Two local authorities in the South West have teamed up with IBM to create a joint venture company to provide shared services on a massive scale to about half a million residents.
The venture, between Somerset County Council, Taunton Deane Borough Council and IBM, is projected to have a total value of £400m over ten years.
The sweeping agreement will include customer services and access, workforce development and procurement, as well as managing the shared IT infrastructure for the councils.
The new venture will be based in Taunton and known as Southwest One. It will be run by staff seconded from both councils and IBM.
Southwest One will deliver to both authorities, the functions including finance, ICT, HR, property services, facilities management and procurement.
Under the arrangement, certain functions will only serve one or other of the councils.
The venture is the first of its kind in the South West and hopes to build on successful shared services initiatives in other parts of the country. It includes a framework agreement entitling over 30 other public sector organisations to acquire similar services through the partnership.
Another key element in this deal is that it is two “excellent”-rated authorities working closely with IBM and its contractor, Mouchel Parkman.
Avon and Somerset Constabulary has been working closely with the authorities and is working towards becoming the first police force in the country to join a joint venture arrangement to deliver shared services. A decision on whether or not they will join the venture could be made by the Police Authority in November.
The launch of Southwest One is being heralded by both councils as a potential solution to the increasing pressures on local government finances.
Jill Shortland, leader of Somerset County Council, said the partnership was “absolutely essential to both organisations in our attempts to inject funding into frontline services in the prevailing climate of huge public and government expectation. Both councils are in absolute agreement that our partnership with IBM represents excellent value [and] will result in better outcomes for the people of Somerset.”
Analyst group Ovum said the contract was "groundbreaking in its size, scale and aspirations for service delivery in the local government market. It is one of the largest outsourcing contracts signed to date in local government."
In terms of revenue splits, Ovum said it understood that IBM would receive £200m of the total contract value over the life of the deal, with approximately £100m of that being paid upfront in the third quarter. The remaining £200m of the deal would be split between partners HBS and Mouchel Parkman, it said.
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