By Tony Collins
IBM-led Southwest One has had a mostly bad press since it was set up in 2007. But the story has a positive postscript.
Officials at Somerset County Council now understand what has long been obvious to ICT professionals: that the bulk of an organisation’s savings come from changing the way people work – and less from the ICT itself.
Now that Somerset County Council has the job of running its own IT again – its IT-based relationship with Southwest One ended prematurely in December 2016 – the council’s officials have realised that technology is not an end in itself but an “enabler” of headcount reductions and improvements in productivity.
A 2017 paper by the county council’s “Programme Management Office” says the council has begun a “technology and people programme” to “contribute to savings via headcount reduction by improving organisational productivity and process efficiency using technology as the key enabler”.
Outsourcing IT a “bad mistake”
It was in 2007 that Somerset County Council and IBM launched a joint venture, Southwest One. The new company took over the IT staff and some services from the council.
In the nine years since then the council has concluded that outsourcing ICT – thereby separating it from the council’s general operations – was not a good idea.
The same message – that IT is too integral and important to an organisation to be outsourced – has also reached Whitehall’s biggest department, the Department for Work and Pensions.
Yesterday (8 February 2017) Lord Freud, who was the Conservative minister in charge of Universal Credit at the Department for Work and Pensions, told MPs that outsourcing IT across government had proved to be a “bad idea”. He said,
“What I didn’t know, and I don’t think anyone knew, was how bad a mistake it had been for all of government to have sent out their IT…
“You went to these big firms to build your IT. I think that was a most fundamental mistake, right across government and probably across government in the western world …
” We talk about IT as something separate but it isn’t. It is part of your operating system. It’s a tool within a much better system. If you get rid of it, and lose control of it, you don’t know how to build these systems.
” So we had an IT department but it was actually an IT commissioning department. It didn’t know how to do the IT.
“What we actually discovered through the (Universal Credit) process was that you had to bring the IT back on board. The department has been rebuilding itself in order to do that. That is a massive job.”
Task facing Somerset officials
Somerset County Council says in its paper that the council now suffers from what it describes as:
- Duplicated effort
- Inefficient business processes
- A reliance on traditional ways of working (paper-based and meeting-focused).
- Technology that is not sufficient to meet business needs
- Inadequate data extraction that does not support evidence based decision making.
- “Significant under-investment in IT”.
To help tackle these problems the council says it needs a shift in culture. This would enable the workforce to change the way it works.
From January 2017 to 2021, the council plans “organisation and people-led transformational change focused on opportunities arising from targeted systems review outcomes”.
The council’s officers hope this will lead to
- Less unproductive time in travelling and attending some statutory duties such as court proceedings.
- Fewer meetings.
- Reduced management time because of fewer people to manage e.g. supervision, appraisal, performance and sickness.
- Reduced infrastructure spend because fewer people will mean cuts in building and office costs, and IT equipment. Also less training would be required.
- Reduction in business support process and roles.
- Reduction in hard copy file storage and retention.
The council has discovered that it could, for instance, with changes in working practices supported by the right technology, conduct the same number of social services assessments with fewer front- line social workers or increase the level of assessments with the same number of staff.
Southwest One continues to provide outsourced services to Avon and Somerset Police. The contract expires next year.
Somerset County Council is taking a bold, almost private sector approach to IT.
Its paper on “technology and people” says in essence that the council cannot save much money by IT change alone.
Genuine savings are to be found in changing ways of working and thus reducing headcount. This will require very close working – and agreement – between IT and the business end-users within the council.
It is an innovative approach for a council.
The downside is that there are major financial risks, such as a big upfront spend with Microsoft that may or may not more than pay for itself.
Does outsourcing IT ever make sense?
Somerset County Council is not an international organisation like BP where outsourcing and standardising IT across many countries can make sense.
The wider implication of Somerset’s experience – and the experience of the Department for Work and Pensions – is that outsourcing IT in the public sector is rarely a good idea.
Thank you to Dave Orr, who worked for Somerset County Council as an IT analyst and who has, since the Southwest One contract was signed in 2007, campaigned for more openness over the implications of the deal.
He has been more effective than any Somerset councillor in holding to account the county council, Taunton Deane Borough Council and Avon and Somerset Police, over the Southwest One deal. He alerted Campaign4Change to Somerset’s “Technology and People Programme” Somerset paper.
One of Orr’s recent discoveries is that the council’s IT assets at the start of the Southwest One contract were worth about £8m and at hand-back in December 2016 were worth just £0.32m, despite various technology refreshes.
Somerset County Council’s “Technology and People Programme” paper
Whitehall’s outsourcing IT a “bad mistake” – and other Universal Credit lessons, by a former DWP minister
Thank you for this good news, albeit on a topic that might have been tackled by Government some years ago.
I don’t want to be sarcastic nor offer cod psychology but I do want to wish everyone concerned much success in their adventure.
Thank you, Tony.
There appears to be considerable ambiguity in the way IT Asset values (hardware and software) have been reported publicly by Somerset County Council.
Hardware was quoted at replacement cost at the outset of the contract in 2007 yet software wasn’t similarly valued for 2007.
The IT Asset return (hardware and software) at the premature end of the contract in December 2016 is at Net Book Value (NBV) which is a different valuation to replacement cost.
However, you would expect, with paid for refreshes, that the returning IT Asset values would fall between the average NBV before a major refresh and the full replacement value.
The potential IT Assert value losses discrepancy is even higher when you consider that SAP (audited as “poorly configured”), CRM & the website (low SOCITM rating) cost Somerset £30m.
What is the value of SAP after 9 years in contract with IBM (for Southwest One) if it has been version refreshed and the original “poor configuration” addressed and functional enhancements made?
I have found that the Councillors would now prefer to move on and do not appear keen to discover whether there are further potential losses (through rundown IT Assets) when my validated count of losses to date is £69.5m!
Automated IT Asset discovery and integration with a promised new Help Desk was a contract deliverable by IBM and pre-paid for by Somerset with annual KPI reporting.
Does the lack of valuations of IT Assets over the life of this failed contract with IBM indicate poor practice and oversight by the Somerset “Intelligent Client Function” and is that why valuations are being withheld?
After a refusal to reasonably clarify IT Asset values in 2007 (at the start of contract) and in 2016 (at the premature end of the contract) for hardware and software using an identical measure (like NBV), I have asked a closing FOI.
I regret that I cynically expect that Somerset County Council will not yield the IT Asset valuations sought and I will then need to appeal to the Information Commissioners Office, as I believe that this information is held (within specific contract schedules and annual KPIs and close of contract papers).
The IT Asset FOI is here:
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