Local government – a challenging future | KPMG | GLOBAL

Local government – a challenging future

Local government – a challenging future

As residents’ expectations and technology evolve, so too must local governments. Leadership can take key actions to succeed in the new landscape | 🕒 5-min read.

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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 local government 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 - Forces the reappraisal and reprioritization of the way local government run their organizations, 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.
  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 government 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 government, 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 local government must address include:

  • Ageing technology and under-investment

Many councils support outdated IT systems, set within a complex and inefficient infrastructure that is not keeping pace with current practices and is limiting their ability to grow. Local governments which have recognized their under-investment in IT, and are prepared to evolve the maturity of their IT function as well as upgrading to cloud-based technology, will create an advantage and be more agile.

  • Historical planning methods

Planning has not caught up with development and is largely still run on a functional/organizational level, rather than being service-led. But service-led planning will enable strategic direction setting, realistic cost assessments, individual staff KPIs, and appropriate funding for technology or outsourcing.

Preparing for success

To succeed in this new landscape, we suggest the following key actions:

  1. Put customer centricity first - Local and municipal governments along with 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.
  2. Re-think business as usual - The ability to meet changing community expectations requires a continual process of self-reflection and evaluation. Service reviews should be an iterative program that drives a culture of continuous improvement and smarter investment in service delivery1. This requires fresh thinking, challenging the way `things have always been done'. It involves critically examining every component of the organization, including redesigning operating models and organizational structures, adopting best practice processes, driving cultural change, adopting innovative methods for engaging key stakeholders, and considering alternative approaches and models for service delivery.
  3. Revisit and reshape IT - Local and municipal governments along with 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 specialized, with only limited options available to it.
  4. Think collaboratively - 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. In Australia for example the 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 local government 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.
  5. Have an innovation agenda - Innovation is on the agenda of most local governments, 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 universal 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 government 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.

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