Shared service delivery is a term ringing in the corridors of local authorities across the country. The concept of sharing corporate services (eg Finance, Procurement, IT, HR) is borne from the need to drive greater efficiencies. The Gershon Review’s demand for annual savings of 2.5% is compounded by the need to invest in IT in order to meet eGovernment targets and CPA pressures to demonstrate value for money and continual improvement.



But sharing the procurement or/and management of IT can be complex, and requires clarity on how the partnership will work, the respective roles of the parties involved, and the detail of how a contract with an IT supplier will be managed.

In terms of approaching a shared service agreement, there are different options being explored by councils. At a simple level, authorities can outsource to a third party IT supplier, who can provide the expertise, technology and hardware that an authority lacks in-house and is unable to source cost-effectively. An IT partner can bring economies of scale, because its expertise and resources are shared across a number of clients. Outsourcing back-office processes such as payroll and IT help desks creates back-office savings that can be translated into front-line efficiencies and improvements in service delivery.

Such economies of scale can be exploited further if authorities work together to jointly procure technology. Such partnerships are already delivering results for pioneers such as Lichfield and Staffordshire Moorlands, who came together to make dramatic savings in excess of £700,000 by undertaking what is believed to be the first ICT outsourcing commissioned jointly by two councils. The project has won awards for its innovative approach including being highly commended in the SOCITM/Solace/Intellect awards and winning the accolade of best IT outsourcing deal 2004’ from the National Outsourcing Association.

Rita Wilson, corporate director for organisational development at Lichfield District Council comments: “The partnership with Staffordshire Moorlands has enabled both councils to work with a specialist within IT and make savings on the procurement process. IT is not our core business, but it is for our provider Serco Solutions, so we were able to get a much more professional service. Small district councils have less money to invest in such projects and can achieve more if they work together than on their own.”

Lichfield and Staffordshire Moorlands have also benefited from additional funding from the Office of the Deputy Prime Minister (ODPM), which is recognising and rewarding such projects. The ODPM is also keen to see more cross-selling of services between councils. The Local Government Act of 2003 gives authorities the power to charge other authorities for services (at cost) and to trade services in a commercial basis where an authority could make a profit.

By granting the power to trade services, the Government aims to encourage local authorities to extend and improve the range of services they offer. Successful local authorities will be those that develop their own areas of best practice, whilst ‘importing’ delivery from their peers in other areas.

Collaborative working will only be successful if each party feels they are winning. All stakeholders need to be clear on goals, processes, demands and outcomes. Effective communication is crucial to achieving the co-operation and support needed to make it work – from third parties to employees.

But as with any partnership, process and contractual agreements will achieve little without trust and understanding in a relationship. Trust, openness and communication are absolutely vital to the success of a shared services project – whether it’s a joint procurement project or an exchange or trade of services from one council to another.

Those authorities embarking on shared service initiatives can learn from/build upon the successes of others. There has been a step change in the number of authorities undertaking such projects, and the achievements of councils such as Lichfield and Staffordshire Moorlands are being replicated across the country. As Rita Wilson comments: “When I joined local government, the suggestion that we could work together with some of our neighbours would have been met with horror. Now not only is it accepted, it is expected.”

But the key challenge remains the overarching need to wring out the cost savings demanded by the Spending Review. Many authorities have made the necessary changes required achieve a 2.5% reduction in spending in the first year. But in the aftermath of the initial savings, it will become harder and harder to find 2.5% year on year, and that pressure will maintain the impetus for new and inventive way of collaborative working.


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Case study: Lichfield and Staffordshire Moorlands

Lichfield and Staffordshire Moorlands District Councils join forces to meet e–government objectives

In 2003, Lichfield and Staffordshire Moorlands District Councils formed an alliance to help to achieve their e-government objectives. The alliance to procure an outsourcing solution from Serco has resulted in a plethora of benefits for the council. These include an improved IT infrastructure, improved access to services for citizens across both districts and improved efficiency of back-office processes.

The procurement strategy has also resulted in additional funding of £150,000 from the Office of the Deputy Prime Minister (ODPM) in recognition of their innovative approach and an award for outstanding achievement from the Society of Procurement Officers, being highly commended in the SOCITM/Solace/Intellect awards, and winning the accolade of best IT outsourcing deal 2004’ from the National Outsourcing Association.

When Lichfield and Staffordshire Moorlands commenced work towards their e-government objectives in 2000, both councils felt that an innovative approach was needed in order to create the best service possible. Having discussed the project, both councils shared a belief that in order to truly deliver on e-government objectives, they needed to exploit the joint vision, expertise and economies of scale presented through a partnership with one another.

Both councils undertook a full options appraisal on service delivery models and unanimously decided on an external partnership, primarily because this approach presented scope for greater access to skills and resources and as such, a significant step change in service delivery could be achieved in a much quicker timeframe.

Rita Wilson, corporate director for organisational development at Lichfield District Council comments:
“Through outsourcing the upgrading and management of our IT infrastructure to an external provider, we knew we could be able to access a greater bank of resources, rely on 24/7/365 service and be able to tap into all of the skills we required. Having weighed up the options, we knew we simply wouldn’t be able to achieve the high service levels we needed through continuing with an in-house service.”

The rationale behind the joint procurement was based on several factors. Firstly and most importantly, the combined entity made up of the two councils could attract a wider range of better quality service providers. And once a provider had been selected, the two councils could share support costs such as legal fees and consultancy so more funds could be dedicated into improving a wider range of services. In addition there would be twice the number of resources to assess the market and evaluate the various solutions proposed – reducing the time invested by each council.

Having made the decision to outsource to a specialist provider, Lichfield and Staffordshire Moorlands went to tender and set out a specific range of criteria with the help and involvement of SOCITM (Society of IT Managers).

Serco was selected because it had a good cultural match with both Lichfield and Staffordshire Moorlands councils, an ability to meet the strict criteria set out and a genuine enthusiasm to work with both councils according to their partnership model.

Both councils are now realising the benefits of their joint procurement of Serco’s services. All of their IT processes for support services - including infrastructure, desktop management new projects, disaster recovery, systems development and integration, database management and helpdesk support – are managed through a single partnership.

Chris Elliott, Head of ICT & Corporate Procurement at Staffordshire Moorlands Council, comments:
“We now have a 365 degree view of all our IT systems as well as common standards to benchmark against. We can constantly monitor and measure performance against these standards and use information gleaned to support our wider e-government strategy. In addition, we’ve had excellent feedback from users who are already experiencing far greater service levels than before.”

He continues:
“As and when we undertake any project or major upgrade, both the Lichfield and Staffordshire Moorlands teams know that they can rely on the experience, expertise of a trusted partner. Through working with Serco we have maximised our skills pool, resources and capabilities and almost eliminated the risk factor associated with many projects, which are undertaken in-house. Our approach proves that working as part of a true partnership based on trust and honest feedback reaps immense rewards. As a result of this project we really have achieved results that otherwise simply would not have been possible.”