Business Operations: The Engine of the UN

R-UNDG ORIENTATION WORKSHOP BUSINESS OPERATIONS STRATEGY POSITION PAPER 1O-14 OCTOBER

HIGH LEVEL PANEL RECOMMENDATIONS 2007 - OPERATIONS Harmonization Transaction Cost Duplications Cost savings Integration of operations and programmes

DaO INDEPENDENT PILOT EVALUATIONS – OPERATIONS - 2011 All Pilot countries are making progress: Establishing LTAs Functioning OMTs Annual Work plans No clear baselines and Cost Savings are difficult to establish

QCPR and Business Operations QCPR 2013-2016- Business Operations Consolidation of support services Greater collaboration in procurement Decision power delegated to OMT Common and standardized system of cost control Reduce the nr. of parallel project implementation units Increased use of national public and private systems Redirect efficiency savings into programmes (Feasibility Study) ERP Interoperability Establishment of common premises Prioritize the availability of financial and human resources Funding mechanisms for innovation 11 mandates for H-BO Message- There are 11 different mandates provided through the QCPR (pick the mandate that fits the message of the presentation/audience) QCPR Mandates relevant to Business Operations 152. Requests the United Nations development system funds and programmes, and encourages the specialized agencies and other entities of the United Nations, to further pursue higher-quality, more effective and cost-efficient support services in all programme countries by reducing the duplication of functions, and administrative and transaction costs through the consolidation of support services at the country level, either by delegating common functions to a lead agency, establishing a common United Nations service centre or, where feasible, outsourcing support services without compromising quality of services, and, within their mandates, ensuring that efficiency savings are used for programme activities with a view to building national capacities, and to report on concrete achievements in this regard to their respective governing bodies by the end of 2014 and annually thereafter, and requests the funds and programmes to submit a joint plan in this regard to their executive boards at their first regular sessions in 2014; 153. Also requests the funds and programmes, and encourages the specialized agencies and other entities of the United Nations, to further invest in intra-agency rationalization of business operations and to present plans in this regard to their governing bodies by the end of 2013; 154. Further requests the funds and programmes, and encourages the specialized agencies and other entities of the United Nations system, to develop and conclude inter-agency framework agreements regarding the provision of support services regulating the mutual validity of agreements between United Nations entities and third parties at the country level and to delegate the authority to country teams to establish and manage common services and long-term agreements with third parties through standardized inter-agency agreements without further approval requirements by the end of 2013; 155. Requests the Secretary-General through the High-level Committee on Management and the United Nations Development Group to present plans for the establishment of common support services at the country, regional and headquarters levels, based on a unified set of regulations and rules, policies and procedures, at the country, regional and headquarters levels, in the functional areas of finance, human resources management, procurement, information technology management and other administrative services, for review by the Economic and Social Council and approval by the executive boards of the funds and programmes and the governing bodies of the specialized agencies by end of 2014, with a view to implementation by 2016; 156. Recognizes that more cost-effective, efficient and harmonized procurement practices can help to achieve greater effectiveness and better results, encourages the United Nations development system to consider options for greater collaboration in procurement at the country, regional and global levels, taking into account the United Nations procurement principles of, inter alia, fairness, integrity, transparency and effective international competition, and in this regard requests the funds and programmes, and encourages the specialized agencies and other entities of the United Nations system, to address the barriers to greater procurement cooperation and to fully exploit the potential for improved efficiency and effectiveness through increased collaboration, and to redirect efficiency savings, including from economies of scale, into programmes, and to make full use of the existing long-term agreements, develop new ones and implement the guidelines on common procurement at the country level; 157. Encourages the United Nations development system, in compliance with existing relevant legislative frameworks, to make increased use of national public and private systems for support services, including for procurement, security, information technology, telecommunications, travel and banking, as well as, when appropriate, for planning, reporting and evaluation; 158. Also encourages the United Nations development system to avoid and significantly reduce the number of its parallel project implementation units in programme countries as a means of strengthening national capacities and reducing transaction costs; 159. Requests the Secretary-General to present to the executive boards of the funds and programmes, by the beginning of 2014, a proposal on the common definition of operating costs and a common and standardized system of cost control, paying due attention to their different business models, with a view to their taking a decision on this issue; 160. Requests the funds and programmes, and encourages the specialized agencies and other entities of the United Nations development system, to consider system-wide interoperability of enterprise resources planning systems, with the objective of harmonizing the electronic processing of internal and external management information, supporting harmonized business processes and practices across the entire United Nations development system in all future investments related to existing or new enterprise resources planning systems, and in this regard requests the Secretary-General to undertake a study to examine the feasibility of establishing interoperability among the existing enterprise resources planning systems of the funds and programmes and to report on progress in achieving full interoperability in 2016 in the context of the quadrennial comprehensive policy review; 161. Requests the United Nations development system to develop a strategy, in consultation with Member States, by the end of 2013, with concrete goals and targets, to support the establishment of common premises in programme countries that wish to adopt them, with due consideration to security conditions as well as cost-effectiveness, and to report on progress in this regard to the Economic and Social Council on a biennial basis, and encourages United Nations country teams to explore all potential savings across the organizations, including the harmonization of business practices in all functional areas and the consolidation of support services; 162. Also requests the United Nations development system to prioritize the availability of financial and human resources, without compromising the allocation of resources to programmatic activities, to further support the effective harmonization and rationalization of business operations, including the option of developing funding mechanisms and other incentives in support of innovative and sustainable business solutions supporting the further development and implementation of high-quality, efficient and cost-effective common support services; 163. Strongly encourages the governing bodies of the specialized agencies and other relevant United Nations entities to review and discuss the provisions in this subsection with a view to promoting their implementation by the respective entities and improving harmonization with funds and programmes;

BOS PILOT 2015 Present and discuss the evaluation key findings and recommendations….. ….including the key findings from the cost benefit analysis spotlighting the common service procurement As per conclusion of the report – overall the mid term evaluation confirms in quantitative and qualitative terms the immediate and potential value of BOS to operational harmonisation for the UN system. Awareness raising and communication are a priority Mechanisms to reinvest a percentage of cost savings are needed Capacity development across the network of BOS countries is a priority strengthen expert rosster skills development of BOS practitioners An accountability framework for BOS is needed The Cost Benefit Analysis draws conclusions about the applicability of the hybrid model used for the evaluation Continued simplification and further development of tools is a key part to BOS implementation remaining consistent An enabling environment for BOS that addresses barriers caused by conflicting agency policies needs to be urgently addresse Ethiopia Lesotho Malawi Rwanda Tanzania Facility Services Human Resources Information Communication Technology Procurement

Global evaluation BOS: Impact The benefit-cost1 ratio - on average a USD 1 investment in Common Operations produced USD 4.67 in benefits Note: Take care extrapolating Only 5 countries in evaluation Benefits are country dependent Message: Procurement is a major source for cost reduction, even though other common services generate cost reductions as well, although at a lower level. Stress that the assessment was done for a limited number of countries (5) in one specific region. Therefore these numbers cannot be scaled globally. But they indicate a trend, directional data suggesting a positive impact of common operations in terms of cost reductions. Procurement benefit-cost ratio is greater with USD 1 producing benefits of USD 25 1 Benefits include both monetary savings (e.g. bulk discounts from common procurement) and transaction costs avoided (labor savings) ,

Overall net-benefits of USD 4.7 m were documented Cost benefit analysis results: Overall net-benefits of USD 4.7 m were documented Subject to review based on factual accuracy In USD m Costs Benefits Net-benefits Lesotho 586,531 86,572 - 499,959 Ethiopia 318,718 2,811,500 2,492,827 Malawi 116,000 1,398,838 1,282,838 Rwanda 2,000 1,043,787 1,041,787 Tanzania 248,842 595,980 347,138 Total 1,272,046 5,936,677 4,664,631 Note: Lesotho negative due to large up front investment into ITC infrastructure. Note: data used based on reports from countries. Limited data availability. Data limitations discussed in detail in the report.

Lessons Adapt CBA to include high-level HLCM cost categories and coordination costs (avoiding split out of ‘indirect costs’) Importance of harmonised business operations – UNDG M&E frameworks – key indicators and baselines for each operations area Cost benefit ratio – case for agencies redirecting some savings in hire of BOS coordinator to alleviate pressures of BOS implementation Transaction costs avoided – what are savings used for? Other productive purposes – study to identify qualitative value of BOS

Most prevalent areas under BOS Procurement, HR and ICT are by far the most popular areas under the BOS

Possible UN BOS outcome areas Flexible- selection based on country need and capacity Impact Lower Cost Better Service Quality BOS Service Lines Procurement Human Resources ICT Outcome Administration and Logistics Finance Common Services

Challenges Common Operations Message: This slide reflects the main challenges, as observed by OMTs. It helps to make UNCTs/OMTs aware of these challenges and plan for them and manage the risk coming with these challenges materialising. Highlight the three biggest challenges Source- DESA QCPR Survey Jan 2016

Linking Programme and Business Operations 10 min The graph reflects the steps of the UNDAF process as per UNDG guidelines in blue- start with explaining these (high level) The green bubbles are the equivalent BOS steps, linked to each step in the UNDAF process. UNDAF Roadmap --- The BOS has a roadmap as well- timelines preferably are similar (parallel) (KEY ENGAGEMENT POINT PROGRAMME AND OPS STAFF) 2. UNDAF Common Country Analysis (CCA) --- The BOS has the equivalent of the Operations Analysis (Baseline, Needs and CBA analysis) 3. UNDAF Strategic prioritization --- The BOS has also Strategic prioritization following the operations analysis 4. UNDAF Implementation with Joint AWP --- BOS implementation based on JAWP 5. Annual Monitoring for UNDAF --- BOS has annual monitoring for common operations 6. Evaluation for UNDAF (end of cycle) --- BOS evaluation (end of cycle)

Key engagement points UNDAF-BOS Objective: Align timelines UNDAF & BOS Instrument: Draft roadmaps Timing: at the outset of UNDAF/BOS development Roadmap Objective: Ensure UNDAF needs are covered in BOS Instrument: Draft results frameworks UNDAF & BOS Timing: Just before finalization results frameworks Strategic Prioritization Objective: Cross analyze issues in implementation progress Instrument: Monitoring framework JAWP UNDAF and BOS Timing: End of year Annual Monitoring 10 min Objective: Cross analyze issues in implementation progress & lessons learned for next cycle Instrument: Evaluation Plan UNDAF and BOS Timing: End of cycle Evaluation

Government of United Republic of Tanzania One Budget Common Budgetary Framework Joint Resource Mobilization Strategy & Monitoring One Fund & Performance Based Allocations One Programme Operating as One Business Operations Strategy Procure- ment HACT/ Finance Common Premises Human Resources ICT Communicating as One Joint Comms. Strategy Common Messaging & Advocacy Common tools OMT Resident Coordinator & UNCMT One Leader* Government of United Republic of Tanzania JSC Audit, Monitoring and Evaluation POMT UNCG Shared Values, Norms and Standards ECG Programme Results Matrix NOTE: Only display for a few seconds, to provide an overview of current Governance structure and how the Business Operataions Strategy is integrated. This reflect the current Governance structure of UN Tanzania and as you will notice the BOS is an integral part of the Operating as One pillar and contribute to the One UN Country Result report that is produced on an annual basis. 10 x Programme Working Groups One UN Country Results Report * Main elements are: Management and Accountability System, UNCT Code of Conduct and mutual accountability framework of Results Groups, OMT and CCG conveners and members.

Operating as One - BOS UPDATES Working Groups   BOS Planned Savings for UNDAP ($ US) Actuals up to date ($ US) ICT (Common Internet Services) 1,572,047 Key Common One UN ISP with MNT now in place-$330k monthly savings achieved at end July2016. Not just $Monetary savings: Agencies took advantage of best price from ISP to increase Bandwidth (efficiency) from109MBs to 217MBs Projected ICT savings of $1.58m from harmonization/sharing of systems & contracts in common ICT ops. BOS estimated target likely t/b achieved by 2018. Procurement 1,488,489 Total BOS cost savings on LTA discounts and reduction in Transactional costs (efficiency gains/time savings). Also improving overall quality of procurements. Current savings on operational LTAs (Transactional cost savings & Discounts) at $908,000 at end July 2016 14 LTAs developed & operationalized (target is 19 LTAs for entire UNDAP). Remaining 5 LTAs by end 2016. Key Hotel LTAs to be soon in place with 22 Hotels. Key Printing LTA not timely implemented. Delays on Hotel & Printing LTAs cost us approx. $200k/ year in lost savings. Target Savings may still be reached: Revised estimate savings now at $1.2 mil Finance ( US$ exchange rate) 10,190,700 Savings from Preferential rates on USDs exchanged to Rwfs, local banks & International financial companies using a bidding process on all FX transactions. Planned Target may be missed by $1m. Current savings at $4.0 million at end July 2016 Implementation of new Banking LTAs by key Agencies was late(Aug2015)–However, if same US$185m or more is exchanged for remaining UNDAP period,BOS svngs w/b at $9m by 2018. Human Resources Joint Recruitments: Strengthen inter-agency recruitment panels, develop good candidate roasters t/b shared amongst Agencies Joint Learning: Staff Learning Needs Assessment Survey t/b relaunched in Q3 2016 then develop a UN joint learning plan. Harmonized Service Contract Modality: Alternate Output: Effectively conduct Salary Surveys for FTAs & SC Holders: Activities: Conduct SC Salary Survey (highly required) in Q3 2016, WFP is Lead Agency. Work closely with LSSC on FTA Salary Surveys Q3 2016: BOS estimated benefits will be partially realized One UN House 1,725,172 Total Estimated BOS Savings 14,976,408

BOS focus areas and results to date Procurement Tanzania One Procurement Team active since 2008 Focus on common Long Term Agreements 66 common LTAs developed Estimated cost avoidance of USD 2,5 million since 2011 ICT All but two agencies connected to common ICT network Bandwidth management service Increased mphs and reduced costs Share point facility piloted Human Resources Harmonized approach towards staff DaO staff appraisal Common induction booklet Delays in harmonization in recruitment process, job classification etc due to HQ rules HACT/Finance Joint macro and micro assessment undertaken Common assurance plan developed Common policy of transport allowances KEY MESSAGE: Focus has been on common procurement (which is also the recommendation from the BOS evaluation) which has generated cumulative cost avoidance from 2011 of about 2.5 million USD. ONLY ON REDUCED TRANSACTION COST. SAVINGS ON DISCOUNTS NOT YET CALCULATED Procurement Of the six BOS areas included in Tanzania, focus has been on common procurement, whereas the Tanzania One Procurement Team (TOPT) has been active since 2008, supporting common procurement progress. TOPT has developed 66 common long term agreements, available to all UN agencies. The LTAs range from provision of services such as cleaning, security, conference facilities, generator maintenance to provision of office suppliers, driver uniforms; printer supplies. Agreement of areas for common LTAs has been based on spending analysis combined with a discussion in the TOPT. Through the use of the common LTA, we have estimated cost avoidance, in terms of staff time for the past four years of 2,5 million USD. This does not mean 2,5 million extra in our pocket, but that agency staff have been able to reduce time spent on procurement which they have been able to use for other areas. ICT Progress has also been made within common ICT whereas all but two agencies are connected to a common network, applying bandwidth management service and UN had been able to increase speed while reducing costs. Further progress will be made on the Knowledge management aspects in relation to the roll-out of our new on-line platform which I will get back to by the end of the presentation. Human Resources Work within Human Resource area has been challenged by rules and regulations within agencies, hampering many of the initiatives taken by staff at country level. Some progress has been made in the institution of a common agreed policy for inclusion on contribution to DaO in staff performance appraisal. Identifying incentives for staff to engage in common processes is one of the key aspects of a successful collaboration on business harmonization. HACT/Finance We note with concern an apparently reverse in HACT collaboration with the launch of the new guidelines, whereas agencies retract to applying the minimum requirement of collaboration as guided by their respective HQs. Common UN premises The strive to establish a One UN house in Dar es Salaam is ongoing and new progress has been made recently with the allocation of land by Government. Currently 9 agencies are co-located in Dar es Salaam, while other are scatters following a severe flooding destroying the UN compound in 2011. In Zanzibar all agencies are co-located and the office is managed as a common service, cost shared by agencies presented on the islands. IN THE PAST 2 YEARS WE HAVE MANAGED TO CONTAINED BUGDET TO ABOUT 3% INCREASES. Transport and Logistics Has mostly been managed by the development of common agreement with vendors but we foresee more cost-savings to be made by introduction of common fleet management, as where number of co-located agencies are increased. Common UN premises Common premise in Zanzibar 9 agencies co-located in Dar es Salaam One UN house in development process Transport and Logistics Common agreement for transport/car rental/travel Exploring options for common fleet management

UNDG Support for BOS Message: UNDG will support the UNCTs who want to move forward on the BOS. These are the BOS support structures in place for the countries. They can be unlocked by the RC sending the UNCT approved roadmap with the BOS project timelines to the UNDG (ref next slide)

QUESTIONS