Birmingham City Council is set to beef up its in-house ICT capability in order to better manage its outsourced joint venture arrangements with supplier Capita.
A review by the council of its relationship with its Service Birmingham joint venture has concluded that the loss of key staff to the company has weakened the council’s ability to manage and control its ICT costs.
A report by council officers recommends increasing spending on in-house capability.
It says: “Separate independent reports from the Public Accounts Committee, the National Audit Office, the Local Government Association and Atos Consulting have all stated that the industry standard recommended cost of a client function is at least 2% of the overall contract cost.
“The cost of the current ICT client function is far below this level and is inadequate.”
It said that provision has been included in the council’s proposed budget to reach the 2% level.
In the short term, the council plans to appoint a private sector ICT partner to act as critical friend for up to three years.
After that, it would replace this service by transferring certain ICT staff back into the council from Service Birmingham.
The report says: “While the staffing may cost more than at present the delivery of value will substantially outweigh this…”
The review of the contract also concluded that the council has “lost sight of ICT as an drive to enable innovation and efficiency”.
Officers said that until recently there had been no short or long term council-wide ICT expenditure forecast for infrastructure or applications which in turn meant that insufficient budget had been allocated for future needs.
“Spending is not always driven by a clear ICT strategy and opportunities for economies of scale may have been lost,” their report says.
An initial seven year investment plan for infrastructure and corporate applications has been developed with Service Birmingham, and the first iteration of this document has already been shared with the council.
Among other measures, the council intends to establish or improve direct working relationships with major suppliers “such as SAP, Virgin, Cisco, Northgate and Microsoft to ensure a mature dialogue exists for business development, technical and innovation matters, while respecting that the commercial relationship exists between the council and Service Birmingham, and Service Birmingham and the suppliers”.
The council entered into a strategic partnership with Capita in 2006 to form Service Birmingham.
This week, councillor Ken Wood, a member of the contracts and partnership scrutiny committee at the council, said unless Service Birmingham sold services to other agencies the joint venture arrangement is a waste of time, according to reports.
Last year, the council approved a package of measures aimed at saving £150m on the amount it pays to its ICT provider over the next seven years.