Birmingham is likely to change its business model more radically than most local authorities, after receiving only two stars out of a maximum of four, in last month's annual assessment of local authority performance.
Across England, only 21% of councils received one or two stars from the Audit Commission.
The city now wants to work with Capita to deliver the improvements it needs to raise its standing, 10 months after the council set up a joint venture company with Capita called Service Birmingham to run different services on its behalf.
The 10-year, £420m contract transfers all of the city's IT functions to Service Birmingham, and council IT director Glyn Evans said he expects to save £10m a year from outsourcing IT over the life of the contract.
Evans said the council is well placed to make these savings, since the biggest challenge was securing the support of key stakeholders.
When the joint venture went live on 1 April 2006, some 500 council IT employees were transferred to Service Birmingham.
It took until October for work to begin on an implementation of SAP, and this is scheduled to finish this month.
Evans is confident that it will soon reap savings since it will be the first time the council has standardised on a single set of applications, having previously only deployed a SAP application for its general ledger.
The main objective of the SAP project is to cut procurement costs at the council, but Service Birmingham is also introducing flexible working and increasing the time social workers spend delivering services.
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