Councils embrace technology transformation
Australian local government councils are under intense pressure to transform their operations to meet the increased expectations of their residents, according to a new report from KPMG and Public Sector Network.
In May, KPMG sponsored Public Sector Network’s Local Government Transformation Series — an evaluation of the key challenges faced by local government areas in Australia. The initiative involved a roadshow across six cities in Australia and New Zealand.
The resulting report evaluates the state of technology transformation across the local government sector.
According to the report, a number of local councils are either developing technology transformation strategies or in the midst of rolling out transformation programs.
But these initiatives have met with varying degrees of success. While some councils are adopting a ‘quick fix’ approach by immediately seeking to transform the front end of customer experience, a truly successful transformation program must also involve a great deal of middle- and back-office transformation as well.
Attendees to the series were asked a number of questions regarding the status of their transformation journey.
The survey found that a local government transformation program can be divided into three key steps — program strategy development, program business case development and program operational rollout.
Responses indicate that 29% of councils are at the strategy development phase, 22% are at the business case development stage and 37% are at the operational rollout stage.
Only 7% of councils have not started a technology transformation program at all, and just 3% consider themselves to be at the transformed stage.
The state of transformation varies by area, KPMG said — while the majority of respondents from Western Australia and South Australia stated they were at the operational rollout stage, the majority from NSW are at the business case development phase, and the majority from Victoria and Queensland are at the strategy development phase.
The report states that the results of the survey do not fully reflect the extent of digital transformation projects that the company has observed in the market.
For example, KPMG has observed that a number of councils in Victoria and South Australia have established live transformation programs, which is not the case in NSW, where the focus has been on amalgamation challenges.
The transformation programs being planned or underway share some common characteristics. Nearly 100% of respondents stated that their transformation projects had the key prime focus areas of improving customer experience, digitisation and modernising technology.
A key theme involves adopting sophisticated data analytics to capture customer information to make more informed decisions.
KPMG said it has identified a real increase in the maturity and expertise of councils in focusing on the customer. This has included developing the skills and resources to understand what customers want, how they want to engage with council, and what changes need to be made to facilitate this. The results of the research reflect this.
All of the respondents to the survey agreed that improving the customer experience was the biggest identified benefit in their investment case for their transformation program.
This was followed by improving decision-making and collaboration and breaking down organisational silos (70%). Other significant identified benefits include improving productivity as well as lowering maintenance spending and unnecessary vendor costs.
But councils are also facing a number of roadblocks obstructing their customer and technology transformation program, the survey found.
A full 100% of respondents identified a lack of adequately skilled resources as the largest potential obstacle inhibiting their transformation programs. This was followed by a lack of clear leadership (83%) and insufficient financial resources (53%). Nearly half cited difficulties in sourcing vendors and procurement partners.
“Successful delivery of a transformation program obviously requires bringing together a range of unique skill sets across a variety of disciplines, including project management, change management, customer experience and user experience design, solution architecture, data migration, integration, and systems analysts,” the report stated.
“No single council has all these skills to hand, nor does Local Government have a lot of free capacity or funding to release existing resources full time.”
The survey found that 98% of respondents’ transformation programs include back-office and customer relationship management software replacement. KMPG said this demonstrates respondents’ understanding that tackling the often unseen back-end procedures and processes is a vital step in transforming the front-end customer experience.
By contrast, while 70% of respondents had invested in front-end components such as redesigning their council website, many have not yet commenced this component of their transformation.
In addition, one-third have still not tackled ‘middle section’ components such as integration layers, data warehouses or payments platforms.
“A holistic integration of back, middle and front end components must take place to make a significant step change in transformation. Replacement of core back office and CRM technology will deliver firm foundations, however to ensure a seamless service experience for customers and council employees, investment in the ‘middle section’ is needed to support end-to-end process delivery,” the report stated.
“Based on our survey results, this is a significant pain point and a number of transformation programs are suffering from under-investment in these key components that deliver real, direct customer experience improvement.”
According to the report, a connected council transformation program should include back-office investments in fit-for-purpose IT and data architecture, as well as in ensuring processes and functions support a seamless customer experience.
This should be accompanied by investments in service delivery supporting the redesign towards a customer-centric model, as well as in customer experience and engagement. This requires understanding the needs and preferences of end users.
Both components should be combined as part of an underlying service delivery framework.
The report also proposes that councils could assist each other on their transformation journey by collaborating to develop standardised toolkits and architecture roadmaps for these programs. But it notes that precise transformation plans should always be customised to fit the individual culture and environment of each council.
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