Durham and Northumberland have agreed one of the first shared services deals between county councils, after Durham decided against sharing services with 10 smaller local councils in the county because of poor business fit and mismatches in their respective IT cycles.
Durham is projecting a saving of £900,000 a year by running its procurement and financial management functions on Northumberland's IT systems. Since implementing Oracle E-Business Suite in 2004, Northumberland has realised cost savings of £1m a year.
Durham will replace its Smartstream finance application from software supplier Geac with the Oracle system by 2008. E-Business Suite also offers a procurement function for which Durham does not have an IT system currently.
Roger Goodes, head of efficiency at Durham County Council, said efficiences from the deal would come from stripping out manual and duplicated processes.
"Different departments within the county council had developed their own financial management systems to feed into Smartstream, so there has been a degree of rekeying to get a corporate view of the council," he said.
Northumberland wants other councils to use its Oracle systems once Durham's procurement and finance functions have been successfully transferred.
Durham will set up disaster recovery facilities for both councils.
With the shared services due to go live in 2008, the two IT departments are currently planning how to manage the deployment. They are expected to begin by connecting both councils' networks.
The deal is one of the first examples of two county councils sharing core back-office services. Most sharing between counties to date has seen two councils use one or two applications to manage a single front-line service.