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Local government transformation playbook

Executive summary

Local governments across Australia are under pressure like never before as a new generation of constituents demand higher levels of services and greater flexibility in the way they interact with their local council.  Unfortunately, councils are rarely able to respond rapidly to these calls for change as they struggle with constraints created by a fixed revenue base and ever increasing operating costs.

Nationally, councils are aware of the need for transformation, not only for constituent driven reasons but also because of regulatory oversight pressures. Unfortunately, most of them are unprepared for the journey. Major change is made difficult by insufficient scale, legacy IT systems and outdated organisational structures.

The COVID pandemic, for all its destruction, has raised questions about not only how we work and interact with one another, but also about long-standing inefficient practices previously defended as “the way things are done around here.” Whilst hopefully the pandemic will soon be in the rearview mirror, remote working, digital service channels and cloud computing will likely now be fast-tracked to become standard operating procedures across local governments.

The arrival of Industry 4.0 or the 4th Industrial Revolution is one of the most exciting times in evolution of global business; however; it has dramatic implications for local governments. IoT, automation, Big Data and robotics literally reimagine how local governments will carry out the majority of their work. But transforming ways of working is difficult and the potential for these technologies still exceeds the user cases developed by software vendors.

In this report, we look at the top eight trends globally which are driving the evolution of local government. More concretely, these trends represent the actions being taken by leading councils to respond to the market forces around them. Some of our findings were expected and are part of a long term evoloution, for example, the increasing rollout of the smart cities vision and the renewed industry focus on CX. Other trends however, have only gained prominence in the last few years. 

Cybersecurity, for example, was previously an issue only for the IT department, but is now a first-order CEO and leadership team challenge. 

It is clear that the local governments who are able to embrace these eight trends will be able to create a step change in performance both financially and in terms of customer satisfaction. Councils that are unwilling to adapt are likely destined for a future of unsatisfied constituents, insufficient budgets and few options for performance improvement.

The eight trends shaping the future of local government

01 Cybersecurity as a first-order ceo priority

Historically, cybersecurity did not make it onto the agenda of local government leaders – it was something for IT specialists to manage. However, the experience of the last two years has changed that forever. Large-scale adoption of work-from-home technologies, heightened activity on customer-facing networks, and greater use of online services all present fresh openings, which a new generation of cyberattackers have been quick to exploit.

Local governments globally have been identified by hackers as prime targets due to the large amount of sensitive data they hold, the unique control they have over strategic assets (like water) and the increasing use of vulnerable IoT technologies to manage assets.

One of these attacks took place in the fall of 2019 hitting 22 smaller communities in Texas for a combined ransom of $2.5 million. Many of these local governments without reliable backups were left with no option but to pay the ransom to get back up and running.

It is estimated that a breathtaking 70% of all ransomware attacks globally target state and local government. 

Leading local governments have placed Cybersecurity at the top of their executive agenda and devote substantial budgetary resources to it. Many have appointed a CISO (chief information security officer) who reports directly to the CEO, as is the emerging trend in the corporate world. Most importantly, however, leaders in this space are focused on introducing cybersecurity awareness across their entire organisations, including annual mandatory trainings, regular employee testing and rigid enforcement of cybersecurity policies. The majority of cybersecurity breaches originate from poor security that create vulnerabilities that are able to be utilised by hackers.

CASE STUDY - Atlanta from last to first in cyber

In 2018, the City of Atlanta was hit with a crippling ransomware attack, an attack which at the time was one of the largest ever on a local government. As a result, a third of the software programs used by the city went offline or were partially disabled, affecting city services to a large extent and ultimately costing tax payers around 17 million.

Since then, high-profile Mayor Keisha Lance Bottoms has made cybersecurity the number one priority of her administration, resulting in the city emerging, after two years of transformation, as a front-runner in cybersecurity globally. The first step was the creation of a new cybersecurity governance structure of senior, experienced IT employees (CIO and CISO) who were able to operate outside and across historical departmental silos. This leadership team, including the mayor, then rebuilt the city’s cyber capabilities utilising three key pillars. Firstly, the creation of a framework which places cybersecurity at the center of decisions made both by management and employees. This was about focusing on fundamentals – getting things like password management, system access and email policy right. Secondly, the leadership team accelerated the retirement of vulnerable legacy systems and migration to hybrid cloud services. The final piece of the transformation as a recognition that no local government can beat cybercrime alone and that partnering closely with state and national authorities is vital to staying one step ahead.

02 A more targeted fight to attract business

The competition both locally, nationally and internationally to attract new businesses and their accompanying investments is fierce. Local governments seeking more jobs for their residents and a higher tax base for council continue to offer a myriad of financial incentives to bring brand name companies to their community.

The truth is, however, that convincing businesses to move is difficult, large corporates are often “stuck” to their current locations due to an entrenched labour force and legacy infrastructure. But beyond corporate inertia, councils struggle to convince businesses because they find it difficult to genuinely differentiate themselves from other possible investment locations. Councils have historically relied heavily on financial incentives to compete in this area, though research would suggest that such grants are no more than hygiene factors and certainly not genuine motivating factors. Far more important are decision criteria such as support infrastructure, access to markets, lifestyle and industry-specific ecosystems.

To address these difficulties, local governments are increasingly sharpening their industry focus, realising that the highest payoffs from business-attraction efforts come from initiatives that are part of a more holistic strategy to boost growth within certain economic sectors.

Cluster strategies create a field of gravity that attracts other companies that are in the same supply chain e.g., health clusters, renewable energy clusters etc. However, such strategies must be accompanied with aggressive anchoring incentives, cluster-specific infrastructure and a proactive ecosystem development program.

The lattest trend in business attraction is a renewed interest in start-ups at the local government level. Given the difficulty in uprooting established businesses, often the best hope for attracting business is actively nurturing and growing emerging entities. If done correctly and at sufficient scale, this can ensure an infinite pipeline of new business investments in a region, thereby delivering a stable growth in jobs over time. Surprising perhaps is how far leading local governments are prepared to go to support such start-ups. This can include the development of physical workspace facilities, government spinoffs, generous grants, first-buyer guarantees, provision of access to data and platforms, and connections with VC providers.

The economic rationale for these kinds of initiatives is simply that by making a large number of relatively low-cost bets, local governments are able ensure future economic

CASE STUDY - Lake macquarie backing entrepreuers

In 2014, copying models from the USA and Western Europe, the Lake Macquarie City Council established a fully funded but separate corporate entity responsible for the economic development of the city. Known as LMEDC, the entity comprises two divisions – Dantia and Dashworks, each with separate strategic objectives.

Dantia’s purpose is to diversify the city’s economic base and increase investment and jobs across the area. Dantia supports and liaises with potential investors in the region, offering deep local knowledge, experience and connections, plus the flexibility and business acumen to make things happen quickly without the bureaucracy which can sometimes be associated with government.

Dashworks, by comparison, has a singular focus on building new businesses with its corporate purpose being the development and commercialisation of start-ups. Dashworks offers budding entrepreneurs top-quality coworking facilities, high-speed Internet, and tailored capacity-building events. Beyond coworking, Dashboards operates Makespace, Australia’s first fully integrated accelerator and incubator for hardware. The incubator offers access to commercial grade equipment, funding opportunities, manufacturing R&D and mentor support programs.

Whilst too early to fully evaluate this innovative program, in 2019 alone Dantia reports facilitating the creation of 962 local jobs, $50 million of investment and support for over 150 businesses to innovate and grow.

03 Practical execution of the smart cities vision

Whilst the concept of smart cities has been with us for decades, the promise of smart cities has often felt as a distant dream compared to the reality of daily operations. However, that gap which historically consisted of a mix of cultural, budgetary and technology limitations is now beginning to close rapidly.

Perhaps, the biggest enabler of this has been the fast-moving evolution of technology, mainly AI, IoT and Big Data. These
technologies have not only matured but have become economically accessible allowing greater relisation of the smart cities vision. With implementation now underway, this emerging trend is now gaining genuine momentum. IDC, for example, expects smart-city spending to increase to $203 billion by 2024.

Leading local government are increasing their focus in two key regards. Firstly, implementation of remote management of critical infrastructure and services. It is expected that the top 30% of local governments will be using IoT, AI and digital twins to create a hybrid physical/digital solution by 2025. Secondly, local governments are using technology to enable greater amenity for citizens – AI-optimised maintenance and cleaning routines for parks and public toilets, IoT smart street lighting and preventative road maintenance based on dashboard camera footage.

These generalised trends will be augmented by the emergence of new products to address the public health challenges of the last 24 months. Smart-city elements such as public safety through contactless technologies, 5G popularisation and biometric identification will all begin to be implemented at a grass roots.

CASE STUDY - The “SMART” city of Gold Coast

The City of the Gold Coast, the second largest local government in Australia, established in 2016 the aspirational goal of becoming Australia’s leading digital city. Since then, it has intitated its digital city program and launched a raft of integrated technology projects propelling it to the cutting edge of digital in the local government space.

The Gold Coast’s “Surf Network” is being planned as Australia’s largest public Wi-Fi network. The council-owned fibre optic network provides free public internet to residents and has already been rolled out to key city population centres and city libraries. It already boasts some 2 million users taking advantage of the 4 GB-per-day download allowance. The Gold Coast Smart Meters digital project has already replaced thousands of smart meters utilising a large-scale LoRaWAN network. The smart device is attached to existing meters, it then collects, transmits and analyses water-usage data, digitally sending the information to secure operational and customer digital portals. This allows customers to self-monitor usage and council to monitor for network leaks or maintence related issues.

Perhaps the Gold Coast’s most ambitious project has been the development of its Digital City Platform. This initiative seeks to integrate large volumes of data, including transport, economic and operational data in order to allow improved investment decisions and better allocation of resources. Initial digital initiatives have already been developed on the platform including a digital car parking management system as well as an emergency action protocol program in the case of natural disasters like flooding. The platform is also being used to allow a better understanding of the characteristics and flows of the millions of visitors to the Gold Coast with a particular focus on enabling improvements in the tourism and events sectors.

04 Partnering and cooperation

Unfortunately, the majority of local governments are still sub-scale, resulting in significant underutilisation of assets and inefficiency of operations. In response to this, the last decade has seen ongoing amalgamations of local councils as cities realise the benefit that larger councils can offer. Such amalgamations are, however, extremely political in nature, excruciating slow to negotiate and costly to execute.

As a workaround to this, there is an increasing trend for local councils to partner and cooperate with other councils and, in some cases, contract specific functions to other larger more established councils. This has the benefit of creating savings for the smaller local council, whilst at the same time creating new revenue opportunities for the large council.

Partnering is particularly important in the technology space. As we move into a new paradigm of digital platforms, it is clear that many technology efforts by local governments duplicate work which would more appropriately be managed on a single shared platform. Questions remain around who should be the first movers to build these platforms – being a pioneer is costly in terms of time, budget and risk, something most local councils have limited appetite for.

Moving forward, the implementation of a sustainable partnering model will likely require alignment of economic incentives. Specifically, a lead (council) investor with a number of consortium members who subsequently adopt and pay for the developed software.

CASE STUDY - Reroc shining a light on partnering

The Riverina Eastern Regional Organisation of Councils (REROC) is a voluntary association of seven councils and one water authority – Bland, Coolamon, Cootamundra-Gundagai, Greater Hume, Junee, Lockhart, Temora and Goldenfields Water. REROC’s main focus is the identification and implementation of resource sharing activities. This is primarily done through procurement and group purchasing for items such as retail electricity, technology hardware and software, bitumen emulsion, collection of scrap metal and purchase of waste oil collection facilities. The partnership group actively seeks out opportunities to share staffing resources as well.

Perhaps the greatest achievement of REROC since its inception has been as the lead partner for the Southern Lights NSW. Managed by REROC this program is the largest deployment of smart-enabled LED lighting in Australia, with over 75,000 LED street lights deployed across 41 local government areas. The deployment, which commenced in late 2019, has resulted in almost 40,000 lights installed by late 2020. The full deployment is expected to be completed by late 2022.

The project is designed to deliver better, safer, cheaper lighting and smarter, more connected communities. Not only will lighting levels be improved, the project will provide significant connectivity benefits to regional and rural communities. The Southern Lights project is a tangible example of the capacity for local government to collaborate and partner to improve service levels.

05 A new race to relocate skilled workers

Whether councils should primarily focus on attracting businesses or workers has long been something of a debate akin to which came first, the chicken or the egg. Traditional thinking has come down on the side of focusing on attracting businesses, who then in turn create jobs, which subsequently attracts new workers to the local government area.

This traditional thinking has however come under new scrutiny recently given that human capital (talent) is typically a precursor to the attraction of investment capital. That is, a robust and sustainable economy relies on a strong working population. Secondly, the COVID crisis has seen a significant acceleration in remote working, creating a physical decoupling of workers from their workplaces. Such a trend has seen workforces migrating out of major capital cities to seek lower cost and higher quality lifestyle locations.

Leading local councils are already instituting strategies to take advantage of these trends. Suddenly, smaller and more regional local government areas are able to compete on an equal footing with flashy capital cities in being able to appeal to in-demand working professionals such as architects, engineers, lawyers and accountants. Innovative councils have launched lifestyle-related promotions on social media to confront apartment bound, city dwelling employees with images of idyllic beaches, tranquil mountains and lush farmland as alternatives to their overpriced cramped city living arrangements.

Some governments are going even further to attract workers. The Queensland government has offered up to $1,750 in incentives for workers moving to specific regions with high labour needs. This program has been particularly effective as a result of its accompanying marketing and branding program “work in paradise.”

CASE STUDY - Tulsa remote “10,000 reasons to move”

Tulsa is the second-largest city in the state of Oklahoma and is home to over 400,000 residents. In the years just before the pandemic, the state of Oklahoma had its worst population outflow in years as college graduates kept moving away, particularly to big cities. To stem this brain drain, local council developed a worker attraction strategy called Tulsa Remote. The program is now known internationally as one of the most innovative and aggressive campaigns of any local government to relocate workers to a new local government area.

The program offers talented professionals considering relocating to Tulsa a raft of incentives designed to bring the best and brightest to the city. These incentives include $10,000 cash, space at Tulsa’s top coworking community, access to a community building programming, and events designed to assist with professional and personal networking.

The conditions of the program are simply that applicants must be full-time employed or self-employed on a remote basis, and that they will continue working on a remote basis once they arrive in Tulsa. The program is also selective with candidates chosen based on local government’s priorities in terms of skills, industry and social criteria.

The program has been an outsized success – the city receives some 60 applications for every place available in the program. In just a few short years, the program has relocated nearly 1,000 talented remote working professionals to the city. Equally, economic analysis suggests that the program has a payback period to the government of less than 3 years.

06 Customer experience defined by digital

Local council executives reported that their highest priority in 2020 was improving customer experience (CX). This is a trend which will no doubt carry through into 2021 and beyond(1).

Whilst the driver of CX is digital enablement, the starting point is customer understanding. Many councils are able to clearly articulate the services that they offer but fail to focus sufficiently on which customer problems they solve.

Leading local governments are able to put themselves into the customer’s shoes and understand not only their customer’s problems but also their pain points as they approach council for assistance.

Most failures in customer experience are not intuitive but require a deep understanding of how consumers experience the world and what resources they have available to them. For example, councils might have online forms but they might not be mobile responsive.

By comparison, mobile represents the predominant way consumers interact with the digital world. Alternatively, service requests may be able to be lodged digitally but no updates are provided to constituents on their status – failure to create this two-way digital conversation generates consumer anxiety and call centre frustration as vast amounts of time are spent dealing with followup requests.

Of course, considering solely customer interfaces is not sufficient – service delivery needs to be executed seamlessly across the front, middle and back offices, without relying on an increase in human resources and manual processes. Councils seeking a step change in CX are defining their vision, building customer insights and developing the processes, culture and organisation to support great CX. Finally they are enabling this with cutting-edge digital tools and technology.

CASE STUDY - Tea tree gully’s cx focus

The City of Tea Tree Gully (CTTG) is a local council in the Australian state of South Australia, in the outer north-eastern suburbs of Adelaide catering for around 100,000 residents.

CTTG have been on an ongoing journey to deliver exceptional customer experience. This multi-year program is based on three key goals – better understand the needs of their customers, embedding positive customer experience into all services, and being able to relate more closely to customer perceptions.

One initiative within this broader program has been the implementation of Openforms with direct integration into records management. This initiative has allowed the city to digitize more than 100 services. Key to this program has been a conscious effort to eliminate paper forms and PDF forms, which has resulted in a dramatic increase in online servicing and a corresponding reduction in processing time, with consumers utilsing online channels in up to 90% of cases for key services. This in turn has reduced call centre volumes by 31% and reduced significantly payment processing requirements.

The city closely tracks customer experience utilising standardized metrics and industry benchmarking to track performance and ensure improvement insights are actioned. So far, the program has achieved a 70% first contact resolution metric, some 13 percentage points above the industry average.

07 Shift from continuous improvement to transformation

Continuous improvement has for a long time been part of the vernacular of local councils. Most typically, this has been implemented with continuous improvement specialists embedded council departments along with council-level savings targets, which are then applied pro-rata to each of the departments. This traditional model has, however, come under increasing criticism in recent years. Such a siloed approach to improvement is typically only able to capture low hanging fruit and has put undue emphasis on one-off departmental cost initiatives which are often not aligned with the strategic direction of the local government as a whole.

To address this, leading local councils are making the move from continuous improvement to strategy-lead transformation. That is, rather than making one-off unrelated improvements, business transformation is about making fundamental changes in respond to shifts in the market. Such transformation should touch all aspects of an organisation, including the business model, customer relationships and culture.

Best practice transformation requires three key pillars – a comprehensive transformation plan, a supporting digital strategy and a rigorous implementation through an enterprise project management office (EPMO). The transformation plan and digital strategy establishes guiding principles for planned investments to improve the operations of the council and to ensure technology is aligned to strategic objectives. An effective EPMO is responsible for ensuring project execution and more importantly benefits realisation.

CASE STUDY - Boroughes of kingston and sutton

The Royal Borough of Kingston and Sutton Council are two separate local governments in the UK who collectively cover nearly 400,000 citizens and employ around 5,000 staff. They have both been on a unique and interesting joint transformation program since setting up a shared IT service in 2014. This change program is headed up by a Corporate Head of Digital Transformation, a resource which, unsurprisingly, is also shared across both organisations.

A key objective of the transformation program was to allow all 5,000 council users to access all of their services from any device, anywhere. From a technology perspective this was enabled through the combination of a thin client device, Acer Chromebooks, Google Workspace and a Citrix platform.

As a result of the program, when the challenges associated with COVID hit, they were able to move to 95% of their staff working remotely without any changes to infrastructure, and only minor user cases which needed to be resolved – e.g., CAD technologies, etc.

Their digital transformation has also been aligned with the council’s new environmental priorities and its stated goal in terms of carbon neutrality by 2038. Through a movement away from old desktop devices and inefficient local data storage as well as reductions in commuting allowed by remote working, the digital transformation project has been able to achieve energy reductions of around 32%.

08 Realignment of local government workforces

There is a wide recognition that the mix of skill sets currently within local council are unlikely to be the skill sets which will be necessary for councils to thrive over the next decade. LGAQ report that less than 32% of councils have resources who are highly skilled in digital and other complementary skills.

This skills gap is partially the result of historical hiring patterns and the outdated organisational structure of many councils, but it is also a result of an inability of local government bodies to be able to attract the skilled professionals that they require in order to make step changes in their service, operations and data analysis.

The issue associated with labour lie not only in skill gaps but in the necessity to realign existing labour to higher value work.

Today it is estimated that around 40% of public service time is spent on tasks such as data collection and processing. In local government, these tasks include reviewing permit applications, collecting payments, maintaining financial records, preparing documentation for contracts, and regulatory compliance. As these tasks inevitably become automated over the next decade, staff will need to be retrained and redeployed to deal with higher-value-added analytical tasks.

Leading councils are taking a number of proactive steps to avoid this looming crisis through the proactive identification of processes for automation, rollout of digital training across the enterprise, aggressive hiring of digital resources and development of staff redeployment plans and training.

CASE STUDY - Redbridge council

Redbridge is a London borough in East London, England. It is home to around 300,000 people. Over the last decade it has seen its budget reduced by 60% as grants provided by the central government have been reduced to zero.

To respond to these budgetary pressures accompanied by higher customer expectations the council have turned to technology, in particular to AI, to deliver the required level of service at a fraction of the cost. This has been particularly successful in relation to planning applications – AI scans electronically submitted planning forms and drawings, checking that the right documents and fees have been submitted; it then inputs the data into the data repository and performs the assessment against established criteria. Whilst traditional validation can take several days to process, AI can do it almost immediately. The implementation of AI has saved around 161 days per technical officer per year.

Under the scheme the public are provided with automatic email updates on progress of an application which thereby prevents planners from being interrupted with simple questions like, “Have you received my application?”

This increased automation has allowed planning officers to be redirected to deal with more value-adding tasks. This includes dealing with more complicated planning applications which are identified as exceptions by the AI system, spending time improving the logic and evaluation criteria underlying the tool and developing other automation opportunities such as cross referencing with geographical information systems to identify constrained areas.

About the author

Barcley Consulting is a boutique management consulting firm based on the Gold Coast, focused on helping corporations and government with strategy, innovation and execution.

Have any questions? Contact our business consultants on the Gold Coast for more information.

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