“Authorities will manage how to find a balance between increasing demands for efficiency and whilst improving operations .”
JEANETTE AXEN RUZICKA, PA STRATEGY EXPERT
To read the full article in Swedish, click here
By focusing on one area at a time and clearly communicating which areas should be the focus for efficiency gains, Swedish authorities will be better able to cope with the pressures that face their operations.
According to the National Audit Office (2011) the central government is used to operating in a changing environment, but the pace of change has increased as cost effectiveness and flexibility have become the guiding principles. The National Audit Office says there is a greater pressure to streamline operations while resources are shrinking. In recent years, a firm requirement for Swedish authorities has been efficiency gains with a particular focus on the cost side. This has meant that the authorities have had to scrutinise their activities to find potentials for cost reduction.
For many authorities, it is a great challenge to drive internal cost reduction while simultaneously focusing on improving operations. A key issue is the demand for new IT solutions and e-services, which the organisations need to satisfy. A previous study by PA Consulting Group shows that IT costs, in relation to the total cost of the activities of the authorities, is far above the average for comparable organisations.
Many agencies have considered sourcing solutions to see if this may be a possible path toward greater long-term efficiency and cost reduction. This is an approach that IT Minister Anna-Karin Hatt has encouraged since mid-2011, when the National Audit Office came out with a report (RIR 2011:4) which advocated outsourcing in this context.
But the challenges in public administration are quite different from those in the private sector – as the government largely controls the direction, objectives and financial targets. So what can the authorities do to find a balance between increasing demands for efficiency whilst improving operations?
Some advice from PA:
• Focus on one area at a time. Today it is not uncommon for agencies to pursue cost-efficiency and service improvement in several areas of activity simultaneously. Our recommendation is to let the government mandate during the period form the basis of the planned measures. Does the agency face a structural change such as a merger / acquisition? Are we talking about a binding EU legislation or demands for an improved public service?
• Make clear which areas are in focus for efficiency gains and which areas are in focus for improvement of operations and services. In many cases, streamlining and efficiency gains in one area are a prerequisite to fund development of services in another. It is therefore important to plan with this in mind.
• Collaboration across agency boundaries. Collaboration with other agencies can be a solution to smooth out the peaks and troughs in the demand for administrative services. Only a few agencies use this approach today but it could favorably be adopted by a greater number of organisations. Long-term partnerships that extend over several years could help Swedish authorities to move the focus beyond the annual planning driven by government appropriations and grants.
• Ensure strategic anchoring of IT. In many cases there is no long-term IT strategy, pointing out the direction of IT, based on the strategy and goals of the organization. In PA's study, only half of the Director-General respondents indicated they have both an IT and sourcing strategy. As IT has an increasingly central role in government organisations, a long-term IT and sourcing strategy is of vital importance.
Jeanette Axén Ruzicka is a strategy expert at PA Consulting Group