Agenda item

To seek Cabinet’s support and approval to three proposed digital transformation investment strands to provide opportunities to increase efficiency, reduce operating costs and potentially generate income.

RESOLVED that Cabinet approves -

(a) each of the Digital Transformation programme investment proposals outlined, specifically;

i. A ‘front office’ product suite and specialist consultant resourcing to achieve integration to ‘back office’ databases over an eighteen month period with one-off investment costs of £519,200 with £71,500 re-occurring costs per annum.

ii. An IT migration strategy and specialist consultant resourcing to host the majority of the Council’s IT systems on the Microsoft Azure ‘Public Cloud’ platform over a two year period with one-off investment costs of £226,000 and with Microsoft re-occurring monthly costs thereafter.

iii. Development of a Tendring Tourism and Events smartphone App over a six month period through specialist consultancy resources and with one-off investment costs of £120,000.

(b) that authority be delegated to the Chief Executive, in consultation with the Portfolio Holders for Finance and Corporate Resources and Leisure and Tourism, to agree continuation within existing budgets or termination of the App development after a further feasibility study.

(c) that Digital Transformation Investment works totalling £865,200 be funded in part from £440,000 funds already set aside for existing/ related capital IT improvement budgets with the remaining funding by a transfer of £414,000 from the 2017/18 New Homes Bonus and £11,200 from the Building for the Future Reserve.

(d) that Officers be requested to finalise the associated procurement activities in accordance with the Council’s Procurement Procedure rules.

(e) that authority be delegated to the Corporate Director (Corporate Services) to make the necessary on-going budget adjustments to reflect the financial impact of the investment proposed, as set out in Appendix A to item A.9 of the Report of the Finance and Corporate Services Portfolio Holder.

There was submitted a comprehensive report by the Portfolio Holder for Finance and Corporate Resources (Report A.9), which sought Cabinet’s support and approval to three proposed Digital Transformation investment strands to provide opportunities to increase efficiency, reduce operating costs and potentially generate income.

Cabinet was aware that the Council’s IT systems played a fundamental enabling role in its day to day service provision and access to information. The projects and investment set out in the Portfolio Holder’s report in particular formed a key building block in several of the Council’s key strategies and plans to transform and modernise the way the Council worked, delivered services and interacted with residents. More specifically -

ü The investment proposed demonstrated a strong rate of return and the savings generated would contribute significantly to the newly adopted long term Financial Strategy;

ü The proposed integration of information held on the Council’s major databases into a single view for staff and the opportunity to develop a Tendring Portal would deliver a step change in the delivery of the Customer Service Strategy;

ü Significant improvements to the web site and the development of an “Events App” would be a major step forward in improving access to information digitally – helping to deliver Channel Shift; and

ü The integration of back office systems and the move to host systems and store data remotely in “the cloud” would deliver increased flexibility and the ability to deliver services better using digital means and to support face to face delivery of services by staff – all in accordance with the IT Strategy.

It was reported that for the past six months Officers had been working alongside Amido and Intergence consultants to understand Tendring District Council’s state of digital maturity i.e. how each department currently used IT to deliver statutory and non-statutory services to residents. The recommendations resulting from this work comprised three strands of IT and specialist resource investment proposals, as follows:-

1. Investment in ‘front office’ IT products and specialist consultant resources to integrate these systems with existing ‘back office’ databases and systems requiring £519,200 one off investment with £71,500 ongoing costs per year and returning an overall ongoing saving of £35,266 per year. (6.8% ROI). The project would enable ‘step change’ improvements in customer service delivery, and Officers mobile working out in the community.

2. Investment to migrate IT systems data storage from Council-owned/ maintained hardware that would soon require investment or replacement to that of rented Microsoft Azure platform resources – ‘The Public Cloud’. This project required a one off investment of £226,000 and had ongoing estimated costs of £149,000 which represented a small overall cost increase of £8,337 per year. However, this project represented a shift from periodic and increasingly large capital investment and ownership of IT hardware, to that of monthly ‘pay as you go’ hardware rental costs. There were additional operational benefits in terms of flexibility and business continuity/ resilience.

3. Investment to develop a Council Smartphone ‘Tourism and Events App’ to promote tourism events and to enhance Air Show crowd funding income. This project required a one off investment of £120,000 with additional income streams indicatively estimated at £113,119 per year in year 3 of the project. The project also represented a new communications media for the Council to utilise.

Cabinet was informed that the digital transformation programme was primarily about using technology in order to improve performance and efficiency (doing more for less), provide residents and customers with a digital self-service ‘single portal access to services’ council-wide and introducing a new Mobile Phone App communications media channel - from a financial perspective the programme costs could be summarised as follows:

Digital Transformation Programme Strand	One Off Investment Costs (£)	Ongoing Annual Costs (£)	Estimated Savings/ Income (£)
Investment In ‘Front Office’ Technology Integrated With ‘Back Office’ Databases	519,200	71,500	106,766
Migration To The Microsoft Azure Platform – ‘The Public Cloud’	226,000	149,000	140,663
Development of a Smartphone Tendring ‘Tourism Events App’’	120,000	0	113,119
Totals	865,200	220,500	360,548

The full financial costs of each of the three elements together with their different investment return models were outlined in detail in Appendix A to the Portfolio Holder’s report.

Cabinet was advised that the proposed two year programme of investment in customer service improvements supported through new IT investment represented a considerable investment on the Council’s behalf. There were clearly programme delivery risks which were outlined with appropriate risk mitigation/ management measures in Appendix B to the Portfolio Holder’s report.

Cabinet recognised that the programme would require robust monitoring and reporting arrangements with risks and issues requiring active management throughout. With this in mind, key officers would meet with the consultants to monitor issues/ risks and performance on a weekly basis. Additionally, Officers would establish a monthly Programme Board, chaired by the Corporate Director (Corporate Services), and including the Portfolio Holder for Finance and Corporate Resources together with key officers to monitor deliverables, timescales, costs and savings.

It was proposed that the procurement would be undertaken through the UK Government GCloud-9 framework agreement route which accorded with the Council’s Procurement Procedure Rules.

The Portfolio Holder for Finance and Corporate Resources (Councillor G V Guglielmi) read out the following statement:-

“This is the next phase of our Digital Transformation journey, following the completion of our December 2013 £1.5million investment in our ageing IT infrastructure which spanned over three years.

It should be noted that this has saved some £110,000 one-off savings and at least £80,000 ongoing yearly saving. Most importantly it enabled this Council to cope with the ever increasing reliance on IT services and pave the way for the huge digital benefits which we will now be embarking on.

The cost of this proposed next phase of our Digital Transformation will be £865,000 delivered over a two years’ time frame.

In April 2016 we brought back in-house our IT support services – producing ongoing yearly savings of £200,000 – at that time we identified that there would be a need for specialist contracts and that is in essence what these costs are.

I should stress the prudent approach taken in reporting this next Digital Transformation investment as it is based upon savings associated with forecasts of new customer self-service account take-up and estimates of new income generation. The reported savings and new income are modest, however, the actual returns could potentially far exceed the figures provided.

Some of these savings are staff savings (4 FTE in total) and whilst we predict significant staff efficiency improvements there will be managerial decisions required as to what to take and what to re-utilise in other areas. The staff savings will come about through natural staff turnover and UNISON has already been consulted.

Finance aside, this next Digital Transformation phase is about delivering our customer service strategy and our corporate priorities. It is about using technology to improve performance and doing more for less. It is about providing our residents and customers with secure digital self-service and introducing a new mobile phone App. There are three major strands of investment.

The first strand will introduce new front office technology integrated with our back office databases. It will generate estimated £35,000 savings from 2020 bur more importantly it will create a ‘council wide single view’ of each resident/customer for staff across all our IT systems. It will also allow digitally connected residents/customers to set up secure self-service accounts to pay bills, raise orders, view balance statements etc.

We already have evidence that our residents are migrating naturally to on-line engagement as one of the previous reports pointed out.

“Face-to-face” services will not cease. Instead, we will use the new technology to enhance our staff working capabilities and access to digital transformation out in the community and by working with partners.

The second strand will see the Council migrate its data storage to the Public Cloud, specifically the Microsoft Azure platform.

Back in 2013 the Public Cloud was not developed enough for it to be considered a credible, secure solution for us but Microsoft have since invested nearly £15 billion in this platform with an extra £1 billion investment in cyber security. It is a direction being adopted by our Essex Authority partners in the Essex On Line Partnership. The Council already runs some It services in the Cloud, this proposal will shift the balance to running nearly all IT services in the Cloud.

This data storage migration will move the Council from that of IT hardware ownership and periodic significant IT purchase costs to monthly ‘pay as you go’ IT rental charges removing an unbudgeted reoccurring cost estimated to be around £336,000 in 2019.

The third strand, the creation of a smart phone app is the most exciting. It is for us unchartered territory and an untapped market for TDC. This new “Tendring Tourism and Events App” will not only promote Crowd Funding income from our well-established Air Show but also support and promote other tourism events throughout the District.

Smartphone ownership is outstripping laptop ownership with 88% of UK adults predicted to own a smart phone by mid-2018 and 90% of the younger population (18 to 45 year olds) have owned one for several years. We will look for other ways to exploit this new media channel as our knowledge grows.

This App is a new venture for the Council and careful management will be needed. By way of recognising/minimising the risks a further feasibility study will determine if it is practicable to move forward with the App project or to cancel this strand of the programme without incurring charges. Having said this, the earning possibilities could be very substantial.

Our IT team led by John Higgins has a proven track record in managing and delivering IT investment and savings. This new Digital Transformation investment programme will again require an equally robust monitoring and reporting framework which I will ensure progresses smoothly. John Higgins and his team will once again lead the delivery working alongside the consultants.

I would like to conclude that this investment is very much the right course for this Council to embark on for two key, simple reasons:

1. Firstly, the investment will deliver a ‘step change’ in our resident/customer service capabilities (both mediated service and customer self-service). It will provide a toolkit to deliver our adopted Customer Service Strategy.

2. Secondly, that the reliance on IT services is increasing all the time and as such we must ensure that out IT infrastructure is robust enough and able enough to cope with the ever increasing demand on these services.”

Having considered the contents of the comprehensive report:-

It was proposed by Councillor G V Guglielmi, seconded by Councillor Nicholls and: