Local government organisations are putting their
outsourced IT contracts at risk by not retaining enough skills
in-house to manage the relationship and the contract
effectively.
That was the finding of a report from local authority IT
managers group Socitm and public sector accountancy organisation
Cipfa.
The report into private sector partnerships, published last
week, said, "We have found many examples where the council found
that its initial view about the client team was unrealistic, the
team being just too small, or, amazingly, in some cases
non-existent.
"There is a strong tendency to underestimate the amount of
contract management work to be done."
Martin Greenwood, programme manager of Socitm Insight, the
organisation's consultancy arm, which produced
the report, said some public sector bodies were "unbelievably
naive" about the skills they need to retain in-house to manage the
relationship with the private sector IT partner. He said in some
cases councils dedicated a half-time role to running the
contract.
"It is not simple to balance the needs of the organisation and
keep a positive relationship with the supplier. You need a lot of
nous and experience to handle it," said Greenwood.
The report recommended that councils "closely question the
motives of those existing employees who do not want to work for the
commercial partner and seek a client role".
Greenwood explained that some people who do not transfer are
seen by the supplier as "misfits", yet councils trust them with
such a critical role. "This reflects a lack of understanding of the
real importance of IT in service improvement," he said.
The report said skills for managing contracts and relationships
are rare and advised councils to recruit from outside if skills are
not available internally.
Effective due diligence before signing IT partnering contracts
is also a problem for councils, the report found. "Our research
shows that due diligence is not done well," it said.
"Many councils are content to leave the due diligence process to
their supplier. We think this approach carries risks for the
council if the supplier does not do the work diligently."
Greenwood said pressure from council members or chief executives
to sign partnering contracts before a deadline created pressure to
cut corners on due diligence.
"It is a mistake not to realise how important due diligence
might be. Councils can be faced with unexpected costs after the
contract is signed if it is not done properly," he said.
The report also found there were too few attempts in partnering
contracts to motivate suppliers in a positive way through bonus
payments for outstanding performance, as opposed to penalising
contractors through tightly enforced service level agreements.