After the honeymoon: ensuring alternative delivery models are a success

23-05-2016

By Mohammed Hans, CIPFA Alternative Service Delivery Network Advisor 

Over the next few years, CIPFA expects significant changes to the way public services are delivered. While this will offer opportunities – in some cases – for public bodies to generate additional revenues by setting up various commercial models (for example trading company or staff mutual), allow staff personal development and deliver better quality and personalised services to citizens. It also carries huge risks which could end up costing the organisation more especially if they end up having to bring the services back in-house at a future point in time.

Get it right from the start 

Setting up new commercial delivery models or service options can offer practitioners an exciting journey to introduce innovation and make the services fit for the future. This can be achieved with: 

• careful planning and a clear vision
• ensuring that the authority has a robust business case
• established comparative costings and closely monitored budgets
• a clear forward order book so that it is not looking for a customer on day one.

Options for delivery 

From initial research by CIPFA’s new Alternative Service Delivery Network (ASDN) experiences of success varies considerably between the different types of delivery models which are currently being set up. Whilst some areas of trading will prove an instant hit and attract new clientele allow diversification and less reliance on loan notes from the host authority, many trading entities are finding out the realities of the commercial world is much harsher than merely changing a few job titles.

CASDN diagram

Figure 1: alternative service delivery models. (Source: DWF Associates 2016)

Key challenges from our findings

Onerous obligations under the Companies Act 2006, as well as the new way of operating and managing conflicts of interests can also be a daunting task and can lead to putting the closing down shutters much earlier than expected. There have also been a number of outsourcing and joint venture agreements which have had to be terminated as the original foundation has moved due to changing economic conditions and increased competition. 

It is necessary then that any organisations that are embarking on this alternative service delivery models are aware of these challenges and have prepared their business plans to manage any transitional difficulties.

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