A 10-year outsourced shared services contract covering ICT has delivered less than a third of the £10m savings anticipated to one of the member councils, according to a new report.
The Southwest One (SWO) contract between supplier IBM, Somerset County Council, Taunton Deane Borough Council and Avon & Somerset Police is due to expire in 2017.
Taunton Deane is examining its future options, and said in a report that identified savings have failed to reach expectations.
It said: “The original target for procurement savings was £10m, but SWO have revised this to circa £5m. In practice only circa £3m savings have been identified to date.”
In addition, it said, measuring continuous improvement in service delivery through the contract is getting harder to measure and enforce.
Annual savings of 2.5% planned by the SWO contract are now out of line with the council’s requirement of dealing with 40% reduction in central government funding, the report said.
In addition, Avon and Somerset Police has recently announced it is exploring a potential back office services arrangement with Wiltshire Police Force.
Somerset County Council is creating alternative service delivery units for significant elements of its workforce.
The report said: “SWO has not attracted new partner authorities to the extent originally envisaged and has not grown as a business.”
The council pays around £1.6m each year for services provided through SWO, a price that fell two thirds from 2007 levels as a result of taking some services back in-house.
In addition, a recent review by the council found that the SAP system supplied through SWO is “no longer the right platform” for delivery of its services.
It said that the platform is costly, complex and resource intensive, is a barrier to sharing services with other district councils, and does not support customer access.
The council is required to make a decision on its future ICT service delivery by next year in order to allow for a transition to any new arrangements by 2017.
However, the report added that the costs of exiting from the SWO arrangement are likely to be significant.
“Any disaggregation from the shared service model will be complex and resource intensive and will also be challenging for SWO as it attempts to satisfy the requirements of three partners whilst protecting and maximising its own financial position,” the report said.
Last year, Somerset County Council identified litany of problems with the “incredibly complicated” SWO contract.
