Archive for September, 2011

The value of establishing the economics of alignment

Wednesday, September 14th, 2011

by Andrew Harrison

How can we convincingly show the value of aligning services to the needs of the individual service user?

  • It is a truism at the moment that outcomes can be improved for vulnerable service users facing complex problems, if multiple service providers can align their offers with each other.  But it is also a truism that if alignment involves managing a more complex collaboration between different service providers, then the costs of alignment are going to go up, irrespective of the improved outcomes.

How is this trade-off between cost and benefit to be managed? And in whose interests is it to provide this collaboration?

  • Consider the vulnerable individual facing multiple deprivations for whom local government has a duty of care.  We can begin to answer these questions if we look at the costs of that individual’s ‘through-life’ service experience, and consider where the costs (of a lack of collaboration) fall over time by service providers. By modeling the whole scope of the ‘through-life’ service, we can demonstrate that the ‘through-life’ costs are increased, with the increased direct costs falling on local government, while the increased indirect costs fall on both the individual and other public services.

As things stand, no-one is managing this trade-off, it being in no-one’s direct interests to manage it: reducing through-life costs is not a valid basis for increasing this year’s budgets to include costs of alignment.  So on what basis could increased costs of managing alignment be justified in terms of their benefit in reducing ‘through-life’ direct and indirect costs?

  • This would need to be more than the usual cost benefit analysis.  We would need to assess the direct and indirect value to both service users and service providers within the context of the larger ecosystem within which they were interacting with each other over time. We would need to establish that there were some contexts in which managing the economics of alignment could/might provide real traction on ‘through-life’ costs, and by implication where it could/might not – the economics of alignment within the context of the way the larger ecosystem performed being a deciding factor.

So, by establishing the economics of alignment, we could make the case for alignment of services in terms of their quantifiable impact on costs and benefits, as well as appealing to the value of improving outcomes.