Exploring Income Management and ePayments so that all councils can benefit from a viable alternative to legacy systems and suppliers.
All local authorities need to manage their finances through income management (IM) and reconciliation processes:
- matching expected income against actual income
- allocating actual income to paying users’ accounts (for example, to show that someone has paid their council tax)
- matching actual income to ledger codes so books can be balanced and the requirements laid out in the Service Reporting Code of Practice (SeRCOP) can be met
While that sounds straight-forward, these processes are typically very complex, involving a maze of interdependent products, intertwined with bespoke integrations and reliant on carefully timed flat-file export/import routines. Such are the complexities involved in these “systems” that if a single scheduled activity concludes out of step, the whole arrangement can break and require IT involvement to reset and put things right.
Sitting at the core of these systems are often poor, inflexible income management products that ultimately contribute to bad user experience for citizens and impose heavier burdens on local authorities. Operational inefficiency and double-costing are commonplace as council’s have designed their income management processes around the inherent shortcomings.
The round 1 funded project “Gov.UK Pay as a viable alternative ePayment provider” carried out research that found councils create a large amount of bespoke code and business processes in that regard, to get these IM products working in their own environments. This is despite them paying vendors a significant amount of money to develop their income processing capabilities.
It’s noted as an aside that the supplier market is small and encourages local authorities into longer, more expensive contracts than would be the case if the market was more saturated. We’re hearing of local authorities locked into 5+ year contracts for example. This limitation perpetuates the situation which shows no signs of changing without targeted intervention.
A small number of local authorities have built their own income management products either because doing so secured them a solution that met their needs and alleviated their pressures, or because it was cheaper for them to do so than going to market, or both.
Barnsley Council is one such council and is interested in sharing both their product and what they have learned with other local authorities. Our hypothesis is that this web based IM product has great potential to provide an effective low cost solution for all local authorities and that it addresses many of the issues described.
The primary assumptions are:
- the Barnsley developed system is a good fit for all councils
- other Local Authorities share similar levels of dissatisfaction with their current products
- other Local Authorities would be interested in implementing a solution designed by councils, for use by councils
The initial discovery found that:
- Barnsley’s solution was co-designed by their finance and IT teams, so user needs are at the forefront of their product
- their finance team are very happy with the product and are empowered to customise it where they find opportunities for more automation
- there is a positive, dynamic relationship between the finance team and IT team
- the system supports the finance team to operate at a lower headcount
- the system may be able to integrate with GOV.UK Pay, enabling LAs to more easily use this common component (in line with the Local Digital Declaration)
A subsequent demo of the Barnsley IM product in June 2019 with representatives from four LAs received feedback that:
- from initial review, the functionality was impressive and in quite a few areas seemed to outperform existing IM products and meet many user needs
- further research and testing was considered necessary to understand how far it can meet the user needs of other Local Authorities and how it might be developed further to plug any identified gaps
- there were questions around the possible future models for supply and support
- how it might integrate with GOV.UK Pay as payment provider needs to be investigated
- all were interested in participating in further research to support this work and several are partners in this collaborative submission
For the detailed feedback from the demo, please see https://docs.google.com/document/d/100fJieK8vH8JXF0jvyzYjkfc_BiVMJXObUQMKz6jOM4/edit#heading=h.eu6rsudjubku in which it was captured.
The discovery will research:
- whether there is a market for an alternative IM product
- what are the user needs for a good IM product amongst LAs
- whether the Barnsley IM product meets the needs of other LAs (or if it is too specific to Barnsley’s needs and set up)
- whether changes can be made to the Barnsley IM product where gaps are identified in it meeting the user needs of other LAs
- whether the product can integrate successfully with GOV.UK Pay to offer a more holistic solution
- if an IM product could be built and shared within the public sector, what is the best way to ensure a cost-effective, well-supported solution for Local Authorities?
By partnering with other councils and GOV.UK Pay there is sufficient representation to carry out a project to validate assumptions and research the above points. This can include participation in workshop sessions, agile project development and user testing of the system.
Barnsley MBC until very recently covered their income management requirements via a legacy solution with costs of around c50K per annum, often inflated by compulsory upgrades at c10K each. The same arrangement had been in place with a single supplier for 10 years prior. Contract renewal negotiations sought to tie the council into a further 3 year contract, as was typical, offering an inflexible product with a slow development cycle and requiring that Barnsley continue to develop and maintain much of their own code and workarounds.
Many of the IM products in the market are “closed systems” which makes it harder for Local Authorities to integrate with products from other providers and put together the best combination of products for them. This is not in keeping with the principles of the Local Government Declaration and leads to operational inefficiencies and double costings for LA’s as they design their income management processes around these shortcomings.
In the course of the research during the round 1 “Gov.UK Pay as a viable alternative ePayment provider” discovery project, it was identified that there were multiple problems with existing income management systems, such as:
- not having accessible APIs (or paying significant sums to use them), so it’s not possible to seamlessly integrate IM products. Files have to be ingested which in turn makes it difficult to access real time reporting
- the expense of licencing costs and upgrades are high
- paying vendors for software which is actually largely configured by local authority service teams is inappropriate
- inability to fine tune products leads to developing costly workarounds
- high levels of manual inputs into products including double keying of data
- products being inaccurate in matching data and so requiring high levels of manual checking
- training costs – staff have to know how to use income management products safely. They are not intuitive, are difficult to use and it’s easy to make mistakes
- unfriendly user interfaces exacerbate the previous point
Poor, inflexible income management products contribute to bad user experience for citizens and impose heavier operational burdens on local authority finance teams. This leads to a double cost – software costs, and higher than necessary staffing costs.
At the last contract renewal in Barnsley a decision was mandated by senior management to use some of the money it would have spent on a market product, to develop an in house solution which would not only be significantly cheaper than the incumbent but would also meet requirements better. An agile development process resulted in successful implementation during 2018.
The market does not appear responsive to a modern local authority’s requirements and preliminary discussions with several peer organisations suggest that the Barnsley MBC solution would be a good fit. Although costs will vary, they are being incurred across all councils (x408) that accept payments giving potential for large scale savings if a system can be offered as close to ‘freeware’ as possible.
When combined with GOV.UK Pay and potentially GOV.UK PaaS, there is a genuine opportunity to enliven a stale market-place.
In order to communicate between a dispersed team the project will use an appropriate range of collaboration tools such as Slack, Google docs to share and co-produce documentation related to the project. For regular updates / meets it is anticipated that these will primarily be virtual via Hangouts, Skype or other tools as available to all partners.
The bid seeks resources for a project manager to oversee the project and coordinate stakeholders. It is anticipated that Barnsley will lead the bid and through this project manager be responsible for putting appropriate project governance in place which will have iterative, agile methods at its heart, adopting typical Scrum processes.
The team intend to learn from and refine the experience of the team that worked on the payments discovery and other MHCLG discoveries, utilising:
- Weekly stand-ups via video conference – recorded to YouTube
- Slack channel for ongoing communications
- Trello board to manage the agile sprints and track progress
- Co-produced documents using Google tools
Part of the scope is to engage with a research partner. This partner will be procured via framework / tender as appropriate, specifically noting the Digital Outcomes Framework as an option for its speed. We would expect to work in genuine partnership with the successful bidder in order to make the aspiration a reality.
The project will then be dependent on support from the Local Digital Collaboration Unit and/or this research partner, to offer guidance in leading a multi-organisation project team. This may in some part include training to those involved.
It is also likely that the project will be looking for an ‘executive sponsor’ to support engagement with senior stakeholders in partner organisations as described above.
Specialist suppliers will also be required and support to procure these quickly and in a compliant manner will be vital. This will be provided through council procurement functions.