Local authorities have been badly hit by the austerity measures being put in place by Central Government.
That fact has been apparent for several years. Not only are authorities dealing with an increase in demands from their constituents, they are being put under increasing pressure from the coalition government to deliver up significant savings.
To many experiencing this pressure, strategic commissioning is seen as the ultimate panacea. Whilst strategic commissioning can be effective in improving services and cutting costs, too many local authorities are leaping onto the bandwagon without so much as a tentative look beforehand.
Ultimately, this has led to some high-profile disasters, and numerous failures. Local authorities often replace one problem with another. And that in itself is the mistake.
But more on that shortly – let’s first take a look at why local authorities should outsource.
The Benefits and Advantages of Strategic Commissioning
When delivered and managed in the right way, strategic commissioning offers an enormous number of benefits. It allows local authorities to:
- Focus on core competencies
- Reduce in-house headcount and attrition rates
- Reallocate core staff to more prioritised outcomes
- Refine project/programme management, risk management, contract management and service delivery skills
- Implement demand management and service delivery disciplines
- Move risk, responsibility, and accountability for the delivery of benefits realisation to a third party
- Set-up a strong governance discipline and predict longer term expenses for the outsourced function against pre-defined business objectives
- Facilitate joint and proactive problem-solving and innovation practices.
At Best Practice Group we have a great deal of experience in seeing how strategic commissioning can work – and when it works, it can have an extraordinarily beneficial impact on both costs and service delivery, as outlined above.
Unfortunately, many local authorities have found out the hard way that strategic commissioning is not an immediate, “set and forget” solution. The benefits mentioned above only surface when strategic commissioning is implemented in the right manner, and under the right circumstances.
When is the Right Time?
When first considering strategic commissioning, the first question that any local authority should ask themselves is this:
Am I outsourcing a problem?
The answer is often “yes”. Under those circumstances, if the local authority proceeds, the future relationship with a service provider is typically doomed before it has even begun.
If we could give just one piece of advice to local authorities considering strategic commissioning, it would be this: you should never outsource a problem. Why? Because you do not solve a problem by outsourcing it – you simply move it to a third party.
Dealing with an in-house problem is hard when you have direct control over the people, budget and environment. Now consider how much harder it would be to deal with that same problem if you didn’t have direct control over the people, budget and environment.
Strategic Commissioning Mistake
Problem-solving comes first, followed by strategic commissioning. Too many local authorities have made the mistake of getting those two steps in the wrong order. You may engage with third parties to help resolve the problem, and that help may well come from the organisation that you eventually partner with in the long term. However, there must be a clear delineation between problem-solving and strategic commissioning.
A service should only be outsourced once you have unequivocal evidence, proven over a reasonable period of time, that any associated problems have been resolved.
The potential for success of any strategic commissioning partnership is determined at the outset.
The common strategic commissioning mistake is that too many local authorities hand over a problem and expect to see an improvement in service delivery and a reduction in cost. The clash of reality versus expectations is plain to see.
If instead the problem is first resolved, then outsourced, reality and expectations can tread the same path.
Creative Commons image courtesy of lumaxart