When it comes to strategy, the public sector is often criticised for reacting to situations as opposed to taking a proactive stance. With the government’s spending priorities the temptation is to become more reactive, addressing challenges when they crop up and fighting fires on a piecemeal basis.
But the kind of challenges thrown up in the public sector – reducing the cost of landfill, improving social care, reducing crime rates and helping disadvantaged families – require leaders to go back to the causes and find efficient solutions.
In the first wave of cost-cutting five years ago, public sector organisations did the obvious things: they cut non-essential activities, became more careful about waste and improved the way they delivered some services. That resulted in a lot of savings, but the reduction was way off target.
In the second phase, these groups undertook a fundamental review of their operations, making adjustments and improvements at the very heart of how they operate. The costs were reduced again, yet it was clear that spending still needed to drop further.
The public sector is still under considerable pressure. One of the most effective ways it can meet its target is through better use of information, specifically by improving the way it collects, correlates and acts upon data from the people it serves. So spending time analysing data and connecting devices will be vital components in the way we operate in years to come.
At the core of this data-driven drive for efficiency is demand management. In other words, looking at the needs of individuals and working out how we can address those needs in a better way. How can we put in place measures that address small problems before they become big expensive ones?
It also means sharing information more readily between departments and groups, because a saving in one place could also lead to a positive impact elsewhere. For example, most local councils spend a large chunk of their budget on social care for older people. By building efficiencies in this area, it’s possible to reduce the burden on the NHS. And by improving the NHS, we could reduce spend on social care. Benefits are cyclical and intrinsically linked across numerous services – once one is improved, the indirect benefits are vast.
How budgets are created will be a factor. It’s easy to see how separating out small pots of money and giving individual managers responsibility over how they are spent could prevent economies of scale and stifle collaborative work.
Using data, we can show budget-holders how spending some money now could lead to big saving in future. People need incentives to act, and giving them details of the cause and effect of what they do is one way to guide their decisions for the better.
Stakeholders are then much more likely to invest from a constantly shrinking money pot, it they are convinced it will help those costs fall in the longer term.
When people think of Big Data they imagine enormous mines of information that are created and sifted into meaningful structures over large amounts of time. This is great for the long term, but right now we need to select problems that are easiest to fix and take steps to make it happen. Managers who are bold enough to take some risks and capable enough to manage the implications of their decisions will be the first-movers. My advice to local authorities has always been to deal with the low-hanging fruit first.
For example, smart metering in social residences can help people with special needs live at home for longer. This has huge social benefits – most people want to be independent – but it also relieves pressure on the public purse because professional care is a large expense.
Biometric data recorded from people with chronic conditions such as severe diabetes can be used by medical professionals to know how and when to make interventions. Channelling this data through wearable technology in real-time will let health workers make instant improvements to lifestyles and prevent the need for hospitalisation.
It might be as simple as telling someone they need to drink more water, but knowing instantly when a trigger event is occurring will improve health and lessen the need for medical care.
These are just two examples where data and smart technology in the home can help to reduce spend overall. But there are many other real-world examples of this kind of investment happening throughout the UK and globally.
The key to speeding up this process, delivering social benefits and cutting the impact on the taxpayer, will be the public’s buy-in. People are nervous about giving up their data, arguably more so when public sector organisations ask for it, compared to private sector companies.
The reason for this is that people need to see a perceived benefit to the recipient. You let Amazon know, for example, your buying preferences (implicitly if not explicitly) because that will improve the service and you might get a few offers and discounts.
This quid pro quo needs to be translated in the public domain. The benefits are there in the form of a better standard of living, better services and fewer interruptions to people’s daily lives. But there is a communication job to do if people are to fully grasp these benefits.
Once these messages have been delivered and accepted, public sector services will be more efficient and impactful – all delivered at a fraction of the current cost.