The case studies below are from local authorities that were included in the SOLACE Guide to Sourcing and each one highlights how joint ventures can be a viable option:

• Liverpool Direct: the first and still the biggest
• Service Birmingham: award-winning joint venture
• Southwest One

Summary of the Project
Liverpool Direct Limited is a joint venture created in 2001, providing back office and customer services to Liverpool City Council and 20 other clients. Thanks to the additional business won, turnover has nearly trebled. BT and Liverpool City Council are partners in the joint venture, with BT owning 80.1% and the City Council 19.9%. The contract was awarded initially for 10 years and has since been extended by a further five years.

What is covered
The main services offered are ICT, HR, public access, revenues and benefits, learning and development and web services. Services for other clients include services to schools in Stockport, Defra Helplines and transactional processing for the Security Industry Authority. Liverpool Direct Limited also manages
transformation and efficiency programmes, such as the introduction of automated self service for HR and document handling.

What’s unique about this solution?
At the time, its breadth and scale were unique in local government as was the structure of the joint venture. While some partnerships have struggled to win the new business and create the new jobs that were envisaged at the outset, Liverpool Direct has since secured new work, increasing its annual turnover from £30m in 2001 to £82m by 2008. Despite improved efficiency, 1200 staff are now employed compared with 850 at the outset. While many authorities that are outsourcing today are doing so from a strong performance base, “we wanted to address a number of services which were poor and secure a significant level of investment in technology”, remembers Phil Halsall, Executive Director for Finance and Legal Services at the City Council.

What was the outcome of this project?
As services were migrated to Liverpool Direct Limited, the council was able to secure £10m in annual revenue savings at the outset of the contract. A range of striking service improvements have been achieved. Examples include the benefits service, which had been one of the worst performing in the country. It is now achieving top quartile performance across all indicators and a CPA service score rating of 4. HR improvements have enabled the council to reduce its staff absence levels from 16.5 days per annum to 10, below the national average.

What were the key lessons learned?
The partners stress a number of important lessons:

• Proving the model – David McElhinney, Liverpool Direct Limited’s CEO, describes the joint venture as a “spectacular success”which has “exceeded all expectations”
• Accelerating the procurement process – across all phases, “things should now be achieved much more quickly” says David McElhinney
• Building in flexibility – Phil Halsall stresses the need to keep the scope under review, with some services moving out , eg housing stock transfer and some added, eg One Stop Shops

For more information, please contact:
Name:   Dr David McElhinney
Position: CEO
Authority: Liverpool Direct Limited
Telephone: 44 (0)151 227 1410
Email:  liverpool.direct@liverpool.gov.uk
Website: www.liverpooldirectlimited.co.uk

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Summary of the Project
Service Birmingham, created in April 2006, is a joint venture providing ICT and business transformation services to Birmingham City Council, with an ambition to provide services to other public bodies and private sector organisations. Capita and Birmingham City Council are partners in the joint venture, with Capita owning 68% and Birmingham 32%. The £474m contract is a 10 year deal with an option to extend by a further five years. Service Birmingham’s key partners include Axon who support the business transformation programme.

What is covered
The contract specifies high standards of operational IT services and the replacement of legacy infrastructure and a range of application upgrades and replacement, including the implementation of SAP’s ERP system as part of the Corporate Services Transformation programme.

What’s unique about this solution?
The most striking feature of Service Birmingham is its scale given that its focus is on one back office function. Its size is a reflection of the city council’s scale as Service Birmingham has to serve 20,000 users based in 450 schools, 60 libraries and 240 Council-related offices. 490 council staff transferred to the joint venture, the vast majority on secondment. Behind the deal lies a determination to bring in external capacity and expertise and to transfer risk and the management overhead. With a £17bn regeneration programme over the next five to ten years, Stephen Hughes expects the transfer to “free up managerial capacity to focus on strategic issues”.

What was the outcome of this project?
Initial efficiency savings of £35m have been achieved to date and, in the long term, the council is aiming for efficiency savings of £1billion by the end of the contract. A substantial element of these savings will flow from the procurement stream in the Corporate Services transformation programme.

Targets have been built into the contract for ‘world class’ performance and for the achievement of external benchmarks, such as top decile performance in the SOCITM survey. Results so far include:

• Increasing customer satisfaction by 8.5 percentage points in 2008 compared with 2007
• Achieving top or upper quartile performance in most of SOCITM’s value for money indicators in its 2007 survey

What were the key lessons learned?
The partners stress a number of important lessons:

• Speeding up negotiations – the partners demonstrated that the negotiation process can be fast-tracked. Although Capita were confirmed as preferred supplier only in November 2005, the new contract was launched in April 2006
• Ensuring transformation is coherent - the transformation programme is managed through a corporate governance structure operating within a single methodology. Glyn Evans comments, “By having a standard approach across all transformation workstreams, we can minimise the ‘gaps and overlaps’, identify dependencies and more readily learn from our experience.”
• Fostering a partnership culture – the joint venture approach helps to encourage positive collaboration and is more flexible. “I try to involve them as much as I can” says Stephen Hughes, who ensures that Service Birmingham is involved in Corporate Management Team sub-group.

For more information, please contact:
Name: Mr Glyn Evans
Position: Assistant to the Chief Executive on Transformation
Authority: Birmingham City Council
Telephone: 44 (0)12 1303 3621
Email:glyn.evans@birmingham.gov.uk
Website: www.birmingham.gov.uk

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Summary of the Project
First signed in September 2007, Southwest One is a £400m, 10 year public/private joint venture and framework contract covering back office and customer services.

Somerset County Council, Taunton Deane Borough Council, Avon and Somerset Constabulary and IBM supported by Mouchel Parkman. IBM owns 75% of the joint venture and the public sector partners 25%.

What is covered
The main services covered are: finance, ICT, human resources, customer services, property services, FM, design, print and postal services, procurement, traded services to schools, revenues and benefits. In addition to the provision of services, a transformation programme will be supported, with the implementation of major systems such as ERP and CRM.


What’s unique about this solution?
This is the first major BPO joint venture that includes both local authorities and another public body as partners. It has also been developed as a framework deal, with the explicit objective of allowing other public bodies in the South West to take advantage of its services without the need for a separate procurement process.

For Somerset’s Chief Executive, Alan Jones, the aim is to create “a flywheel of efficiency through better procurement that will be driving further efficiencies”. Alan Jones talks of the challenge of moving ‘beyond excellence’ and four-star Taunton Deane’s Chief Executive, Penny James, says of IBM’s role “we needed a new skill set, something a shared service with another local authority couldn’t give us. On our own, we didn’t have what was needed to get to the next level”.

What was the outcome of this project?
It is too early to judge performance as the contract was only signed in September 2007. The transition of the services and staff to Southwest One is described by Taunton Deane’s Strategic Director, Shirlene Adam, as very smooth “it’s been a steady ship”.

Perhaps most striking is the projection of the savings that the new approach to procurement is expected to achieve. Roger Kershaw, Somerset County Council’s Corporate Director Resources, states “we are expecting £200m of benefits to the County over the life of the contract”.

What were the key lessons learned?
The partners stress a number of important lessons:

• Governance – a structure that enables elected members to shape and challenge the process. All partner authorities engaged in robust scrutiny and review of the process. “The County Council’s external auditors have described it as one of the most scrutinised processes they had ever witnessed”, reports Roger Kershaw.
• Learning from the past – Shirlene Adam described how “We’ve looked hard at the organisational lessons learnt from a previous outsourcing of our revenues and benefits service”
• Investment in the process – the clienting of the process was well resourced, evaluations were far reaching and involved dozens of expert staff and for the due diligence process alone, the county had to cope “with over 60 IBM staff descending on us”, reports Roger Kershaw.

For more information, please contact:
Name: Mr Simon Humberstone
Position: Executive Partner, Local Government Industry
Authority: IBM Global Business Services
Telephone: 44 (0) 20 7021 9515
Email: simon.humberstone@uk.ibm.com

Name: Shirlene Adam
Position: Strategic Director
Authority: Taunton Deane Borough Council
Email: s.adam@tauntondeane.gov.uk

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