Ten years after its launch, the Regional Software Holdings collaboration provides a model for other councils looking to work more closely together.
Regional Software Holdings (RSHL) is a local government shared service success story. It has racked up substantial achievements to date and locked in opportunities for the future. It also carries significant potential as a model for similar collaborations across the sector.
RSHL comprises six shareholding regional councils: Northern, Waikato, Taranaki, Horizons, West Coast and Environment Southland. Hawke’s Bay Regional Council recently joined as a customer council.
GM John Crane told delegates at the recent ALGIM conference in Rotorua that through collaboration – and by sharing services, resources and investment – it aims to enable councils to do more, “and do it better”.
“We’ve got software that’s worth over $5 million and none of us has spent anything like that,” he said. “That asset is of far greater value than any of us could afford on our own. And we’ve got real value in our collaboration framework; the shared best practice, the consistency around our processes, our solutions, our data, that’s the golden nugget. We’re an established, proven organisation with a legal basis, a structure, roles, processes and funding.”
No-one has a monopoly on good ideas and good practice, says John. “So the more we work together the better we can do things and, by pooling resources, the more we can achieve.”
As a public limited liability company, RSHL operates under the Companies Act. It’s also a council controlled organisation and therefore has responsibilities under the Local Government Act. However, unlike investments which generate dividends, such as ports and buildings, it’s not an investment CCO.
It’s a company providing shared service capabilities to shareholders. “We’re not here to make a profit,” says John. “In fact as part of our operating model, we’re not permitted to do that.”
John says part of the value lies in the organisation being run by council employees. “We work among the regional councils, know council business and know what’s required of us.”
Essentially, RSHL provides a framework for collaboration. This involves the delivery of shared software and information products and services specific to regional councils, thereby enabling those councils to achieve shared best practice, consistency and standardisation.
“We’re all governed by the same regulatory framework. We shouldn’t need to be doing things wildly differently. By doing them together we can choose the best practice and drive consistency around that.”
Making the most of limited resources is another important aspect, John says. “The more we can do together, the better use we can make of limited funding.”
The origins of RSHL date back to 2008. At that stage the various local councils that now form the shareholding group were operating on ageing and unsupported software programs; “there was a bit of a crisis”, says John.
A common need to replace these systems became the driver. Working individually didn’t make sense, he says, so, as a group they went to the market to identify a suitable software solution.
The absence of an off-the-shelf solution saw them undertake a collaborative development project with Datacom to build one tailored to the specific regulatory needs of the regional councils.
The result is IRIS – Integrated Regional Information Systems – a software product providing a central point of control for a previously disconnected set of information needs around core regional council functions, including the regulatory areas of consents, compliance, biosecurity and enforcement. IRIS has also been integrated with Datacom’s Mobile Capture and Online Services.
Development of IRIS took two years with implementation taking place around 2012 at which stage the councils involved realised someone had to ‘own’ the asset.
“Someone had to manage the services around the software, the operational support, the ongoing enhancement, and that takes a vehicle, an entity that can enter into contracts, that has funding and a legal structure. RSHL was formed to own and manage IRIS.”
The RSHL board comprises six directors of CE or tier-two executive level from each of the shareholding councils with Hawke’s Bay as an attendee. The company is also bringing in an independent commercial director.
Management is provided largely by Waikato Regional Council and Horizons, which also provides financial management. In addition, RSHL has an advisory body made up of the senior IT representatives from each of the councils. “They provide the management and direction of RSHL, particularly the IRIS product. Datacom sits alongside that as well to help that guidance.”
User groups are another key to RSHL’s success; representatives from the councils who are subject matter experts sharing best practice, the best way of doing things. “The design authority is really the architecture,” says John, “making sure the product has integrity for the future.” The advisory group video-conferences once a month and the management team meet, in person, quarterly. “These are really positive interactions,” says John.
Income for RSHL comes from the shareholding councils and the more recent customer council.
“We’re committed to annual funding through to 2023 so we’re assured of funding to move forward.”
Nearly two-thirds of the annual funding goes into improving the product. And, as John says, “Spreading the funding across the development means we’re all getting more than we’re individually putting into the pot. So there’s real value around that shared investment.”
And, while RSHL’s not-for-profit objective means not having a surplus at the end of the year, (any surplus would be taxed) he says the organisation focuses on wise and proper use of funds.
“It’s ratepayers’ money so we have to be really robust around how we use it.”
IRIS shareholding determines the amount of annual contribution. This is decided by what John calls “a whole load of metrics” but essentially means Waikato, as the largest, contributes close to 33 percent, with most others contributing about 15 percent to 16 percent.
IRIS clearly delivers value, says John. “We’ve got a core product that meets our specific needs and we have control over it. It’s designed for New Zealand’s regional councils and that’s something quite unique. It’s been proven across six regional councils and being implemented at a seventh. And it’s backed by the capabilities and local government knowledge of Datacom. We’ve extended functionality. We own it. We own the IP and control its direction and destiny.”
When it comes to IRIS, the future lies in extending the customer base and ensuring the software is future proof. Increasing the number of councils using IRIS will mean more funding to do more and do it more quickly, says John. “And, as Hawke’s Bay has shown us, new customers bring new ideas, different ways of thinking as their experts interact with ours.”
For RSHL, John sees a real opportunity to build on current achievements and leverage the company as a vehicle for future collaboration across the sector.
“There’s clear pressure on councils to collaborate more. While local representation is important, having 70-odd local government entities across New Zealand doesn’t make a lot of sense in terms of efficiency. We need to gain efficiencies while preserving that representation. If we can’t demonstrate we can work together as a sector someone else will make the decisions for us.
“We’ve put a proposal to regional council CEs to leverage RSHL for collaborative initiatives around software and information. We’re all looking at business intelligence for better insights around the regulatory functions we perform, so isn’t it crazy to do it 11 or 12 different times?
“Imagine the power and the saving in investment with the insights we could get, not just into our own individual council functions but across all those councils, if we were to get agreement around the standard datasets and bring them into a common data warehouse then put a single business intelligence tool across it. Who’s doing things really well? What are they doing differently? There are some great opportunities for collaboration.”
There are also challenges. “We wear two hats so this adds to our workload,” says John. “There’s the pressure of our day jobs and making sure we wear the right hat for the right occasion.” He suggests it’s a balancing act; “Putting the right amount of work into RSHL and not neglecting our day jobs with councils. That said, working together means we can deliver more for our day jobs than we would on our own.”
John highlights three areas he sees as vital to the success of RSHL; performance structure, procedures and processes, and funding. “They’re really important; they’re the enduring thing. But you need direction. Our board gives us clear direction and, like any entity we need that. You can’t collaborate alone. It’s a team thing. You need those trusted relationships and you need those partnerships. You’ve got to have strong drivers. For RSHL it was about making IRIS successful. You’ve got to have the right people because it’s the people who make it work.”
RSHL demonstrates how effective collaboration can be in local government. “But collaboration is about compromise and considering the greater good,” says John. “It takes commitment, hard work and time.
“RSHL has been a collaboration for over 10 years and a lot of people have put in a huge amount of hard work. It’s a great example of people working together for a common and mutual benefit and we’ve achieved a great deal.
“Looking to the future, with RSHL we have a successful shared service collaboration opportunity to build on, and a model that others can replicate in their particular part of the local government sector.”
This article was first published in the February 2017 issue of NZ Local Government Magazine.