Local Government Finance Professionals Conference Alan Hansell IBRS Pty Ltd 19/10/17 (ahansell@ibrs.com.au)

IBRS Local Government Finance Professionals My Objective Help you to: Contribute to digital and business transformation programs in Council Establish business partnership arrangements with the IT department in Council Better understand IT management concerns as the function reports into CFO or Corporate Service function Sources: Survey responses - interviews with senior ICT and business managers in a cross section of Councils - NSW, Victoria, ACT, SA and Qld. in 2016 / 17 Survey report published July, 2017. available on ibrs.com.au IBRS Local Government Finance Professionals

IBRS Local Government Finance Professionals Agenda Survey - Major Issues and Priorities Demand and Supply Roles Council Case Histories 1 - 3 IT and Finance – Why Cloud et al? Take Away or Do Differently IBRS Local Government Finance Professionals

Issues and Concerns Identified IT Management’s Current Priorities are: 1 Providing a secure environment 2. Enabling (digital) transformation of business processes 3. Attracting and Retaining skilled IT and business professionals, eg in regional councils 4. Implementing business solutions on time and within budget IBRS Local Government Finance Professionals

Issues and Concerns Identified Respondents stated Transformation (Digital) was being driven by in ranking order: 1. IT management 2. The Executive and IT management jointly 3. The Executive 4. Shared Business and IT management responsibility Take away: IT managers claim business managers, including CFOs, are not participating in the transformation program. IBRS Local Government Finance Professionals

Issues and Concerns Identified cont’d. Unable to get funding to Improve service delivery and Implement digital / business transformation For instance IT Spending to revenue: Large councils it was as high as 6% pa – Transformation feasible Average IT Spend to Revenue = 3.5% pa – Transformation slow In most regional councils it was 1.5% pa – Transformation impracticable But: Some Victorian councils have set aside $1m+ pa * 4 years to transform IBRS Local Government Finance Professionals

IBRS Local Government Finance Professionals Demand and Supply side roles for Enterprise Information Systems - Simplified Supply Demand CIO Business Managers IT Resource Allocation Business Managers Identify ‘information on demand’ needed by clients Sell and justify solutions Define requirements Track and publish benefits CIO / ICT Managers: Shape client expectations Supply integrated systems, eg: Process transactions Provide management reports Manage data security program Comment: ‘IT is an enabler only’ ie business professionals must lead not IT staff - Director Corporate Services - large NSW Council IBRS Local Government Finance Professionals

Council Merger & Transformation # 1 CIO and Executive specified phased transformation program CIO and Business Transformation Director report to CEO Defined new business operations processes for merged council Identified ‘best fit’ Finance and business systems from each council Installed latest version of best fit systems Defined new Chart of Accounts for merged council Implemented new systems (Phase 1), eg Finance ERP, on schedule Used business change coaches for process and systems assimilation In Phase 2 of transformation program including Payroll, Fleet and Asset IBRS Local Government Finance Professionals

Transformation Leader # 2 – Case History Synopsis Cultural Transformation program components: Major ERP implemented – Finance, Budgeting, Supply Chain, Assets, Performance Field operatives trained by business analysts at 6.30 am on site to process work orders, raise defects, capture asset changes Service request raised on line – workload of counter staff and service lag reduced No hard copy incoming / outgoing mail - EDRMS workflow implemented Property Development Applications now tracked online by owners Mini-university in-house created for IT staff Gradually migrating all business systems to Software as a Service Now in Phase 2 Transformation Program IBRS Local Government Finance Professionals

Transformation Leader # 3 – Case History - Ballarat Digital Transformation team in CEO’s office initiated projects such as: Rationalised Telstra invoicing from 1 per site to 1 invoice covering all sites Conducting hackathons (Lean Thinking approach) to rationalise Waste Management that: Reduced kilometres travelled, ie 3% pa for landfill and 9% for green waste Increased average collection loads Obviated need for Saturday waste collection shift Improved handling of missed bin collection Reduced contractor spend pa Freed capacity to grow service without increasing costs for next 2 years IBRS Local Government Finance Professionals

IT – on premises or Cloud – For Finance A Nuanced Picture Why Cloud Against Cloud Transfer assets off books Fewer IT staff Provider takes capital risks, ie no Capex only Opex Capacity available on demand, eg NSW Rural Fire Service Provider keeps software current Data sovereignty (offshore) issues Lose control, ie now external Hidden costs, eg billing admin. Consumption based services billing impacting cash flow forecasting No sunset clauses in SaaS contracts Cost of migrating data, designing hybrid cloud and exiting is high ** Most survey respondents are ‘dipping their toe’ into the water (Cloud). Others staying on premises for now. IBRS Local Government Finance Professionals

IBRS Local Government Finance Professionals Finance Management – Take Away or Do Differently Encourage finance professionals to rotate through IT department for cross training, eg as business analysts (#1 skill in demand) Include Total Cost of Service (not Ownership) approach in business case for Cloud solutions Include Finance professionals in hackathons for transformation program to sanity check opportunities, eg for Virtual Closes Apply for funds for transformation program stating planned initiatives IBRS Local Government Finance Professionals

IBRS Local Government Finance Professionals Finance Management – do differently cont’d. Establish Finance / IT business partnership agreement to enhance service delivery Support IT management in their bid to increase funding above average for LGAs, ie 3.5% pa to invest in transformation Provide helpful feedback, when apt, to IT management and staff Conduct business benefits study from transformation program and report results, eg Ballarat Expect staff resistance to transformation programs. Develop mitigation strategies, eg appoint change coaches IBRS Local Government Finance Professionals

IBRS Local Government Finance Professionals What does IBRS do? Cyber security & risk IT & business management Enterprise networking Economics & productivity Outsourcing deals Future workspaces Design thinking IT as a Service Enterprise infrastructure IT strategy & governance IBRS is a local IT and business research advisory firm. IBRS Local Government Finance Professionals