As residents’ expectations and technology evolve, so too must local governments. Customer centricity, cloud IT and innovation must be high on the agenda of leaders.
The pressures on local government to get key investment, resource allocation and delivery model decisions right have never been greater. Increasing demand for services, rapid technology change and the constant requirement to invest in asset construction and renewal are forcing councils to reconsider traditional business models.
In responding to these pressures and re-examining the way local government is run, leadership is contending with three key factors:
1. Limitations on traditional revenue sources
Pressures on local government have been compounded by the Commonwealth decision in the 2014-15 Budget to pause the indexation of Financial Assistance Grants to local government1; the recognition by the Productivity Commission that local government is near its maximum capacity to generate own-source revenue2; and in Victoria, the introduction of ‘Fair Go rate capping’.
This forces the reappraisal and reprioritisation of the way councils run their organisations, to deliver more for less. They must challenge the way things have ‘always been done’, transform operating models, drive best practice and process efficiency, and investigate alternative models for service delivery.
However, as one local council CEO said at KPMG’s ‘Local Government, Ripe for Disruption’ Conversation Series, the limitation on revenue is only one factor to drive transformational change. It should not serve as the primary driver as this will limit creativity. It can, however, create urgency to trigger action.
2. The change in residents’ expectations
Social media and new technology enable constituents to express themselves vocally, if they believe that issues are not being addressed or council services fall short. This is aligned to the growing perception of residents as ‘customers’, rather than merely ratepayers, who expect the same levels of service from government as from commercial transactions. Customer experience tops the list in many industries, and consumers are used to high quality, easy-to-use user interfaces. Residents no longer differentiate between their expectations of service delivery.
3. Rapidly advancing technologies
Technology is changing rapidly. Both those in customer-facing services, and those in support roles, must drive efficiency and deliver on the mandate of providing value for money.
We cannot see what technologies will emerge, so forward planning is increasingly difficult. However, two technologies that will impact councils are self-driving cars and drones. These will reshape the look and feel of local councils, and impact on the services and infrastructure needed to accommodate them. Preparing for these changes will be a task on a never-seen-before scale.
Other factors that individual councils must address include:
To succeed in this new landscape, we suggest the following key actions:
Put customer centricity first
Councils have the greatest capacity to identify and respond to emerging community needs. This strength must be reflected in how local government determines shifting customer demands, while ensuring that its governance and resource allocation models are flexible.
Local governments are striving towards customer-centric models of service delivery that anticipate and respond to community needs in a sustainable and agile manner. Having clear views on the cost to serve and the outcomes delivered is essential.
Re-think business as usual
The ability to meet changing community expectations requires a continual process of self-reflection and evaluation by councils. As highlighted by the Australian Centre for Excellence in Local Government, “…service delivery reviews are vital processes to ensure local government services are appropriate, effective and efficient”.3
Service reviews should be an iterative program of review that drives a culture of continuous improvement and smarter investment in service delivery. This requires fresh thinking, challenging the way ‘things have always been done’. It involves critically examining every component of the organisation, including redesigning operating models and organisational structures, adopting best practice processes, driving cultural change, adopting innovative methods for engaging key stakeholders, and considering alternative approaches and models for service delivery.
Revisit and reshape IT
Councils need to invest in a future-proof IT architecture, incorporating modern technology principles and practices such as cloud based Software as a Service (SaaS), business and process led specification, and agile methods.
With today’s shift towards cloud based SaaS solutions, systems that were previously out of reach are now affordable to local government. The higher rate of change requires more innovation and adjustment in what the systems offer to residents. There is an opportunity to take a fresh look at systems, and to challenge the assumptions that local government is highly specialised, with only limited options available to it.
Local governments can no longer afford to only think locally. Regional partners at local, state and federal levels are fundamental to the achievement of better social and economic outcomes within a fiscally constrained environment. Our current Commonwealth Government has a committed Cities agenda, and a willingness to engage with state and local governments around their priorities through City Deals. We are seeing heightened collaboration with like-minded councils around investment in IT service profiling and reviews, operational shared services and innovative knowledge sharing. Leveraging regional and national partnerships is critical to ensuring local investment can be amplified through complementary investments.
Have an innovation agenda
Innovation is on the agenda of most councils, but open and effective innovation management requires nurturing and ongoing development.
One example is ‘Smart Cities’. Underpinned by emerging technologies such as the Internet of Things (IoT), cloud computing and ubiquitous connectivity, alongside advances in cognitive computing and machine learning (AI), Smart Cities can enable greater citizen engagement, improve quality of life, provide opportunities for economic development and unlock service efficiencies.
While Smart City initiatives can provide a range of benefits and are efficient and cost-effective, they do have challenges. Many Smart City projects or pilots have been ‘point solutions’ driven by technology, rather than from the viewpoint of the citizen. These have not been sustainable nor scalable, and may have missed the mark in terms of understanding and addressing the core issues facing city stakeholders.
Therefore, creating a strategic framework and guiding principles framed around a ‘citizen-centric’ view is an important foundational component of Smart City thinking. Smart Cities can be an important building block of an innovation agenda, but this requires an appropriate approach and framework.
If the changes ahead appear daunting, remember that all challenges can be turned into opportunities. As we approach 2020, local councils can take stock, re-evaluate and prepare. They have every chance to lead the way into a dynamic future.
A version of this article, Looking to the future: what's next for local government, was previously published on Australian Govlink Issue 20, 2017.