Public sector remains wary of Southwest One

News Analysis

Public sector remains wary of Southwest One

Tony Collins

Southwest One, a ground-breaking joint venture to provide IT and other services to the public sector in Somerset, ought to be the object of desire for dozens of councils, police forces and even companies in the private sector.

Many local authorities across England have set up joint ventures with suppliers of IT or other services and have seconded hundreds of staff to them. Theseinclude Capita, BT, and Mouchel Parkman.

But Southwest One remains unique because of its blend of partners: IBM, a police force, a district council and a county council.

Hundreds of public sector IT workers have been seconded to Southwest One. It offers a one-stop shared services shop for IT, finance, human resources, property management, purchasing, facilities management, customer contact centres and services to schools.

It even offers IT transformation services, so organisations joining it can run more smoothly in a standardised, simplified way.

"No other partnership of a similar nature exists across Europe so we are breaking new ground in bringing excellence to the citizens of the area," it says on its website.

The contract is worth about £500m to IBM. In return, IBM offers its global experience and skills, and must cut costs and offer better services to people in the constituency of Southwest One's partners: Somerset County Council Taunton Deane District Council and Avon and Somerset Police.

Southwest One actively promotes itself. For more than a year it has been asking dozens of organisations to join, or at least buy IT and other shared services.

Councils and even companies in the private sector in the Southwest of England, where the joint venture is based, should be at its door, wanting to know how to join as a partner.

But nobody is willing to join.

One reason could be simply because they think participation will be legally complicated and expensive, with upfront joining costsas high as £2m-£3m.

Or they may be staying away because they perceive Southwest One as a risky and unconventional venture. It may improve services to the public - but any failure could disrupt public services, as happened at Birmingham City Council when its joint venture company implemented a SAP-based system which led to 18,000 invoices not being paid.

Somerset County Council's Chief Executive, Alan Jones, who founded Southwest One, says councils which do not join are missing an opportunity.

He told the Public Sector Transformation Summit, near Hyde Park in London, if public authorities want to join Southwest One, "we will welcome them - but if they don't, that is their business".

He added: "We think - I think - they would be looking a gift horse in the mouth, but that's my opinion, and not necessarily theirs."

The more organisations join, the lower the costs per transaction for each member, Alan Jones said. Any public authority wanting to join has an entrance fee, which Jones called a "spike". This is an upfront payment which funds transformation and savings later on. Jones said the spike is putting off authorities from joining the venture.

That may change if a SAP go-live across Southwest One, which is due to happen on 1 April, defies the odds and proves a success.

It is likely many potential participants in Southwest One are waiting to see whether it succeeds with its SAP-based transformation, which has been planned since 2007.

After Birmingham City Council went live with SAP and invoices went unpaid, bailiffs visited the council, some suppliers withdrew goods and services and employees claimed that staff had to use their own money to buy food for a children's care home.

Even without the explicit support of other councils and organisations, Southwest One may impress its founders and local residents. But technology costs are coming down anyway, especially with developments such as cloud computing. It remains to be seen whether SouthWest One will cut costs and improve services any more than could have been achieved without such a huge and risky venture.


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