1. Can one CEO really run three LAs? Stephen Giacchino Director, MITIE

2. MITIE Can 1 CE run 3 LAs? Can SS work? Can outsourcing add value? Lessons Learned MY BRIEF  Who are MITIE and what do they do?  Can one Chief Executive really run three LAs?  Can Shared Services offer the efficiencies needed?  Can outsourcing support innovation and create efficiencies?  What can we learn from the commercial sector?

3. MITIE Can 1 CE run 3 LAs? Can SS work? Can outsourcing help? Lessons Learned Property Management Asset Management Facilities Management Energy Services 63:37 Private : Public £1.9bn Revenue 61,906+ employees 23 years of growth TOP 4 UK FM service provider

4. MITIE Can 1 CE run 3 LAs? Can SS work? Can outsourcing help? Lessons Learned

5. MITIE Can 1 CE run 3 LAs? Can SS work? Can outsourcing add value? Lessons Learned MITIE Social Housing 12% of Group Revenue

6. MITIE Can 1 CE run 3 LAs? Can SS work? Can outsourcing add value? Lessons Learned  It is not new  And more seem to be on the way  It happens in HAs as well  In the private sector, it almost always happens post merger YES 44 of the 50 largest HAs by stock ownership share a CE [Source: TSA, Regulatory and Statistical Return (RSR) for the year ended 31st March 2009] LGG, Shared Services Map http://local.gov.uk/lgv2/core/page.do?pageId=824307#contents-1 9 Unitaries from 44 councils

7. MITIE Can 1 CE run 3 LAs? Can SS work? Can outsourcing add value? Lessons Learned BUT Private Sector LESS Complex MORE Complex Public Sector Vision, Mission and Mandate Business Agenda Stakeholder Diversity Governance & Accountability Politics Districts Housing Associations Unitiaries / Shires  Can we really compare LAs to HAs and the private sector? Role of the CE

8. MITIE Can 1 CE run 3 LAs? Can SS work? Can outsourcing add value? Lessons Learned YES Other Benefits  New career opportunities  Easier recruitment and retention  More investment opportunities  Scale for best-of-breed technologies  Providing service users with access to specialist staff Nottinghamshire & Leicestershire County Councils £2m p.aHR, payroll, finance Bromsgrove & Redditch Councils£0.5m p.a.Management services East Lindsey & South Holland Districts £3.1m p.a.5 back office functions [Source: LG Group Shared Services Project, March 2011] Oxfordshire CC£4.5m p.a.Back office Herefordshire Council, NHS Herefordshire & Hospital Trusts £5.4m p.a.Corporate support functions [Source: CIPFA Shared Services Report, 2010] “ …more than 200 projects either already up-and-running or under consideration, with some delivering savings to residents in excess of £3 million a year ”. [Source: LG Group Shared Services Project, March 2011]

9. MITIE Can 1 CE run 3 LAs? Can SS work? Can outsourcing add value? Lessons Learned Views of 101 Councils about sharing services with adjacent councils or other public bodies ‘Total Place is very much on the agenda, rebadged in its new iteration… Joined up public services should not be a question, I want it to be the norm.’ Bob Neil, Local Government Minister, “..continuing with Total Place was ‘a no brainer’” David Parsons, Deputy Leader LGA [Source: YouGovStone Survey, May 2011]

10. MITIE Can 1 CE run 3 LAs? Can SS work? Can outsourcing add value? Lessons Learned BUT Private Sector Less EMOTIVE More EMOTIVE Public Sector Goal Alignment Service Objectives Identity Control Politics Significant Challenges

11. MITIE Can 1 CE run 3 LAs? Can SS work? Can outsourcing add value? Lessons Learned  The question should be WHY… …shared services ? …have 1 CEO ? To cut costs  To share R&D To capitalise on brand To focus on core competency To grow services / products To enter new markets Because you don’t need more than 1  One Golden Rule (shareholder value)  Single Agenda (growth)  Homogenous stakeholder group  Transactional Leadership is vested elsewhere

12. MITIE Can 1 CE run 3 LAs? Can SS work? Can outsourcing add value? Lessons Learned YES  Total UK Turnover = £207bn p.a.  60:40 private/public sector  Facilities & Property Management = £55.8bn p.a [Source: Oxford Economics, April 2011]

13. MITIE Can 1 CE run 3 LAs? Can SS work? Can outsourcing add value? Lessons Learned [Source: Oxford Economics, April 2011]

14. MITIE Can 1 CE run 3 LAs? Can SS work? Can outsourcing add value? Lessons Learned YES Survey of 101 Councils (May 2011)  84% believe outsourcing has been successful in achieving savings  58% believe outsourcing is critical to them achieving savings  70% - the expected increase in levels of outsourcing  63% believe that partnership is the most important factor in a public-private relationship [Source: YouGovStone Survey, May 2011]

15. MITIE Can 1 CE run 3 LAs? Can SS work? Can outsourcing add value? Lessons Learned 1980 1990 2000 2010 2015 Single Service In-houseIntegrated FMStrategic Outsourcing Bundled Services Managed Services Cost Reduction Opportunities Contribution to client’s strategic development External Investment Potential Added Value

16. MITIE Can 1 CE run 3 LAs? Can SS work? Can outsourcing add value? Lessons Learned 1980 1990 2000 2010 2015 Cost Reduction Opportunities Low High Low Contribution to client’s strategic development External Investment Potential High Low Single Service Managed Services Integrated Services Bundled Services Strategic Outsourcing In-houseSingle Service Integrated FMStrategic Outsourcing Bundled Services Managed Services

17. MITIE Can 1 CE run 3 LAs? Can SS work? Can outsourcing add value? Lessons Learned  Four Social Partners  Separate, ‘greenfield’ legal entity  Platform for community engagement  Employee Ownership

18. MITIE Can 1 CE run 3 LAs? Can SS work? Can outsourcing add value? Lessons Learned Restructuring cost base And not…  short-term gains It’s about…  cost cutting Creating strategic opportunity Strategic goal alignment  service scope similarity Cultural fit  geographical proximity Political will  political dictat TRANSFORMATIONAL Leadership  TRANSACTIONAL Leadership

19. In Summary… The evidence suggests you can have 1 CE, SS does work, and outsourcing adds value one CE? share services? outsourcing? WHY There ISN’T a right or wrong answer BUT There IS a right question

20. Dr Stephen Giacchino Director, Strategy and Corporate Development MITIE Group PLC T: 0115 9407015 E: stephen.giacchino@mitie.com Follow us on Twitter @MPM_Strategy