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Moving to the cloud shouldn’t be daunting for Local Authorities

Local Authorities are under intense pressure to escalate Digital Transformation strategies while also dramatically reducing IT costs, achieving public sector sustainability goals and extending citizen self-service access to key services. With stretched in-house resources and a widely acknowledged skills shortage, the existing IT team is dedicated to keeping the lights on for as long as possible.

With many councils asking where they can find the time, resources or confidence to advance a cloud-first strategy, Don Valentine, Commercial Director, Absoft outlines five reasons for why embracing ERP in the cloud right now will actually solve many of the crisis facing public sector IT…

Unprecedented Challenge

Local Authority IT teams are facing incompatible goals. Is it possible to cut the IT budget by £millions per year over the next five years while also replacing an incredibly extensive legacy infrastructure with an up to the minute cloud based alternative? Or improve operational processes and ramp up citizen self-service while also ensuring stretched staff across departments have constant, uninterrupted access to the information and systems they need to be effective and productive?

With so many stakeholders to satisfy, the future looks daunting. But there are many reasons why Local Authorities should be confident to embrace a cloud-first strategy and the latest ERP solutions.

Reason 1: A Cloud Migration can be Tactical

With growing numbers of local authorities reducing building space to cut costs, IT teams are under intense pressure to accelerate cloud migration strategies. With tight deadlines to close on premise data centres, a tactical cloud migration offers tangible benefits, not least a chance to address the punitive cost base. At Barnsley Metropolitan Borough Council, building closure created a 12 week deadline to migrate its SAP estate, including 128 interfaces, to Microsoft Azure.

By taking a tactical approach, rather than a more complex cloud migration that includes an overview of operational processes, Local Authorities can very quickly achieve a cost effective, future proof IT infrastructure that can become the foundation for on-going innovation and change.

Reason 2: Budgetary Goals can be Achieved

Replacing expensive, dated on premise equipment with a secure, UK based cloud service immediately removes the heavy maintenance costs associated with keeping legacy solutions up and running. It eradicates the burden of perpetual license costs – often for solutions that are no longer required. Moving to a subscription based model also delivers a far more manageable, flexible and predictable annual IT budget. The tactical migration to the cloud undertaken by Barnsley Metropolitan Borough Council led to an immediate saving of £125,000 in ongoing operational support fees and the enablement of the internal team.

Reason 3: Complexity is Reduced

Far too many Local Authorities have over-specified ERP deployments dating back to the pre-austerity era. Times have changed – and so has the core functionality of ERP solutions. There is no longer any need for expensive add-ons – from payroll to procurement, cloud-based ERP technology delivers the vast majority of operational functionality. This allows a significant rationalisation of the software solution set, minimising complexity and avoiding the expensive upgrade costs that can devastate IT budgets. One large local authority was able to achieve a 40% reduction of server hosts through landscape rationalisation, leading to a 50% cut in hosting costs once in the cloud.

Reason 4: Providing a Foundation for Operational Transformation

Rationalising IT systems also frees up talented staff from tedious and stressful maintenance and support activities to focus on innovation. With access to a state-of-the-art ERP solution, individuals can work to streamline processes and improve automation – especially in areas such as citizen self-service.

This, in turn, will release staff across the local authority from time consuming manual activities, ensuring they can use their experience to deliver the more complex services and provide support to vulnerable citizens. Furthermore, with better information councils can embark upon essential business modelling – a key requirement given the impact of inflation and the collapse in business rates – as well as exploring new areas to add revenue streams, such as expanding existing payroll services to schools and academies.

Reason 5: Achieving Sustainability Goals

Local authorities are also tasked with addressing their carbon footprint, along with the rest of the public sector. Moving away from dedicated on-premises data centres to the cloud will be more efficient and support the sustainability goals. Cloud-based data centres offer far more effective energy consumption: one study confirmed that using the Microsoft Azure cloud platform can be up to 93% more energy efficiency and up to 98% more carbon efficient than on-premises solutions. Plus with a commitment to using 100% renewable energy by 2025, to be water positive by 2030, achieve zero-waste certification by 2030 and to be net-zero on deforestation from new construction, the cloud provider’s investment in sustainability will help the council continually improve its position.

In addition, a fully integrated ERP system provides detailed insight to help understand the broader carbon footprint, from procurement to travel, allowing councils to monitor, report and provide transparency around CO2 emissions.

Conclusion

Any significant IT strategic change can appear daunting – especially for stretched IT teams under huge pressure to cut costs while managing out of date and unsuitable legacy systems. The shift to the cloud, however, is not just achievable; it can be made within a tight timeframe and deliver immediate benefits to both budget and resources. Plus, of course, it provides the foundation for on-going digital transformation and provide access to an array of innovative technologies.

Government pushes ‘Outsourcing Playbook’ for public services

The UK government has unveiled its ‘Outsourcing Playbook’, which has been designed to improve government procurement and deliver better public services.

The Playbook offers guidance to ensure the government gets more projects right from the start, engages with a diverse and healthy marketplace of companies, including small businesses and charities, and is ready for when things go wrong.

The initiative follows reforms announced in recent months by the Chancellor of the Duchy of Lancaster and Minister for the Cabinet Office, David Lidington, to ensure that government procurement is fit for the future.

New measures include changes to how government allocates risk between itself and its suppliers, to ensure contracts are set-up for success and the public are provided with the best possible service.

The government is also taking steps to improve the design of outsourcing projects from their inception. New complex contracts will be piloted with the private sector before rolling out fully, enabling the government to learn from experience.

Further measures in the Playbook include suppliers drawing up plans in the unlikely event of business failure, and requiring them to publish key performance data – all announced by Lidington in recent months.

Speaking to business leaders at the CBI, Cabinet Office Minister Oliver Dowden said: “Outsourcing can deliver significant benefits, including value for money and more innovative public services. Our new measures will improve how the government works with industry and provide better public services for people across the country.

“I can today provide reassurance that the Playbook makes explicit that, when designing contracts, departments must seek to mitigate, reduce and then allocate risks to the party best able to manage it.

“A more considered approach to risk allocation will make us a smarter, more attractive client to do business with.

Jon Lewis, the CEO of Capita, one of the suppliers which government worked with to develop the new measures, added: “Capita is working closely with government to develop these reforms. This is a sea-change, both recognising the vital contribution the private sector makes in delivering first-rate public services, and then finding ways to do this even better.

“These new ways of working will place a stronger focus on establishing partnerships based on mutual trust and a joint focus on positive outcomes. This is fundamental to the successful procurement and delivery of public-sector contracts.”

European commercial outsourcing grew 5% to €3bn in 4Q18

The sourcing market in Europe, Middle East and Africa (EMEA) grew in the final quarter of 2018 despite unsettling macro-economic and political events across the region.

The EMEA ISG Index from the Information Services Group, which measures commercial outsourcing contracts with annual contract value (ACV) of €4 million or more, shows the EMEA market posted combined fourth-quarter ACV of €3 billion, an increase of 5 percent from the prior year.

This rise was bolstered by a 44 percent year-on-year increase in as-a-service ACV, to €1.3 billion, as strong demand for digital transformation remained an enterprise imperative.

Infrastructure-as-a-Service (IaaS) and Software-as-a-Service (SaaS) in EMEA both performed strongly, posting ACV of €960 million and €331 million, respectively. Traditional sourcing, meanwhile, contracted by 12 percent year-on-year to €1.7 billion.

For the full year, EMEA reached €12.9 billion in ACV, up 9 percent against 2017. Traditional sourcing ACV of €8 billion was down 6 percent year-on-year, but as-a-service grew 48 percent to reach €4.9 billion.

The rise in as-a-service sourcing – which now accounts for 38 percent of total ACV for EMEA – continued to be driven by demand for SaaS and IaaS, both of which increased by more than 40 percent in 2018.

Steve Hall, partner and president of ISG, said: “Despite ongoing political and economic uncertainty in Europe and resulting business caution, companies are making significant investment in digital technologies to improve their ability to compete and to engage with their customers. This is a clear testament that the tailwinds of digital transformation are stronger than the headwinds of political and economic issues.”

Globally, fourth-quarter ACV for the combined global market grew 18 percent, to €9.8 billion. As-a-service ACV pushed to new highs in the fourth quarter, up 43 percent year-on-year, while traditional sourcing inched up 2 percent.

Declines in the UK, DACH and France pulled down the traditional sourcing market in 2018.

Full-year ACV in the UK fell by 27 percent, to €2.5 billion, despite a 5 percent increase in the number of contracts. The traditional sourcing market in the UK has slumped since the Brexit vote in June 2016. Prior to the vote, the UK averaged three €800-million quarters for traditional sourcing per year. Since the vote, only one quarter – the first quarter of 2017, which included the signing of some exceptionally large mega-deals – reached that mark.

Traditional sourcing ACV in DACH was down 4 percent in 2018, with a 19 percent drop in contract signings. The economy in DACH slowed in 2018 and fears of a recession have slowed decision-making. The UK Government defeat over the Brexit vote presents a further substantial economic risk to Germany, as well as the UK.

While UK and DACH companies are exercising caution in traditional sourcing decisions, both are increasing their investments in new technologies and as-a-service contracting to improve efficiency and meet consumer demand for new services and channels.

The results of unsettling economic and political factors also are evident in France, where traditional sourcing ACV edged down 3 percent, to €640 million, despite a steeper drop of 13 percent in contract volume. French consumers have turned to online shopping in recent weeks as the Gilet Jaune demonstrations spread, benefiting Amazon and other online retailers and potentially affecting the Retail sector in 2019.

In the Nordics, traditional sourcing was up 20 percent, to €1.1 billion, with the number of contracts growing by 14 percent. The smaller EMEA markets also showed strength with gains in Southern Europe, Africa/Middle East and Russia/Eastern Europe.