savings (beyond what is planned by each borough) should be possible from consolidation of management, but the primary impact is likely to be an uplift in service for both boroughs e.g. ICT project managers available to Kingston services, business partners available to Sutton services.

§ Phase E: Exploit market conditions The expectation is that Cloud Computing services will continue to develop rapidly and shortly become a widely credible and cost efficient mechanism for ICT service delivery. The deployment of the latest technologies on the market will be easier to achieve for the shared service than through each borough acting alone.

Different parts of the shared service will progress through phases C to E at different speeds with the emphasis on accelerating those that underpin greater integration – principally the joining up of the existing Wide Area Networks (both provided by Virgin Media).

At this stage agreement is being sought for the recruitment of the joint Head of ICT to take forward the development of a more detailed set of proposals (and potentially some early integration steps) for further review. If the proposals are agreed, they will be implemented by the same Head of ICT rather than doing significant detailed work and asking for a new recruit to deliver them. If not, the shared Head of ICT post would be deleted (or redefined to cover one borough only, either way the redundancy implications will be minimal for a decision made in the first two years) and each borough will independently pursue an alternative course of action.

Shared services in ICT have been muted before, but the time is right to proceed for both


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boroughs. Interim management arrangements need to be replaced, issues of scale arising from service efficiencies need to be addressed, complementary services are in place and other routes for further cost savings are not viable. Furthermore, shared ICT is a powerful enabler of otherwise difficult to justify sharing of other services. In return for the shared benefits, each borough will need to compromise on the specificity of its own arrangements but this should only serve to disrupt artificial silos and non-standard processes. In proceeding to delivery there will be four main categories of challenge to overcome:

• Selection of the most appropriate delivery model and governance arrangements – options include host borough, limited company and social enterprise with differing levels of funding commitment for each model

• Definition of the benefits sharing procedures – there will need to be agreement over the best way for the shared service to deliver and then apportion benefits to service quality or service cost across the two boroughs

• Managing staff terms and conditions – through both boroughs

• Mitigation of risk to current business priorities Each of these challenges is discussed further in the body of this business case.

3 FINANCIAL SUMMARY:

The focus of the Outline Business case has been on the broad range of benefits that a shared service can bring rather than being just financially driven. There are financial benefits to be achieved but the bulk of these will be realised once the shared service is in place and the new management team has developed and started to implement its operational strategy. In Tranche 1 (which covers the changes of Phases A and B plus network and service management toolset integration in Phase C) there will be gross annual savings of £87k achieved through the consolidation of posts within the new structure, and elimination of some items of spend that can be addressed through access to a wider skills base. These savings however, need to be offset against the initial investment of approximately £150k over the first two years to set up the shared service. This will give a break even position in Year 3 (counting the first year as Year 0). The initial investment could be reduced by a lower cost implementation path and/or linking the project up with the SW London Cloud work funded by Capital Ambition. The potential for significant savings lies in Tranche 2 (the remainder of Phase C and Phases D and E) where invest to save proposals, particularly software consolidation, will offer opportunities to achieve gross savings in the order of £750k per annum. All figures are across both boroughs – as an approximate guide the costs and benefits for each borough will be half of the totals presented in this report. Projected savings are in addition to existing efficiency plans for the ICT services at each borough. For Sutton this is principally a 6.7% (or £150k) reduction in supplier expenditure for the next financial year (followed by a further 1.6% reduction in 2012-13) plus staff savings of approximately £100k next year (followed by a similar reduction in 2012-13). For Kingston this is a phased reduction of £1.28m by 2014/15. The shared service delivery strategy has been developed in order to minimise the investment required to transition into the shared service state.


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The first tranche of investment is needed to get the services up and running and deliver integrated (but not necessarily optimised) operations – this relates to Phase A, Phase B and selected portions of Phase C in the overall shared service strategy introduced in the executive summary. It will address the existing challenges of scale and provide a platform for further shared services. The second tranche of investment will be driven by a series of invest to save proposals to be brought forward by the service managers and Executive Head of ICT as part of business-as-usual – this relates to the later parts of Phase C plus Phases D and E in the overall shared service strategy. Some of these proposals are likely to be similar to those that each borough might elect to undertake individually (e.g. business case for outsourcing the desktop service tower), whilst others may relate specifically to opportunities from the shared service (e.g. consolidation of Citrix environment to reduce costs compared to running two separate environments and the consolidation of software outlined below).

This business case is asking for approval of Phase A and agreement in principle (pending the detailed report from the Executive Head of ICT in Phase A) to the investment required to deliver Tranche 1 and focuses on the benefits it will deliver. However, as an important benefit of Tranche 1 is unlocking the benefits that can be delivered in Tranche 2, some examples are explored within the business case.

Tranche 1:

The transition to the shared service will require a net investment of approximately £150k across the setup years 0 and 1. This investment will be paid back in cash terms during Year 3 of the business case based on the equivalent reduction in posts of one lead officer and two reporting managers (note that the two lead officer posts and two manager posts are currently vacant or filled by interims).

Cashable Position (All figures in thousands)

Investment (Costs) Year 0 (Setup) Year 1 (Setup) Year 2 Year 3 Year 4

Staffing: New Posts 69£ 422£ 517£ 517£ 517£

Staffing: Additional Costs -£ 30£ 30£ 30£ 30£

Services 14£ 181£ -£ -£ -£

Technology -£ 117£ 12£ 12£ 12£

TOTAL 83£ 750£ 559£ 559£ 559£

Benefits (Savings)

Staffing: Deleted Posts 131£ 469£ 572£ 572£ 572£

Services -£ 70£ 60£ 60£ 60£

Technology -£ 14£ 14£ 14£ 14£

TOTAL 131£ 553£ 646£ 646£ 646£

CASHABLE NET POSITION 49£ 197-£ 87£ 87£ 87£

CASHABLE CUMULATIVE NET POSITION 49£ 149-£ 62-£ 25£ 111£

These figures represent the recommended allowance for investment across Year 0 and Year 1. An alternative model has been prepared (discussed later in the business case) which reduces the net Year 0 and Year 1 investment to approximately £20k and achieves payback


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more quickly (even when allowing for the equivalent of an additional half-time management post). The reduced investment relies on a restriction in the choice of service management tools and the acceptance of greater risk by placing more reliance on internal resources.

Important Note: The majority of these costs and benefits relate to costs and benefits associated with newly created and deleted roles in the top two tiers of ICT management. We have made assumptions related to the posts that could be deleted in created for the purposes of this OBC – these figures will need to be adjusted once the target operating model for the new service is defined by the newly appointed Executive Head of ICT. Redundancy costs are excluded at this stage.

The relationship with existing financial plans is explored in Section 13. The key points to note are shown below.

For Sutton:

• Investment in Service Improvement tools and delivery of efficiencies in ICT Operations should and will still happen. The Shared Service will offer the opportunity for the two boroughs to exploit each other’s solutions and lessons learnt.

• There will be added impetus to the Steria contract negotiations with a focus on providing a flexible platform that could be expanded or contracted as appropriate to support the Kingston aspects of the service.

• The Smarter Working Programme could be easier to deliver for a scaled up service and Kingston already has experience in providing ICT to support hot-desking and greater remote working.

• Replacement of Telephony System still needs to happen in much the same way though there will be added consideration of compatibility with the Kingston setup (not technically challenging) and learning from Kingston’s experience.

For Kingston:

• Investment in server virtualisation and consolidation, upgrades to network switches and improvements to network security, planned for the next 2 years, should go ahead. The second year investment programme will be reviewed in light of progress with the Shared Service.

• Investment in linking to the schools evolved Ethernet ring, planned for 2011/12, should go ahead but will be reviewed, prior to making the investment, following discussions with Virgin Media who supply both boroughs.

• The CRM and Web development projects will go ahead but consideration will be given to how the procurement, design development and support arrangements might benefit the Shared Service.

• The review of the financial organisation, processes and re-implementation of Agresso will go ahead but decisions and experiences will be shared between the boroughs. Consideration will be given to the longer term ‘hosting’ of a shared service with a number of boroughs once existing contractual relationships cease.

Tranche 2:

The potential for significant financial savings from the business case lies in tranche 2 activity and in particular in tackling the issues and opportunities of software consolidation across the


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two councils. Examples of financial benefits that could be delivered by exploiting the shared service include:

• Inter-borough consolidation of software applications

Between them Sutton and Kingston spend approximately £3m per annum on new software and maintenance arrangements. Through consolidation of applications, reductions of 25%+ should be eminently achievable. If this level of saving was replicated, with service engagement and buy-in, across all business software it would deliver £750k per annum in cashable benefits and strengthen the platform for wider shared services in these areas.

• Rationalising piloting of Cloud Based SaaS for Office Productivity

Conducting a typical pilot of alternative Office Productivity solutions such as Google Apps will cost in the region of £10k – cost which would only need to be incurred once in a shared service environment

• Aggregated Internet connectivity demand

As part of its contract with Steria Sutton has an unused internet connection that provides a failover capability in case the primary internet connection is disrupted. Switching off this line in favour of using the Kingston connection as back-up would save approximately £17k per annum (estimate based on previous costs of a 10mb connection direct with Virgin Media).

• Rationalisation of LPSN connections

Both Kingston and Sutton maintain connections to the London Public Sector Network (LPSN) principally for access to the Government Secure Intranet (GSI) used to access sensitive DWP data used in Revenues & Benefits. Rationalisation to a single connection would save £18k per annum (based on Sutton corporate ICT contribution).

4 BACKGROUND:

Kingston The way forward for the council is driven by the One Council, One Kingston approach. This has been designed to deliver the Council’s vision and make people’s experience of services as easy and as positive as possible by acting as One council, One Kingston. Put simply, it is about one way of doing things and doing things once. The programme is not focused totally on cutting costs. It is about doing things differently in ways that will both improve the services offered to residents and which reduce expenditure. It is about getting better value for money. One Council, One Kingston is shaped by personalising choice and control to meet the needs of individuals and communities and designing services and making them accessible in ways that suit those that want to use them. This all being achieved by working with partner organisations in the voluntary, public and private sectors. Managing the delivery of these changes is set within a framework of supporting principles to ensure that the Council’s financial, human and physical assets are used to best effect while ensuring that the Council remains agile and adaptable. One Council, One Kingston recognises that technology has a key part to play in improving services and enabling staff to work flexibly and efficiently. The Council spends £4.1m revenue a year on ICT and typically around £500k capital. The current programme of cost reduction will reduce revenue expenditure to £3.5m. ICT Services has 40 staff and comprises 4 teams – Service Desk & Desktop; Applications Development & Support; Infrastructure and Business Partners. An interim arrangement is currently in place for the Head of ICT.


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The ICT Strategy has 4 main themes:

• Transforming services through innovation in ICT

• Helping staff to do their job

• Modernising ICT Services

• ICT Strategy Monitoring & Innovation Fundamental to each of these themes is value for money. The initial focus in implementing the strategy was Modernising ICT Services through a One Council approach where improving the quality of services at a reduced cost was paramount. This has been achieved through:

• Bringing all ICT staff into one team – ICT Services

• Consolidating management roles, introducing a business partner function to bond ICT with Services, creating teams to support applications and ICT infrastructure

• Establishing a commercial management and procurement function to consolidate contracts, reduce prices and manage suppliers

• Implementing best practice eg. ITIL The ICT Strategy recognises that improving in-house ICT services is the first phase in modernisation. It also recognises that as the Council changes the way it works and how services are provided, there is a need to shape and source ICT accordingly and to grasp new opportunities for the procurement and delivery of ICT services. Consideration has been given to:

• retaining a largely in-house function – this is not really a viable option because the service is too small to retain all the specialist skills now required and, similarly, attracting the talent required is difficult because of a limited career structure and lower salary scale. The resilience provided by a small team with multi-skilled individuals is not sufficient for a modern day public service organisation.

• looking for a long term strategic partner – this has been ruled out because entering into a long term contract (say 10 years) with a single supplier would potentially restrict the flexibility the Council needs to exploit developing opportunities in the market place particularly as the future direction of many services is uncertain.

• the opportunity for a Shared Service model which might embrace one or more organisations – this is attractive from a number of perspectives because it brings a sustainable scale to ICT services which enables opportunities to reduce costs through a shared sourcing model based around quality services at best pricing. It also brings into scope the opportunity to work with a range of organisations and achieve the principles of the One Kingston approach. It provides greater flexibility and control.

Discussions with Sutton have identified a lot of common ground where working together will bring distinct advantages in terms of cost, flexibility, control and resilience. Sutton Sutton’s ICT service has approximately 30 staff and an annual budget of approximately £3m. The service is organised into the core functions of ICT Operations, Technical Architecture & Security and Strategy & Contracts with two ‘non-core’ recharged functions for ICT Project Management and Development & Integration. Service hosting and management is outsourced to Steria. The Council’s ICT strategy has two main phases – implementing the findings from a service review in 2009 and then exploring more radical options for future delivery. The majority of the remaining work from the review concerns increasing efficiency through:


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• Reducing the costs of ICT contracts through better demand and contract management • Reducing the cost (by head-count reduction) of ICT support through demand management, problem management, self-service and technology investment – an important part of achieving this will be embedding appropriate ownership

Following the departure of the Head of ICT in October 2010 a replacement needed to be recruited. It was clear that the best candidate for the role depends upon the nature of the ICT Service that they are to manage (e.g. contract management skills are critical for a fully outsourced service). Following the existing roadmap a deep analysis of the options was not due until 2012, but to avoid missing any opportunities available at this time and/or recruiting the wrong long term candidate the decision was taken to bring forward the investigation of these options with interim management arrangements. The full spectrum of options was explored and a shared service with Kingston emerged as the strongest as:

• Combining Corporate ICT with Schools ICT is not a proven model, means bringing together services with very different customers, and risks the commercial value the Schools ICT can exploit through the other income generating options presented as part of the Smarter Services reviews;

• Sutton’s other neighbouring boroughs are not in a position to pursue shared services – Richmond and Croydon have outsourced ICT service arrangements and Merton’s priorities lie elsewhere;

• Expanding the existing managed service contract with Steria to cover the remainder of the corporate ICT service will reduce flexibility and not release financial savings, and other managed service providers have not provided confidence that the alternatives that they could offer would bring additional savings or flexibility.

• Remaining “as is”, restricts the specialist expertise, career structure and resilience that the service can support.

5 OBJECTIVES:

Project UnITy seeks to merge the ICT services currently provided separately to Sutton and Kingston into a single organisation providing services to both boroughs. The overriding objective is to deliver a sustainable ICT service that has the scale, capability and flexibility to meet the requirements of customers and can adapt and survive in an environment facing significant change. This will be achieved through the following actions:

• Addressing the staffing challenges resulting from a smaller ICT service staff base than at other boroughs:

o Supporting technical expertise – the Council relies on the ICT service for technical expertise on a range of issues from keeping up with ICT network security requirements to advising on the capability of service software packages. A smaller service is restricted in the number of specialist posts it can maintain and therefore the depth of capability it can support.

o Resilience – the smaller the team, the more susceptible it will be to business continuity and key person dependency risk.

o Attracting talent – a smaller pool of staff necessitates a smaller number of management roles, fewer steps on the ICT career ladder, less frequent openings of more senior positions, and a less senior ‘top job’. These factors combined make it increasingly difficult to attract and keep the best people with


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the motivation, skills and experience to deliver the best possible services to customers.

• Improving and broadening the range of ICT services offered across the two Councils including in particular opening up a proven low cost ICT project management capability to Kingston and a Business Relationship Management function to Sutton that can be more effective through direct sharing of learning across two boroughs.

• Strengthening the position of the ICT services to achieve savings through greater purchasing power and solving issues (such as desktop strategy, or CoCo Security compliance) once, not twice.

• Delivering a platform for further sharing of services between Kingston and Sutton (though not exclusively between those boroughs) or incorporating ICT (and other) services from additional boroughs.

6 SCOPE:

Project UnITy covers all services, staff and technology assets that currently fall under the line management of the Head of ICT at LB Sutton and Head of ICT at RB Kingston. In addition it includes the Commercial Manager & ICT Programme Manager from RB Kingston. Proposals under Tranche 2 of the investment strategy will include expansion of the scope to include functions that fall within scope at one borough, but not at the other. For clarity this currently includes:

• Website management at LB Sutton

• Group based provision (i.e. system administration) at LB Sutton This business case seeks endorsement to prepare separate business cases for the incorporation of the expanded Tranche 2 scope within the shared services.

7 OPTIONS:

The range of options for the future development of the service at Kingston and Sutton were introduced in Section 4. This section focuses on the options for the delivery of the Kingston-Sutton shared service and the reason why a gradual internally driven integration has emerged as the preferred option. Delivery Approach Do Nothing (Continue with existing operating model) If nothing is done at this time, each borough will continue to pursue its own development of the ICT service which could take the services further apart and therefore close the window of opportunity for a shared service, though conversely opportunities with other boroughs may open up, for example via the Capital Ambition Local Government Cloud Project. Each borough will hire its own Head of ICT though based on prior experience finding the right candidate to drive the services forward may be difficult. The boroughs will also continue to deliver to their own efficiency plans (note: these plans, or equivalents, would be delivered on top of shared service savings in a shared service arrangement).


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Engagement with the market to provide services on an outsourced basis would continue to remain difficult for the scale of service present in each borough. As Cloud solutions mature each borough will need to invest in determining the right way to exploit the technology and take the risk associated with pilot applications alone. Shared services for other parts of the Council could emerge requiring ‘point’ solutions to integrate ICT which would introduce additional complexity and cost. Share Head of ICT only Sharing a Head of ICT alone would yield benefits of approximately £30k per annum per borough. However, this time would need to be spread across two services running in a different way with two groups of reports to manage. Where these arrangements have been employed by other local authorities they have usually resulted in a move towards some further sharing in ICT services in order to maximise the efficiency with which management time is used. Business Aligned Shared Service Approach The ICT Service both at Sutton and Kingston will be relied upon by the business to contribute to a number of major technology dependent projects over the coming 18 months. For Sutton:

• Smarter Working where we will lead the ICT workstream;

• Replacement of Social Care System and

• Implementation of shared HR Payroll System where ICT is on the Project Board and instrumental in establishing the operational environment.

• Parking Services system upgrade and other projects emerging from the Smarter Service Reviews

This is in addition to service led projects to:

• Implement Service Improvement Tools;

• Replace the corporate telephony system.

• Replacement of the hosted server contract 2012/13 For Kingston:

• The One Council, One Kingston Programme;

• Server virtualisation and consolidation;

• Linking schools to the evolved Ethernet;

• CRM & Web development Projects;

• Reimplementation of Agresso. The risk of the ICT services focussing inwardly over this period when major business led initiatives need to be delivered can be managed by deferring stages of integration into a shared service pending the completion of these initiatives – the extent of the deferral would be led by the available capacity compared to that needed to deliver the priority work programmes. This offers short term reassurance for current priorities, noting that in a full shared service model, prioritisation will inevitably run across two Councils. During this period, the services at both boroughs would prepare the ground for integration by:

• Appointing a Joint Head of ICT to lead further design and due diligence work for the shared service with regular checkpoints to review progress and emerging issues with officer and member management – this would deliver a shared saving of approximately £60k per annum.

• Ensuring that when technology decisions are to be made, there is a deliberate effort to


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re-use the solution in place at the other borough where fit for purpose and/or an assessment of the cost of rolling out solutions across both boroughs is considered as part of any design or selection process;

• Developing and refining a governance model for a shared ICT service, this could include testing it whilst both services are running with current structures;

• ICT staff undertaking a series of “site visits” to the other borough to understand more about how things are done and potentially identify opportunities to second staff between boroughs to assist in areas where they have particular skills and build stronger ties.

Excluded from this approach would be the work on a target operating model for a shared service and the staffing within it – it is this activity that will cause the disruption to staff morale and so additional effort to push through project delivery. Staffing changes beyond the Head of ICT role would be expected from the end of Year 1 onwards. Though in many ways attractive, this approach poses a number of challenges:

• Much of the decision making in ICT will continue to happen in duplicate and agility will be lost through consultations across two boroughs, not one.

• There is likely to be a strong pressure against decisions that cost one borough more in the short term in order to deliver a stronger position for a shared service to which neither borough is fully committed.

• The capacity of the shared head of ICT will be stretched as they will effectively have two services to manage and the stop on implementing the integration that they identify will make it a much less attractive role – some of the savings could be invested into a secretariat resource to alleviate some of the administrative burden of working across two authorities.

Gradual Internally Driven Integration Under a gradual internally driven integration of services a number of core changes to the service management staff and supporting technology will be delivered within the programme of work proposed by this business case with staffing changes happening in the first half of Year 1. This will be followed by a set of initiatives led out of each of the newly created consolidated teams (not by consultants) to integrate their operations and achieve the service quality of efficiency benefits they offer. This approach will quickly realise the principal benefits of savings in service managers and a platform for further shared services. It will work to minimise the investment that needs to be made by using greater elapsed time in place of high risk ‘pump priming’ of services that are not yet understood to the degree needed to make detailed changes. Adopting this strategy will also position the Kingston-Sutton service strongly to exploit the wider Capital Ambition funded work on shared data centre and associated services which is scheduled to deliver consumable solutions in 2012. It may be that aggressive integration plans emerge in certain areas following the appointment of the relevant service managers, but this approach will not mandate this. This approach would commence with the appointment of a shared Head of ICT to present back a more detailed set of proposals for the integration of ICT services, and in particular the target operating model for staff. These detailed proposals will act as the final decision point before integration proceeds in earnest – this approach would lower costs compared to relying on interim resources and through the offer of a permanent contract would ensure that the


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leading figure in the development of the proposals leads the two services through implementation. If these proposals are rejected, each borough can go its separate ways through recruiting a separate Head of ICT having lost very little (the redundancy implications will be minimal for a decision made in the first two years). In this case the shared service could offer a different set of support to Sutton’s priority projects: • Smarter Working where Sutton’s ICT service are leading the ICT workstream Drawing on solution design and deployment expertise from Kingston’s existing implementation of ‘new ways of working’ workspaces and enabling technology • Replacement of Social Care System Drawing on support from Kingston system administrators and development resources to provide point support during implementation challenges. Access to Business Relationship Management support to verify on-going alignment of delivery to desired project outcomes. • Implementation of shared HR Payroll System where ICT is on the Project Board and instrumental in establishing the operational environment Consolidating ICT input and networking solutions across the two boroughs, both of which are ‘customers’ for the system. • Parking Services system upgrade and other projects emerging from the Smarter Service Reviews Drawing on support from Kingston system administrators and development resources to provide point support during implementation challenges. Access to Business Relationship Management support to verify on-going alignment of delivery to desired project outcomes. • Replace the corporate telephony system. Drawing on the lessons learnt during Kingston’s VoIP implementation. Kingston will be able to draw on the following support from Sutton for its key infrastructure projects: • Additional project management resources to deliver server, firewall and network upgrades • Working with the Enterprise architect to plan joint ways forward for the technical architecture • Developing further, and jointly, the procurement and supplier management function Aggressive Internally Driven Integration The internally driven integration can be accelerated to deliver fully integrated teams over the next 12 months. This approach will aggressively pursue the realisation of (as yet unidentified) service efficiencies across all aspects of ICT services. Though this approach could have a stronger positive impact on the revenue budget for 2012-13 it has a number of disadvantages:

• It is higher risk with more potential for mistakes that could serve to disrupt the partnership

• It will rely on rapid identification and implementation of opportunities by service mangers only recently appointed t their posts with limited understanding of at least one of the boroughs – this could be pre-planned but will mean a significant investment of time (effort and elapsed) in advance of commencing integration

• The need for point solution consultancy support will be greater (as will cost) to find the necessary time in the compressed timescale

Aggressive Commercial Partner Led Integration To deliver the aggressive integration timeline the services could involve a commercial partner to lead on the integration – most likely through some type of outsourcing arrangement. This would allow the services to access proven ‘take on’ procedures for the integration of services but has significant disadvantages:


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• Procurement of the commercial partner would take a significant amount of time – anything up to a year for this type of contract

• The most difficult parts of the service integration would still need to be tackled without the commercial partner e.g. specification of the service across the two boroughs

• The levels of up-front contractual protection required by each borough would almost certainly be much higher than a high-trust, culturally compatible, gradual transition

Aggressive Integration through Cloud Computing Technology There is strengthening consensus that the future of ICT service provision will revolve around a multi-sourcing strategy underpinned by Cloud Computing technology and utility pricing. An aggressive integration strategy based on exploiting Cloud solutions could be pursued to ‘fast-track’ the partnership to the Cloud. This is not felt to be appropriate as:

• The Cloud market is still maturing – even the most aggressive local government adopters are talking about two to three year transitions to ‘infrastructure free’

• The evolution and delivery of the core Desktop and Network services will still need to proceed outside the Cloud

• Sutton has contractual obligations to Steria that run until 2013 for server hosting (or Infrastructure as a Service in Cloud terminology)

• Aggressive Cloud adoption means changing business applications – a process that is only likely to make sense in line with refreshes to applications suites that are led by ICTs customers in the services

Organisational Model Beyond the delivery approach there are a number of options for how the shared service organisation is managed. Each of these options is introduced at this point for consideration. The project team would welcome any initial comments on the preferred delivery model. Host Borough The host borough model works by transferring staff (most likely under TUPE regulations) and relevant assets from one of the partner boroughs to the other (usually from the smaller to larger i.e. Sutton to Kingston in this case). Staff are employed by the host borough and a contract is put in place for the consumption of services by the other borough. This is a simple model to implement making use of existing structures but will almost certainly feel like a ‘takeover’ by one borough of the other. Limited Company The two partner boroughs create a new limited company with split ownership. Staff (most likely under TUPE regulations) and (if deemed appropriate) relevant assets from both of the partner boroughs are transferred to the limited company which is then contracted to deliver ICT services to both boroughs. Profits made by the company (through greater efficiency) are divided in accordance with the division of shares. Social Enterprise The Social Enterprise model is a variation on the Limited Company approach. Social enterprises are businesses driven by a social or environmental purpose – in this case it would be something like ‘enabling efficiency in the delivery of local public services to the people of the boroughs of Kingston and Sutton’. All profits would be reinvested towards achieving that purpose – which could be expanded to encourage the addition of further boroughs (or other public sector organisations) to the enterprise. Other than the formation of a limited company a social enterprise could also consider a couple of other common legal forms:

• Community Interest Company (CIC). Created specifically for social enterprises a CIC’s


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social objective is "regulated" ensuring that the organisation cannot deviate from its social mission and that its assets are protected.

• Industrial and provident society (IPS). This is democratically controlled by its members (i.e. staff) in order to ensure their involvement in the decisions of the business.

Note that company based (Social Enterprise or otherwise) delivery mechanisms may have other financial implications relating to rates and VAT. Whatever model is chosen there will be a transfer of staff into a single structure. Over time this new structure will need to address the terms and conditions under which employees are employed and deal with the legacy of variations in pay and conditions between the two boroughs – note that a quick review suggest that the Spine Points are generally similar or identical so this should not be an overly onerous process. In the short term it is recommended that host borough model is used for the appointment of the Joint Head of ICT – it should be possible to source model documentation for much of this arrangement from Newham-Havering who share a CIO. Division of benefits Linked to the selected organisational model there will need to careful consideration of the division of benefits amongst the two boroughs. The three main models are:

• Equal Split – whatever surplus or overspend is generated by the shared service is split equally between the partner boroughs (this is the current assumption)

• Proportional Split – the ‘input’ of each borough is assessed and a proportional split to be universally applied agreed at the commencement of integration

• Forensic Split – each initiative is assessed for its impact on each borough and a proportional split calculated

It is common to tie division of benefits in with ‘lock ins’ to the shared service.

8 APPROACH TO DELIVERING UNITY

The proposed strategy is divided into five phases: § Phase A: Appoint Joint Head of ICT and prepare detailed proposals for approval During Phase A the shared Head of ICT (the Executive Head of ICT) will focus on developing detailed proposals for the integration of ICT services at Sutton and Kingston into a single shared service. This will include work to define the Target Operating Model, legal structure and the outline of a shared ICT strategy. The Executive Head of ICT will report back to the officer and member management groups at both boroughs with these detailed proposals and seek approval to implement. Providing for the uplift in salary to reflect the expanded responsibility this will deliver a direct shared saving of up to £60k per annum over the employment of heads of ICT for each borough.

§ § Phase B: Create delivery vehicle and appoint Service Managers Providing the detailed proposals are agreed, the phase B will focus on creating the legal structure for the shared service, appointment of the service management positions that report to the Executive Head of ICT and completion of the shared ICT strategy.

§ Phase C: Roll services and staff into delivery vehicle This phase will not focus on realising savings, but on creating the contractual


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arrangements with staff and suppliers that act as a platform for Phase D. It is expected that this will include some staff currently based outside of the ICT service at both boroughs e.g. website management teams.

§ Phase D: Integrate services The activities in Phase C will bring together the individual borough teams to a consolidated, standardised, robust and cost efficient method of service provision. Some ICT cost savings (beyond what is planned by each borough) should be possible from consolidation of management, but the primary impact is likely to be an uplift in service for both boroughs e.g. ICT project managers available to Kingston services, business partners available to Sutton services.

§ Phase E: Exploit market conditions The expectation is that Cloud Computing services will continue to develop rapidly and shortly become a widely credible and cost efficient mechanism for ICT service delivery. The deployment of the latest technologies on the market will be easier to achieve for the shared service than through each borough acting alone.

Different parts of the shared service will progress through phases C to E at different speeds with the emphasis on accelerating those that underpin greater integration – principally the joining up of the existing Wide Area Networks (both provided by Virgin Media). Remember that this business case is calling for the first tranche of investment to get the services up and running and deliver integrated (but not necessarily optimised) operations – this relates to Phase A, Phase B and selected portions of Phase C in the overall shared service strategy. It will address the existing challenges of scale and provide a platform for further shared services. The right sequencing and transition states for the service to pursue will need to be driven the Joint Head of ICT together with his or her ICT managers. However, in order to provide a marker for expectations an overall roadmap is set out below.

Year 0 on this chart (and other analysis) could coincide directly with the financial year 2011/12

if the decision to proceed can be made rapidly.


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If the ‘business aligned shared service approach’ option is taken, the majority of activity other

than the appointment of a shared head of ICT would be deferred by 12months or more.

9 BENEFIT QUANTIFICATION

We have highlighted below the potential benefits that could be the first tranche of investment needed to get the services up and running and deliver integrated (but not necessarily optimised) operations.

9.1 CASHABLE BENEFITS

The cashable benefits total approximately £85k per annum in Year 2 and beyond. This is broken down as follows:

9.1.1 Staffing

Description of Benefit Moving to a shared ICT service arrangement presents an opportunity to rationalise the number of staff (particularly management) needed to administer the shared service compared to two individual services. Other than the appointment of a single Joint Head of ICT, all other staffing changes are for illustration purposes only and define the scale of the staff savings we expect the Target Operating Model to be able to deliver once developed under the leadership of the new Joint Head of ICT. The financial analysis for this OBC is based on the appointment of senior ICT managers into the following five roles (one of each covering the shared service): Chief Information Officer ICT Operations Manager ICT Strategy and Commercial Manager ICT Programme Director ICT Enterprise Architect The creation of these five new roles needs to be balanced out. For the purposes of this business case we have assumed that the Head of ICT (Kingston), Head of ICT (Sutton) plus six other management posts will be deleted i.e. a net reduction of three posts. Note that four management roles are currently vacant (Head of ICT at each borough plus two others). Quantification of Benefit The illustrative staffing adjustments equate to a net annual saving from 2012/13 onwards of approximately £55k. Assumption All posts will be subject to evaluation. For the purposes of this OBC a total salary of £395k has been used across the new posts. For removed posts, the average salary of managers currently reporting directly to the Head of ICT at each borough has been used.


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Note: the tables in this report present these salaries with the addition of on-costs.

9.1.2 Reduction in service costs

Description of Benefit Kingston buys in technical support for their infrastructure from 2E2 to address gaps in knowledge or capacity. Sutton has a skilled technical architect and rapidly progressing pool of infrastructure technicians who could alleviate the need for this external support. Quantification of Benefit Approximate benefit per annum = £60,000

9.1.3 Service Management System Licences/Support

Description of Benefit In consolidating to a single Service Management tool, one set of the licence purchases or system maintenance fees currently paid will no longer be required. Quantification of Benefit Approximate spend per annum = £17,000

9.2 NON-CASHABLE BENEFITS

Non-cashable benefits are those that do not result in an immediate financial benefit to the council – primarily related to staff time or other capacity that is not readily converted into a cash equivalent. There will be a significant number of these through rationalisation of effort across the two boroughs. Immediate examples include:

• Single Desktop Strategy Development (20 man days or £3,636.36 based on average pay estimates)

• Single Cloud Adoption Strategy (100 man days per annum or £18,181.82 based on average pay estimates)

• Single ICT Strategy Development (30 man days or £5454.55 based on average pay estimates)

10 IMPLEMENTATION COSTS

The following implementation costs have been identified for Tranche 1 activity. Project Management Support: £71,500 one-off Based on the equivalent of six months full time support from a project management resource costing £650 per day. Lower cost option for three months full time support: £35,750. Implication: this will put more project management load on the ICT service managers and require a lean governance framework. Technical consultancy: £60,000 one-off Allowance for consultancy support to support the Joint Head of ICT in tranche 1 activities such as network integration. Lower cost option reduces allowance: £30,000. Implication: this will increase the reliance on existing staff and thus increase the chances of the work taking longer to complete and/or errors being made.


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Legal services cost: £42,000 one-off Allowance of 210 hours (30 working days) at £100 per hour for each borough. Travel allowances for staff: £30,000 per annum ongoing Allowance for 60 staff each @ £500 per annum Staff moves for those changing office: £6,000 one-off Allowance for 60 moves @ £100 per move Establishing a network connection between Sutton and Kingston: £5000 in the first year, £12000 per annum ongoing. Based on two (for resilience) of £2500 installation plus £6000 per annum on an ongoing basis for a 100mb line (quote from Virgin Media). Additional MS System Centre Licences (for Service Management): £100,000 one-off Sutton is in the process of evaluating service management tools and expects to conclude that a MS System Centre based solution offers the best value. Expanding this solution to cover Kingston will require an additional licence fee of approx £100k (based on MS Select Pricing). Lower cost option: £25000 based on Sutton adopting Sostenuto in place of System Centre with allowance for uplift in licence cost position at Sutton and Kingston. Implication: this will rely on the Sostenuto product suite being fit for purpose and supporting the efficiency measures that Sutton has planned to achieve through it. Migration of data from Sostenuto (Kingston legacy solution for service management) to MS System Centre: £15,000 Estimated consultancy fee. Lower cost option: £5000 if Sutton take Sostenuto instead of MS System Centre and so data consolidation is simplified. Implications: as above. Further ‘non-cash’ costs have been identified where additional strain will be placed on corporate resources. Training for RB Kingston on System Centre (by LB Sutton staff): £7,272.73 Based on 20 staff, 2 man days each and average salary model. Attendance at additional service workshops and team meetings: £32,727.27 Based on 60 staff, 3 man days input each and average salary model. HR Support from RB Kingston and LB Sutton: £4,090.91 Based on 20 days of input from each borough and average salary model. Notes:

• We have not assumed any uplift in cost (or benefit) for the recruitment of the Joint Head of ICT on the basis that each borough would have to recruit individually if the shared service did not go ahead.

• Accommodation and support costs have been excluded on the basis that the shared service will not result in a significant alteration to this position.

11 QUALITATIVE IMPACT


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Bringing the ICT teams together to provide a shared service will have a significant impact on improving the quality of services:

• Once the service is established, customers will see an improvement in the quality of ICT services as the combined set of skills and resources focus on improved service delivery

• The drive for smarter working at both councils will be benefited by Kingston’s existing flexible working and Citrix experience but also by the planning and understanding of the latest developments in thin client technology which Sutton has been exploring

• Similarly, Kingston has many year’s experience in VOIP telephony which will prove valuable in supporting the smooth implementation at Sutton and again give Kingston an opportunity to learn from a new implementation

• Sutton has a well established project management function which offers the opportunity to have a shared in-house resource to manage an agreed programme of projects. Kingston has no ICT project managers and struggles to source the quality required by going to the market for individual projects

• A critical skill required for the success of ICT, particularly in light of the changes identified in the Context section, is the technology awareness and technical understanding to be able to plan the ICT architecture going forward. This function is separated across a number of roles at Kingston and does not get the necessary commitment. Sutton has a dedicated role for technology architecture and this will benefit both councils going forward

• Another skills’ set that is essential for the future is procurement and contract management. Sutton has a developed function for this area but Kingston is only at the fledgling stage. Combining these functions will again provide considerable strength in moving forward as a shared service

• The Business Partner function at Kingston is fairly new but is proving successful in managing the relationship and work plans for customers across the Council. Bringing this role into a shared services approach will help smooth the transition period and provide a real customer focus in the way ICT services work

Given the financial pressures facing councils and the changing shape of ICT delivery, many of the qualitative benefits outlined above would be lost if Kingston and Sutton retain separate services. As services get smaller, the set of skills available will be diluted and providing a sustainable ICT service will be severely challenged.

12 RETURN ON INVESTMENT

The table below shows the cashable position of the project for the proposed model of transition. In summary points to an annual saving of approximately £85k meaning that the change will break even (for Tranche 1 activities) in Year 3..


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Investment (Costs) Year 0 (Setup) Year 1 (Setup) Year 2 Year 3 Year 4 Notes


Chief Information Officer 69£ 137£ 137£ 137£ 137£ Dependent upon official grading, £105k salary. Six months of Y0.

ICT Service Manager 69£ 92£ 92£ 92£ Dependent upon official grading, £70k salary. Nine months of Y1.

ICT Strategy and Commercial Manager 69£ 92£ 92£ 92£ Dependent upon official grading, £70k salary. Nine months of Y1.

ICT Programme Director 69£ 92£ 92£ 92£ Dependent upon official grading, £70k salary. Nine months of Y1.

ICT Enterprise Architect 79£ 105£ 105£ 105£ Dependent upon official grading, £80k salary. Nine months of Y1.


Travel Allowance for all staff 30£ 30£ 30£ 30£ Assumed £500 per annum, 60 staff

Services 14£ 181£ -£ -£ -£

Interim Heads of ICT until CIO in post No change -£ -£ -£ -£ Required for same period with or without move to a shared service

Staff moves for those changing office 6£ -£ -£ -£ Assumed based in existing office accommodation, 60 movers

Legal services 14£ 28£ -£ -£ -£ 210 hours per borough

Project management 72£ -£ -£ -£ Equivalent of full time project manager support for six months

Technical consultancy 60£ -£ -£ -£ Estimated allowance

Recruitment of CIO No change -£ -£ -£ -£ Recruitment needed regardless of shared service move

Migration of data from Sostenuto to System Centre 15£ -£ -£ -£ Estimate

Technology -£ 117£ 12£ 12£ 12£

Connecting up the Wide Area Networks 17£ 12£ 12£ 12£ 2 x Virgin 100mb fibre cost approx £2.5k to install, annual rental of approx £6k

Additional MS System Centre Licences (Service Management) 100£ -£ -£ 0£ Need to check licensing costs

TOTAL 83£ 750£ 559£ 559£ 559£

Benefits (Savings)


Head of ICT (Kingston) 52£ 105£ 105£ 105£ 105£

Head of ICT (Sutton) 48£ 96£ 96£ 96£ 96£

Current Service Management Post 1 31£ 62£ 62£ 62£ 62£

Current Service Management Post 2 41£ 62£ 62£ 62£





Services -£ 70£ 60£ 60£ 60£

Infrastructure Support (Kingston - 2E2) 70£ 60£ 60£ 60£ Absorbed into technical consultancy costs in Year 1, then reduced requirement.

Technology -£ 14£ 14£ 14£ 14£

Redundant Sostenuto Licences / Support -£ 14£ 14£ 14£ 14£ On assumption of move to System Centre

Redundant SMS Licences N/A - Select -£ -£ -£ -£ Perpetual licences so no cash benefit

TOTAL 131£ 553£ 646£ 646£ 646£


CASHABLE CUMULATIVE NET POSITION 49£ 149-£ 62-£ 25£ 111£

One vacant post at Kingston not filled for six months once joint head in place (contract

resource prior to that).

Redundancy costs excluded.

Roles removed after 4 months of Y1 (one month handover).

Roles deleted once Exec Head appointed - After six months of Y0

The alternative lower cost transition (with additional staff retention allowance) is shown in the table below. The changes from the table above are highlighted in yellow. In summary this model points to an annual saving of approximately £55k which in tandem with the reduced investment means that the change will break even (for Tranche 1 activities) midway through Year 2.


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Investment (Costs) Year 0 (Setup) Year 1 (Setup) Year 2 Year 3 Year 4 Notes


Chief Information Officer 69£ 137£ 137£ 137£ 137£ Dependent upon official grading, £105k salary. Six months of Y0.

ICT Service Manager 69£ 92£ 92£ 92£ Dependent upon official grading, £70k salary. Nine months of Y1.

ICT Strategy and Commercial Manager 69£ 92£ 92£ 92£ Dependent upon official grading, £70k salary. Nine months of Y1.

ICT Programme Director 69£ 92£ 92£ 92£ Dependent upon official grading, £70k salary. Nine months of Y1.

ICT Enterprise Architect 79£ 105£ 105£ 105£ Dependent upon official grading, £80k salary. Nine months of Y1.


Travel Allowance for all staff 30£ 30£ 30£ 30£ Assumed £500 per annum, 60 staff

Services 14£ 105£ -£ -£ -£

Interim Heads of ICT until CIO in post No change -£ -£ -£ -£ Required for same period with or without move to a shared service

Staff moves for those changing office 6£ -£ -£ -£ Assumed based in existing office accommodation, 60 movers

Legal services 14£ 28£ -£ -£ -£ 210 hours per borough

Project management 36£ -£ -£ -£ Equivalent of full time project manager support for three months

Technical consultancy 30£ -£ -£ -£ Estimated allowance - optimistic on capability to cover internally.

Recruitment of CIO No change -£ -£ -£ -£ Recruitment needed regardless of shared service move

Migration of data to consolidated Sostenuto Tool 5£ -£ -£ -£ Estimate if bulk is covered by Sutton investment fund for Service Improvement Tools.

Technology -£ 42£ 12£ 12£ 12£

Connecting up the Wide Area Networks 17£ 12£ 12£ 12£ 2 x Virgin 100mb fibre cost approx £2.5k to install, annual rental of approx £6k

Licence uplift on consolidated Sostenuto deployment 25£ -£ -£ 0£ If Sutton adopts Sostenuto and applies existing service improvement tool budget.

TOTAL 83£ 599£ 559£ 559£ 559£

Benefits (Savings)


Head of ICT (Kingston) 52£ 105£ 105£ 105£ 105£

Head of ICT (Sutton) 48£ 96£ 96£ 96£ 96£

Current Service Management Post 1 31£ 62£ 62£ 62£ 62£





One half of Current Service Management Post 6 21£ 31£ 31£ 31£

Services -£ 70£ 60£ 60£ 60£

Infrastructure Support (Kingston - 2E2) 70£ 60£ 60£ 60£ Absorbed into technical consultancy costs in Year 1, then reduced requirement.

Technology -£ 14£ 14£ 14£ 14£

Redundant Sostenuto Licences / Support -£ 14£ 14£ 14£ 14£ On assumption of move to System Centre

Redundant SMS Licences N/A - Select -£ -£ -£ -£ Perpetual licences so no cash benefit

TOTAL 131£ 532£ 615£ 615£ 615£


CASHABLE CUMULATIVE NET POSITION 49£ 18-£ 37£ 93£ 148£

Roles deleted once Exec Head appointed - After six months of Y0

One vacant post at Kingston not filled for six months once joint head in place (contract resource

prior to that).

Redundancy costs excluded.

Roles removed after 4 months of Y1 (one month handover).

13 DEPENDENCIES AND INTERFACES

The proposals for a shared ICT service across Kingston and Sutton relates to a number of existing initiatives:

• Wider shared service discussions – Though not directly motivated by the wider discussions between Kingston, Sutton the other boroughs in South West London this proposal is consistent with the principles that have been discussed.

• SW London Cloud – This Capital Ambition funded piece of work has looked at the potential for sharing elements of ICT services across up to five boroughs. This project addresses a wider scope of ICT service, but does not preclude – indeed some of the early design material emerging from the project would be a sensible starting point for a shared service blueprint. It may also be possible to link some of the activity undertaken for this shared service proposal in with capital ambition funding for the wider project.

• Shared HR-Payroll System – This project is an example of the types of savings and collaborative working that a move to a shared service could help support. The existing project would not be impacted by the move to a shared ICT service other than offering the potential for some modest rationalisation of implementation effort from ICT.

Both ICT Services have plans for investment and service development outside of the Shared Service to be considered.

Sutton

It is important to understand how the financial and service quality picture emerging from the shared service initiative relates to existing plans – these relationships are explored here:

• Service Improvement tools and efficiencies in ICT Operations


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o Service Management software

Currently ICT Service Management relies on the CRM software and call handling staff in the customer facing contact centre. ICT is in the process of replacing the CRM system with a fit for purpose ICT Service Management solution that will enable users to self-service on the reporting of ICT issues (including resetting their own network passwords) and act to simplify and accelerate the resolution of issues by ICT staff.

A fit for purpose, full featured service management tool will be a real asset to the shared service. Once rolled out for Sutton purposes, this tool can be expanded to replace Kingston’s existing setup (which though better than Sutton’s existing configuration is not as feature rich in its current deployment as that desired by Sutton). There are a number of technologies that could be used to achieve this and as described in the implementation costs there is an opportunity to minimise the overall cost across the two boroughs in moving to a shared service if an early decision in principle is made that Sutton’s investments should be aligned with an assumption of service integration.

o E-mail and file archiving software

The Council’s requirements for digital storage are increasing exponentially as the sharing of files becomes more ubiquitous and file sizes increase through the inclusion of images and videos. To minimise the required investment in additional server disk space and back-up all historical e-mails ICT Services are in the process of rolling out an archiving solution that will de-duplicate the storage of files and mean that historical e-mails that are currently stored in PST files on user’s local hard drives

Kingston also uses Sutton’s current preferred solution (Symantec Enterprise Vault) and are planning to upgrade the installation to the specification Sutton are working to in 2011/12.

o Desktop lock-down and refresh

In order to comply with GCSxCoCo security requirements, reduce the number of desktop support issues and maximise the flexibility of the desktop platform ICT Services are in the process of ‘locking down’ PCs (i.e. removing local user administrator rights) and changing the way in which software is deployed and run. Following refresh desktop computers will use a ‘virtualised application’environment that can be remotely managed so users can self-select the applications they want from approved lists based on their user profile without the need for ICT staff involvement.

Desktop lock-down is a requirement of GCSxCoCo and has already been completed in Kingston. The proposed application virtualisation software is compatible with Kingston’s existing Citrix solution and presents a great option for ‘disconnected’ workers.

• Steria contract negotiations

The ICT Strategy & Contracts team is currently in negotiations with Steria over a more flexible and cost effective contract structure that will deliver a reduced overall contract cost and make it possible to scale up and scale down the level of support to match demand over time.

The renegotiated Steria contract could provide a strong platform and structure for the commissioning of some or part of the services currently provided ‘in-house’ across Kingston and the remaining shared service functions.

• Smarter Working Programme


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The Smarter Working programme will move Sutton’s staff to a consolidated set of premises with a supporting increase in the amount of remote (mobile or home) working. The programme will require significant investment in the desktop computing and network infrastructure to enable hot-desking (use any computer) and remote working respectively.

The delivery of solutions to support new styles of working is a challenge common to ICT Services in Kingston and Sutton. The increased scale of the service should make it more responsive in delivering large scale change and mean that lessons learnt are shared directly with re-use and standardisation of solutions wherever possible.

Provided the Smarter Working programme OBC gains the necessary elected member approval in early March 2011, the ICT service will need to prepare the design for the ICT components of the civic centre re-configuration (the computer/communications rooms and cabling in particular) and the ICT (technology and support capability) that will support each user group over the first quarter of the new financial year. This work will include discussion with other Councils of the arrangements that they have put in place in any case, but if the decision is made to proceed with transition to a shared ICT service the relevant design will additionally consider what Kingston ICT assets would be of benefit to the programme, how the Smarter Working technology solution will integrate with Kingston’s existing/planned suite.

It is not necessary for a decision to have been made on the shared ICT service for the work on the Smarter Working programme to be completed (or vice versa). However, early agreement (at least in principle) of the shared ICT service would mean that design decisions on Smarter Working would be “future proofed” against the shared service as much as possible i.e. opportunities to exploit existing assets would not be missed and conflicting solutions could be avoided – the risk of genuine ‘conflicts’ between technologies is low and this is more about avoiding divergence where other things are equal. The shared ICT service may also open up alternative decant strategies using Kingston/shared accommodation – this will depend upon Kingston’s own office rationalisation programme.

• Replacement of Telephony System

Support for the existing telephony system goes out of support in 2012 and needs to be replaced with an up-to-date, VoIP based alternative.

The need for this investment is not impacted by the move to a shared service, however the shared service would present an opportunity to practicably access the experience Kingston have of implementing and using VoIP telephony.

Kingston:

• Infrastructure Upgrades

o Server Virtualisation

Investment in server virtualisation, and further server consolidation, will continue in order to reduce the numbers of servers, improve utilisation and reduce energy costs.

Making this investment will contribute to getting the ‘house in order’. In the short term this may assist a shared services approach through releasing space in data centres which could be shared with Sutton to help improve service resilience. In the longer term, it will help make implementation of any strategic change in the approach to the delivery of the infrastructure, through a shared service, easier to implement.

o Replacement of Network Switches & Security Upgrade


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Investment will continue to replace out of date network switches, firewalls and network concentrators in order to bring equipment into support and provide the necessary security for remote workers and access by partner organisations.

This will bring the necessary reliability required in a shared services environment and provide an early opportunity to agree a common strategy for taking the telecommunications infrastructure forward including security and a common product set.

• Linking to the Schools Ethernet Ring

o This investment will improve the resilience of the Kingston infrastructure and support improved disaster recovery and business continuity arrangements.

This will facilitate the linking of the Kingston and Sutton networks into a shared service arrangement in a more streamlined way than would currently be possible. Once there is a shared infrastructure, this will open up a wide range of opportunities for smarter working.

• CRM and Web Development

o Although the projects cover all customer access channels, the key objective is to raise the awareness, and use, of self-service in order to improve customer service and drive down transactional costs. The focus is on the re-implementation of CRM and giving a rebranding and new underlying structure to the Web site.

Part of this work will look at how the Web/CRM environments are best supported by ICT Services and individual services and the relationship to taking Social Media forward. This will also provide the opportunity to see how this might work across the councils in a shared services approach.

• Financial Review

o This fundamental review of Finance including organisational structure, processes and financial systems, including Agresso and associated interfaces, provides an opportunity to maximise the full functionality of Agresso and the implementation of electronic document management and P2P.

Given that both councils use Agresso, this is an ideal opportunity to share experiences. There are pan-London discussions about a shared services approach to finance systems and, even if these do not bring anything Kingston and Sutton want to buy into, there will be a good opportunity to consider a shared sourcing approach with consequential savings.


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14 RISKS

The key risks to transition to a shared service and how each will be managed are show below.

Risk Probability Impact Mitigation Service quality is interrupted as ICT staff focus on internal re-organisation. Of particular relevance to high profile project work.

High Medium Seek to clarify target operating model quickly. Adopt a ‘no compulsory redundancies in year 0’ policy to provide maximum possible security whilst changes are planned and implemented.

Errors are made during integration that interrupts standard service

Low High Seek advice from experts with prior experience. Manage service-critical transitions carefully. Undertake most significant changes outside of working hours to allow restoration to prior state if needed.

Agreement cannot be reached on the most appropriate legal structure and division of investment and benefits

Medium High Gain agreement on merits of shared ict services and take early sounding of any preferences amongst senior officers or members.

Service requirements vary widely across the two boroughs.

Low Medium Allow sufficient time for definition of shared service standards to enable full consultation where significant impacts will be felt.

Staff terms and conditions cannot be reconciled across the two boroughs

Low Medium Initial investigations suggest that the grading of posts in Kingston and Sutton is generally similar with roughly equivalent spine point grades and salaries. The nature and scope of any challenges will be better understood once the Target Operating Model is developed.


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15 REVIEW AND REPORTING

While the shared service is being established, the following governance arrangements are proposed:

These arrangements will also be suitable for dealing with business as usual in the first instance but over time would need to re-considered as the organisational model is decided and implemented. Clear terms of reference for each group will be required along with the operational protocol while the shared service model is being progressed. The Joint Head of ICT will require an SMT/CMT Director at each borough to report to if not invited to report to the Chief Executive. The working assumption is that the reporting lines will, in the short term, continue into the directors that have responsibility for ICT in current arrangements and that a host borough will be selected to employ the Joint Head of ICT while the future organisation model is being determined. It is intended to seek an independent review from the ICT expert from Capital Ambition. The expert will be asked to examine the proposals for a shared service and the governance arrangements that will preside over them and report back on the viability and timing of the changes. We are confident of securing this review in light of the links to the ongoing work on the Local Government Cloud Project, led by Merton, in which Sutton, Kingston, Richmond and Wandsworth are working together to explore provision of a “private cloud” through shared ICT infrastructure to reduce costs and improve resilience. An independent review (at cost) from outside the boroughs from other shared service arrangements, e.g. Newham Havering, would further validate our chosen direction of travel.

16 SUCCESS FACTORS

The creation of a shared service is a significant undertaking. It is proposed that success is measured against:

• Achievement of objectives o Address the staffing challenges resulting from a smaller ICT service staff base than at other boroughs Measured by assessment of the Joint Head of ICT and service managers of the


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change in levels of technical expertise, service resilience and quality of applicants applying for roles with the organisation.

o Improving and broadening the range of ICT services offered across the two Councils including in particular opening up a proven low cost ICT project management capability to Kingston and a Business Relationship Management function to Sutton that can be more effective through direct sharing of learning across two boroughs. Measured through improvements in levels of customer satisfaction with ICT services.

o Strengthen the position of the ICT services to achieve savings through greater purchasing power and solving issues (such as desktop strategy, or CoCo Security compliance) once, not twice. Measured by the shared service derived budget savings in 2012/13, the amount of effort in what would have been duplicate activity that is avoided by the shared service, and the amount of Tranche2 savings delivered

o Deliver a platform for further sharing of services between Kingston and Sutton or incorporating ICT (and other) services from additional boroughs Measured by the number of ICT integration costs and risks identified in any further shared service propositions

• Quality of transition o Degree of trust between the two partners at Member and Senior Officer level over the course of the transition to the shared service

o Impact on day-to-day services delivered to the services that ICT supports – can be tracked through number of incidents and associated resolution times

o Appetite for and level of re-use of the transition process established through this project.

These success criteria will form an important basis for further work on the shared service proposition.

17 APPENDIX – Shared services at other boroughs and in other services

Both parties agree the importance of learning from and monitoring ICT shared service developments at other Councils. Of current interest are:

• The Tri-Borough proposals from Hammersmith & Fulham, Kensington & Chelsea, and Westminster for which initial material has recently been released.

• Newham-Havering that started as a contract for Newham to provide a CIO service using half the time of the Newham CIO (Geoff Connell). This is now being expanded into wider integration of services.

• Cheshire East and Cheshire West & Chester which operates a full shared service via a jointly owned company that is now seeking to offer its services more widely. This entity was created by combining the County Council and District Council ICT functions when local government was re-organised into two unitary councils in April 2009.

• GoPartnership between Cotswold District Council, Forest of Dean District Council, West Oxfordshire District Council, and Cheltenham Borough Council built around a shared Finance System.

Authors: Mike Fogaty, RB Kingston; Peter Dewsbury, LB Sutton; Nicky Wilkins, LB Sutton;

Checked by: Daniel Ratchford, LB Sutton; Roy Thompson, RB Kingston.


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Documents

Draft Outline Business Case Document · contracts. The ICT strategy will move to a multi-sourced approach where different elements of the service are purchased through contracts with