The decision by councils in Northumberland and Durham to share a single installation of Oracle E-Business Suite (Computer Weekly, 10 October) points the way to how the government's shared services vision could work in practice for many local authorities.
Central government has been seeking to duplicate in the public sector the efficiencies created in parts of the private sector through shared back-office functions.
Next month, the Cabinet Office will increase the pressure on all parts of the public sector when it publishes its proposals for sharing services. Nine sector plans will set targets for the number of public sector shared services centres to be created within three to seven years.
Separate plans will be published for education, health, the criminal justice system, local government, the Department for Work and Pensions, defence, HM Revenue & Customs, departments with multiple agencies and other central government bodies.
Under the arrangement between Northumberland and Durham county councils, Durham's finance and procurement functions will be hosted on Northumberland's systems. The plan is that Northumberland's Oracle E-Business Suite will replace Durham's Geac Smartstream finance application by 2008.
Durham needed to update its Geac system to realise cost savings of £900,000 by transforming its finance and procurement functions. Using Northumberland's system will be far cheaper than implementing a new system of its own.
Northumberland benefits by sharing the cost of maintaining the Oracle E-Business Suite software that it implemented two years ago.
The project is a clear example of the kind of approach being supported by government CIO John Suffolk.
Speaking at the Society of IT Management's annual conference earlier this month, Suffolk signalled a change in government thinking about shared services. "I would not say there is one model for all councils in all situations that says big is beautiful. We do have to be careful, and I do not think shared services means robotic, identical services for everyone."
In this light, the Northumberland deal can be seen as offering an alternative to the approach taken by several large councils, which have signed major deals with systems integrators over the past few years.
Birmingham, Liverpool and Suffolk have contracts to transform their IT systems lasting five or more years and costing tens of millions of pounds. These councils and their private sector partners are creating shared services centres that could also be used to supply back-office services to smaller local authorities.
By contrast, Durham and Northumberland's partnership is enabling them to share more complex, embedded systems than councils that have partnered with systems integrators.
As well as finance and procurement functions, the North East councils will benefit from a reciprocal mirroring of their datacentres to provide business continuity. Further down the line, Northumberland is also planning to link up with the shared customer relationship management application that Durham is using under a shared services agreement with the eight district councils in the county.
Both sides said the shared services project appealed from the outset because the councils had already built some connectivity between their networks.
Durham provides Derwentside District Council's IT services under an earlier shared services deal. As part of that deal, Durham County Council extended its network as far as Northumberland.
As part of the project, Durham County Council will move its systems on to a new datacentre. The migration is expected to be completed between January and March next year. Once the datacentre is operational, a joint project team of Durham and Northumberland IT staff will make it a live back-up for Northumberland's systems.
At the same time, a second joint project team will set up Northumberland's datacentre in Morpeth as the live back-up for Durham's systems, thereby completing the circle and giving both councils comparatively low-cost business continuity systems. Derwentside District Council will also benefit from free business continuity systems.
The main shared application, Oracle's E-Business Suite, has already delivered cost savings of £1m a year for Northumberland, where it has been live since 2004.
Northumberland is rolling out a range of Oracle modules in the run up to its shared business continuity systems going live. These include training administration, property management and enterprise asset management.
During the remainder of 2007, it plans to deploy a time management module, a balanced scorecard and an enterprise recruitment module - functions that will not be available to Durham initially but which potentially it could take advantage of in the future.
The final piece in the jigsaw will be Northumberland implementing the same instance of Oracle CRM that is being used by Durham and its district councils. No definite timeframe has been set but Northumberland expects to be using the system within the next few years.