A shared service agreement between Cambridgeshire and Northamptonshire County Councils is forecast to save nearly £5 million in annual ICT costs, a report has revealed.
The councils set up the LGSS in October 2010 to cover back office, professional and frontline services, including ICT, finance and HR. The aim of the shared service was to create efficiencies, as well as cut costs, across both councils, in the face of reduced central government budgets, rising costs and an ageing demographic. To generate revenue, the councils also planned to provide its shared services to other councils.
In a report by the Local Government Association (LGA), LGSS has predicted that the reprocurement of the Cambridgeshire ICT network infrastructure will lead to an annual IT saving of £2.96 million from 2012/13, the second year that the LGSS has been in operation.
This saving would be on top of the £1.78 million the councils saved during 2011/12 and 2012/13 by integrating IT provision with Oracle and Fujitsu.
Together, these savings make up half of the total £9.47 million savings that LGSS has predicted it will achieve from sharing services for 2012/13.
"Importantly there has been no bespoking of software. LGSS has insisted on a plain 'vanilla' approach to IT to ensure that processes are intuitive and simple. This has helped increase the savings that can be delivered," the LGA said.
The councils have so far invested £3.32 million in creating LGSS, with the main set-up costs attributed to the upgrading, extending and integrating of a shared ERP system, version R12, from Oracle. These costs include project and related staff costs.
Other technology changes that have helped to save money and improve services include the introduction of electronic, to replace paper, forms relating to HR, finance, pensions and IT.
"The current pilot of e-forms has simplified processes and provided managers with better management information," the LGA said.
The councils have also installed a new pensions system, called Altair, which has allowed LGSS to eliminate a four-year, 1,200 case backlog that it had inherited, with the system changes expected to result in annual savings of around £400,000.
Northamptonshire has also made savings by bringing its payroll system in-house to LGSS from outsourced provider Mouchel Business Services, and the council is also currently undergoing a project to move its management systems into a SharePoint model office.
In addition, LGSS has brought the support service helpdesks for IT, HR, finance, pensions and property under one management structure, to act as a 'one-stop shop'.
Meanwhile, greater use of video conferencing across both councils' sites have helped cut the costs of travelling.
However, the LGA noted that the councils still have some challenges to overcome.
"Despite the upfront annual savings in IT that resulted from consolidating arrangements with external suppliers, specifically Oracle, LGSS has yet to implement a single, integrated IT strategy across the organisation," it said.
"The IT directorate was one of the last to be integrated into LGSS and some organisation consolidation has yet to be completed. Additional savings will therefore be delivered once further integration has been achieved.
For example, although SharePoint has been introduced for the sharing of documents, not all staff have been trained to use the system yet.
Also, the councils' two IT systems are not yet fully integrated, which means that staff have to use remote access to use one or other of the council's systems.
"The increasing move to web-based and fully-shared applications like the [Heywood] Altair pensions systems and Oracle R12 is alleviating this issue," the LGA said.
Nonetheless, the LGSS has made some headway in its income-generating plans. During 2012 it has entered into partnership agreements to provide finance and ICT services to Norwich City Council, and HR and payroll services to Huntingdonshire District Council.
Overall, LGSS's forecast savings of £9.5 million by the end of March 2013, make it a "major success story", according to the LGA. The organisation has also identified further internal savings that are projected to take annual savings to over £18 million by the end of 2015/16.
"These will result from longer-term changes to processes, culture and technology. In particular, ensuring the effective integration of the IT across the two councils is a major priority," the LGA said.
"IT is a critical enabler of wider business transformation and any failure will slow down other initiatives and ultimately impact on the success of third-party contracts."