by Leo King

Deloitte signal an end to large Council outsourcing deals

Nov 08, 2009
Financial Services IndustryGovernmentIT Leadership

The days of “monolithic” outsourcing deals by local councils are coming to an end, according to consultancy /**//**/ /**/ var so = new SWFObject("", "delComPlayer", "498", "371", "9", "#ffffff");so.addParam("wmode", "opaque");so.addParam("allowScriptAccess", "always");so.addVariable("filepath", "");so.addVariable("autoplay", "true");so.addVariable("previewImage", "");so.write("flashcontent"); /**/ ” data-old-href=”/**//**/ /**/ var so = new SWFObject("", "delComPlayer", "498", "371", "9", "#ffffff");so.addParam("wmode", "opaque");so.addParam("allowScriptAccess", "always");so.addVariable("filepath", "");so.addVariable("autoplay", "true");so.addVariable("previewImage", "");so.write("flashcontent"); /**/ “>Deloitte.

Councils have for “too long” viewed IT as a “black art that is better performed by external contractors”, the company claimed in a new paper. Success in these deals was “rare”, it said, and led to the growth of disparate IT functions that “lack centralised control”.

Costi Perricos, author of the ‘Taking Control of IT’ report, which is based on Deloitte’s experience of advising local councils, said the local authorities would be better advised to take “proper ownership” of their IT and develop good governance in order to achieve success.

“That’s not to say the outsourcing of some IT functions can’t work,” he added, “but the days of the monolithic IT outsourcing deal – that sees the entire council’s IT capability outsourced to one supplier and managed by a small contracting team – are numbered.”

He advised local authorities to “take and retain control” of technology strategy, including the management of suppliers, in order to deliver benefits to citizen services and internal efficiencies.

There were also potential financial gains to be made by keeping work in-house and restructuring IT as demonstrated by Lancashire County Council, Deloitte said. Many councils could save “up to 30 percent” of their IT expenditure over time by redesigning IT, it claimed.

In order to achieve such a saving, however, council managers would need to collaborate more to make the most of their IT investment, and technological and skills capabilities would have to be unified across departments, Deloitte said.

Initial savings could come from software licence and data storage optimisation, as well as project rationalisation and strategic sourcing of commoditised technology, the report said. After this, councils could consolidate applications, servers and datacentres, optimise their hardware usage, and improve shared services.

Finally, it said, councils could standardise their application architecture and software delivery lifecycle, improve governance, and consider outsourcing specific maintenance, operations and network functions.

It advised authorities to establish a senior IT board, communicate IT costs in terms of the benefits the functions will deliver, properly balance control and risk, and make careful choices on the use of existing applications versus new software.

Councils could only benefit from IT change, Deloitte said, if the “whole authority moves in the same direction”.

In spite of the claims that large outsourcing deals were numbered, however, a number of councils have signed large contracts in recent months. Last month, the Highland Council said it was set to begin a £66 million IT overhaul, naming Fujitsu as preferred bidder for the work. Gloucestershire Council is also working on an IT transformation with Capgemini, aimed at saving £60 million over four years.

Last week, Cardiff Council signed a 15 year deal with Tata Consultancy Services, reportedly worth £150 million, principally to integrate software platforms and automate processes. But in that deal Tata would work fully on-site with Cardiff’s own IT department, without staff being transferred, the council insisted.