Category Archives: SAP

Why are councils hiding exit costs of outsourcing deals – embarrassment perhaps?

Tony Collins

Excerpt from Taunton Deane council’s confidential “pink pages”.
The last sentence contains a warning that IBM-owned SWO – Southwest One – may try to “maximise revenues” on exiting its joint venture with the council.

Somerset County Council has refused a Freedom of Information request for the costs of exiting its joint venture with IBM.

But a secret report written last year by officers at Taunton Deane Borough Council – which was a party to the IBM-owned joint venture company Southwest One  – warned that the supplier could attempt to “maximise revenues on exit”.

It said,

“… from experience anything slightly ambiguous within the contract is likely to be challenged by SWO [Southwest One] in order to push it into the chargeable category as they attempt to maximise revenues on exit”.

A separate section of the confidential report said,

“disaggregating from the SWO [Southwest One] contract will be complex and expensive …”

Taunton Deane Borough Council did not tell councillors what the exit turned out to be. The figures are also being kept secret by Somerset County Council which signed the “transformative” SWO joint venture deal with IBM in 2007.

Both councils have now brought back services in-house.

Secrecy over the exit costs is in contrast to Somerset’s willingness to talk in public about the potential savings when local television news covered the setting up of Southwest One in 2007.

The silence will fuel some local suspicions that exit costs have proved considerable and will have contributed to the justifications for Somerset’s large council tax rise this year.

£69m losses?

David Orr, a former Somerset County Council IT employee, has followed closely the costs of the joint venture, and particularly its SAP-based “transformation.

It was his FOI request for details of the exit costs that the council refused.

Orr says that Somerset has lost money as a result of the Southwest One deal. Instead of saving £180m, the joint venture has cost the council £69m, he says.

FOI

Under the Freedom of Information Act, Orr asked Somerset for the “total contract termination costs” including legal, consultancy, negotiation, asset valuations, audit and extra staffing.

He also asked whether IBM was paid compensation for early termination of the Southwest One contract. In replying, the council said,

“The Authority exited from a significant contract with Southwest One early, and the services delivered through this contract were brought back in-house in November 2016.

“The Authority expects the costs to fall significantly now it has regained control of those services.

“Somerset County Council made payment under the ‘Termination for Convenience’ provisions of the original contract. We do hold further information but will not be releasing it at this point as we believe to do so would damage the commercial interests of the County Council, in that it would prejudice the our negotiating position in future contract termination agreements in that it would give contractors details on what terms the Council was willing to settle …”

Orr will appeal. He says the Information Commissioner has already established a principle with Suffolk Coastal District Council that the termination costs of a contract with a third party should be disclosed. The commissioner told Suffolk Coastal council that, in opting out of FOI,

“there is no exemption for embarrassment”

Hidden costs

Taunton’s pink pages paper said that the Southwest One contract’s Exit Management Plan provided for a smooth transfer of services and data, and for access to staff to assess skills and do due diligence.

In practice, though, there were many exit-related complications and costs – potential and actual. The paper warned that Taunton would need to find the money for:

  • Exit programme and project management costs
  • Early termination fees
  • Contingency
  • ICT infrastructure disaggregation
  • Service transition and accommodation costs
  • Disaggregating SAP from Southwest One. Also the council would need to exit its SAP-based shared services with Somerset County Council because the estimated costs were lower when run on a non shared services basis. SAP covered finance, procurement, HR, payroll, website and customer relationship management.
  • Costs involved in a “soft” or “hard” (adversarial) exit.
  • Estimating council exit costs when IBM was keeping secret its own Southwest One running costs.
  • Staff transfer issues.

Comment

So much for open government. It tends to apply when disclosures will not embarrass local government officials.

In 2007 Somerset County Council enjoyed local TV, radio and newspaper coverage of the new joint venture with IBM. Officials spoke proudly on camera of the benefits for local taxpayers, particularly the huge savings.

Now, ten years later, the losses are stacking up. Former Somerset IT employee and FOI campaigner Dave Orr puts the losses at £69m. And local officials are keeping secret the further exit costs.

Suffolk Coastal District Council lost an FOI case to withhold details of how much it paid in compensation to a third party contractor to terminate a contract. But at least it had published its other exit costs.

Somerset is more secretive. It is withholding details of the sums it paid to IBM in compensation for ending the joint venture early; it also refuses to publish its other exit costs.

Trust?

Can anything said by councils such as Somerset or Barnet in support of major outsourcing/joint venture deals be trusted if the claimed savings figures are not audited and the other side of the story – the hidden costs – are, well, hidden?

In local elections, residents choose councillors but they have no say over the appointment of the permanent officials. It’s the officials who decide when to refuse FOI requests; and they usually decide whether the council will tell only one side of the story when public statements are made on outsourcing/joint ventures.

Across the UK, local councils employed 3,400 press and communications staff –  about double the total number in central government – in part to promote the authorities’ services and activities.

What’s the point if they publicise only one side of the story – the benefits and not the costs?

Somerset’s decision to refuse Orr’s reasonable FOI request makes, in its own small way, a mockery of open government.

It also gives just cause for Somerset residents to be sceptical about any council statement on the benefits of its services and activities.

Can all councils open up like this please – even Barnet?

By Tony Collins

Bitten by misfortune over its outsourcing/joint venture deal with IBM, Somerset County  Council has become more open – which seemed unlikely nearly a decade ago.

In 2007 the council and IBM formed Southwest One, a joint services company owned by IBM. The deal was characterised by official secrecy. Even non-confidential financial information on the deal was off-limits.

That’s no longer the case. Humbled a little by a failure of the outsourcing deal (including a legal action launched by IBM that cost the council’s taxpayers at least £5.9m)  local officials and their lawyers don’t automatically reach for the screens when things go wrong.

In 2014 Somerset County Council published a useful report on the lessons learnt from its Southwest One contract.

The latest disclosure is a report to the council’s audit committee meeting in June. The report focuses on the poor management and lack of oversight by some of Somerset’s officers of a range of contractor contracts. The council has 800 contracts, 87 of which are worth over £1m and some worth a lot more.

Given that the Council is committed to becoming an increasingly commissioning authority, it is likely that the total value of contracts will increase in the medium term, says the audit report by the excellent South West Audit Partnership (SWAP).

SWAP put the risk of contracts not being delivered within budget as “high”, but council officers had put this risk initially at only “medium”. SWAP found that the risk of services falling below expected standards or not delivering was “high” but, at the start of the audit assessment, council officers had put the risk at only “medium”.

somerset county council2One contract costing more than £10m a year had no performance indicators that were being actively monitored, said SWAP.

None of the contracts reviewed had an up-to-date risk register to inform performance monitoring.

No corporate contract performance framework was in place for managing contracts above defined thresholds.

“Some key risks are not well managed,” says the report.

“It is acknowledged that the Council has implemented new contract procedural rules from May 2015 which post-dates the contracts reviewed in this audit; however these procedural rules contain only ‘headline’ statements relating to contract management.

“Most notable in the audit work undertaken was the lack of consistency in terms of the approach to contract management across the contracts reviewed. Whilst good practice was found to be in place in several areas, the level of and approach to management of contracts varied greatly.

“No rationale based on proportionality, value, or risk for this variation was found to be in place. The largest contract reviewed had an annual value of over £10 million but no performance indicators were currently being actively monitored.”

Report withdrawn

Soon after the report was published the council withdrew it from its website. It says the Audit Committee meeting for 3 May has been postponed until June. It’s expected that the audit report will be published (again) shortly before that meeting.

Fortunately campaigner Dave Orr downloaded the audit report before it was taken down.

Comment

How many councils manage outsourcing and other contracts as unpredictably as Somerset but keep quiet about it?

Why, for example, have Barnet’s officers and ruling councillors not made public any full audit reports on the council’s performance in managing its contracts with Capita?

It could be that councils up and down the country are not properly managing their contracts – or are leaving it to the outsourcing companies to reveal when things go wrong.

Would that regular SWAP reports were published for every council.

All public authorities have internal auditors who may well do a good job but their findings, particularly if they are critical of the management of suppliers, are usually kept confidential.

Freedom of information legislation has made councils more open generally, as has guidance the Department for Communities and Local Government issued in 2014.

But none of this has made councils such as Barnet more open about any problems on its outsourcing deals.

Indeed clear and perceptive audit reports such as the one from SWAP are rare in the world of local government.

All of which raises the question of whether one reason some councils love outsourcing is that they can pass responsibility to suppliers for things that go wrong knowing the public may never find out the full truth because secrecy is still endemic in local government.

Thank you to Dave Orr for drawing my attention to the audit report – and its (temporary) withdrawal.

Somerset Council’s (withdrawn) Audit Committee report

Southwest One – the complete story by Dave Orr

Has 8 years of IT-based outsourcing really come to this?

By Tony Collins

In public, in the past, Taunton Deane Borough Council’s IT-based outsourcing deal has always been a success. Two years ago council officers and an executive at IBM were particularly upbeat about the success of their partnership.

“Service delivery … viewed in the round, is broadly on track. The majority of services perform well or extremely well…”

Now that the 10-year contract is 2 years away from expiry, which encourages officers to consider what happens then,  more of the truth is emerging.

A council report this month reveals that:

Savings are less than half those first envisaged – £3m against £10m projected. The £3m is an “identified” rather than actual saving.  The projected savings are “now out of alignment with our new financial circumstances and savings requirements”.

– Costs of exiting the contract with the IBM-run Southwest One partnership will be “significant”.

– Unravelling a shared services contract and reallocating work to the 50 council staff seconded to Southwest One will be “complex”. Says the report: “Any disaggregation from the shared service model will be complex and resource intensive and will also be challenging for SWO [Southwest One] as it attempts to satisfy the requirements of three partners whilst protecting and maximising its own financial position”.

– Use of lawyers will be intensive and already consultants have been engaged to advise on the implications of the contract’s ending. Funding this work will mean dipping into the council’s financial reserves.

– the joint venture with IBM has “not attracted new partner authorities” as first envisaged.

– IBM’s global strategy has changed, as has the council’s. Says Taunton Deane’s report of 10 March 2015: “Whilst central government once heralded large scale, multi agency and multi service partnerships with the private sector as the future, their advice now appears to be changing (in favour of) sustained competition, disaggregated services, small short contracts, transparency and diverse supply.”

– Technology strategies have changed. “Computer data centres are being replaced by cloud solutions and mobile technologies have become the norm in many business environments”.

It also emerges that the council is deeply unhappy with its SAP-based transformation, which was directed and implemented by IBM.  The SAP system is “costly”, “complex”, “not responsive to TDBC requirements”, and “resource intensive”.

The SAP system is also a “barrier to sharing services with other district councils”, and “does not support the customer access agenda in respect of channel shift as the SAP Citizen Portal (website) is inadequate”.

The “system is overly complex and users find the processes inefficient”.

Ending the contract means considering in depth:
– staffing implications
– premises and accommodation
– asset & third-party contract transfers
– communications
– logistics, technical infrastructure and system security and access
– intellectual property and authority data
– work in progress transfer
– service transition and knowledge transfer
– company dissolution

The council will also need to consider its service delivery options, which will involve:
– costed business case and recommendations
– understanding risks
– contractual implications and legal advice
– financial implications
– exploratory negotiations with SWO and discussions with the public
partners
– a detailed review to identify the options and costs for potential
replacement systems for the SAP system

Says the council report:

“Preparing for and implementing contract end and potentially exit from SWO [Southwest One] will require a significant amount of time and effort from the authorities due to the volume of work required, some of which is contractual and cannot be avoided.

“Contract end will require robust project governance and the appointment of an authority exit management team including work-streams around: exit management, HR, legal/contract representation, commercial, project management, communications, finance, technology and procurement.

“The resource requirement will be similar whichever future delivery option is selected.”

Comment

Councils that are considering large IT-based outsourcing deals could learn much from Taunton Deane’s experiences. At the start of such deals clients and suppliers find it easy to talk about what they’ll deliver – they need prove nothing by actions at this stage.

Taunton Deane and Somerset County Council, its lead partner in Southwest One, blew the trumpet in advance of their deal with IBM. Big savings were promised, and a transformation programme that would be led by a world-class supplier.

Barnet Council’s leading councillors  and officers also published numerous upbeat reports and gave zestful speeches in praise their forthcoming outsourcing deal with Capita.

At Taunton Deane, over time, expensive actions replaced cheap words. Partners did not join the partnership so economies of scale did not materialise. The transformation proved more complex than first envisaged. Reality overwhelmed aspirations.

Nobody could escape from the fact that the council was passing across to IBM a host of conflicting realities and expectations. Beyond the rosy Disney world of pre-contract euphoria was a harsh landscape.

Officers and councillors were actually passing across costs that were unlikely to decrease, and savings requirements that were likely to become more demanding. On top of this the supplier had to make a profit.

How can big savings and costly IT-led transformations not be in conflict with the inbuilt demands of suppliers whose share price is sensitive to the exacting expectations of investors who require ever increasing returns?

Councils will continue to outsource because their officers and lead councillors are unlikely to be in place in the later stages of a contract when they could otherwise be accountable for an administrative, financial and technological mess. In the early stages nobody need be held accountable for anything.  Words are sufficient. Promises cannot be tested yet.  Guarantees sound impressive.

It’s only actions that are hard to achieve.

Perhaps the answer is for auditors to become more proactive. The National Audit Office has this week published well considered guidelines for local authority auditors which calls for “professional scepticism”.  Auditors can stop councils making mistakes. They can see through promises and so-called guarantees.  It’s actions that matter.

At the start of a contract when the supplier’s executives, council officers and lead councillors are all in love they’ll say anything to reassure to each other. But everyone knows that when expectations are at their peak there is only one way to go – Taunton Deane has discovered to its cost.

Thank you to openness campaigner Dave Orr for providing the information on which this blog is based. 

TDBC SW1 contract exit planning Item 10 March 2015 (2)

Reasons for councils to avoid large-scale outsourcing? – lessons learnt report

By Tony Collins

Somerset County Council’s Audit Committee has just published “Update on Lessons Learnt from the Experience of the South West One Contract”. The lessons could be read by some as a warning against any all-encompassing outsourcing deal between a council and a supplier, in this case IBM.

The carefully-worded report is written by Kevin Nacey, the county council’s Director of Finance and Performance. It updates a “lessons learnt” report the council published in February 2014.

The latest report concludes:

“… All parties have been working very hard to keep good relationships and to fix service issues as they arise. The sheer size and complexity of this contract has proven difficult to manage and future commissioning decisions will bear this in mind.”

All local authority large-scale outsourcing deals are complex and difficult to manage. So are councils that sign big outsourcing deals courting trouble? Should councils avoid such contracts whatever the supplier incentives?

Somerset County Council was a top performing council when it created a joint venture owned by IBM in 2007. The aim was to take the council “beyond excellence” in the words of the then Somerset chief executive Alan Jones. His councillors hoped that the new company, Southwest One, would attract much new business and so cut costs for each of the partners.

But even without attracting new business, IBM had difficulties managing the sometimes conflicting expectations and services for each of the initial three clients: the county council, Taunton Deane Borough Council and Avon and Somerset Police.

Former Somerset County Council IT specialist Dave Orr has written a well-informed series of articles on the Southwest One contract.

What’s interesting now is that Somerset County Council, under pressure from Orr and others, has investigated what has gone wrong and why, and is disseminating the lessons, after giving them much thought.

Originally Somerset was proud of its deal with two councils and a police force. Its auditors in 2007 praised the deal’s innovative approach. Now we learn from the latest Somerset report that the contract was “incredibly complicated”. The report says:

“One of the most significant lessons learnt related to the sheer size, breadth and complexity of the contract. Both the provider [IBM] and the Council would agree that the contract is incredibly complicated.

“A contract with over 3,000 pages was drawn up back in 2007 which was considered necessary at the time given the range of services and the partnership and contractual arrangements created.”

[But all big outsourcing contracts run to thousands of pages and are unlikely to be anything but incredibly complicated.]

More from the council’s latest lessons learnt report:

“What has become clear over time is that any such partnership depends upon having similar incentives …”

[Does any big outsourcing deal have similar incentives for supplier and client? Only, perhaps, in the press releases. In reality suppliers exist to make money and, in times of austerity, councils want to spend less.]

“Dissatisfaction can occur”

The county council’s report: “The well-documented financial difficulties faced by the provider [IBM] early into the contract life also affected its ability to meet client expectations. The net effect is that at times the provider and partner aims in service delivery do not always match and discord and dissatisfaction can occur.”

Client function too small

“The Client function monitoring a major contract needs to be adequately resourced. At the outset the size of the client unit was deemed commensurate with the tasks ahead … However, as performance issues became evident and legal and other contractual disputes escalated, the team had to cope with increasing workloads and increasing pressure from service managers and Council Members to address these issues. This is a difficult balancing act.

“You do not want to assemble a large client function that in part duplicates the management of the services being provided nor overstaff to the extent that there is insufficient work if contract performance is such that no issues are created.

“With hindsight, the initial team was too small to manage the contract when SAP and other performance issues were not resolved quickly enough. Sizing the function is tricky but we do now have an extremely knowledgeable and experienced client team.”

3,000-page contract of little use?

“Performance indicators need to be meaningful rather than simply what can be measured. Agreement between the provider and the SCC client of all the appropriate performance measures was a long and difficult exercise at the beginning of the contract.

“Early on in the first year of the contract, there were a large number of meetings held to agree how to record performance and what steps would be necessary should performance slip below targets. Internal audit advice was taken (and has been at least twice since under further reviews) on the quality and value of the performance indicator regime.

“It is regrettable and again with hindsight a learning point that too much attention was paid to these contractual mechanisms rather than ensuring the relationship between provider and SCC was positive. Perhaps the regime was too onerous for both sides to administer.”

[A 3,000 page contract proved of little value in holding the supplier to account on performance. So was there much value in the contract apart from making a lot of money for lawyers? Too tight a contract and it’s “too onerous for both sides to administer”. Too loose and there’s no point in the contract. Another reason for councils to avoid entering a big outsourcing deal?]

“Too ambitious for all parties”

The report says:

“Contract periods need to be different for different services as the pace of change is different. The range of services provided under the initial few years of the contract were quite extensive. On another related point the provider also had to manage different services for different clients. This level of complexity was perhaps too ambitious for all parties.

“Although there were many successful parts to the contract, it is inevitable that most will remember those that did not work so well. The contract period of 10 years is a long time for 9 different services to change at the same pace…”

Drawback of seconding staff

“The secondment model introduced as part of the contract arrangements had been used elsewhere in the country. Nevertheless, it was the first time that 3 separate organisations had seconded staff into one provider.

“In many ways the model worked as staff felt both loyalty to their “home” employer, keeping the public service ethos we all felt to be important, and to Southwest One as they merged staff into a centre of excellence model.

“The disadvantage was that Southwest One was hampered by the terms and conditions staff kept as they tried to find savings for their business model and to provide savings to the Council in recent years given the changing financial conditions we now operate under.”

Different clients on one main contract – a nightmare?

“Another aspect of this contract in terms of complexity is the nature of the partnering arrangement. It is not easy for all partners to have exactly the same view or stance on an issue. Southwest One had to manage competing priorities from its clients and the partners also had varying opinions on the level of performance provided.

“Remedy for such circumstances differed depending upon initial views of the scale of the performance issue and what each client required for its service.”

Quick audit work “stifled”

“It has been particularly challenging to achieve effective audit of the contract, both by internal and external auditors. Access for auditors has been a prime issue with clearance of those auditors often being slow as process involved all clients being satisfied that audit scope, coverage and findings were appropriate.

“The contract allowed for transparent audit access and there is no suggestion here that SWO did not welcome audit.

“Indeed, for the first few years of the contract there was a team within business controls in SWO that enabled and carried out their own audit work on behalf of IBM. It again proved to be the controls required by all partners and the complexity of access that stifled quick audit work to be performed.

“Increasingly, there was debate about capacity to support audit work within SWO and therefore, SWAP [South West Audit Partnership] suffered in terms of their ability to conduct audit work in good time. In addition,

“Police levels of security needed to be far higher than SCC and this complicated access for auditors.”

Arguments over confidentiality – FOI requests “incredibly difficult to answer”

“The most recent SWAP [South West Audit Partnership] audit of the contract client function found that there has been effective monitoring of SWO performance.

“The problem is that reporting of that performance has been hampered by arguments over commercial confidentiality and sensitivities about the validity of reporting.

“It is fair to say that the three clients do not always agree on the quality of service provided, which of course gives rise to SWO management challenging SCC’s robust approach if other clients do not agree when in our view service is deficient.

“The transparency surrounding contract performance has been a contentious issue given these difficulties, and especially at times of dispute and with court proceedings pending. Future contracts must make these issues clearer and give the authority the ability to follow the national agenda for transparency more explicitly and without fear of upsetting either partners or the provider.

“The Freedom of Information legislation is there to serve the transparency agenda but such requests have been incredibly difficult to answer because of need to ensure all parties are sighted on information made public.”

Confused data ownership

“A further issue is that of data ownership and responsibility. SCC must make available data if indeed it has that data. On a number of occasions SCC did not and SWO held data that contained references to other authorities.

“The shared service platform and the nature of service delivery occasionally made it costly to segregate data to respond to FoI and other requests. Secondees were also often torn between their allegiance to their ‘home’ employing authority and their commitment to SWO, which did cause some confusion regarding information ownership.

“In all contracts SCC must strive to ensure transparency is foremost in our thoughts and that clearance of data release is not subject to other parties’ views.”

ICT, SAP and splitting a one-vendor database – a host of issues

“Another lesson learnt from this contract relates to the use of ICT systems to be delivered and managed by the provider in any contract… Firstly, the introduction of SAP so early in the contract life and the system issues experienced meant that SWO performance became synonymous with SAP performance.

“There were many other benefits provided by SWO in the first few years of the contract related to other improvements in the network and associated applications but this was overshadowed by the SAP technology issue.

“Over time SAP has worked for SCC albeit there are still outstanding issues with its configuration and its flexibility to adjust to the Council’s changing needs.

“The creation of one vendor database in support of the shared service agenda is now with hindsight going to be a bigger issue for all clients as we approach the end of the contract.

“There is still insufficient knowledge transfer to secondees and this will leave a legacy issue for our authorities. Future contracts must clarify asset ownership, system maintenance and replacement infrastructure issues.”

Comment

Somerset County Council’s Audit Committee deserves recognition for the work it has put into the lessons learnt report.

It has produced the report under the pressure of years of intense outside scrutiny, by Dave Orr, and others.

Without such scrutiny Somerset could have ended up concealing contractual problems even from itself. We’ve seen in other parts of the country, where councils have failing outsourcing contracts, that the most enthusiastic councillors convince themselves that all is well.

They assume that negative local newspaper reports of problems on their major outsourcing contract are prompted by the profoundly disaffected, just as some councillors and officials in parts of the UK wrongly blamed the lifestyles of complainants when they alleged child abuse.

Mutual incentives?

The Somerset report says each side in an outsourcing relationship needs to be motivated by similar incentives. But can that ever happen? Councils exist to provide good public services as cheaply as possible. Suppliers exist to make as much money as possible.

There can only be similar incentives if a council is so inefficient that there’s enough spare cash to cover council savings and the supplier’s profits.

If there isn’t the spare cash, the council, in its enthusiasm to do something different by outsourcing, can simply fictionalise the figures for benefits and potential savings.

This creative (and legal) exercise is perfectly possible given the depth of the conjecture needed to project costs and savings over 6 years or more.

Part-time councillors who are considering a big outsourcing contract have the time only to glance at summary documents or the preferred supplier’s Powerpoint slides. They are unlikely to spot the assumptions that pervade the formalised legal language.

During such a pre-contract exercise, the most sceptical councillors are often excluded from internal scrutiny, and the disinterested ones who are admitted into the inner chamber can find their heads swimming in a supplier-inspired language that either swathes uncertainty in the business jargon of near certainty or obscures reality in opaque legalese.

How are these lay councillors to get at the truth? Do they have the time?

Big outsourcing deals between councils and suppliers are inherently flawed, as this Somerset report indicates. Too many such deals have ended badly for council taxpayers as Dexter Whitfield’s investigations have shown.

But still some councils sign huge outsourcing deals. Their leading officials and councillors say they took lessons from failed contracts around the country into account. But what does that mean? If a deal is inherently flawed, perhaps because of diverging incentives, it is inherently flawed.

The disaster that is Southwest One could be a priceless jewel in the public sector’s display case if it serves to deter councillors and officials signing further large-scale council outsourcing deals.

Thanks to Dave Orr for alerting me to the lessons learnt report.

Somerset report “Update on Lessons Learnt from the Experience of the South West One Contract”.

UK outsourcing expands despite high failure rates.

 

SAP an unseen player in Germany’s World Cup win

By Tony Collins

Brian McKenna of Computer Weekly has written an excellent article which shows the role played by SAP – headquartered in Germany – in the national football team’s victory over Argentina in the World Cup final.

In October 2013, the German Football Association and SAP began collaborating to develop a “Match Insights” software system for the German national team to use in preparation for and during the tournament.

SAP delivered a prototype in March 2014 and Germany’s coach Joachim Low and his management team have been using the software ever since.

During the World Cup, the German team analysed the data captured by video cameras around the pitch and turned it into information that could be viewed on tablet or mobile devices to help improve team performance and gain a deeper insight into its rivals.

The article quotes Oliver Bierhoff, a SAP brand ambassador and off-field manager of the German team,  assisting coach Joachim Low, as saying:

“We had a lot of qualitative data for the opposition available. Jerome Boateng asked to look at the way Cristiano Ronaldo moves in the box, for example. And before the game against France, we saw that the French were very concentrated in the middle but left spaces on the flanks because their full-backs didn’t push up properly. So we targeted those areas.”

There were eight cameras covering each pitch in Brazil and data was available to all the teams – but only the land of Audi, BMW and Mercedes made use of this type of big data analytics, writes McKenna.

Thank you to Dave Orr for drawing my attention to this article.

Brian McKenna’s article 

Stop filming! That’s the IBM exit strategy we’re discussing

By Tony Collins

Dave Orr, a former IT employee at Somerset County Council, is now a local taxpayer trying to see if public statements made aboutthe authority’s joint venture with IBM match up to the facts.

Some councillors don’t seem to welcome his scrutiny, or his campaigning which can attract the attention of the local press.

Somerset claims it is saving millions of pounds through the Southwest One joint venture – which is majority owned by IBM. But Orr has learned through FOI requests and council reports that once extra costs are taken into account the council has had a net loss of £53m on the contract. He points to:

– £52m of SAP and “transformation” costs the council paid upfront to IBM

– £4m of council bid costs

–  £2m for a written-off loan to Avon and Somerset Police for SAP

–  £3m interest on a £30m loan over 10 years

–  £3m in contract management costs

–  £5m in legal costs over a dispute with IBM

This totals £69m. Procurement savings to December 2013 were £16m – which gives a net loss of £53m. The contract is supposed to save £150m over its 10-year life. The deal was signed in 2007 by IBM, Somerset County Council, Taunton Deane Borough Council and Avon and Somerset Police. The authorities are considering what they will do at the end of the contract.

Stop filming

At a meeting of the council’s audit committee last month, the chairman of the audit committee asked Orr to stop filming. He was using a Panasonic compact camera. A vote was proposed and seconded that the meeting not be recorded.

Five councillors voted in favour and 3 Lib-dems abstained. Those supporting the motion to stop filming included Tory, Labour and UKIP members.  Somerset is Conservative controlled.

Orr says the discussion shortly before the vote was taken was on Southwest One and the council’s exit strategy from the contract.  Councillors also agreed that they may at a later date go into a secret “Part 2” session to discuss a “lessons learnt” report about the collaboration with Southwest One.

A blow to local democracy?  

The government has issued guidance that states explicitly that councils should allow the public to film council meetings. Under the heading “Lights, camera, democracy in action” an announcement by local government secretary Eric Pickles  says on the gov.uk website:

“I want to stand up for the rights of journalists and taxpayers to scrutinise and challenge decisions of the state. Data protection rules or health and safety should not be used to suppress reporting or a healthy dose of criticism.

“Modern technology has created a new cadre of bloggers and hyper-local journalists, and councils should open their digital doors and not cling to analogue interpretations of council rules.

“Councillors shouldn’t be shy about the public seeing the good work they do in championing local communities and local interests.”

Before the meeting of the audit committee Orr had obtained informal consent from the council to filming.

Comment

Open government is not a party political issue – none of the parties seem to want it. Indeed councillors at Somerset seem at their most comfortable  when voting for secrecy.  Is this because it gives them a feeling of privilege – having access to information the ordinary citizens don’t have?

In central government one of the first things the civil service does after a general election is give new ministers access to state secrets. It distances the ministers from ordinary people. Ministers feel privileged – “one of us”.  Is this the main unspoken reason some Somerset councillors  love to have secret meetings?

Councillors may feel weighed down by Orr’s questions and campaigning. But his questions are arguably more important than those raised internally by deferential party politicians who don’t ask the most difficult questions.

If anything they should be asking themselves whether they should ask the questions he is asking.

It’s too easy on big outsourcing contracts for supplier and client to put a gloss on the relationship. It’s easier talking about unsubstantiated savings than explaining why the contract isn’t making the savings originally intended. And it’s even easier when you shun scrutiny from members of the public.

Somerset Council publishes “lessons learnt” from IBM contract

By Tony Collins

It’s rare for any council to publish the lessons learned from its outsourcing/joint venture contract, but Somerset County Council has set an example.

The council has produced its report to “inform future commissioning”. The council held a workshop to help identify the right lessons.

Written by Kevin Nacey, the council’s Director of Finance and Performance, and published by the Audit Committee, the document is diplomatically worded because the South West One joint venture contract with IBM continues; it was renegotiated in 2013 when the council took back some services and about 100 staff that had been seconded to South West One.

IBM is the majority shareholder in the joint venture company, and is its main funder. The minority shareholders comprise the county council, Taunton Deane Borough Council and Avon and Somerset Police. The joint venture company still provides ICT, finance and human resources/payroll.

Dave Orr, a former council IT employee and campaigner for openness, who spotted Nacey’s report, says it misses some important lessons, which are in Orr’s From Hubris to High Court (almost) – the story of Southwest One.

Lessons

From Somerset County Council’s Audit Committee report:

Contract too long and complicated

“One of the most significant lessons learnt is not to make contracts overly complicated. Both the provider and the Council would agree that the contract is incredibly complicated. A contract with over 3,000 pages was drawn up back in 2007 which was considered necessary at the time given the range of services and the partnership and contractual arrangements created.”

Expectations not met

“The partnership between the provider and the three clients has at times been adversarial and at times worked well. What has become clear over time is that any such partnership depends upon having similar incentives and an understanding of each partner’s requirements.

“Requirements change and the nature of local government changed considerably as a result of the national austerity programme. The well-documented financial difficulties faced by the provider early into the contract life also affected its ability to meet client expectations. The net effect is that at times the provider and partner aims in service delivery do not always match and discord and dissatisfaction can occur.”

Client team to monitor supplier “too small”

“The Client function monitoring a major contract needs to be adequately resourced. At the outset the size of the client unit was deemed commensurate with the tasks ahead, such as monitoring a range of performance measures and reporting on such to various management and Member forums.

“Liaison between partners, approving service development plans and approval of payments under the contract were other significant roles performed by the client unit. However, as performance issues became evident and legal and other contractual disputes escalated, the team had to cope with increasing workloads and increasing pressure from service managers and Council Members to address these issues.

“This is a difficult balancing act. You do not want to assemble a large client function that in part duplicates the management of the services being provided nor overstaff to the extent that there is insufficient work if contract performance is such that no issues are created.

“With hindsight, the initial team was too small to manage the contract when SAP and other performance issues were not resolved quickly enough. Sizing the function is tricky but we do now have an extremely knowledgeable and experienced client team.”

Some contract clauses “too onerous”

“Performance indicators need to be meaningful rather than simply what can be measured. Agreement between the provider and the SCC client of all the appropriate performance measures was a long and difficult exercise at the beginning of the contract. Early on in the first year of the contract, there were a large number of meetings held to agree how to record performance and what steps would be necessary should performance slip below targets.

“Internal audit advice was taken (and has been at least twice since under further reviews) on the quality and value of the performance indicator regime. It is regrettable and again with hindsight a learning point that too much attention was paid to these contractual mechanisms rather than ensuring the relationship between provider and SCC was positive. Perhaps the regime was too onerous for both sides to administer.”

Too ambitious

“Contract periods need to be different for different services as the pace of change is different. The range of services provided under the initial few years of the contract were quite extensive. On another related point the provider also had to manage different services for different clients.

“This level of complexity was perhaps too ambitious for all parties. Although there are many successful parts to the contract, it is inevitable that most will remember those that did not work so well.

“The contract period of 10 years is a long time for 9 different services to change at the same pace. Of course, service development plans were agreed for each service to attempt to keep pace with service needs as they changed. The secondment model introduced as part of the contract arrangements had been used elsewhere in the country before this contract used it.

“Nevertheless, it was the first time that 3 separate organisations had seconded staff into one provider. In many ways the model worked as staff felt both loyalty to their “home” employer, keeping the public service ethos we all felt to be important, and to Southwest One as they merged staff into a centre of excellence model.”

Hampered by terms of staff contracts

“The disadvantage was that Southwest One was hampered by the terms and conditions staff kept as they tried to find savings for their business model and to provide savings to the Council in recent years given the changing financial conditions we now operate under.

“Another aspect of this contract in terms of complexity is the nature of the partnering arrangement. It is not easy for all partners to have exactly the same view or stance on an issue. Southwest One had to manage competing priorities from its clients and the partners also had varying opinions on the level of performance provided.”

In summary

“This was a very ambitious venture. The service provided in some cases got off to an unfortunate start with the issues generated by SAP problems and relationships were strained and attracted much inside and outside attention.

“All parties have been working very hard to keep good relationships and to fix service issues as they arise. The sheer size and complexity of this contract has proven difficult to manage and future commissioning decisions will bear this in mind.

“Over the years officers running services that receive support from Southwest One have been surveyed regularly on how they feel the contract has been progressing. Despite all of the issues and lessons learnt outlined in this report, it is worth pointing out that many of the customer satisfaction and performance levels under the contract have been met by Southwest One.”

Comment

Well done to Somerset County Council’s Audit Committee and the Council’s auditors Grant Thornton for asking for the report. The South West One contract has been a costly embarrassment for IBM and the council. It has also had mixed results for Taunton Deane and the local police though officials in these two organisations seem locked into a “good news” culture and cannot admit it.

Perhaps the best thing to emerge from the IBM-led joint venture is this “lessons learnt” report. Without it, what would be the point of the millions lost and the damage to council services?

From contracts that don’t work out as expected, councils and central government departments rarely produce a “lessons” report , because nobody requires them to. Why should they bother, especially when it may be hard to get an internal consensus on what the lessons are, and especially when a report may mean admitting that mistakes were made when the contract was drawn up and signed.

Public sector organisations will sometimes do anything to avoid admitting they’ve made mistakes. Somerset County Council and its Audit Committee have shown they are different. Maybe the rest of the public sector will start to follow their example.

Dave Orr’s well-informed analysis of the lessons from Southwest One.

Officials black out IT security report after it’s published in full

By Tony Collins

In one of the most bizarre regressions since the FOI Act came into force in 2005, officials at Somerset County Council have redacted an audit report on SAP security weaknesses after the report was published in full.

The result is that anyone can see links to both reports. This is the report with parts of it redacted – blacked out. These are links to the full versions, which were published before the redactions – here and here.

The report was written by auditors Grant Thornton for Somerset County Council and highlights weaknesses in a database that is shared by the council, Taunton Deane Borough Council and Avon and Somerset Police.  The database is part of a SAP system run by Southwest One on behalf of the three authorities.

Southwest One is an IBM-led enterprise that provides IT and other services to the three authorities under a controversial outsourcing contract. Dave Orr has written comprehensively about the deal.

Somerset published the Grant Thornton report in full. The media including Campaign4Change published some details of the IT security weaknesses mentioned in the Grant Thornton report. It appears that Avon and Somerset Police asked officials at Somerset to black out details of some of the weaknesses.

Somerset-based FOI campaigner Dave Orr says the blacking out is to save the blushes of the police.

Says Orr: “Much of the redaction in the Somerset County Council IT Controls report by Grant Thornton, especially generic and available password advice in Section 3, is not based in a genuine security threat, but looks to be rooted in a Police culture that seeks to avoid criticism and/or embarrassment.”

Somerset MP Ian Liddell-Grainger says:

“SAP was built on the cheap by IBM to serve three different customers – the County Council, Taunton Deane district council and the Police. It would have made sense to bung in a few partitions to stop council eyes taking a peek at police matters, or vice versa. But that would have cost money – perish the thought.”   

 Police SAP systems’s “significant” security weaknesses. 

Top 5 posts on this site in last 12 months

Below are the top 5 most viewed posts of 2013.  Of other posts the most viewed includes “What exactly is HMRC paying Capgemini billions for?” and “Somerset County Council settles IBM dispute – who wins?“.

1) Big IT suppliers and their Whitehall “hostages

Mark Thompson is a senior lecturer in information systems at Cambridge Judge Business School, ICT futures advisor to the Cabinet Office and strategy director at consultancy Methods.

Last month he said in a Guardian comment that central government departments are “increasingly being held hostage by a handful of huge, often overseas, suppliers of customised all-or-nothing IT systems”.

Some senior officials are happy to be held captive.

“Unfortunately, hostage and hostage taker have become closely aligned in Stockholm-syndrome fashion.

“Many people in the public sector now design, procure, manage and evaluate these IT systems and ignore the exploitative nature of the relationship,” said Thompson.

The Stockholm syndrome is a psychological phenomenon in which hostages bond with their captors, sometimes to the point of defending them.

This month the Foreign and Commonwealth Office issued  a pre-tender notice for Oracle ERP systems. Worth between £250m and £750m, the framework will be open to all central government departments, arms length bodies and agencies and will replace the current “Prism” contract with Capgemini.

It’s an old-style centralised framework that, says Chris Chant, former Executive Director at the Cabinet Office who was its head of G-Cloud, will have Oracle popping champagne corks.

2) Natwest/RBS – what went wrong?

Outsourcing to India and losing IBM mainframe skills in the process? The failure of CA-7 batch scheduling software which had a knock-on effect on multiple feeder systems?

As RBS continues to try and clear the backlog from last week’s crash during a software upgrade, many in the IT industry are asking how it could have happened.

3) Another Universal Credit leader stands down

Universal Credit’s Programme Director, Hilary Reynolds, has stood down after only four months in post. The Department for Work and Pensions says she has been replaced by the interim head of Universal Credit David Pitchford.

Last month the DWP said Pitchford was temporarily leading Universal Credit following the death of Philip Langsdale at Christmas. In November 2012 the DWP confirmed that the then Programme Director for UC, Malcolm Whitehouse, was stepping down – to be replaced by Hilary Reynolds. Steve Dover,  the DWP’s Corporate Director, Universal Credit Programme Business, has also been replaced.

4) The “best implementation of Cerner Millennium yet”?

Edward Donald, the chief executive of Reading-based Royal Berkshire NHS Foundation Trust, is reported in the trust’s latest published board papers as saying that a Cerner go-live has been relatively successful.

“The Chief Executive emphasised that, despite these challenges, the ‘go-live’ at the Trust had been more successful than in other Cerner Millennium sites.”

A similar, stronger message appeared was in a separate board paper which was released under FOI.  Royal Berkshire’s EPR [electronic patient record] Executive Governance Committee minutes said:

“… the Committee noted that the Trust’s launch had been considered to be the best implementation of Cerner Millennium yet and that despite staff misgivings, the project was progressing well. This positive message should also be disseminated…”

Royal Berkshire went live in June 2012 with an implementation of Cerner outside the NPfIT.  In mid-2009, the trust signed with University of Pittsburgh Medical Centre to deliver Millennium.

Not everything has gone well – which raises questions, if this was the best Cerner implementation yet,  of what others were like.

5) Universal Credit – the ace up Duncan Smith’s sleeve?

Some people, including those in the know, suspect  Universal Credit will be a failed IT-based project, among them Francis Maude. As Cabinet Office minister Maude is ultimately responsible for the Major Projects Authority which has the job, among other things, of averting major project failures.

But Iain Duncan Smith, the DWP secretary of state, has an ace up his sleeve: the initial go-live of Universal Credit is so limited in scope that claims could be managed by hand, at least in part.

The DWP’s FAQs suggest that Universal Credit will handle, in its first phase due to start in October 2013, only new claims  – and only those from the unemployed.  Under such a light load the system is unlikely to fail, as any particularly complicated claims could managed clerically.

 

Who polices police IT reports?

By Tony Collins

The police, and civil and public servants in central government, the NHS and local authorities criticise journalists for biased reporting – taking selected facts out of context.

They’re sometimes right.  Journalists working for national newspapers can draft an article that is diligently balanced only to find, by the time it’s published, it leaves out facts which would have complicated, blunted, or contradicted the main points.

It’s one thing for this to happen in the world of journalism. You don’t expect public bodies to report on their own affairs with a partiality that rivals out-of-context reporting by some newspapers.

But it appears to be happening so regularly that one-sided self-reporting on organisational performance may be becoming the norm in the public sector.

In the NHS subjective, positive reporting in board papers – where managers tell directors what they think they want to hear – could help to explain why Cerner patient record implementations have, for years, gone badly wrong for the same reasons.

In recent months reports without balance have been published on the performance of Avon and Somerset Police’s IT outsourcing contract with IBM. 

Somerset County Council, Taunton Deane Borough Council and Avon and Somerset Police  are minority shareholders in a private company, Southwest One,  which is owned by IBM.

Confusingly, Taunton Deane Borough Council issued positive reports about its successful partnership with Southwest One – and then it decided to take some services back in-house.

Now it has emerged – only as a result of FOI requests by Somerset resident and campaigner Dave Orr – that two independent organisations, the National Audit Office, and HM Inspectorate of Constabulary, have commented positively on Avon and Somerset Constabulary’s partnership with Southwest One, based entirely on the unaudited opinions of the police force itself.

SAP

From his FOI requests Orr learned that the Avon and Somerset’s outsourcing deal with Southwest One has not gone entirely as expected. The National Audit Office’s FOI team has released notes of a joint visit by the NAO and HM Inspectorate of Constabulary to Avon and Somerset police in December 2012.  The visit was to find out about how well Southwest One was delivering services to the police force.  

The NAO’s notes are positive in parts. They say that performance has improved considerably since the implementation of the contract.

“Implementation of SAP improving the accounts close-down process, initial issues being resolved and a good quality of service being provided regularly.”

But there is another side to the story that is not reflected in the published accounts of Avon and Somerset’s relationship with Southwest One. The NAO’s [unpublished] field notes say:

“Fewer than expected benefits have been realised from IT due to the considerably different security requirements of the Police compared to the Councils.

“It also took a long time for SAP to be implemented. There has yet to be a duty management system implemented by SWOne which is part of the contract… SAP would have benefited from some pre-launch testing or piloting.”

A letter to Orr from the Home Office appears to confirm that Avon and Somerset Police’s participation in Southwest One is an unequivocal success.

“The private sector can help to deliver police support services better and at lower cost. Every pound saved means more money for the front line, putting officers on the streets…

“In its report “Policing in Austerity: rising to the challenge [2013] Her Majesty’s Inspectorate of Constabulary identified the Southwest One partnership as being a key element in achieving savings for Avon and Somerset Constabulary while ensuring better procurement, streamlining business support processes, and ensuring better use of police officer time.

“The report also noted that the Southwest One collaboration was the first of its kind for policing in England and Wales and that to date, no other force has delivered this level of partnership with local authorities.”

A little of the other side of the story comes in the last sentence of the Home Office letter to Orr which says: “We understand that Avon and Somerset Constabulary continues to work closely with IBM to resolve any technical difficulties and improve the services provided by Southwest One.”

Indeed a table on page 155 of HMIC ‘s 2013 report Policing in austerity: rising to the challenge indicates that Avon and Somerset Constabulary has one of the worst records of any police force when it comes to savings delivered between 2010/11 and 2012/13. [Table: Key indicators of the challenge – quartile analysis.]

Southwest One began a 10-year contract providing services to Avon and Somerset Police in 2008. The services included enquiry offices, district HR, estates, financial services, site administration, facilities, corporate human resources, information services, purchasing and supply, and reprographics. The contract involves 554 seconded staff.

Comment

Police forces, councils, the NHS and central government departments need  a few Richard Feymans to report on their organisation’s performance. Feynman was a gifted scientist, MIT graduate and noble prize winner who was chosen as a commissioner to report on the cause , or causes, of the Challenger Space Shuttle “O” rings accident on 28 January 1986.

He reported with such independence of mind and diligence that his hard-hitting findings were not considered acceptable to be included in the main report of the Presidential Commission of inquiry into the accident.  Feynman had to be content with having his findings published as an appendix to the Commission’s report – and an edited appendix at that.  

He suggested in his book “What do you care what other people think?” that his appendix was the only genuinely balanced part of the official inquiry report. 

“For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled,” said Feynman.

One of his questions was whether “organisation weaknesses that contributed to the [Shuttle] accident [was] confined to the solid rocket booster sector, or were they a more general characteristic of NASA.”

One of Feynman’s conclusions:

“It would appear that, for whatever purpose – be it for internal or external consumption – the management of NASA exaggerates the reliability of its product to the point of fantasy.”

If such exaggeration happens at NASA it can happen in UK police force IT reports, and in board papers on the performance of councils and NHS trusts.

When journalists get it wrong it’s usually to their eternal regret. In the public sector positive unbalanced reporting is so “normal” that hardly anyone involved realises it’s a deviant practice. The US author Diane Vaughan coined a phrase for such corporate behaviour.  She called it the normalisation of deviance.  

It’s surely time for public bodies to move away from the norm and start reporting on their performance, and the performance of their outsourcing other private sector contracts, with balance, objectivity and independence of mind.   

If managers knew that reports on the progress of their contracts would be audited for impartiality and competence over organisational self-interest, perhaps they would have a greater incentive to avoid badly thought through outsourcing deals and IT implementations.

Is this why some council and NHS scandals stay hidden for years?

NAO report “Private sector partnering in the police service”

Dave Orr’s HMIC FOI requests and answers

NAO’s FOI responses on Avon and Somerset Police