The social housing sector is once again facing an upheaval in both regulatory climate and strategic direction, from the Homes and Community Agency’s self-regulatory model and emphasis on financial performance, value for money and national consistency, to the government’s clear drive towards creating a self-financing social housing sector.
From the way services are provided to tenants to the way business transformation projects are delivered and new IT systems procured, if housing providers are to operate effectively in the new environment a robust governance model is required.
Housing providers need to apply new rigour to attain value for money from IT, from evolving their existing infrastructures to respond to new demands such as universal credit, to improving procurement and contract structure, and ensuring IT investment meets the requirements of strategic business improvement plans.
The housing sector has proven resilient in the face of the global financial crisis to date. However, the landscape for housing providers is now changing radically. From the introduction of Universal Credit to the reduction in public funding and the need to expand service delivery beyond their core housing activities, housing providers are having to adapt fast.
A new governance model is at the heart of these changes. The Homes and Community Agency’s regulatory framework is now placing the onus on housing providers to demonstrate robust financial viability and sustainability. Furthermore, the social housing regulator is demanding housing providers do more to achieve value for money, after finding it cannot account for variations of almost a third in costs between different providers.
At the same time, organisations are under pressure from stakeholders to increase accountability, improve efficiency, and deliver an effective range of services that supports tenants and delivers new revenue streams.
This move towards greater accountability combined with a clear government commitment to reduce public funding and create a self-sufficient housing sector will demand significant operational, structural and personnel change. From reinvigorating plans for shared service delivery to demanding significant business transformation, the challenge for housing organisations is have the right structure and skills to support both accountability and value for money.
Improved governance extends from the creation of new boards of directors, through the delivery of major business improvement projects (which should include top level management and close collaboration with IT) to the next tier of service delivery management.
To support the new structure, housing organisations require a far more robust culture of performance management, exploiting business intelligence tools that can deliver both day-to-day operational key performance indicator (KPI) monitoring and on-going strategic performance measurement. It is only by achieving end-to-end performance management that organisations will be able to deliver not only the financial metrics demanded by the HCA but also the softer, customer-led metrics that will remain key to supporting service delivery improvements.
Technology and service procurement
One of the most significant areas of change is the way in which housing providers procure technology and services. After a decade of somewhat anarchic investments, with organisations typically exploiting one-off solutions to achieve specific objectives, under new governance models the sector needs to create a much more strategic approach to IT adoption and investment.
This should start with an in-depth assessment of the current technology investment in conjunction with business improvement objectives. Once the strategy has been developed and key areas of IT investment identified, there are opportunities to adopt cleverer procurement processes – albeit within the confines of EU procurement law. To attain the best result, it is important to understand these options and choose the most effective route to achieve best value and work with suppliers that demonstrate relevant market experience and expertise.
For example, while a straightforward tender process is designed for the purchase of an off-the-shelf software solution, a housing provider could opt to use Competitive Dialogue for less-defined requirements such as an outsourced IT service. The use of Competitive Dialogue in this environment helps the organisation to shape the content and context of the service required through on-going discussions with potential vendors and achieve a service that is fit for purpose.
By improving both the understanding of technology requirements, including the link between business improvement projects and technology needs, and the way in which technology is procured, housing providers can attain the critical evolution from a tactical to strategic approach to IT that will drive the long-term value for money requirements.
This change in attitude should also demand new levels of governance from IT vendors. Excellence in IT will underpin many aspects of new service delivery and governance transparency and the onus is on vendors to demonstrate the value of the investment. Benefit realisation plans should become a core component of the overall technology assessment process, even if the benefits may not be realised during the lifetime of that vendor’s contract, to ensure the organisation is following its strategic direction and addressing requirements for value for money.
IT vendors can also play an important role in facilitating shared services with neighbouring organisations. Critically, this does not have to be limited to other housing providers. As the social housing market increasingly looks at service diversification in order to provide tenants with access to a raft of additional services, there is an opportunity for the housing provider to act as a single centralised function for a number of local service delivery organisations.
In some ways, the shift towards self-governance and a regulator focused on financial metrics rather than the more complex, customer service-led measures removes some of the pressure from the social housing sector. However, the reality is very different. With changes in welfare funding and a clear political move towards creating a self-funding sector, the onus is on housing providers to become far more strategic and to build partnerships and relationships with other local organisations. Strong governance across the organisation, from the board to the delivery of IT services and support, will be critical to effective operation in this new era of social housing provision.
Jacqui Stoggall is director of consultancy at Sovereign Business Integration Group.