Public sector-focused software and services provider Civica has made its intentions clear following its award of a significant revenues and benefits (R&B) outsourcing deal at Gloucester City Council - it is now a serious contendor in the local government business process services (BPS) market. Civica will take over responsibility for the management and delivery of Gloucester's existing R&B service over the next seven years. Although the value of the deal isn’t disclosed, Civica will take on 67 R&B employees from the council, and commit to maintain those staff levels, while delivering annual savings of £220,000. Civica’s plan is to create an R&B centre of excellence in Gloucester with the aim of eventually offering those services to other local authorities.
The scale of this BPS deal is a first for Civica, which till now has performed some small-scale platform-based BPS deals using its electronic document management (EDM) and workflow software in areas like outsourced post room services. Taking on Gloucester's R&B function however puts it squarely in a bigger opportunity area, dominated by local government outsourcers such as Capita, Serco, BT, Liberata and Northgate.
As an IP-based provider, Civica’s approach is based on the R&B platform that it acquired from IBS OpenSystems/Capita in July 2009 (see here). For Gloucester, it will now supply this back office system, while also providing business process improvement, and operations run and support, the latter of which is effectively traditional ‘lift-and-shift’ BPO. This approach fits neatly with our view on platform-based BPS as we define it in our report UK Business Process Services: Market Trends & Forecasts 2011, where the supplier takes on responsibility for the delivery of the business process service, including the provisioning of the platform itself. However, this may or may not include the lift-and-shift BPO component.
Platform-based BPS is increasingly attractive for customers (both public and private sector) who want to reduce costs, and use best of breed methodologies to improve services, and often improve the top line/derive additional income - in Gloucester’s case it wants to improve collections and eventually sell services to other authorities. For suppliers it provides certainty of longer-term recurring revenue, and potentially lower cost of delivery.
Other local government competitors with their own IP, such as Capita with its Academy R&B software, and Northgate with its Northgate Benefits software, have been following this approach for some time, and are now the market leaders. Civica is a much smaller player, but has a well-established platform with over 60 local authority customers. There should be opportunities for Civica to grow market share as local authorities are under huge pressure to cut costs. One way will be to exploit some of its existing R&B software relationships, and convert them into platform-based BPS.