Summary
West Lindsey District Council has a population of 88,000 and is situated in Lincolnshire. In 2007/08 the council spent £14.2 million on all council services. In 2000 the council outsourced its information and communications technology (ICT) services to a large private company. During SR04 the council reviewed the contract to see if it still provided Value for Money (VFM). As a result of this exercise the council brought its ICT service back in-house and created £750,000 of efficiency savings (5 per cent of spending on all council services in 2007/08) during SR04.
The situation
In 1989 West Lindsey District Council outsourced its ICT to services to a large private sector company. Under the terms of the contract, the company provided ICT hardware, infrastructure and staff to the council. The council achieved early efficiency savings from the contract through a reduction in the ICT budget. However overtime the contract became less efficient and did not provide value for money.
Approaches used and efficiencies realised
Benchmarking with other contracts
In 2005 senior management at the council recognised that the ICT contract needed reviewing and employed an officer with experience of renegotiating ICT contracts. The officer obtained funding from IDeA to procure an experienced consultant to help the council to make the best VFM decision about the contract. The officer and consultant undertook a cost and performance benchmarking exercise to understand all the possible alternatives to the existing contract.
As a result of the benchmarking exercise, the officer and the consultant recommended to councillors and senior management that in-sourcing ICT services provided the best VFM option for the council. Senior management and councillors were concerned about the possible risks of bringing the council's ICT function back in-house.
The officer and consultant worked with an officer from a neighbouring council who had experience of bringing other outsourced ICT contracts back in-house, to conduct a consultation exercise with councillors and senior management.
Following the consultation exercise senior management and councillors endorsed the decision to bring the council's ICT function back in-house and four staff from the private contractor transferred into the council.
Efficiencies realised
West Lindsey DC created £750,000 of back office efficiency savings during SR04 (5 per cent of spending on all council services in 2007/08) from insourcing its ICT services. The council also experienced improved ICT service performance as a result of the insourcing; with the Society of Information Technology Management (SOCITM) presenting the council with the 'Most Improved District Council IT Award' in 2007.
Insourcing has also allowed the council to extend its ICT partnership working through entering into an informal partnership arrangement with a neighbouring authority. The partnership enabled the council to minimise risks including staff shortages through the sharing of staff skills and expertise between the two councils.
Learning points
- West Lindsey District Council took a transitional approach to back office efficiency during SR04
- In 1989 the council outsourced its ICT services to a large private company
- Overtime the contract became less efficient and did not provide VFM
- The council conducted a benchmarking exercise during SR04 to understand the best VFM alternative to the outsourced contract
- As a result of the benchmarking exercise the council brought the ICT contract back in-house following consultation with councillors and senior management
- West Lindsey DC created £750,000 of back office efficiency gains during SR04 from bringing the ICT contract back in-house
Questions to consider for your council:
- What approach has your council taken to back office efficiency during SR04?
- Transactional
- Transitional
- Transformational
- How might this case study enable you to take a transformational approach to efficiency during CSR07?
- Do you have any back office functions that are outsourced?
- If yes, have you conducted a benchmarking exercise of the outsourced arrangement?
- Would you consider bringing the outsourced contract back in-house?
- If no, have you considered outsourcing any of your back office functions?