Purpose of the report: To receive an update on the Council’s Digital Business and Insights (DB&I) programme.
Anna D’Alessandro, Director of Corporate Finance
Zully Grant-Duff, Cabinet Member for Corporate Support
Andrew Richards, DB&I Programme Director
Leigh Whitehouse, Executive Director of Resources
Key points raised during the discussion:
1. The Director of Corporate Finance introduced the report, noting that the Digital Business and Insights (DB&I) programme linked in with the Finance Improvement Programme (FIP). The SAP system the Council had been using was slow and outdated. It was anticipated that the new enterprise resource planning (ERP) system, which was called Unit 4, would improve the speed of reporting and make a significant transformational change. Its scope comprised finance, HR and payroll. Implementation would continue from the present until December 2021.
2. The Director of Corporate Finance continued to say that the programme entailed a revenue cost of £600,000. A reserve had been set aside to manage the funding of the programme, and there had been extensive risk and mitigation reporting.
Chris Townsend left the meeting at 12:05pm.
3. The DB&I Programme Director explained that since the contract had been signed, the first step had been mobilised and completed on-plan last week and approval had been gained from the Strategic Programme Board. The initial design stage would run from now until the end of December 2020. There were two main phases to the project implementation stage. Phase one would focus on strategic procurement requirements delivered by Proactis, and would go live on 1 June 2021. It was an out-of-the-box product that the Council could configure to meet its needs. Phase two would cover the rest of the scope across finance, HR and payroll, as well as more transactional procurement.
4. The Programme Director continued to state that the focus of the DB&I programme was on adopting change, improving processes and thereby helping to deliver the objectives of the FIP. In terms of the approach to the design of the programme, all experts involved would attend workshops and identify any exceptional areas where the Council could not fully align. Deep dives into specific configuration requirements would then be conducted based on this. Moreover, change management was being conducted, such as familiarisation training sessions for all those involved, which were going well and producing positive feedback.
5. The Programme Director added that officers involved in the programme were in the process of procuring an archiving solution for SAP material that would not be migrated to the new ERP system, so it was anticipated that the Council would be able to decommission SAP in early 2022.
6. A Member remarked that a past concern about SAP was that since the Council had installed it, it had been customised too much, making it difficult to maintain and improve. He requested assurance this would not happen again with the new ERP software. The Programme Director responded that the new ERP software would be regularly updated, so that it always offered the most suitable system, and was efficient and cost-effective. It was important that the Council monitored those updates closely to ensure they aligned with the Strategic Programme Board’s design principles. Furthermore, efforts were being made to incorporate work that was currently being conducted offline – for example, on Excel spreadsheets – into the new ERP system where appropriate.
7. A Member highlighted that an ERP system change was high-risk for the whole organisation. He asked for more information about the background of Unit 4, their experience with similar clientele and feedback on implementations they had already completed. The Programme Director stated that Unit 4 were a well-known ERP provider in the public sector, particularly within local government. There were a number of comparators to Surrey County Council that used Unit 4, the most similar being the LGSS partnership between Cambridgeshire, Northamptonshire and Milton Keynes councils. Hoople shared services, which was a similar scale organisation to Surrey County Council, also used Unit 4, and Guildford Borough Council had recently completed implementation. During the procurement process, Surrey County Council had had support from an external consultancy called Moore Stephens Insight, which specialised in ERP systems. They were positive about Unit 4 and said that the system was intuitive and had good self-service. The Programme Director also found that Unit 4 was more suitable for the Council’s needs and less impersonal than some of the competitors.
8. A Member asked whether the Council’s contractual arrangements entailed a fixed price for implementation, or whether there would be cost implications for the Council if the timetable slipped. The Programme Director said that the contract was based on a fixed price and was to be delivered by 31 September 2021. If a delay was caused by the supplier, the financial risk would not fall on the Council.
9. A Member enquired what the impact of Covid-19 had been on the DB&I programme. The Programme Director stated that it had not been significantly impacted by the pandemic or the County Hall move. Remote working during the implementation of the system had been going well. Staff from impacted services had continued to be engaged in the design and the programme was well resourced. An integration lead had recently been recruited and an integration strategy was being developed, which would feed into the build stage in early 2021. The Cabinet Member for Corporate Support commended the Programme Director on his work.
10. A Member asked what due diligence had been conducted leading up to the decision to adopt the programme, such as scrutiny and alternative options proposed. He questioned whether there would have been a wider field of choice if the procurement hadn’t gone through the Official Journal of the European Union (OJEU). The Director of Corporate Finance said that in terms of scrutiny, as part of the FIP there had been an Executive Member Panel and a sub-panel that a number of Members had attended. Prior to that, key officers had met with Members every two months and updated them about the various options. The Select Committee requested that the Part 2 DB&I report that had gone to Cabinet, which detailed different options considered, be forwarded to Members.
11. A Member expressed concern that the timeline for the programme looked tight and asked whether there were contingencies should this slip. The Programme Director replied that the Council had been advised that the Unit 4 implementation would be achievable within this timescale. Unit 4 was the most achievable option to implement within this timescale, compared to other ERP systems available. The reason behind the 1 December 2021 deadline was that the Council was billed for SAP in January of each year, and it was not possible for the Council to pay for only a part of the year, so it would have to pay the £700,000 fee for 2022 if it had not decommissioned SAP by the end of 2021. Contingencies of 5% had been included in the programme, as well as a 10% contingency on revenue cost. The level of cost of slipping into 2022 could only be determined if that stage was reached; it would depend on the areas of implementation completed and the resources needed to continue to enable go-live into 2022. There was a risk, but the solution the Council had selected was the best option available.
12. The Chairman summarised that there were a number of risks; most risks were rated ‘high’ in risk analysis that had been conducted. However, steps had been put in place to mitigate these risks and the programme entailed a number of benefits. The Select Committee would like to continue to monitor the programme as it progressed.
The Select Committee is concerned about the tight deadlines, achievement of savings and lack of an obvious contingency plan. Therefore, the Select Committee recommends that there is assurance put in place demonstrating effective monitoring of risks, timely review of progress and implementation of next steps.
Actions/further information to be provided:
1. Officers to send the Cabinet Part 2 DB&I report to the Select Committee.