Hyped up deals and problems with helpdesks blamed for negative view
In local government, IT outsourcing has an image problem. A detailed survey of staff in 94 local authorities found that user satisfaction was 13% lower in councils with outsourced IT compared with those that ran IT in-house.
The highest scoring council with outsourced IT failed to make the top 50 in user satisfaction.
The research was carried out by Insight, the consultancy arm of local authority IT managers association Socitm. It comes at an important time for local government outsourcing.
Cumbria County Council has signed a £50m partnership deal based on performance outcome negotiated on an ongoing basis. Swansea Council is still negotiating terms and conditions in a £150m outsourcing process that sparked industrial action last year. Bradford Council could be facing a strike over outsourcing. And Birmingham City Council continues its lengthy negotiations over a massive IT partnering contract.
Those entering outsourcing arrangements say they can offer greater efficiency and bring an influx of investment and IT skills to the local authority, but the Socitm survey found that council staff who rely on outsourced IT support do not believe they benefit from the deal.
Martin Greenwood, programme manager at Socitm Insight, said, "There is a perception that there is less value for money in outsourcing. The ability to solve a problem quickly and accurately is worse. It can be harder to contact an outsourced organisation - you are adding to the support chain. The person solving the problem is one step removed from the people who need help."
These factors were revealed in the research, but Greenwood believes there are other reasons behind the negative views of outsourcing. "There is the perception that the supplier's staff are part of another organisation, so it is easier to blame them."
Expectations can be unrealistically raised ahead of the deal by both the IT services company and the council, Greenwood said. "A lot of deals are hyped up before they are signed. This creates the impression the service will be much better. In reality it may be worse or not have changed, but expectations rise."
Even when metrics show that performance has improved under outsourcing, the reputation of the deal could still be negative. "There is some evidence that the performance on the helpdesk can be at least as good on objective measures [under outsourcing], but that is not the perception. Information is not communicated to the users so they can see it."
Where Socitm was able to survey staff before and after IT outsourcing, the results were disappointing. In English unitary authorities the number of council staff who said they believed IT spending was value for money fell by 33% after outsourcing.
Many local authority staff regarded themselves as intensive users of IT, the survey found. "We argue, however, that the process of embedding ICT into local government is not well understood and that ICT might not be seen as being integral to the delivery of services and the council's strategy, as it is in some other sectors of business," the report said.
Socitm found that user satisfaction was lower when IT was not embedded in council processes. "Problems embedding IT into the organisation are not unique to local government, and it has been very receptive to feedback. But it is a cultural problem, with a history of IT not being critical to improving service performance," Greenwood said.
There were other alarming findings for IT managers. More than 38% of users considered themselves to be inadequately trained to some degree in IT. In this, outsourced IT scored better than in-house.
Other areas where outsourced IT was rated as better than in-house included having up-to-date hardware and software, user participation in planning new systems, and a clear resource plan for new systems.
Phil Morris, director at outsourcing advisory firm Morgan Chambers, said the problem of users having a poor perception of outsourcing was not unique to the public sector or to IT outsourcing.
"It is extremely common. It happens in the private sector and with business process outsourcing. To solve it, you have to sell [IT outsourcing] at every level within the organisation, highlighting the advantages that you are creating," he said.
Morris said IT departments should publicise improved performance metrics and case studies of business problems the outsourcing partner has helped to solve.
"You need to continually sell what has happened. Classically, IT managers are poor at saying what they have done well and the value that they have created for the organisation. They think they are a cost overhead because that is how they have been made to feel over the years."