Best in Class Finance Functions For Police Forces

Backgroundof scale, long-term cost savings and an
Police funding has risen by £4.8 billion andempowered group of proud finance professionals,
77 per cent (39 per cent in real terms) sinceshould outweigh those initial costs.
1997. However the days where forces haveTo reduce the commercial, operational and
enjoyed such levels of funding are over.capability risks, the finance functions can be
Chief Constables and senior managementcompletely outsourced or partially outsourced to
recognize that the annual cycle of looking forthird parties. This will provide guaranteed cost
efficiencies year-on-year is not sustainable, and willbenefits and may provide the opportunity to
not address the cash shortfall in years to come.leverage relationships with vendors that provide
Facing slower funding growth and real cashbest practice processes.
deficits in their budgets, the Police Service mustProcess Efficiencies
adopt innovative strategies which generate theTypically for Police Forces the focus on
productivity and efficiency gains needed to deliverdevelopment has developed a silo based culture
high quality policing to the public.with disparate processes. As a result significant
The step-change in performance required to meetopportunities exist for standardization and
this challenge will only be achieved if the policesimplification of processes which provide scalability,
service fully embraces effective resourcereduce manual effort and deliver business benefit.
management and makes efficient and productiveFrom simply rationalizing processes, a force can
use of its technology, partnerships and people.typically accrue a 40% reduction in the number of
The finance function has an essential role to playprocesses. An example of this is the use of
in addressing these challenges and supportingelectronic bank statements instead of using the
Forces' objectives economically and efficiently.manual bank statement for bank reconciliation and
Challengeaccounts receivable processes. This would save
Police Forces tend to nurture a divisional andconsiderable effort that is involved in analyzing the
departmental culture rather than a corporate one,data, moving the data onto different spreadsheet
with individual procurement activities that do notand inputting the data into the financial systems.
exploit economies of scale. This is in part theOrganizations that possess a silo operating model
result of over a decade of devolving functionstend to have significant inefficiencies and
from the center to the.divisions.duplication in their processes, for example in HR
In order to reduce costs, improve efficiency andand Payroll. This is largely due to the teams
mitigate against the threat of "top down"involved meeting their own goals but not aligning
mandatory, centrally-driven initiatives, Policeto the corporate objectives of an organization.
Forces need to set up a corporate back officePolice Forces have a number of independent
and induce behavioral change. This change mustteams that are reliant on one another for data
involve compliance with a corporate culture ratherwith finance in departments, divisions and
than a series of silos running through theheadquarters sending and receiving information
organization.from each other as well as from the rest of the
Developing a Best in Class Finance FunctionForce. The silo model leads to ineffective data
Traditionally finance functions within Police Forcesbeing received by the teams that then have to
have focused on transactional processing withcarry out additional work to obtain the information
only limited support for management informationrequired.
and business decision support. With a renewedWhilst the argument for development has been
focus on efficiencies, there is now a pressing needwell made in the context of moving decision
for finance departments to transform in order tomaking closer to operational service delivery, the
add greater value to the force but with minimaladded cost in terms of resources, duplication and
costs.misaligned processes has rarely featured in the
1) Aligning to Force Strategydebate. In the current financial climate these costs
As Police Forces need finance to function, it isneed to be recognized.
imperative that finance and operations are closelyCulture
aligned. This collaboration can be very powerfulWithin transactional processes, a leading finance
and help deliver significant improvements to afunction will set up targets for staff members on
Force, but in order to achieve this model, therea daily basis. This target setting is an element of
are many barriers to overcome. Finance Directorsthe metric based culture that leading finance
must look at whether their Force is ready for thisfunctions develop. If the appropriate metrics of
collaboration, but more importantly, they mustproductivity and quality are applied and when
consider whether the Force itself can survivethese targets are challenging but not impossible,
without it.this is proven to result in improvements to
Finance requires a clear vision that centers aroundproductivity and quality.
its role as a balanced business partner. HoweverA 'Best in Class' finance function in Police Forces
to achieve this vision a huge effort is requiredwill have a service focused culture, with the
from the bottom up to understand the significantprimary objectives of providing a high level of
complexity in underlying systems and processessatisfaction for its customers (departments,
and to devise a way forward that can work fordivisions, employees & suppliers). A 'Best in
that particular organization.Class' finance function will measure customer
The success of any change managementsatisfaction on a timely basis through a metric
program is dependent on its execution. Change isbased approach. This will be combined with a
difficult and costly to execute correctly, andteam wide focus on process improvement, with
often, Police Forces lack the relevant experienceprocess owners, that will not necessarily be the
to achieve such change. Although finance directorsteam leads, owning force-wide improvement to
are required to hold appropriate professionaleach of the finance processes.
qualifications (as opposed to being former policeOrganizational Improvements
officers as was the case a few years ago) manyOrganizational structures within Police Forces are
have progressed within the Public Sector withtypically made up of supervisors leading teams of
limited opportunities for learning from andone to four team members. Through centralizing
interaction with best in class methodologies. Inand consolidating the finance function, an
addition cultural issues around self-preservationopportunity exists to increase the span of control
can present barriers to change.to best practice levels of 6 to 8 team members
Whilst it is relatively easy to get the message ofto one team lead / supervisor. By adjusting the
finance transformation across, securingorganizational structure and increasing the span of
commitment to embark on bold change can becontrol, Police Forces can accrue significant
tough. Business cases often lack the qualitycashable benefit from a reduction in the number
required to drive through change and even whereof team leads and team leads can accrue better
they are of exceptional quality senior policemanagement experience from managing larger
officers often lack the commercial awareness toteams.
trust them.Technology Enabled Improvements
2) Supporting Force DecisionsThere are a significant number of technology
Many Finance Directors are keen to develop theirimprovements that a Police Force could implement
finance functions. The challenge they face isto help develop a 'Best in Class' finance function.
convincing the rest of the Force that the financeThese include:
function can add value - by devoting more timeA) Scanning and workflow
and effort to financial analysis and providing seniorThrough adopting a scanning and workflow
management with the tools to understand thesolution to replace manual processes, improved
financial implications of major strategic decisions.visibility, transparency and efficiencies can be
Maintaining Financial Controls and Managing Riskreaped.
Sarbanes Oxley, International Financial ReportingB) Call logging, tracking and workflow tool
Standards (IFRS), Basel II and Individual CapitalPolice Forces generally have a number of
Assessments (ICA) have all put financial controlsindividuals responding to internal and supplier
and reporting under the spotlight in the privatequeries. These queries are neither logged nor
sector. This in turn is increasing the spotlight ontracked. The consequence of this is dual:o Queries
financial controls in the public sector.consume considerable effort within a particular
A 'Best in Class' Police Force finance function willfinance team. There is a high risk of duplicated
not just have the minimum controls to meet theeffort from the lack of logging of queries. For
regulatory requirements but will evaluate how theexample, a query could be responded to for 30
legislation and regulations that the finance functionminutes by person A in the finance team. Due to
are required to comply with, can be leveraged tothis query not being logged, if the individual that
provide value to the organization. Providingraised the query called up again and spoke to a
strategic information that will enable the force todifferent person then just for one additional
meet its objectives is a key task for a leadingquestion, this could take up to 20 minutes to
finance function.ensure that the background was appropriately
3) Value to the Forceexplained.o Queries can have numerous interfaces
The drive for development over the last decadewith the business. An unresolved query can be
or so, has moved decision making to the Divisionsresponded against by up to four separate teams
and has led to an increase in costs in the financewith considerable delay in providing a clear answer
function. Through utilizing a number of initiatives infor the supplier.
a program of transformation, a Force canThe implementation of a call logging, tracking and
leverage up to 40% of savings on the cost ofworkflow tool to document, measure and close
finance together with improving theinternal and supplier queries combined with the set
responsiveness of finance teams and the qualityup of a central queries team, would significantly
of financial information. These initiatives include:reduce the effort involved in responding to
Centralizationqueries within the finance departments and
By centralizing the finance function, a Police Forcedivisions, as well as within the actual divisions and
can create centers of excellence where industrydepartments, and procurement.
best practice can be developed and shared. ThisC) Database solution
will not only re-empower the department, creatingThroughout finance departments there are a
greater independence and objectivity in assessingsignificant number of spreadsheets utilized prior to
projects and performance, but also lead to moreinput into the financial system. There is a
consistent management information and a highertendency to transfer information manually from
degree of control. A Police Force can also developone spreadsheet to another to meet the needs
a business partner group to act as strategicof different teams.
liaisons to departments and divisions. The businessReplacing the spreadsheets with a database
partners would, for example, advise on how thesolution would rationalize the number of inputs and
departmental and divisional commanders can meetlead to effort savings for the front line Police
the budget in future months instead of merelyOfficers as well as Police Staff.
advising that the budget has been missed for theD) Customize reports
previous month.In obtaining management information from the
With the mundane number crunching beingfinancial systems, police staff run a series of
performed in a shared service center, financereports, import these into excel, use lookups to
professionals will find they now have time to actmatch the data and implement pivots to illustrate
as business partners to divisions and departmentsthe data as required. There is significant manual
and focus on the strategic issues.effort that is involved in carrying out this work.
The cultural impact on the departments andThrough customizing reports the outputs from
divisional commanders should not bethe financial system can be set up to provide the
underestimated. Commanders will be concerneddata in the formats required through the click of a
that:o Their budgets will be centralizedo Workloadsbutton. This would have the benefit of reduced
would increaseo There will be limited access toeffort and improved motivation for team
finance individualso There will not be on sitemembers that previously carried out these
supportmundane tasks.
However, if the centralized shared service centerIn designing, procuring and implementing new
is designed appropriately none of the abovetechnology enabling tools, a Police Force will face a
should apply. In fact from centralization under anumber of challenges including investment
best practice model, leaders should accrue theapproval; IT capacity; capability; and procurement.
following benefits:o Strategic advice provided byThese challenges can be mitigated through
business partnerso Increased flexibilityo Improvedpartnering with a third party service company
management informationo Faster transactionsowith whom the investment can be shared, the
Reduced number of unresolved querieso Greaterskills can be provided and the procurement cycle
clarity on service and cost of provisiono Forumcan be minimized.
for finance to be strategically aligned to the needsConclusion
of the ForceIt is clear that cultural, process and technology
A Force that moves from a de-centralized to achange is required if police forces are to deliver
centralized system should try and ensure that theboth sustainable efficiencies and high quality
finance function does not lose touch with theservices. In an environment where for the first
Chief Constable and Divisional Commanders.time forces face real cash deficits and face
Forces need to have a robust business case forhaving to reduce police officer and support staff
finance transformation combined with anumbers whilst maintaining current performance
governance structure that spans operational,levels the current finance delivery models requires
tactical and strategic requirements. There is a risknew thinking.
that potential benefits of implementing such aWhile there a number of barriers to be overcome
change may not be realized if the program is notin achieving a best in class finance function, it
carefully managed. Investment is needed towon't be long before such a decision becomes
create a successful centralized finance function.mandatory. Those who are ahead of the curve
Typically the future potential benefits of greaterwill inevitably find themselves in a stronger
visibility and control, consistent processes,position.
standardized management information, economies