BusinessPeople In BusinessCareers: public sector – Working in the public eye

Careers: public sector - Working in the public eye

The Government's commitment to public services means the sector can be seen as a safe haven for consultants. But it is not immune to recessionary-or budgetary- pressures, says Mary Huntington.

According to figures from the Management Consultancies Association, public sector consulting is a pretty healthy marketplace. Member firms, who represent 50% of the UK consultancy market, saw revenues of £384m from the sector in 2000. Although this was lower than the previous year, 2001 is expected to hold up well, fuelled by devolution, the delivery of modernising government initiatives and Public Private Partnerships such as PFI and outsourcing. Figures from the National Audit Office to April this year put expenditure across all departments on specialist advice, expertise and assistance (excluding IT services) at £610m, 38% of which was directly attributable to management consultancy. However, since 1993 the overall spend has only increased by 7% in real terms.

Despite this, many consultancies have seen an increase in work in the sector. Andrew Hooke, a member of PA Consulting’s management group and deputy practice head of its government and public services practice, says the firm has been extremely busy in the home affairs and justice area over the last four years. And Richard Jones, a partner in PricewaterhouseCoopers’ public sector business unit, has seen a substantial increase in work in the sector in recent years. “The size of our practice has risen and continues to do so. Even through a round of redundancies the number of people working in this area has increased,” he says.

In general, he adds, PwC’s work comes from fairly large contracts running for some period. “For example, the Capital contract at the Ministry of Defence, now into its sixth year, is concerned with financial management and associated systems such as logistics or procurement. We also have a substantial part in the Sirius Programme of modernisation for the Home Office. That is a 10-year contract, covering areas such as the immigration department and so on.”

PwC has won a number of contracts recently, he says, in both central and local government. “A lot of local authorities are faced with substantial change and again we have been quite successful there on things like financial management systems, customer communications systems and CRM type software.”

Bill Cook, vice president in charge of the public sector at Cap Gemini Ernst & Young, has also seen business growth in the last couple of years. He attributes this to two factors: the increased strength of the firm’s current offering since the merger; and growth in the marketplace.

He identifies a number of catalysts for the latter. “The new administration introduced a three year planning horizon in 1997 and that, combined with announcements of substantial investments in public services from the Chancellor, means departments can have the confidence to plan going into the future.” Another big driver is the Prime Minister’s commitment to 2005 targets for e-government and the provision of electronic information to citizens. “Quite hard targets have been set for departments to deliver against the Modernising Government initiative, creating a good degree of interest in change,” he says.

PA’s Hooke agrees: “Delivery is very much a theme of this second term and the modernising agenda is still very much one of the main drivers of change. In my case a whole new agenda is emerging in terms of how the justice system is managed, driving a lot of change in both the business and IT consulting market.”

The Government’s manifesto pledge to halve the time from arrest to sentence for persistent young offenders by May 2002 led to a major and complex change management programme for PA with the Youth Justice Board in 1999.

The firm’s involvement included the production of a best practice guide, the production and implementation of action plans to tackle delay in 42 areas, the development of a performance management system and the design of a website to enable knowledge sharing. PA also helped the agencies concerned to manage change in a systematic way. The programme hit its target, reducing timescales from 142 days to 71 days, by June 2001, almost a year ahead of schedule – and won the MCA’s award for the best strategy and business transformation project in 2000.

Hooke sees PA’s level of government work continuing but he is not complacent. “We are certainly well ahead of what we were doing last year and well ahead of budget. Things are looking healthy for the short and medium term but I do not see the sector as ‘recession-proof’. It is not as vulnerable as some of the private sector consultancy markets but it can suffer if you don’t get your strategy right.”

Peter Kilgour, UK managing director for Towers Perrin, offers a slightly different angle on the sector. His firm does not do IT work but concentrates on process and people. “We haven’t seen a dramatic change in the amount of work in the sector – it remains relatively constant. Some of it involves technical advice on pay systems or levels, some is integration work, for example the HR stuff related to starting up the Financial Services Authority, or, more recently, the merging of different organisations or regulators for efficiency reasons. There has been a lot of work in that area.”

Whether the sector will withstand the icy blast of recession depends on a number of factors, he says. “How will the Treasury approach this year’s spending round? Will it be influenced by the pressures on budgets associated with terrorist issues or Foot and Mouth? Is it going to be influenced by a re-prioritisation? Until we know the answers to those questions we can’t determine whether it is recession-proof or not.”

By and large, he says, the Government is pretty prudent about how it spends its money. “I find civil servants’ attitude to cost budgets as rigorous as that in the private sector, and therefore the drivers that would lead the public sector to be ‘recession-proof’ or not are around the prioritisation and focus that government puts on how it is going to spend its money.”

However, he adds: “I can’t believe that all the things that are going on in the world at the moment won’t mean some change in prioritisation of government spend and attitude to spend.”

PwC’s Jones agrees. He says: “Recession doesn’t happen to government as quickly as it happens to industry. Government has a number of long-term initiatives, which it carries on with. But recession may mean that it will not replace them for a time when they finish. I don’t expect Gordon Brown to miss his tax targets for a while but in the next round of planning he might think ‘we’ve got a war to support, we’ve spent most if not all of the contingency fund on Foot and Mouth’, and if he has a tax shortfall, that pressure on budgets will manifest itself for firms like us in another year or so.”

He adds: “While longer planning cycles have given government departments more confidence about resources, changing priorities can still put individual programmes on hold while funds are directed elsewhere. So while the Government cannot go out of business, working in the sector is not without risk by a long way.”

He says this is one of the reasons why PwC is keen to win some of the larger contracts. “We are trying to make our type of business less up and down by winning longer-term relationships to help us ride through the downturn and be ready to rebid when things start to improve again.”

The main issue with continuity in government circles, he adds, is around the quality you deliver and the people you provide.

PA is also working hard to ensure that when long-running jobs come to an end, there are other things to replace them. Says Hooke: “We are monitoring the sales pipeline very carefully and ensuring that where there are opportunities that match our capability we have a good chance of success.”

He says the firm has been debating internally how to manage when a flavour of recession is in the air. “It is important to maintain a focus on the things you are good at and the capabilities you have – i.e. you don’t flit between jobs because you think there may be some downturn in the market. Clearly you have to react if there is a slump in a particular subsector but the argument here is about maintaining focus and a long-term view.”

Hooke also stresses the importance of combining content knowledge with consultancy skills, be that business process, re-engineering, performance improvement, or IT. “It’s the combination of those two that allow you to deliver to your clients and create the longer-term relationships that we all desire,” he concludes.


“We are particularly busy in systems integration, the implementation of ERP packages and outsourcing,” says CGE&Y’s Cook. “The big areas coming through are e-procurement and CRM.” But, he adds:”CRM is about consulting around relationships with citizens at the moment, rather than big implementations of packages.”

PwC’s Jones agrees. “The public sector is keen on IT integration skills, bringing together legacy infrastructures with new applications, and financial management skills.”

Change management skills are also in demand, “to ensure that people want to buy into new ways of doing things”.

Government targets on the proportion of business to be done by e-methods by 2005 are driving many e-procurement initiatives, says Jones. But he also foresees e-growth in other areas: “Many departments do not have modern, integrated HR systems – and they are beginning to see the benefits of managing employees’ careers properly.”

HR player Towers Perrin is working on a lot of large integration projects, bringing major parts of government together, says MD Kilgour. “We are also seeing quite a strong pressure to get more modern performance management and reward systems in place – and to bring in more outside people to government as part of the modernising programme.”

Outsourcing also has a major part to play. “A lot of basic financial transaction processes are outsourced, as is the support of IT infrastructure. And huge numbers of buildings need to be maintained under infrastructure service agreements,” says Jones.

PwC also does quite a bit in the Private Finance Initiative area, he says. “PFI is still alive and kicking despite disasters like Railtrack. It is a useful solution but like outsourcing you have to be absolutely clear on the quality and content of what you want to PFI. It is a mistake to think you can outsource a problem.”

Generally, PA’s Hooke sees a demand for people who can deliver and understand what “joined-up” government means in practice. On the IT front he identifies a move towards more pragmatic skills, away from large scale strategic or philosophical jobs towards implementation. “There is a growing recognition that IT and business are integral and joined up. Our clients are demanding things that can be piloted, used by users on the ground and rolled out quickly if they work.” This doesn’t happen across the board, he says. “We know there are big systems jobs out there and in some cases they are quite appropriate. But we do see a change in approach.”

Mary Huntington is a freelance journalist

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