13th European Conference on eGovernment – ECEG 2013 1 | Page 272

Paul Jackson

Value‐adding analysis can therefore be important in removing waste, focusing on aspects that really matter to customers and minimising those activities which, while essential, do not benefit either the organisation or the users of its services. When combined with accurate cost information, such analysis can be a powerful input into decisions about redesigning services.

This returns us to the specific concern of the current paper and the use of ABC in supporting business process improvements and decisions about delivery channels. This should be of particular relevance to public bodies, such as local authorities. Unlike profit‐making companies, such organisations have little choice as to which services they provide; hence product costing and customer profitability analysis are of little interest to them. Public bodies are therefore less concerned with finding the optimum product mix than identifying the most efficient way of delivering value to customers while meeting statutory responsibilities.

4. The practical application of ABC to support service improvement

Against this theoretical background we will now look at the practical application of ABC within a community of UK local authorities. This will cover the three phases of work, the organisations involved and the outputs produced. At the centre of this work was the creation, enhancement and roll out of what became known as the‘ Cost Architecture Framework’. The three phases are summarised in Table 1.

Table 1: The three phases of work

The author, as a member of the CIPFA team, was heavily involved in the first two phases of this work, attending project meetings, supporting analysis and helping to draft the related reports. Data on Phase 3 has been collected in discussion with ESD Toolkit consultants, reviews of guidance reports and inspection of relevant tools.

4.1 The cost architecture guidance in context

In 2008 the Department of Communities and Local Government produced the guidance report Delivering Efficiency: understanding the cost of local government services( CLG 2008). The document was jointly authored by IPF( the then name for the business services arm of CIPFA) and the North West e‐Government Group( NWeGG). The primary audience for the report, it says, are process analysts and improvement managers, but also anyone tasked with improving services and / or seeking to evidence efficiency gains( p. 7).

The report provides a cost allocation framework based on ABC and draws on the Best Value Accounting Code of Practice 3( a code managed by CIPFA under legislative authority). As the report says, it was written in response to practitioner demand for guidance and tools to help in identifying the cost of services delivered to customers. Its genesis lies in earlier work by CIPFA and NWeGG, the Validated Service Delivery Costs Project.

4.1.1 Phase 1: Understanding service delivery costs

In 2006, as part of a broader effort in promoting online services, NWeGG commissioned CIPFA to support its work on channel migration strategies. The challenge here was to understand the cost of different local authority delivery channels: face‐to‐face, telephone / contact centres and websites. Although cost data existed, different costing and reporting structures were evident across councils, with no agreed methodology for measurement. This was compounded by differences in the unit being measured. For example, taking an application over the web is certainly a service transaction, but it is only part of a broader set of transactions through which a service( such as a benefit claim or planning application) is delivered ‐ much of it happening behind the electronic interface. 1

The North West e‐Government Group, now reformed as as iNetwork. 2 Electronic Services Delivery Toolkit, later renamed Effective Services Delivery Toolkit. 3 Later renamed the Service Reporting Code of Practice( SeRCOP).

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