Essex County Council outsources stuff to IBM

Essex county council and IBM announced a major but somewhat vague outsourcing deal yesterday. There seem to be a couple of immediate development type projects – the modernisation of the council's back-office function and streamlining procurement operations; but then IBM will ‘review services one by one’ with a decision then about whether to outsource or retain in house.  According to the Daily Mail,

“Under the £5.4billion deal, services in the county - such as schools management, social care, highways and libraries - will be reviewed one by one by IBM. The computer firm will decide whether it would be cheaper and more effective to keep the service in house, or contract it out to a private provider.”

That sounds like a classic make / buy analysis, which one would hope an internal strategic procurement or commercial function would be doing as part of their responsibilities.  Obviously not in this case – that role appears to be given to IBM.  What is not clear is whether IBM will also potentially deliver some of those services; which would raise the obvious question as to how they can impartially review a service if they are a potential service provider as well!

I sat client side (a couple of years ago to be fair) on a major procurement outsource where IBM were shortlisted – and let’s just say they didn’t win.  So I hope IBM have the procurement skills to do this successfully.  If I were an Essex council tax payer I would also be interested in how IBM will be paid – is this going to be day rate consulting fees?  Are they sharing risk on delivering the savings? And perhaps most importantly, do Essex have the skills in-house to carry out the necessary contract and supplier management of IBM themselves?  Because partnership or not, that will be a key issue here.

Anyway, very interesting, a possible 'pilot' or exemplar for a future Tory government perhaps,  and a story we will no doubt follow.

Peter Smith

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