Outcome-based Contracts

SSON News and Analysis
Posted: 07/09/2012

"Whenever we go to market, obviously our objective is to get a win-win - there’s nothing in it for us if the vendor is not getting something out of it as well. And that way you usually get a better overall outcome as you go forward."

Jane King, Deputy Commissioner for Customer Service and Solutions, the Australian Taxation Office

SSON: Jane, could you give us an overview of where the Australian Taxation Office is on its Shared Services implementation, and what your goals are for the coming year?

Jane King: We’ve been on quite a journey over a number of years, so I guess our initial focus is more in the information and communication technology area. We’ve recently put out three fairly big bundles in this area, and I guess the big shift here has been moving away from transactions-based and KPI-focused, to an outcomes-based contract. So it’s very much about moving into a partnership model with our partners in that space.

The other areas we’ve been focused on are in our frontline. This includes some of our processing mail distribution or other more traditional areas, but more recently, we’ve been looking into the management area, and looking at what we can get from any shared business arrangements here. Of course, in my own area, we’ve moved into an outsourcing space, and we’re currently shaping up and preparing to go back to the market to refresh those contracts. So there’s quite a lot of activity happening both in the back of house and front of house, and we’re certainly looking to see what opportunities we can get from our shared services type of arrangement. So it’s very much about looking for the opportunities going forward over the next year or so.

SSON: Definitely a lot of changes out there in the department…so one change we’ve heard a buzz about is a more citizen-centric strategy when it comes to public sector shared services. How is the ATO moving towards providing a more integrated service (both internally and externally) through shared services?

Jane King: I guess the first step normally is around the internal space, and we’re certainly no different. It’s very hard to manage services externally, if you haven’t got it in control internally. So a lot of our time and focus has been around pulling together an integrated view around that citizen-centric strategy area. For us, it’s been about pulling together contact centres from different business sides, and bringing it together as one virtual center, and then shifting from a product- or processed-based to a customer based. It’s also very much thinking through our customer segments, – e.g, what are the range of things that they need to make contact with us about; and that we need to put together as an integrated package of information that they would want to do. So I focus very much just being in this space, to the point where now we’re pretty much integrated most of our incoming traffic into one area. We are segment-based and what we’re doing for first contact resolution with very little escalation in to the rest of the organisation.

So we’re in a fairly good position internally. Externally, we do a lot of work across many agencies, they’re probably the most obvious one, things about colocation with Interlink offices so that clients can, for instance, get tax file numbers if they need to, and discuss any of their tax matters. We do share information and we do work on behalf of each other, including the disaster recovery on the recent floods, bush fires, and things like that. We work incredibly closely to ensure that the priority of the government is actually attended to, rather than looking at each individual agent with priority. We do a lot of work in the data matching across agencies and a lot of that ends up in our e-tax product - it shows itself up by way of pre-filling, so when people want to lodge their tax return, they can go into e-tax. Most of their data is already there, pre-filled from any other agency or institution we do business with, and obviously, that makes it much easier for them to do the business.

We also operate in the business space, so we’re one of the key players in something called standard business reporting and that’s the beginning for businesses so that they only have to report data to one or two the commonwealth government agencies, and then that information is spread across other agencies. We support that product and we purchase the security key (Auskey) to help business actually be able to interact with that particular product.

I guess at a broader level we’re also working at the whole of government, just in terms of shaping up what the service delivery framework might look like at a government level. The work within the blueprint for a reform of the public service administration is a very important area, one of those subtopics is around space delivery, so, the ATO has always been very much in the business of making things easier, cheaper, more personalise for people to interact with us, but now we’re integrating that into the boarder brain work around integrated service delivery capability across the whole of government.

SSON: You mention the change in the framework right now, but what we’re also seeing is that Public Sector attitudes towards outsourcing are changing. In your experience, what are the main pillars you assess when looking at service providers for your SSO?

Jane King: I think public sector attitudes have changed. Certainly, I think most agencies have commenced with the thinking: you can do it better yourself. I don’t think that’s actually a public sector issue; I suspect every business in the universe thinks that they can deal with their own customers in the best possible way. So it has taken quite a shift for the public sector to think through the fact that others may be able to supply services more effectively. But a little bit of it is about being convinced that someone else can deploy your service.

Obviously, we’re very keen to understand the essentials, such as security and integrity of systems and the data, but I guess now we’ve passed this point. We know that can happen and that we can be assured that we do have good security and integrity in terms of our systems and data. But now we’re able to shift our focus and look more at what is core in the business of government. This is about doing what we do really well; it’s about figuring out what is it that we might be able to put into a shared services type of environment; and it’s about starting to focus more on a partnering arrangement. Take our eyes off just being transaction-based, and look at opportunities around innovation, and really start focusing on an outcome-based process built on a collaborative relationship, rather than a more directive-dynamic relationship that we might have traditionally started off with. But I think we have seen the public sector shifting. It’s a journey, but remember: we have accountability to the broader community, so we have to be very sure we’re making the right steps and the right direction, and that we’re getting the risk around balance correct at the end of the day.

SSON: Interesting that you mention the relationship in this context. So once you’ve chosen a service provider, how do you ensure that the relationship continues to maximise after the contract has been signed? How do you secure a happy marriage between end-user and outsourcer?

Jane King: I think one of the key issues here to be really clear about what it is you want. As I mentioned, we’re preparing to go back to the market to refresh our contracts, and most of our time is spent on preparation; getting together our actual statement of requirements, etc. We’ve done a lot of work in terms of research, talking with other players in the field, and getting a really good understanding of how to be clear about our expectations at the end of this contract. And I certainly believe that if we do our homework on what it is we want to focus on, then we run through a course, the process, ensuring we know how to measure that.

The objective I think is to get rid of as much of the ambiguity as you can – it’s 80% of the trouble and it’s probably only 20% of the outcome that you’re looking for anyway. So if you can get rid of that ambiguity then you can turn your mind into that collaborative relationship; you can build up trust, and you certainly have to be structured in the way in which you’re monitoring and managing the contract.

Having very regular reviews and updates, not only around performance indicators outcomes, but also around the innovation that the partnership can bring together, also reflects on things like the value. And for us, it is certainly just as important that our values are aligned as it is in regards to the actual outcomes and deliverables we’re getting from the contract. So I think it’s about being clear upfront, having a clearer process for review and feedback, making sure it’s a two-way process and it’s about building up trust. That way you’re able to address issues immediately and not let them fester, and keep the contract in a very constructive way. Whenever we go to market, obviously our objective is to get a win-win - there’s nothing in it for us if the vendor is not getting something out of it as well. And that way you usually get a better overall outcome as you go forward.

SSON: You have a lot of experience across integrated call center solutions in both the public and private sector. Do you want to share any pearls of wisdom or lessons learned?

Jane King: It’s a long journey; you can lose many years trying to do it. I guess the question I’ve often heard is "where do you start?" – and often that question puts people off. For me, it is not quite as simple and it depends upon your level of sophistication, but a great starting place for setting up integrated capability is your switch board. Instantly you’ll see what your frequently asked questions are, and you soon work out if you put these clusters together, you start getting a group of things one person might want, and so you’re shifting them into a first contact resolution.

So, shift your switchboard to actually answer the questions rather than just shipping calls around the place, then you pull them together and aggregate clusters, then you can start re-engineering that cluster to get the best overall result. And you can get some really strange outcomes, and I’m sure it’s no different in the commercial world, but one of the first things we did was bring together information clusters. One of my classic examples is the favorite wood duck, where we have three different departments who had information about wood ducks, but the problem was one wanted to eat it, one wanted to get rid of it (because it was a pest), and one wanted to save it, because it was an endangered species… so here is one government with three different views from three different departments.

What is the overall government view? Often it’s not as important and straightforward, obviously there are different views for different reasons, but watch the integrating services and that’s when you’ll see how it can be very confusing from a customer point of view when there are different views and opinions about any particular topic/subject/product. But it’s a long journey; it’s a very worthwhile journey and in my experience, certainly gives far better customer and/or community outcome, so it’s certainly a worthy journey to go down.


Jane King, the Deputy Commissioner for Customer Service and Solutions at the Australian Taxation Office, is speaking at the Shared Services for the Public Sector Event to be held in October in Sydney.

SSON News and Analysis
Posted: 07/09/2012

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