Independent Review of Service Birmingham

By on 03/12/2012 in Deputy Leader, News

An independent review of Service Birmingham, the joint venture between Birmingham City Council and Capita, has been published today (December 3).

The 'health check' review, commissioned by the Council following May's local elections, was led by the Best Practice Group plc.

The aim of the review was to explore if the partnership was providing value for money and to establish if it operates as originally envisaged or if it had changed to a more client-contactor relationship rather than a true partnership. The Best Practice Group plc have drawn a number of conclusions from the review and made a number of findings which are summarised throughout this report.

The City Council notes the recommendations and is concerned about those areas that are poor and underperforming. Clearly, the next 12 months are critical and improvements in those key areas identified by the BPG must be addressed. The Council sees the following as priority areas over the next 12 months to maximise value:

  • Contact Centre affordability – the Council will review the metrics on the contact centre to ensure it is still achieving the City Council outcomes and use this review to determine service delivery and payments to SB
  • Project Initiation and Delivery - the Council will develop a new process for project initiation, development and piloting that balance incentives and penalties
  • website - the Council as it reviews its website will take account of BPG advice and guidance on project development and implementation.
  • £20m p.a. reduction in cost of services delivered by Service Birmingham - the Council will work with SB to identify projects and initiatives that will drive savings from the ICT service provided by SB
  • Develop Project Plan with clearly defined deliverables and timescales
  • 12 month Action Plan to deliver the above

Cllr Ian Ward, Deputy Leader of Birmingham City Council, commented: “The council is committed to playing its part in ensuring the Service Birmingham Partnership continues to improve.

“Some very good progress has been made, but the bleak financial future that the council faces means we need Service Birmingham to operate as effectively as possible to deliver the innovation and efficiency that we need to find from our services to reduce costs and increase value for money.

“The next 12 months will see officers working with Service Birmingham on those key areas identified by the review that will enable the partnership to better deliver for the council.

“I am confident that Service Birmingham wholly endorses the recommendations in this report and will work with us to address improving and building on the work to date.”

Summary of Findings

There must be much clearer understanding of the contract and increased levels of transparency on what it does and does not cover. This transparency will lead to improved trust between the partnerships.

The review has noted that amongst officers, SB staff and members there is misunderstanding on the scope of the contract and the responsibilities associated with the contract. The report recommends that this is addressed by regular training and reporting to ensure there is a clear understanding of the contract across the Council. In addition it notes that greater understanding of the contract will build higher levels of trust within the organisation and ensure its effective use to secure greater value for money.

Summary of Findings

Aspects of performance, reporting performance and value for money need to be improved.

BPG have drawn broad conclusions from the analysis of Socitm (association for ICT and related professionals in the public and third sectors) data on the core ICT services. They conclude that SB is a 'competent' IT provider and in some specific areas excellent. But could and should improve further. The City Council will continue to work with SB on its performance and notes that with the desk-top estate that there are potential savings if Council processes are changed.

The report concludes that project initiation and development needs improvement to ensure that new projects have robust business cases and are delivered in a timely fashion. In order to improve in these areas the Council must seek to involve SB at the earliest stages of projects; only by early involvement can SB provide accurate costings and provide realistic planning and time lines. SB for, its part, must provide a greater level of critical friend challenge to the Council. The Partnership, together, must work on new performance measures that focus on project delivery and BPG have offered suggestions on how best to develop this including incentives for excellent performance that aligns with business outcomes and penalties for failure to provide good value and/or deliver on time. The report comments:

“As to whether the costs accurately reflect the quality of service, again there are instances where the service quality matches or exceeds the amount being paid (for example, a number of aspects of ICT core services). There are other examples where the perception of BCC is that the service quality on a holistic basis and the price paid don't appear to match (for example within the contact centre). Overall, a high level review such as this is not in a position to make exact statements about each service line. What can be said is that in areas where the Council and SB pro-actively collaborate with each other to deliver clearly defined service goals and outcomes, then performance appears to represent good value for BCC as a client. Therefore it would make sense to ensure that the Council invests in areas where this is not happening presently to bolster the resources needed to monitor and improve SB's performance to drive better value.”

The report is of the view that given the relationship challenges between the Council & SB that; (a) that certain individuals within the Council need to understand that SB is not a social enterprise, a public sector mutual, or a charity, and needs to make a significant return on its capital for its shareholders, and (b) SB needs to understand that the Council is in a significantly deteriorating financial position due to government cutbacks.

The report goes on to recognises the good work of the Council's contract management team (ICF) in managing performance and recommends that the client function should be strengthened to deliver greater value for money. However the report notes that the contract terms and performance measures (KPIs) that were originally established for the SB partnership need updating so that they support the revised Council Business outcomes as a result of the Government's austerity measures.

Summary of findings

Limited use of the managed service partnership (the off-shoring company) and use of local resources for SAP work is acceptable and usual given the skills needed by SB.

There are contractual provisions that allow SB to off-shore certain work, providing there is no direct impact on its UK workforce. The use of a company in India, was and is, controversial. BCC and SB reached a way forward in 2011 which gives flexibility to SB and ensures the Council has the appropriate skills when they are needed. The review concludes that wholesale migration of SB roles for SAP and non-SAP related work off shore is not currently occurring. However, the review notes that given the fact that the unions and staff concerns remain, these concerns could best be alleviated by regularly reporting of the usage of this resource to the relevant Board.

Summary of Findings

The level of innovation has stalled now most of the initial projects have been completed. It is recommended that an Innovation Board is created

The BPG report discusses how the Council and SB had a great common cause in the delivery of the Business Transformation projects. These projects are now delivered and the report finds that there is a loss of impetus as a consequence, the level of innovation seems to have stalled and the relationship has deteriorated. Both the Council and SB have lost sight of the next 'great common cause' - the fact that the council needs to further reduce the cost of ICT service delivery by £20m per annum. It recommends an Innovations Board as one of the ways forward. This would see the partnership creating a formal process to discuss and examine innovative ideas in a consistent manner and ensuring that they support the delivery of the revised Council objectives.

It is also suggested that SB/BCC move to a new way of introducing new services and innovation by the use of a piloting model. Following robust analysis a pilot project would be introduced. Where key cost and quality milestones had been achieved this would then move to a longer stage introduction. This managed introduction would allow SB to show the value of new projects without the Council committing long term resources initially.

Summary of Findings

Areas of the contract and governance need reviewing, updating and amendment

There are a number of areas of the contract that need reviewing to provide greater levels of clarity and flexibility in order to align with the new austerity measures and therefore, re-aligned business outcomes for the Council.

This is particularly discussed in relation to the management costs for Service Birmingham where it concludes that there needs to be more flexibility applied particularly in situations where SB has a reduced role because the Council has decided to undertake much of the identification, selection and management of IT solutions.

The contract permits the City Council to request services from a third party, where these services are outside SB's own delivery capability with SB applying a fee for contract management. These situations vary considerably suggesting there should be some flexibility on some pass-through charging.

In addition the project quotation and project delivery response time needs to be reviewed with the introduction of new performance measures and a move to milestone payments following renegotiation with SB.

Summary of Findings

Partnership Working needs to improve and be refocused on common goals

The report discusses that there is a 'commercial trust' issue between BCC and SB that needs to be addressed. The report identifies that there is mistrust within the relationship and disputes over roles and that the attitude and behaviour of some individuals must be changed within a suitable time. It states that such 'noise' in the organisation needs to be addressed and the 'one-upmanship' that occurs needs to be stopped.

An outline Roadmap to re-build this trust has been provided to BCC and SB. To rebuild trust BPG recommend improved transparency on the contract and how it operates and for both parties to understand what the drivers are for each 'business'. For SB it is the fact that it is a commercial operation and for the City Council it is ever more focused on its challenging financial position.

The report has found evidence that the contract extension delivered savings for the Council. But also finds that this is now being met with a stronger commercial approach from SB on areas outside core ICT (such as new projects). Thus it concludes that a new focused common cause and a new process for managing the complete project process is needed.

It is suggested that the Council and SB already have a great common cause in addressing both savings in ICT costs and in supporting the wider savings the Council has to make and need to make this central to its future work.

Summary of Findings

Appoint an Independent Chair to the Board of SB

In order to provide greater transparency of whether SB is providing on-going value for money for the Council, the report recommends following best practice guidelines from the Institute of Directors by engaging an independent Chair with both private sector service provider and public sector expertise. In the interests of governance, the independent chair should have no current or prior connection with Capita or Birmingham City Council. This will help to align the interests of SB and the Council in ensuring partnership working and to maximise value for bother parties out of the relationship.

Summary of Findings

On balance the partnership between SB and BCC has driven value in a number of core services since its inception and evidence suggests it would be better to strengthen the relationship between SB and BCC rather than disengage from the partnership.

The review has identified a number of areas where the Council receives good value for money outcomes, such as ICT, Adult Social Care and Revenues. However, the review also concludes that there are pockets of activity, such as the Contact Centre and new projects, where performance is acceptable in some aspects but value for money (in the case of projects) and the City Council's perception of value for money (in the case of the Contact Centre) could be stronger. Working together on common goals such as Business Transformation has illustrated that, together, the Council and SB can deliver on large projects.

Other notable projects include:

  • For the Library of Birmingham – digitisation of archives, new website and a new ticketing and management system.
  • For Adults Services – Mycare in Birmingham - this allows people to gain information and support for self funding care in Birmingham, and an electronic records system for better management of information for the public and the Council.
  • For Housing - 27 IT projects including choice based lettings, handheld technology, and systems to reduce rent arrears (reduction of rent arrears by 18% to date).
  • For the Council – Secure mobile device management, better financial management systems and systems to support agile working.
  • SB has played a key role in the delivery of savings of around £1bn through the Council’s Business Transformation programmes.


In summary, BPG conclude that the partnership has delivered in the past and driven value for the Council and is worth strengthening. However it is in need of significant improvement over the next 12 months to establish a firm foundation for the next years of the Partnership.

The report from BPG will be tabled at the Governance, Resources and Member Development Overview and Scrutiny Committee on December 11th.

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