Why small is still beautiful for councils

Local authority IT directors have challenged the government's decision to enforce large-scale shared services centres, preferring more adaptable local approaches

Local authority IT directors would rather set up small-scale shared services that deliver immediate, tangible benefits than join large-scale shared services centres of the type that Ian Watmore has warned will become mandatory.

Many IT managers are already achieving sizeable efficiency savings and improvements in the services they provide to the public, through projects with a limited scope and clearly defined objectives.

But last month, Watmore, the former government CIO who now heads the Prime Minister's Delivery Unit, warned a Society of IT Management conference that "it was no longer optional to share" (Computer Weekly, 28 February).

He also said that the next comprehensive spending review, which will set spending limits across the public sector from 2008 to 2011, will assume that councils benefit from the economies of scale promised by large-scale shared services projects.

Watmore's warning followed a message from the Office of Government Commerce - the body responsible for getting value for money from public spending - that councils were proposing to join too many small-scale shared services centres.

The OGC's chief executive, John Oughton, said that, with 130 shared services centres proposed for local government, "the business case for them all can't work".

Socitm's president, Angela Waite, said, "We have to look at the benefits to the public of joined-up service delivery. It can be done on a large scale or a small scale.

"Watmore referred to having one benefit service for a county - a good idea, but it will take a long time to achieve that. Local authorities can move more quickly if they take smaller steps."

Those shared services projects that have been successful so far have been set up by a limited number of councils working towards jointly agreed objectives.

Several small, but successful shared services projects have been set up under the umbrella of London Connects, an organisation engaged in establishing shared services projects among London's 32 borough councils.

London Connects chief executive Steve Pennant said, "We would not be able to get all 32 London boroughs to work on the same project; we would have to start with five or six or seven.

"It works in clusters in London and I'm sure that's how shared services will work elsewhere."

London Connects is working on a project to share disaster recovery between councils. The body is also looking at an out-of-hours call centre for all of London and systems for a single non-emergency telephone number.

Local authority IT directors rejected the notion that the threat of funding cuts could force councils to use large-scale shared services projects.

Sunderland Council's corporate head of IT, Steve Williams, said, "Mandating things goes against the local perogative. Joining a large-scale shared services centre could go against the need for Sunderland to provide its residents with best value. If a system used by Sunderland works superbly, it might be worse value to give it to someone else.

"Mandating is a poor idea. Incentivising good practice and penalising bad practice is better."

Birmingham City Council's director of business solutions and IT, Glyn Evans, who is also one of two IT directors to represent local government on the CIO Council, said, "One of the most obvious ways for central government to encourage the use of large-scale shared services centres is by changing the way central government expenditure is targeted.

"In principle, I don't have a problem with this, providing it doesn't become too prescriptive in determining how local government should achieve things."

Surrey County Council's head of IT, John Gladman, said large-scale shared services projects could be successful "if they are mandatory as part of the Comprehensive Performance Assessment".

He said, "The extra funding model for local authorities to achieve the 2005 e-government target could be a suitable model to emulate for funding the development of shared services."

Gladman's council will migrate its final front-line service to a new shared services centre next month. Adult social services will be the last service to start using the centre for finance, human resources, IT, procurement and property transactions.

Surrey County Council expects to make a net saving of £46m over 10 years after investing £10.8m to integrate MySAP R/3 Enterprise with telephony and call logging systems at a new purpose-built shared services centre.

Greater Manchester Fire and Rescue Service's head of ICT, Damian Parkinson, said, "I think central government should lead by example - as Ian Watmore has indicated - because there is serious duplication and inefficiency in Whitehall departments that have not traditionally shared their services.

"Central government could show a real lead and demonstrate with hard figures how shared services could free up resources."

Local authority IT directors voiced concerns about the track record of major public sector IT projects.

Cardiff Council's head of information systems, Crispin O'Connell, said, "There is a history of large-scale projects that have just gone down the pan. Even in the private sector, businesses have not always been able to harmonise systems."

One of the main issues that is preventing local authorities from using large shared-services centres to provide key back-office functions is the fear of losing local jobs.

The London Borough of Newham's deputy head of ICT, Geoff Connell, said, "There is a political unwillingness to lose local employment.

"For example, if the smaller local authorities in Merseyside bought into the call centre jointly run by Liverpool City Council and BT, they would each need to lay off or otherwise find employment for up to 100 staff."

Josie McGuirk, deputy chief executive of Rushcliffe Borough Council - a district council in Nottinghamshire - said, "Once councils have made all the internal efficiency savings that they can, shared services offers a possible route to making deeper savings.

"However, my view is that shared services can present a threat. Council officers could fear loss of control, loss of importance or even failure. Working in partnership with councils of differing political control can also present a barrier."

Hampshire County Council's IT director and CIO Council member, Jos Creese, said, "Technology has a lot to offer. Technology supporting flexible and mobile working could yield productivity improvements.

"Those are the sorts of things that most local authorities are already looking at, if not actively involved in."

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