By Steve Ranger, 12 April 2005 15:25
NEWS There is not enough mutual trust between local authorities and their IT outsourcing suppliers, warns a new report from the Society of IT Management (Socitm).
Councils are spending at least £4bn on outsourcing, according to Socitm's calculations, with the typical contract worth £6m per year and lasting seven and a half years.
But the user group said: "There is little evidence for mutual trust: indeed, some councils are cynical about the true motives of their 'partners'."
It also found that user satisfaction is likely to be lower when the service is outsourced.
Socitm said that partnership deals can work very successfully, cutting costs and providing additional capacity and capability. But success means building a trusting relationship, it said.
Local authorities should not turn to outsourcing to get rid of a problem. "Managing a difficult issue at armÂ’s length is significantly more difficult than tackling it directly," the report points out.
It also warns the procurement process can often feature "naivety and lack of honesty" on both sides, and this can introduce problems at the very beginning of the relationship.
And too many contract or partnership management teams are defensive and are inadequately resourced, the report said: "They reach for the contract and impose penalties and service credits rather than working with the partner to solve the problem."
Socitm found only one example of a supplier who could earn a bonus for achieving service standards above the specification, while almost every contract had penalty clauses, which it said "seems a little one-sided for a partnership style of operation".
Martin Greenwood, programme manager for Socitm Insight told silicon.com that too many deals break down for reasons that are preventable in hindsight.
"There are some relationships around that are genuinely different and they tend to be councils that have been through the hoops once before," he said.
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1. anonymous
I’m sure local authorities are no different to other organisations in the difficulties they face when outsourcing. Managing the contract rather than the relationship is often the nub of outsourcing failures and could be avoided if teams were to adopt honest, relationship-based management practices. Building a spirit of partnership helps to eliminate common outsourcing problems but involves a lot of trust as your article heads up. They could avoid further unhappiness if both sides managed expectations and understood one another’s requirements and desires and also built in contract flexibility to meet industry flux or market volatility. Companies who have invested time and resources into the skills, planning and processes when putting together an outsourcing programme with their vendor partner(s) tend to enjoy the success stories. As the Socitm report suggests, organisations would be a lot better off if they tried to resolve problems with their partners rather than primarily falling back on words and numbers to achieve successful outsourcing solutions.