Performing in the Public SectorData analytics and strategy based P&C

Deloitte Analytics

Whether you are an educational institution, hospital or security region, as a public sector organisation your aim is to achieve high targets: to get top marks in the knowledge economy, to provide healthcare that matches people's lifestyles. How can you achieve this when billions of expenditure cutbacks are being applied? How can you effectively use available information to plot your course and remain accountable to supervisory bodies and society? Deloitte Strategy-based Planning & Control supported by Deloitte Data Analytics solutions offer a complete solution to effectively and efficiently measure your organisation’s performance enabling to manage it optimally.

Management based on effectsInmostorganisations,performancemanagement–frominputthroughtooutcome–entailsmonitoringKeyPerformanceIndicators(KPIs)and/orKeyRiskIndicators(KRIs).Forexample:processingcomplaintsandrespondingeffectivelytoquestionsfromcitizens,clientsorstudents.Inaddition, performance management involves influencing thebehaviourofemployeesthroughthe‘softside’approach.

Experience has taught that in most organisations the link betweenstrategicobjectivesandtheentire‘productionprocess’ – from input through to outcome – is missing. This results in an inefficient production process and presents a challengeinrealisingthestrategicgoals,astheKPI’s,KRI’sand the desired behaviour have not been clearly formulated and linked to perceived organisational objectives. The right kindofdata(facts)tosupporttheseKPI’sandKRI’sisalsomissing. As a result, management based on performance often ends up being a laborious exercise that fails to deliver the desired results

Societal objectivesAs a public sector organisation, you strive to meet the objectives of your own organisation to create added value and therefore to contribute to a better and more prosperous society. For years now more objectives need to be met with fewer resources. This situation has been made worse by the recent billions in budget cutbacks. The illustration below shows a conceptual framework of the relationship between society’s demands and needs and thestrategicobjectivesofapublicsectororganisation.Italso indicates how efficiency can be increased (achieving more while using fewer resources) with maximum effect (achieving the desired outcome by using resources as intelligently as possible).

KRI KPI

Society's demands and needs

Strategic goals of organisation X

Contribution to

Input Throughput Output Outcome

Risk bearer

Value bearer

Resource allocation

Efforts/Activities

Efficiency Effectiveness

Results/ Products Effects

Illustration 1: Contribution to societal objectives by your organisation

Performance management is not about judging each other — it is about working together to create a better process

Comprehensive approachDeloitte’s Strategy-based Planning & Control defines this framework and combines policy management with risk and performance indicators to provide insight into input, throughput, output and outcome of the organisation’s activities. The starting point is to interpret and clearly quantify the strategic goals. Each objective must provide a clear and measurable contribution to the organisation's direction.

Deloitte Analytics helps you acquire the right information at the right time. The increase in business data and use of social media has resulted in the increasingly challenging task of converting this growing quantity of structured and unstructured data into usable information for management and accountability purposes. Deloitte uses state-of-the-art tools and data analytics techniques that provide clear information to be used to maximum effect in the decision-making processes.

Both concepts, Strategy-based Planning & Control and Deloitte Analytics are described in more detail below. The strength of combining both concepts is illustrated with real-life case studies and customer references. These references are separately available to you.

Strategy-based P&CThe foundation for Deloitte Strategy-based Planning & Control is the proven Deming Cycle, or the Plan-Do-Check-Act steps. What distinguishes Deloitte Strategy-based Planning & Control from regular Planning & Control and a standard PDCA cycle is that it provides the link between strategic objectives that an organisation wants to achieve and the resources available. A clear example of this can be found in the programme budgets of municipalities. Funds are allocated to programmes that arise from political objectives of the current serving council. At hospitals and/or educational institutions, there are various priorities that are drawn from the strategy, which should help the organisation realise its objectives.

A second important element is that Planning & Control processes and instruments must be fully integrated with each other. This is often an issue in public organisations. There is a missing link between long-term planning , annual planning and the reports, resulting in inadequate management.Italsocreateschallengeswithregardtoaccountability and compliance because the aspects that need monitoring and reporting have not been well thought out.

Plan• Formulateobjectivesandmakeplans.• Formulate,compileinformation,choose

from strategic options and convert these into operational objectives and budgets (HRandFIN).

Do• Execute the plans.

Check• Testthechosenoptionsandtheexecution

of plans.

Act• Takemeasurestoadjuststrategicchoicesor

adjust objectives and plans.

Inpracticeweoftenseethat:• Thereisnolinkbetweenplansandreports• Planning&Controlprimarilyproceedsfromafinancialperspective

Semi-annual report

3rd quarter report

Annual report

Approval

Long-term prognosis(strategic planning)

Long-term Strategic plan

Framework letterAnnual plan

Preparation

AccountabilityExecution

Adjust

Adjust

Adjust

DoAct

Act

ActAct

Plan

Check

Check

Check

Check

Budget

Monthly reports

1st quarter report

Illustration 2: Plan, Do, Check, Act cycle

Traditional Business IntelligenceExtraction and integration of data, data management, reports of results and data quality are just some of the items that remain crucial in creating instruments to improve performance. The instruments for managing your organisation rely heavily on these fundamental services. Inthepastfewyears,organisationshavetakenmeasuresin this area but still often struggle with how to use them effectively. New developments in technology have made these instruments more accessible for those who need to use them and therefore provide greater flexibility.

AnalyticsWhat exactly is the issue? Why is this happening? And what will happen in the future? These are just a few of the questions that, when answered, can help you perform

better. Answering these questions is becoming a lot easier due to technological developments. A number of important new functionalities are shown in the illustration below.

Data explorationActually finding the sore spot is the first step in improving poor performance. Simply identifying that a specific party in the chain, a unit or other part of the organisation, is not performing well is not enough. The first step is finding out what the exact problem is, a task simplified by attractivelyvisualisingandarrangingdata.Inthereferencesthere are numerous examples of how you can visualise data to quickly arrive at the correct analysis. This helps in implementing the right improvement measures.

Measuring performance and reporting

Data extraction & integration

Data exploration

Segmentation/ static clustering

Forecasting models

Optimisation, simulation & scenario analysis

Analytics

Traditional BI

Exploration and discovery, predicting the future,actionable insights

Understanding facts, report past and present performance

C6

C1

C12

C4

C7

C9C10

C2

C3

C8

C5C11

Illustration 3: Development of technological possibilities, from basic services to advanced analyses

Data Analytics: are you able to make the right decision based on all the information available?

Decision-makers are increasingly overwhelmed by data. At the same time, the pressure to make quick, effective and efficient decisions increases. This situation demands an approach involving three important factors: in-depth knowledge of the sector, broad functional knowledge and expertise in the use of analytical technologies. The effective combination of these three elements enables you to ask the right questions and find the appropriate answers. Decision-makers who are able to take this alternative route to a new reality will be in a much better position to optimise performance.

Segmentation/clusteringWhich students perform better? What types of service experience delays? Which patients are more likely to have a relapse? To implement specific measures that really take effect and affect the group that needs them is the aim of this technique. By clustering groups based on their performance history this insight is provided and allows you to focus your efforts on the group that needs improvement. This way resources are allocated more effectively, increasing the chance of improving performance considerably.

Forecasting modelsThe next step is to make a prediction based on past performance. Multi-annual forecasts related to finances, residents, patients or student numbers provide a clearer picture of what you can expect in the future. Also, for example, forecasting models can be developed to estimate the chance of relapse of new patients based on known characteristics. Deloitte has experience with various regression techniques to provide solid and effective solutions to these kind of issues.

Optimisation, simulation and scenariosForecasts can also be extrapolated and applied to new situations. For example: you could estimate the response time of a fire department based on the available equipment and number of fire fighters. Recommendations and advice related to attaining the minimum response time can be provided for any budget. Based on this information, the size of the budget can also be adjusted and optimised.

Analytics in your policy-based P&COver the past few years, Deloitte has used many smart and innovative solutions to improve our customers’ integration of processes and instruments. Examples of these can be found in the case studies and our customer references. Each step of your PDCA cycle can be made more effective and efficient by using analytics.

• Useforecastingmodelsandvariousscenariosinyourplanning phase.

• Duringexecution,the‘do’phase,usesegmentationforaspecific and effective handling of the case at hand.

• UseaKPIreporttoinformstakeholdersonprogressandissuesduringthe‘check’phase.

• Basedonthevariousmeasuresconceived,projectwhatthe financial impact will be and how you will implement your optimisation model to make the right choices in your‘act’phase.

By implementing analytics, it is no longer a question of if your management will be fact-based, but when.

Why Deloitte?We can help you access, manage and analyse your data, which serves as a catalyst for the implementation of Strategy-based Planning & Control. Additionally, Deloitte has in-depth knowledge of the public sector and the capacity to conduct advanced analyses. We understand the role of decision-makers in obtaining maximum value – converting your daily information into useful, practical perceptions. These abilities make Deloitte a unique player in the field of performance management.

ContactHans van VlietDeloitte Consulting+31 (0) 6 2127 2828HvanVliet@deloitte.nl

Maurice FransenDeloitte Consulting+31 (0) 6 2025 2449MFransen@deloitte.nl

Naser BakhshiDeloitte Consulting+31 (0) 6 1201 1665NBakhshi@deloitte.nl

www.deloitte.nl

C6: Model InternationalsInternational students living on Campus with above average marks, satisfied and graduated; very unlikely to churn

C1: Successfully GraduatedStudents that have graduated, marks above average

C2: Bread & ButterThe “average” student with large social networks, HECS and happy

C12: Mature Part timersMature age students studying part time with average marks and small social networks

C4: Star StudentsStudents with the hightest average marks and most HDs

C7: Future ConcernsStudents from Schools 1 and 2, Excellent response rate to surveys but unhappy. Low chance to churn

C9: Not Happy (Jan)Australian students with good marks, dissatisfied, and a high proportion reaching graduation. Least likely to churn

C10: RebelsAggressive responsive students on surveys with above average marks unlikely to churn

C5: DisengagedAnglo Saxon students that don’t care and generally don’t complete surveys

C11: ChurnersStudents most likely to churn with poor results

C8: StrugglersStudents with lowest marks and struggling (Fail average)

C3: International social hangoversSchool 4 internationals with low marks, stay beyond first year. Many pick up the slack in year 2

C6

C1

C12

C4

C7

C9C10

C2

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C5C11

UncommittedDropouts Committed, agressive Unsatisfied

Strugglers Committed but unsatisfied

Slow international Honours

Satisfied international Successful BA Average Adult, part time

Result clustering

Illustration 4: Segmentation of students based on satisfaction and dropout rates

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Our experts

Hans van Vliet Managing Partner of the Public Sector advisory business of Deloitte Netherlands. Extensive experience with major organisational changes. Experienced finance professional. Combination of hands-on experience with business economics and a business studies (organisation theory) educational background.

Maurice FransenPerformance management consultant responsible for performance management services in the Public Sector. Extensive experience with management issues, expert in utilising information in the planning & control process and the implementation of measures to optimise performance.

Naser BakhshiSpecialist in providing consulting advice to Public Sector bodies. Extensive experience in the intersection of the financeandITfieldsandmorespecificallyin the optimisation of planning & control processes.Knowledgeandexpertiseinthearea of improving management information flow where the design, structure and implementation of various business intelligence solutions play a fundamental role.

Han van MiddenHead of Deloitte's Public Sector Strategy practice. Han possesses comprehensive knowledge of public governance and public strategic issues. Within this framework it is Han’s goal to base policy and strategic decisions on facts as well as to develop indicators that provide front-end insight into the success of strategy and policy.

Dirk Westra van HoltheExtensive experience in issues related to Strategy-based Planning & Control, performance management and organisation management. Expert in higher education funding and associated specific performance agreements. At the same time, he is also a generalist in the area of major changes with an affinity for the interactionbetweenICTandoperationalmanagement. An example of this is using data analytics to improve operational and management processes.

Ingrid LantingComprehensive experience in the field of business intelligence and analytics with governmental organisations, both as a business intelligence consultant and as a project manager. Specialised inissuesrelatingtoBIstrategyandgovernance.