Public sector can save £3bn via channel shift: Goss Interactive

The public sector could save more than £3bn in next 12 months from shifting transactions to lower-cost channels like web, mobile, social media, SMS, and web kiosks, where delivering services can be up to 98% cheaper than using traditional phone and face to face channels, according to a report by Goss Interactive titled ‘Public Sector Channel Shift Strategies Survey Report 2013’.

The estimate is based on findings from of a survey 575 senior level executives in 480 public sector organisations, including NHS trusts, central government organisations, local authorities, universities, social housing providers and third sector organisations.

Goss claims the report is the largest survey to date on channel shift covering all types of public sector organisation. Carried out by iGov Surveys, an important finding is that while the idea is well embedded in central and local government, where ‘digital by Default’ is a key driver, for other parts of the public sector ‘channel shift’ is an unfamiliar term.

Overall, the survey shows that 66% of public sector organisations agree that channel shift will deliver efficiency savings. More than a third of respondents answering a question on the scale of savings said they expected these would amount to between £500k and £3m in the next 12 months.

Data from the survey indicates that larger public sector organisations expect to save on average £725,000 over the next 12 months, which in local government would equate to more than £300m and across the wider public sector, more than £3bn.

There is variation in savings expectations among the different types of public sector organisations: 88% of housing associations and 82% of local government organisations say that channel shift will deliver efficiency savings, but only 55% of central government and 53% of NHS organisations do so. Regional differences are apparent as across England, 69% of public sector organisations agree that channel shift will deliver savings, while the figure is 72% for public sector organisations in Wales and 88% in Scotland.

Longer term, further savings can be expected, since few organisations are planning to channel shift 100% of services next year. Almost one-third of organisations plan to shift up to a quarter of services in the next 12 months, with another 24% saying they plan to shift between a quarter and half of their services and 12% aiming to shift between half and three-quarters.

In terms of what the survey reveals about progress public sector organisations have made to date on channel shift, only one third overall have more than 25% of services available online today, although central government organisations have made more progress, with 59% already able to deliver more than 25% of services online.

Part of the reason for relatively slow progress to date may be that most organisations are not yet treating channel shift as an organisation-wide strategic initiative. Only 39% of survey respondents reported that their organisation had adopted a clear channel shift strategy. Of the other 61% of public sector organisations, 64% said this is an area they plan to address in the next 12 months, so that by the end of 2014, up to 78% of public sector organisations expect to have a clear channel shift strategy in place.

The biggest channel shift cost-saving opportunity identified by survey respondents is making services available on mobile devices. With 51% of UK adults now owning a smartphone, the mobile web is a particularly good means reaching people in lower-income and other formerly digitally excluded demographics. This may explain why 32% of the respondents to this survey see mobile websites as the channel that can deliver the most savings, compared to 22% for desktop websites, 19% for social media, 9% for LiveChat and 11% for telephone.

In terms of barriers to channel shift, respondents cite a number of organisational and technical issues, including lack of integrated systems, lack of budget, staff culture, understanding of technology, lack of skills and in some instances lack of senior management buy-in.

Of these, lack of systems integration emerges as the top barrier, with disjointed systems requiring data to be re-keyed manually, making it difficult to put online processes that span multiple systems.

Lack if budget also emerges as an issue for survey respondents, which the report says is understandable in the current economic environment. However the report also says that public sector organisations need to look at the scale of the financial return from channel shift, which can deliver returns in the order of several hundred percent, often with immediate effect.

Among many examples of savings cited in the report is one from a UK local authority that simply by revamping its online process for finding out recycling collection days, saved £59,500 annually on call handling costs – also delivering a much better customer experience.

According to Anthony Peake, Marketing Director of Goss Interactive and author of the report: “Our survey shows that as public sector budget cuts are biting, organisations are really engaging now with finding lower-cost ways of delivering services that protect frontline services and maintain service quality. With face to face transactions costing on average £8.62, telephone interactions costing £2.83 and online digital interactions costing less than 15p, the evidence of channel shift activity and the results anticipated, are very encouraging. It is no surprise to us that lack of systems integration has emerged as the biggest barrier to channel shift. For it to be successful, processes need to be understood and mapped, and relevant systems integrated to enable fast, straight-through processing with no human intervention. Achieving this remains a challenge for many organisations.”

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