By Tony Collins
Six years into Southwest One’s joint venture between IBM and three public authorities, the outsourced service is not a big success.
Somerset County Council, one of the joint venture’s partners, has been in dispute with IBM, the major shareholder in Southwest One. It cost the county council £5.9m to settle, including £800,000 in costs when bringing back staff who had been outsourced.
The joint venture’s SAP-based “transformation” led to complaints of poor quality of service by some of Somerset’s finance users; the venture has consistently made losses and on the matter of savings, Somerset Cabinet member for resources, David Huxtable, said there have been some but added:
“It was a very complex contract and lots of the savings were predicated on an ever-increasing amount of money being put into public services and we know in the last four years that has gone into reverse.”
Now IBM has sold its low-margin customer care outsourcing unit which could affect the future of Southwest One.
Yet a smaller partner in Southwest One, Taunton Deane Borough Council, describes the relationship as a “success”. Reports to Taunton Deane’s councillors on Southwest One are remarkably positive.
Dave Orr an IT specialist who used to be work for Somerset County Council and has kept a close eye on Southwest One since it was formed in 2007 has drawn my attention to Taunton’s latest reports on the joint venture. When read quickly Taunton’s reports are upbeat, almost breathless with praise for the joint venture.
Below are excerpts from two reports that have been written for today’s meeting of Taunton Deane’s Corporate Scrutiny Committee. The first is a “Procurement Transformation Update”, report to the council by Southwest One’s Chief Procurement Officer.
There are no hints of any difficulties on the contract except a comment that cutting spending will make it harder to achieve procurement savings. From Southwest One’s report to Taunton:
“As at 31/07/13, in excess of £1.8m [report’s emphasis] savings have been delivered to the Council through signed-off procurement-related initiatives brought about by Southwest One’s Strategic Procurement Service. This is up from £1.59m when last reported in January 2013.
“A further £1.364m of savings are scheduled to be delivered from these signed-off initiatives during the life of the current Southwest One contract, which expires in 2017.
“Multiple projects continue to be progressed by Southwest One Strategic Procurement Service which are expected to significantly add to the pipeline of savings. These Include initiatives for a new pool & spa at Blackbrook; Waste; Insurance; various small scale initiatives within the DLO/HPS areas .”
A second report for Taunton’s Corporate Scrutiny Committee “SouthwestOne Partnership Update report” is written jointly by a team at Taunton council and the CEO of Southwest One. Again it’s upbeat and summarises Southwest One’s performance over the last six months.
“Service delivery for TDBC, viewed in the round, is broadly on track. The majority of services perform well or extremely well (eg Customer Services). We do have concerns in some areas and we are working closely with the services in question to remedy the issues. “
The report says that the shared service model in conjunction with larger authorities provides Taunton with “much needed resilience” (report’s underlining) in service delivery, although “this has been impacted to a certain extent by changes made recently to the contract by the other partners”.
Additionally, “our secondee staff to SWO benefit from ‘assured employment’, which was offered by IBM”.
A survey of staff in June 2013 “saw marked improvements in staff morale and communication”.
Sickness absence for the financial year to the end of March 2013 was slightly down to about 9 days per full-time employee though up a little more recently.
Appendices – now for the problems
It’s only when councillors come to the report’s appendices that they will see some detail of the problems. But how many councillors will scrutinise a report’s appendices? From the Taunton report’s appendices:
“There are service and capacity issues. The helpdesk move caused significant problems, leading to an increased number of issues being raised with the Client Team from TDBC [Taunton Deane Borough Council] staff. We are closely monitoring the plan SWO [Southwest One] have put in place to fix these issues.
“Project delivery capacity and project scheduling continues to cause concern, with improved governance within TDBC highlighting this problem more acutely. Our issue tracker is currently tracking 11 escalated issues with SWOne, 6 of them with a Red RAG status.
“ SRM (Supplier Relationship Management) performance in SAP continues to be well below the required level despite the amount of focus it is receiving from SWOne. Work on a revised governance process for the SAP system is underway and looks likely to deliver a more controlled SAP Change process.”
The most serious problem – and it is not mentioned until the penultimate page of the report’s appendices – is that savings will be nowhere near the original target of £10m.
“This is red, tracked against the original [savings] £10m target. To date £2.8m has been signed-off and it is not yet clear how the lower target of £5.7m will be achieved as there are fewer savings opportunities and initiatives emanating from SWO…”
From the small print of Taunton Deane’s report it is possible to work out that the cost of the council’s SAP implementation was supposed to have been paid off by savings but hasn’t. Indeed a debt of nearly £1m is still incurring interest.
Perhaps it’s unfair to pick on Taunton Deane’s reports to councillors. The positive tone is little different to dozens, perhaps hundreds, of NHS, council and central government board reports I have read over two decades.
If you’re a director of a public authority your job is probably made harder if you’re getting self-vindicating internal reports on the organisation’s progress. It would be more helpful if management reports were neutral and objective, framed by unvarnished facts.
When you hire a roofing company and it reports back on the finished job, you want to know about the tiles that leave a gap or are loose, not the ones that fit nicely.
NHS trust reports can often be particularly one-sided, often of the type that say:
“We had 3 fatalities on the main staircase last month because of a ruptured floor lining but the overall accident rate in that part of the building is down over the last 3 years and our falls rate overall is 3% below the average for the NHS as a whole.
“Our contractor confirms that the floor lining is within KPI requirements and a repair will be effected shortly.”
It appears that those who write board reports for public authorities feel an obligation to motivate and inspire, to leave the reader feeling good, to clothe bad news in layers of good news, omit it altogether or put it in the appendix hardly anyone reads.
Is this one reason so many outsourcing and NHS scandals stay hidden for years?