County council’s cabinet decides to take IT back in-house after early termination of contract with IBM
Somerset County Council has decided to pull out of its contract with IBM for IT, back office and customer contact services a year early.
Its cabinet has decided to end the Southwest One deal and move the services back in-house within 12 months, rather than wait for the scheduled termination in November 2017.
Councillor John Osman, the leader of the council, said: “Having carefully weighed up the benefits and costs of letting the contract run its course or leaving it early, we have concluded that an early exit is in the best interests of the county council and its taxpayers.
“Our partners in Southwest One have been kept informed and we will be working closely with IBM and Southwest One to make the transfer back of services as smooth as possible.”
He added: “This contract was created nearly a decade ago when the economic climate was very different. Since then local government has changed dramatically with a well-documented fall in funding and consequent need to make savings.
“We are a smaller organisation that has made big changes to the way it works. The fixed price nature of the contract has prevented us from making some of the savings that should come with those changes.
“More change is on the horizon and the pressure to make efficiencies and savings has never been higher. We need more flexibility than this contract allows and leaving early allows us to start making changes and savings sooner.”
Somerset said the move will involve about 180 seconded staff returning to its employment, along with a number who had been hired directly by Southwest One.
The decision has no surprise, following the council’s tender for enterprise resource planning services and reports of difficult negotiations with IBM. It marks the culmination of a rocky relationship between the council and the company since the Conservative Party took control from the Liberal Democrats in 2009.
The previous LibDem administration set up the joint venture with IBM, Avon & Somerset Police and Taunton Deane Borough Council in 2007. Before the change of council control, Southwest One was subject to severe criticisms, led by local Conservative MP Ian Liddell-Grainger.
In 2011 a council review reported that there had been problems in the implementation of an SAP software system and that some savings targets had not been met.
Over the following two years a number of services, including HR, facilities management and some parts of IT, were returned to the council. This reduced the value of the contract from £535 million to £158 million.
Image: Somerset county flag by Vexilo, public domain through Wikimedia