The need to generate savings to fund efficiency dividends, repair budgets or support wage increases has become familiar practice for public sector managers since the GFC. However, after many years of continuing to operate within a reduced budget envelope, agencies are now in a situation where additional savings are not easily visible. Traditionally agencies have trimmed their spending on areas such as travel, training, fleet, IT, and other contracts, but when further savings are needed, a different approach is necessary. Tinkering around the edges just won’t generate the level of savings required.
So how can the next level of savings be identified without ceasing to deliver key services? In our experience these are the most beneficial levers for savings:
Process reengineering and reform to reduce resource utilisation, duplication and FTE costs (for more details, see the article below)
Organisational redesign and reengineering of structures to flatten and reduce FTE, better group like activities, skills and resources and improve process velocity
Corporate service reform of services beyond traditional HR, IT, Finance and Records Management
Review of procurement and contracts to take a consolidated, longer term, 3 to 5 year view of volume and requirements to enable the market to ‘sharpen their pencil’ and reduce the number of suppliers across categories
Outsourcing of some core and non-core services
Although seemingly unpopular in Government, it is also important to consider what activities can be reduced or ceased. Activities undertaken or services provided for many years may be culturally engrained in an agency but may not really be needed.
Once these levers have been explored and still further savings are required, agencies will need to fundamentally reform and change their businesses and operating models to continue to realise savings. Greater cross-agency collaboration, bundling and sharing of services, infrastructure and systems will need to be considered to radically reform current practices. In our experience these deeper levels of savings can be realised, but they do take significant analysis, strong leadership, and change management.