By Tony Collins
Facing the TV cameras, officials at Somerset County Council spoke with confidence about the new joint venture company they had set up with the “world-class” IT supplier IBM.
“The contract has to succeed; we will make it succeed, ” a senior official said at the time. Greater choice for residents, more control, sustained improvement of services, improved efficiency, tens of millions in savings and enhanced job prospects for staff.
These were some of the promises in 2007.
Since then, Somerset County Council has been through a costly legal dispute with IBM; projected savings have become losses, and Somerset is days away from taking back the service early.
Now the council faces new IT-related risks to its reputation and finances, warns a team of auditors.
In several audit reports on the exit arrangements, auditors warn of a series of uncertainties about:
- what exactly IT assets the council will own as of 1 December 2016, when the joint venture hands back IT and staff.
- how much software may not be licensed, therefore being used illicitly.
- how much software is being paid for without being needed or used, wasting council tax money.
- whether thousands of pieces of hardware have been disposed of securely over the years of the contract, or whether confidential data could later turn up in the public domain.
- the accuracy of some supplied information. “… the same networking hardware items have the same value associated with them even though one is twelve years old and the other only four” said auditors.
That Somerset County Council laments setting up the Southwest One joint venture with IBM is not new. What continues to surprise is the extent of the difficulties of ending the joint venture cleanly – despite months, indeed more than a year – of preparatory work.
The realty is that uncertainties and risks abound.
When IT journalists ask leading councillors and officers at the start of outsourcing/joint venture deals whether all the most potentially serious risks have been given proper consideration, the spokespeople inevitably sound supremely confident.
If things go wrong, they are sure the council will be able to take back the service under secure arrangements that have been properly planned and written into the contract.
Yet today some of the most potentially serious risks to Somerset’s finances and reputation come from continuing threats such as the possibility confidential data being found on old hardware not securely disposed of.
Or the council may be paying for unneeded software licences.
In short Somerset County Council is taking back the IT service on 1 December 2016 without being certain what it will find.
In future, therefore, when councillors and officials across the country talk with supreme confidence at the start of an outsourcing deal or joint venture about large savings, sustained efficiencies, and a step-change improvement in services that comes with the benefits of collaborating with a world-class private-sector partner, local residents will have every right to be deeply sceptical.
For the reality is more likely to be that the council and its world-class supplier are about to embark on a journey into the unknown.
Thank you to campaigner Dave Orr for alerting me to the council audit reports that made this post possible.
TV broadcast in 2007 days after the council and IBM signed the Southwest One joint venture deal.
Excerpts from reports due to be considered by Somerset County Council’s Audit Committee next week (29 November 2016):
“… laptops, servers, storage devices, networking equipment, etc.) have been disposed of without the correct documentation historically, throughout the term with SWO [Southwest One]. There is a high likelihood that without the documentation to show that SWO were meant to have previously disposed of any specific data baring assets in a compliant manner then subsequent fines and loss of reputation will need to be dealt with by the Council.
“This is being addressed as part of the exit works but initial investigations show an expected lack of documentation.
“The quality of asset management and therefore exposure to risk (over and above this inherited risk) is expected to improve significantly once asset management returns to SCC [Somerset County Council).”
“Asset locations have been updated and improved though there are still issues regarding all asset details not being recorded accurately in the Asset Register. There is a risk that if wrong details are recorded against an asset then incorrect decisions could be made regarding these assets which may in turn cause the Council financial loss and/or loss of reputation.”
“… the same networking hardware items have the same value associated with them even though one is twelve years old and the other only four.”
“Software assets are now included in the monthly asset register report though the information collected and lack of correlation to meaningful license information means the original risk is not fully mitigated.
“This continued lack of software asset usage information against licensing proof of entitlement as well as the obvious risk of illegally using non licensed software there is also a risk that the Council is wasting public funds and Council officer’s time to manage unnecessary software. This means the Council will not be able to show “Best Value” in these purchases which could lead to fines being imposed by Central Government and loss of reputation by the inefficiencies being reported in the media.”
“I cannot though see evidence of the warranty & support arrangements being recorded or accurate recording of end of life assets. Due to a lack of or incorrect detail on the asset information there is the risk of incorrect decisions being made regarding an asset’s usage which could then lead to loss of money or reputation for the Council.”
And still the bills for leaving South West One and IBM are coming in.
Even with these heavy “divorce” costs and the cost of catching up with run down IT assets, it is still cheaper back in-house (£2m a year cheaper just for IT)!
This from a November budget outturn report:
Commercial Procurement and Contract Management: (+) £1.474m overspend, movement (-) £0.136m
End of SWOne contract costs are projected to be £1.743m. These planned costs will be part-funded from the remaining balance of the Unitary Charge equalisation reserve set up at the outset of the contract. This leaves a one-off cost pressure of £1.474m in this financial year.
The forecast savings for the 17/18 year for the range of services returned will be around £2m per annum and therefore each successive year will bring real savings to the Council.
Action is being taken to adjust the Commercial and Procurement team size to reflect the end of contract and the need for a new client role for Learning
Disabilities by team restructuring.
LikeLiked by 1 person
Thank you for the update. Would that every council outsourcing deal was subjected to the kind of dogged scrutiny you have given the IBM/Somerset County Council relationship.
I’ve no doubt the many questions you have asked over the years, the FOI replies you’ve had, and the analyses you’ve written, have opened the eyes of some councillors. That kind of scrutiny makes it less likely that officers and ruling councillors will make poor – and potentially costly – decisions in the belief that people outside the council will not know or care. Tony Collins.
LikeLiked by 1 person
Tony – Just want to thank you for your principled and fearless support throughout the debacle of the “Big Bang” outsource South West One (run by IBM) here in Somerset.
My latest count is around £70m lost (inevitably coming from frontline services like social care, roads, libraries etc.
Somerset County Council are exiting from this disastrous contract with IBM 1 year early and Thursday 1st December 2016 is Somerset’s “Independence Day”. Sadly, the only festive turkeys are the poor local taxpayers.
Will; IBM’s reputation in Local Government for failing to deliver on promises of “transformation” and £180m of savings be in any way tarnished by the Somerset “experience”?
Will Councillors stop thinking of IT as simple “Back Office”?
Will IT outsourcing in “Big Bang” large-scale contracts for long terms go out of fashion?
Beware the Ides of Somerset…….
LikeLiked by 1 person
Pingback: Days from taking back outsourced IT, Somerset Council is unsure what it’ll find | UNITE@SOMERSET COUNTYCOUNCIL
Thank you, Tony, for another insight into the workings of Bedlam.
Do you know, I am world class?
I am, of course, also supremely confident – in fact, as long as I’m being paid a decent amount, I’ll be whatever my paymaster wants me to be.
Can’t wait for Thanksgiving when I can thank myself.
One of the problems is that, the local Council officers and the bureaucratised Civil Service are not the best qualified to separate the wheat from the chaff when faced with hardened sales people, particularly from global organizations. They may not even be skilled enough to choose the most suitable tech people to advise them.
Inevitably, they rely on PR waffle to compensate for the gap in their experience.
Good luck to the taxpayers of Somerset. (They are also getting a dodgy and mega expensive nuclear power station? No wonder they drink cider).
In the meantime, thank you, Tony.
Thank you. You made me smile. There again I’m not a Somerset resident.
LikeLiked by 1 person