Digitalization has brought Nacka into the future

17-05-2018

With a clear vision for their digital residents, Stockholm suburb, Nacka, has chosen several operating partners to enable future growth.

Nacka is one of Sweden’s fastest growing municipalities; the number of residents is expected to double to 200,000 within 15 years. With this fast-paced growth ahead, the requirements for well-functioning municipal services also increase. IT services are seen as the major enabler and the most crucial component of the expansion. As a result Nacka has developed a clear vision and digitalization agenda, where the goal is to be one of the top ten most digitalized municipalities in Sweden. With such a clear objective, Nacka challenges their traditional way of doing business. This includes looking into new suppliers and a new procurement process with a multisource strategy.

IT that supports expansion

The architects behind the municipality’s new multisource agreement are Mats Bohman, managing director, and Lotta Nordström, Nacka’s digitalization manager.

“We have a vision: transparency, diversity and being the best municipality that we can be,” Mats Bohman says. He continues, “there are really good support functions within the municipality where IT support is crucial. Within less than a decade, we now have a new subway running, which has made public transportation much easier. The subway accelerated housing construction, which has led to the number of residents increasing, which in turn increases the need for municipal welfare services. This is where stable IT services come into play – it’s crucial for the functionality of Nacka’s welfare services.”

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Multisource enables flexibility and innovation

Previously, Nacka had only two major suppliers of IT operations and looking ahead there was a feeling that this might make them feel trapped and stop them from being flexible and innovative. So, the most important question during the procurement process was “how do we make sure that innovation and improvement is included in the deal, so we don’t constantly have to pay for new services?”

Nacka’s request for quotations (RFQ) was preceded by a preliminary study and market research, which confirmed that a strategy with multiple suppliers (sources) was, indeed, the right way to go. With a multisource strategy, customers can choose the best suppliers in each area, including network and IT-operations. It took the city council about two years to thoroughly evaluate and find the best, long-term solution for Nacka.

“We’ve also allowed the dialogue with potential suppliers take the time that it needed. I think many people rush through decisions too fast. Instead, you should share your expectations and knowledge between you. I think that’s key when it comes to achieving a good relationship between the municipality and the supplier.”

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Team work and feedback pave the road to success

Prior to the RFQ, a survey was conducted that showed that the municipality’s biggest challenges with the multisource strategy are monitoring, controlling delivery time and, actually, being a good customer. Multiple suppliers will increase the demand on Nacka municipality to be a good project leader. They need to make sure that the suppliers work well individually, but also together. They also need to make sure they have the right conditions to be able to deliver what has been promised. 

The municipality is also conducting a collaborative project with Stockholm School of Economics to monitor the consequences and outcomes of their chosen procurement strategy. The two-year project will measure the impact on the municipality’s innovation, flexibility and efficiency. In addition, Nacka municipality will include an external supplier that follows the process and conducts continuous evaluations.

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Five suppliers

The municipality completed the procurement in several steps. Nacka chose five different suppliers, where Basefarm was chosen to operate the central IT-operations, crucial for the community services.

“Basefarm is a highly competent and proficient supplier of business-critical systems because they ensure its functionality by being meticulous in everything they do. They focus on their area of expertise, instead of trying be an all-round supplier. We wanted their niched competence. Basefarm won our business because they offer the best quality at the best price.”

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Do your homework!

Mats Bohman’s two most important tips to other municipalities are to get a clear picture of how the supplier market looks and how it can collaborate with the needs of the municipality. “Since the suppliers know the ins and outs of IT, I’d recommend you to start a conversation with them relatively early in the process. You need to do your homework before the procurement process starts, so you know exactly what you are looking for. Ask a lot of questions that will indicate if you are on the right track in your train of thought. Once the procurement process has started, everything is, of course, confidential.”

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From the Digital Communications Manager

Lotta Nordström talks about the multisource strategy: “Today, Nacka doesn’t offer enough of its services digitally, which is what we’re aiming to change. Sweden has a strong municipal self-government, but a lot of the IT-solutions are very old-fashioned. We are happy to be part of increasing the speed of the digitalization process. We don’t want suppliers who are offering the old types of solutions. We are now in the second generation of IT outsourcing, where “supplier management” is becoming a strong trend in the municipalities. Project managers and customer managers, among others, are now employed by the municipality so they can maintain a dialogue with our suppliers. We save money even if we need more employees and internal resources, because it gives us shorter lead times and quickens the entire process.”

Lotta continues, “instead of having one player who has general knowledge of everything, we will now collaborate with companies that are experts in their respective areas. This time, we are more mature as customers and we know a lot more about what we want – and how we want it. We are fully aware that once we get into this, we have to be very good at supplier management and follow-ups!”

“We been trying to find out what the optimal mode of operation looks like.  Is it cloud solutions that are hosted by the supplier? Or maybe a hybrid cloud? IT today looks very different compared to the IT solutions of yesterday and I want to ensure that we always have a cost-effective and future-guaranteed operation. Basefarm immediately understood what we were looking for. They focus on technical quality and combine it with a very strong understanding of their role in a multisource strategy. They focus on our end-customers, which are the municipality’s employees, citizens and business owners. Basefarm will operate all central systems that are crucial for all the employees of the municipality.”

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Supplier proactivity is crucial

Basefarm’s responsibility also includes over one hundred applications and databases. Nacka municipality employs thousands of people that rely on their access to these databases, so it’s absolutely crucial that these applications function properly. The residents and business owners should always be able to access the municipality’s services digitally.

Basefarm’s customer team works proactively in order to go above and beyond the industry standard and challenge its customers in everything they do, including choice of technology, licensing, processes, testing and development.

With this approach, customers and Basefarm find new innovative solutions together. This leads to productive business results such as cost savings, increased application stability, improved response times and the creation of new services. It creates a large trust capital which is, in a way, what makes Basefarm unique.

7 tips from Mats Bohman and Lotta Nordström to other municipalities:

  1. Do your homework so you know what to look for
  2. Understand what the market looks like
  3. Have extensive dialogues with potential suppliers
  4. Think about which parts of your IT delivery are suitable to outsource. Do you want to keep anything in-house?
  5. Let the process take the time it needs
  6. Clarify the level of flexibility in long-term deals
  7. Do you expect innovation? Is that included in the deal? Is it effective to include the expectations of innovation in a standardized sourcing agreement? The question is: what is the optimal operating service that is, at the same time, the most cost effective?
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