Herefordshire council and local health bodies expect to save £2.7m a year by using cross-sector shared services.
The public bodies have signed a £1.5m deal with IT provider UNIT4 to use its Agresso-based business software platform.
Herefordshire council, Herefordshire Primary Care Trust (PCT) and Hereford Hospitals Trust are to implement UNIT4’s Local Government Platform, based on its Agresso Business World ERP suite.
The project will see the public sector partners collaborate to share back office services, with the aim of improving services and delivering savings of £2.7m a year.
The UNIT4 platform will provide integrated business support across finance, e-procurement, human resources, payroll, service orders, service agreements, e-invoicing, scanning, and supplier and contract management.
It was chosen over an alternative SAP shared services option, although SAP is already used in the council's ICT department.
Darren Hunt, sales and marketing director at UNIT4, said the supplier would be using the "ground-breaking" council/health deal to promote similar shared service deals elsewhere.
The government’s IT suppliers are set to lose substantial revenue this year, as ministers can projects and renegotiate contracts, said analyst TechMarketView earlier this month. TechMarketView said shared services and cloud computing projects would be adopted by the public sector to help cut costs.