While central government is increasingly moving away from outsourcing deals with single suppliers with a clear view of creating agile services that respond to the changing needs of both government and the public, the picture is very different in some local authorities
Earlier this week, I reported on the news that Scottish Borders Council has signed a £92m contract with CGI. While the deal will bring 200 new jobs in the area– great news for locals— it’s also a 13 year contract with a single supplier.
But what struck me the most, was council leader David Parker’s comment that it was a landmark deal that would “offer a once in a generation transformational opportunity”.
Should IT contracts really be a “once in a generation” event?
3 years is a very long time in a digital world that’s changing quicker than most can keep up with. What is the likelihood of the council’s requirements being the same in 13 years’ time?
Central government has acknowledged that many existing outsourcing deals have proved bad for taxpayers but while government departments such as HM Revenue & Customs, the Ministry of Defence and the Department for Work and Pensions have, or are in the middle of, moving away from large outsourcing deals, outsourcing is far from dead.
In fact, a survey by Nelson Hall for Arvato, published in February 2016, showed that there was £5.67bn worth of deals across the UK public and private sector in 2015 with a 26% increase in public sector spending compared to 2014, reaching £3.8bn.
Scottish Borders isn’t the only one preferring to go down the outsourcing route. In August 2015, City of Edinburgh Council signed a seven year, £186m outsourcing deal with CGI. In September, Burnley council signed a 10 year contract with Liberata in a bid to save money, and in October, Gloucester City Council extended its outsourcing deal with Civica until 2021.
Despite government targets for councils to increase spend with SMEs, the number of local authorities signing deals with smaller companies remains relatively low. If fact, in the North of England, a survey found that more than half of councils spent nothing with SME IT suppliers and 85% had no plans of increasing spend with SMEs.
Of course there are those that do it differently. Cornwall Council finally got the green light to bring its IT back in-house after its botched outsourcing deal with BT, and Adur and Worthing Councils have decided to buy its own, low-code government-as-a-platform. Local authorities get a hard time and are often left on their own to figure things out.
Support from the centre is limited and with chancellor George Osborne announcing in yesterday’s budget that by the end of this parliament, 100% of local government resources will come from local government, it becomes increasingly important to get technology right.
They are stretched to the limit, and although most realise they must embrace digital transformation, tight cost-cutting targets mean some find outsourcing the best way to do that. But what happens in two years, when the long-lasting contract doesn’t seem to fit in with what you need? In five years? In ten years?
While not all outsourcing deals are bad, and many outsourcing suppliers are both innovative and agile, one day, I would really like to never again hear the phrase “once in a generation” and IT contracts in the same sentence.