Deloitte signal an end to large Council outsourcing deals

The days of “monolithic” outsourcing deals by local councils are coming to an end, according to consultancy Deloitte.

Councils have for "too long" viewed IT as a “black art that is better performed by external contractors”, the company claimed in a new paper. Success in these deals was “rare”, it said, and led to the growth of disparate IT functions that “lack centralised control”.

Costi Perricos, author of the ‘Taking Control of IT’ report, which is based on Deloitte’s experience of advising local councils, said the local authorities would be better advised to take “proper ownership” of their IT and develop good governance in order to achieve success.

“That’s not to say the outsourcing of some IT functions can’t work,” he added, “but the days of the monolithic IT outsourcing deal – that sees the entire council’s IT capability outsourced to one supplier and managed by a small contracting team – are numbered.”

He advised local authorities to “take and retain control” of technology strategy, including the management of suppliers, in order to deliver benefits to citizen services and internal efficiencies.

There were also potential financial gains to be made by keeping work in-house and restructuring IT as demonstrated by Lancashire County Council, Deloitte said. Many councils could save “up to 30 percent” of their IT expenditure over time by redesigning IT, it claimed.

In order to achieve such a saving, however, council managers would need to collaborate more to make the most of their IT investment, and technological and skills capabilities would have to be unified across departments, Deloitte said.

Initial savings could come from software licence and data storage optimisation, as well as project rationalisation and strategic sourcing of commoditised technology, the report said. After this, councils could consolidate applications, servers and datacentres, optimise their hardware usage, and improve shared services.

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