Essex County Council is about to begin work on a major IBM-run transformation programme.
The controversial project is expected to eventually cost between £2.3 billion and £5.4 billion, with the council insisting it has full control of the operation’s project management and governance.
Essex suggested it had learnt lessons from previous outsourcing contracts, including with BT, and that flexibility and clear break clauses would be built-in to the IBM deal.
In June, Essex chose IBM as preferred bidder for the work, and last week a board meeting confirmed the supplier had been selected for the deal. The contract is expected to be formally signed in the coming weeks.
Early projects under the eight year scheme will include improving the efficiency of Essex’s back office operations, including modernising systems. The council will also strive to make procurement more effective, and to improve its web-based services.
In the longer run, Essex wants to cut £300 million from its processes and procurement, as well as its building estate costs. It said this would enable it to invest in front-line services, reduce council tax rises, and deliver more value for its money.
As the government continues to promote shared services, there is speculation that the project will eventually provide services for local district councils and other public sector organisations in the south east.
“This is the most ambitious project that the council has undertaken, and finding the right partner to help us deliver it is a vitally important step,” said Lord Hanningfield, leader of Essex County Council.
In February, Essex ditched a multi-million pound outsourcing deal with BT three and a half years before its scheduled completion, prompting BT to threaten legal action.
Neither the supplier nor Essex was able to immediately provide an update on the situation.
Essex insisted in June that the IBM transformation programme was not aimed at replacing the BT deal.
Commenting in the summer before the Essex decision was announced, IDC analyst Douglas Hayward said: “From the government's perspective, the Essex project (along with related projects such as the Service Birmingham initiative) is a litmus test of wholesale service-delivery outsourcing.
“From the perspective of the IT services, consulting, and BPO industries, this initiative will be a huge test of these industries' claims to deliver quality of service and value for money that is clearly superior to that of in-house organisations."