Is shared services the new outsourcing for local government?
Is shared services the new outsourcing for local government?
Jo Best talks to Hampshire county council CIO Jos Creese about how the ideal supplier for one local body could well be another one
What makes an ideal outsourcer for local government? An organisation that understands a local authority's business requirements, makes no secret of its pricing structure, is open about potential problems, or one that grasps the particular challenges of the public sector at a local level?
In short, another local government organisation?
Hampshire county council is already involved in several shared services, providing IT services to other local authorities and contracting services from them. Its CIO, Jos Creese, believes more intra-local government arrangements are likely. Just don't call them outsourcing deals.
"I'm not sure I'd use that terminology," he tells Guardian Government Computing. "Once you use the word outsourcing, that implies a particular type of business model.
"I think it's more a type of collaborative approach where we pool resources, and say we're going to operate with a single business model and operate in a very transparent and semi-commercial way."
Transparent and commercial in that such arrangements set out clear pricing structures and deliverables, and are also a departure from typical commercial agreements through the inclusion of greater flexibility and a desire to get out from under the grip of service level agreements (SLAs).
"That's the problem with some of the outsourcing arrangements they are insufficiently flexible to accommodate change in a way that is affordable for both parties. It's not necessarily a criticism of the public sector or the private sector, it's just a fact of life," Creese says.
But can using another local government organisation as an IT supplier ever deliver the same economies of scale as one of the big vendors?
The CIO cites research by local government IT body Socitm that found many outsourcing arrangements proved more expensive than initially predicted, adding that many don't compare "terribly favourably" in cost terms to most of the best-run in-house services.
"Where we're working with other organisations, we will be completely open about what it's costing, what we're good at, what we're not so good at, and when there's a problem how we can work together to resolve it, so that it genuinely feels as though they have a shareholder stake in that we're not simply selling them something, and they have put to up with it.
"That creates a lot of flexibility. That allows us to say, 'OK I know we said we're going to do that in day 1, it's now day 2 and something's come up. It's not a problem. We'll rejig the priorities, we'll work within the confines of the arrangements and see what we can do to flex'."
Being both a successful supplier and consumer of IT services is no mean feat, but pull it off and there are benefits to be had from contracting a fellow local government organisation: it can ensure that the authority gets a supplier that knows the minutiae of local government IT, as well as being able to attract and keep IT staff.
"If we can get that right, you're bringing real business knowledge, which is often the tricky thing. We're working with people imbued with public service knowledge, with some real technical professionals who can see a career in public sector because of the scale of what we're doing," says Creese.
Hampshire is offering its services through a partnership with Oxfordshire county council. Hampshire will step into the shoes of a private supplier whose contract with Oxfordshire ends later this year to support the council's SAP system. The arrangement will save Oxfordshire £1m over the next three years, the council believes.
However, the idea is that the agreement is more collaborative than traditional outsourcing or managed service arrangements, and more a shared service than a sold one: Oxfordshire will contribute to the deal through elements such as helping to develop best practice.
"As far as possible we develop things on a shared basis," says Creese.
A deal with Hampshire fire and rescue service for example sees the county council provide administrative services such as HR and payroll. The fire and rescue service is leading a project on multimedia and video from which Hampshire expects to benefit.
It also has an agreement with Dorset county council for reciprocal disaster recovery, which has allowed Hampshire to replace its external supplier.
"Working in partnership with Dorset has allowed us to develop a deeper recovery process for rather less cost. It also opens up the opportunity for us to build on that. That's an example of a genuinely reciprocal arrangement where the interest of both organisations are bound together," Creese says.
Perhaps Hampshire's most notable shared initiative is the Hampshire PSN (public services network), which could also lay the foundations for shared services beyond the county's borders.
Set up 12 years ago, the PSN is now used by the county council, as well as other local authorities, schools, colleges, the Hampshire fire and rescue service and Isle of Wight council. Hampshire recently worked on a proof of concept to link up with Kent's PSN, running a Hampshire phone over the Kent network.
Creese believes the proof of concept opens up the ability of neighbouring PSNs to be hosting services on behalf of others in the future and he expects to see more of that happening.
Shared services have been able to gain momentum in local government without seemingly attracting the same negative headlines that have followed their counterparts in central government.
What is local government doing right? Creese says it's not an easy question to answer the issues facing central and local government are not the same.
However, there may be some clues in the history of shared services within central government.
"The challenge perhaps for central government departments is that some are very large indeed and probably the model in the past is one where the very big do it to the smaller using whatever mechanisms they have in place. That is a little different from what we're trying to do in Hampshire," he says.
The Hampshire PSN is a "partnership of equals". While the county council is unquestionably the largest of those equals and acts as a coordinator for some of the work around the PSN, it is not delivering it to the boroughs, the district, the unitary councils which have their own direct relationship with the managed services supplier, Virgin Media Business.
Having such a "club" of users means the organisations involved in the PSN can also share procurement for services such as web filtering or unified communications. Sharing the buying of such services can not only generate economies of scale, it can also open up the possibility of greater integration between the organisations' services the PSN authorities now have a single telephone numbering system across all 14 bodies, with numbers assigned to staff rather than desks.
Meanwhile, more intra-local government deals look to be in the offing. Hampshire is in discussions with "quite a few more" local authorities about setting up such arrangements.
"With money as tight as it is, collaboration has to be the way of the future for IT. Providing you get the mechanisms right, which in my view has to mean genuine collaboration, I think there is a real willingness to work together," says Creese.