Barnet Council: Outsourcing deal with Capita has 'performance issues' Barnet council's controversial £322m 10-year outsourcing deal is plagued by a number "performance issues" particularly within IT - but has also yielded "significant savings" since 2013, according to a report. The borough's chiefs have reviewed the Customer and Support Group (CSG) contract handed to Capita and concluded it has …
I guess the council might think it has but i bet neither it nor country did
What is the betting that ALL the jobs are now somewhere i India. Thus the council will doubtless now have a whole bunch on housing support that wouldn't have been before and the country is paying unemployment.
The only people laughing to the bank are Capita and those in the council on the backhanders.
never mind the Quality, here's a few squid in a brown envelope (just speculating you understand)
As for the jobs in India, then that is probably the case. Crapita may well have chosen a part of India where not even the locals can understand the type of English spoken locally. This inability of their staff to communicate would ensure that all calls are completed within 30 seconds or whatever KPI is appropriate.
Barnet has a rent:income ratio of 63% - around average for London - and an unemployment rate below the London average. Employing more relatively-expensive overhead staff in the borough would simply push up the council tax and increase competition for housing, pushing up local rents.
London is already overlflowing with people and moving any back-office job out of London has to be of ultimate benefit to people who have to be there (like firemen, NHS staff and bus drivers) and everyone that depends on them.
moving any back-office job out of London has to be of ultimate benefit to people who have to be there
Moving those jobs offshore increases our balance of trade deficit. Instead of going with a rubbish outsourcer whose commercial interests are not aligned with the buyer, Barnett would have been far better to have sought a shared services agreement with a competent local council with systems capable of taking on more load. And, despite my low opinion of local government, there are some local authorities able to do that.
of ultimate benefit to people who have to be there (like firemen, NHS staff and bus drivers) and everyone that depends on them.
That's an interesting logic for public sector services. In economic terms it might be argued that the whole purpose of London is to service the fat cats of the City, and property speculators pushing up property prices, and what you're proposing is that anybody who doesn't physically need to be there to support aid said fat cats (directly or indirectly) can sling their hook?
Yeah I was affected by that! Capita also cunningly made it near impossible to actually speak to anyone in their call centre, especially about council tax. Nearly all of the options in the menu eventually lead you to a pre-recorded message telling you that what you want to do can be done on the website whereupon it hangs up.
That would be fine if it wasn't a lie, you often can't do what they say you can on on the website! Still good way to cut call costs i guess.
"Anyone remember the f**k up on election day when people were turned away in Barnet because they weren't on the electoral register - even though they were?"
I'm worried about this, because I moved into the borough a few months ago and one of the first things I did was to submit the online form to register as a voter in the borough ... however, since then I've had several letters from the council reminding me that I still need to register to vote!
"I'm worried about this, because I moved into the borough a few months ago and one of the first things I did was to submit the online form to register as a voter in the borough ... however, since then I've had several letters from the council reminding me that I still need to register to vote!"
But if they put you on the register it'd cost them £31 million, and I don't think your vote is worth £31 million to them.
The very fact that they think an attitude of "Not surprisingly with a contract of this scale and complexity, there have been performance challenges in all services" is acceptable shows how incompetent this council is. There is no good reason why an important contract, of any size, should have significant performance challenges in any area, if it was properly let and managed.
If the first few examples of a new Airbus or Boeing fell out of the sky occasionally, would the airlines just issue press releases saying "well, every new machine has teething troubles", and expect everyone to be happy? If a new range of telephones started catching fire, would we expect the supplier to dismiss it as "just an expected performance challenge", and would their share price remain unchanged?
Why is it only government customers of Crapita who see to think this is normal? Have Crapita ever successfully completed a project on time and to budget?
There is no good reason why an important contract, of any size, should have significant performance challenges in any area, if it was properly let and managed.
Actually there is a very good reason, and that is because the goals of vendor and customer differ. Note the comment that Capita weren't provide strategic IT advice. Why would they? It would be about improving performance (expensive for Capita, probably no new revenue) or reducing Barnett's costs (when Capita broadly speaking make their margin as a share of turnover).
For a small business, outsourcing can get you access to services you can't provide efficiently at small scale, or which would be a complex distraction to do right. For any large organisation that rarely applies because big organisations have scale by definition, and their raison d'etre is doing complex things. This is at the very heart of outsourcing problems and affects corporate customers just as much as the public sector. Outsourcing is a great tool, but only for things that the buyer doesn't want to do, and doesn't really care about the cost or quality.
"For any large organisation that rarely applies because big organisations have scale by definition"
For too many councils this simply extends Murphy's Law so mean that anything that can go wrong will do so on a larger scale and that there will be more things to go wrong.
"Why is it only government customers of Crapita who see to think this is normal? Have Crapita ever successfully completed a project on time and to budget?"
Depressingly, its probably because Crapita have probably still managed to exceed the council's own over expensive under reliable efforts in the areas it has taken over...
...oh that and the council personnel repsposible for the outsourcing will certainly have been busy fabricating propoganda to paint the project in the best possible light to ensure they get their performance bonus.
"If the first few examples of a new Airbus or Boeing fell out of the sky occasionally, would the airlines just issue press releases saying "well, every new machine has teething troubles", and expect everyone to be happy?"
It's the kind of thing you'd expect British Leyland manglement to say - and councils seem to be the final resting place of a lot of ex BL manglement.
"If the first few examples of a new Airbus or Boeing fell out of the sky occasionally, would the airlines just issue press releases saying "well, every new machine has teething troubles..."
Maybe you weren't paying that much attention to the initial tribulations Boeing had with their Dreamliner not that long ago, even before lithium battery fires were a thing on the six o'clock news.
It's largely agreed (and was even predicted before it happened) that too much outsourcing of the product components risked egg on face of the product supplier, not least because (as another contributor has commented here) the goals of the subsystem suppliers are not the same as the goals of the overall system builder (or their customers).
In short: the risks remained with the end product supplier (Boeing), but the profits got outsourced to the subsystem suppliers.
In the case of Boeing, this risk was identified in 2001 by a long-term Boeing staffer:
http://www.iam751.com/iam751/dev/pages/news/2001_02%20Hart-Smith%20Subcontracting%20Paper.pdf
"The purpose of this paper is to describe and explain some highlights associated with the contemporary business practice of out-sourcing more and more of a companies’ activities in the belief that doing so will increase profitability. A strong case is made that it will not always be possible to make more and more profit out of less and less product and that, worse, there is a strong risk of going out of business directly as a result of this policy. The point is made that not only is the work out-sourced; all of the profits associated with the work are out-sourced, too. The history of the former Douglas Aircraft Company is cited as a clear indication of what these policies have done – and as a warning of what more may be done. The subcontractors on the DC-10 made all of the profits; the prime manufacturer absorbed all of the over-runs. [...]"
Obviously outsourcing (e.g.) a local government service, or an enterprise's sales order processing and ledgers etc, has completely different business characteristics than Boeing subcontracting everything. Doesn't it?
> If the first few examples of a new Airbus or Boeing fell out of the sky occasionally, would the airlines just issue press releases saying "well, every new machine has teething troubles", and expect everyone to be happy?
I think you misunderstand. I'm sure Capita's proposal was crystal clear on the level of service that would be provided for the money being paid. In turn, the Council were (probably) quite clear about the level of service they were going to receive. The only "teething trouble" with the project is those pesky residents failing to resign themselves to the reduced level of service quickly enough.
[cynical b'stard icon]
depressingly i think you're right.... the guiding principal amongst local govt managers, seems to be one of reducing any/all services that require/demand any kind of human interaction. We must now get our answers from the less-than-smart, prescriptive website. Which of course is no answer at all. Elderly people etc are disregarded as long as the bureaucrats remain in position on their index linked salaries.
Why is it only government customers of Crapita who see to think this is normal? Have Crapita ever successfully completed a project on time and to budget?
You're not looking at it like a consultant. Chances are they were given a spec full of holes and ambiguities and quoted a reasonable price and timescale based on that. Then someone on the government side says "Oops! We forgot this, please add it in" so the cost goes up to pay for the extra work, which of course takes longer.
There are two sides to any large IT cock-up and while Crapita get most of the blame, it's not entirely their fault - someone needs to point a finger at the government procurement people too. As a responsible consultant, you should be looking at the RFQ and highlighting areas where you think they may be deficient, and clarifying anything you think is ambiguous so that both sides agree what it means, all before providing the price and timescale quote. Of course, this takes up more of your time and probably results in a more expensive quote than the competitor who didn't do due diligence, but I'm sure if it was done properly the overall outcome would be cheaper, or at least generate less bad publicity.
"As a responsible consultant, you should be looking at the RFQ and highlighting areas where you think they may be deficient, and clarifying anything you think is ambiguous so that both sides agree what it means, all before providing the price and timescale quote."
If you ask questions that can't be answered (it'd require someone to do work) you'll be regarded as an awkward bastard and the contract will go elsewhere.
If you ask questions that can't be answered (it'd require someone to do work) you'll be regarded as an awkward bastard and the contract will go elsewhere.
This is where a lot of the problem lies, it needs someone to ask those questions and have them answered. Perhaps if someone actually had to do the work up-front then the magnitude of the screw-up would be significantly reduced.
When it comes to outsourcing those councils have a bunch of elected councillors who believe that this is the way to go, but without necessarily any evidence behind the ideology. (Barnet in particular). And officers who know the job that needs to be done, but no understanding of outsourcing -( or sometimes the other way round).
if it was done properly the overall outcome would be cheaper, or at least generate less bad publicity.
Well, that is exactly what I meant by "if it was properly let and managed.". If Crapita accepted a contract full of holes, and then allowed the council to fill them in later, the faults are on both sides. The problem is that neither side cares about the consequences, unlike a bridge or building falling down, so there's no incentive to ensure the contract is properly written and managed. If people ended up in court over this, as they would if a plane crashed or a building collapsed, then they might pay more attention up front. But since nothing gets hurt except taxpayer wallets, no worries.
"Have Crapita ever successfully completed a project on time and to budget?"
As a sub-contractor to a sub-contractor to Crapita I was on two projects that completed on time. I couldn't comment on budget - outside my scope. I've retired since then so things might have gone downhill a bit.
Much local coverage, e.g.
http://www.birminghampost.co.uk/business/business-news/anger-capita-makes-millions-birmingham-9979387 (3 Sep 2015)
Anger as Capita makes millions in Birmingham City Council deal
The city's outsourcing contract with Capita has come under fire again after Service Birmingham accounts unveiled dividends of more than £1 million a month.
City business expert Professor David Bailey dubbed the IT outsourcing contract "gross by name, and gross in nature" after new accounts showed the venture paid out £12.5 million in dividends across the year to private firm Capita.
However, the dividend fell from £23 million the year before and Service Birmingham's chairman said the operation provided an efficient and valuable service to Birmingham City Council.
Service Birmingham – which is actually a partnership between Birmingham City Council and Capita – saw its turnover fall from £107.4 million to £98.5 million in 2014, while pre-tax profit fell from £19.7 million to £15.8 million.
[continues]
both of which it is acknowledged had performance issues going back a number of years prior to contract commencement
If your management is not sufficiently competent to deliver a good service using staff whose interests (financial and career) are at least somewhat aligned with those of the organisation - what makes you think you will do any better using outsourced staff? Outsourcing is not a magic bullet that can instantly fix a crap IT operation.
The issues include "management instability" which is probably PHB-speak for "people getting hacked off and quitting" or "people leaving before the job kills them"
With outsourcing, at least the day-to-day management is done by people with a small clue. The problem now is rapacious account-managers, whose job is to maximize on-going revenue.
Crap management... the workers might have been half decent (although if the recruitment was bad the team might also be crap).
But one thing is for sure, the workers will have had their jobs taken abroad and the crap management would have got a bigger than ever bonus for being so clever. Now THAT does remind me of BL and similar institutions...
Thatcher blamed the unions, but they were only half the story.
By definition, what the customer wants is what it states in the contract. However, that may not be what the customer needs. This is why sometimes it's well worth paying for a study contract to properly define the requirements so that what's in the contract is closer to the actual needs.
There's still plenty of scope for an awesome fuck-up though.
By definition, what the customer wants is what it states in the contract. However, that may not be what the customer needs.
True, although I did write it as "actually wants" meaning this but "needs" would be more brief and probably more accurate... Although often an end user "needs" a slap but is unlikely to want one... :)
Why does every single council need to buy and develop its' own payroll, HR, council tax payment, etc systems?
Surrely they could all use the same one?
Might this not save a lot of money, reduce Council Tax and stop these ridiculous contracts?
Maybe nobody's though that it might be a good isea yet.
But then you would disempower the "executives" paid bundles for providing services that they barely understand (and indeed don't feel the inclination to understand). These are middle-managers! The life blood of the civil service. Without them we would be shorn of bureaucracy and left with streamlined, efficient services - and what would middle-aged, middle-class, middle-ability men do then?
Think about what you're saying! Next you'll be suggesting that hospitals are run by doctors. And that MPs have "real-life" experience!
Exactly. Why does each council replicate IT systems to deliver exactly the same services? As tax payers do we really need them to replicated IT, HR, Payroll, fleet management, procurement, training, recruitment, Legal, etc.? The same for the 42 Police Forces.
There is potential for massive savings due to economies of scale, adopting common standards, etc., as long as they do not get someone like Crapita in to deliver it as they are not interested in delivering a service, only on making profit for their shareholders.
"We saved 31 million pounds!"
"How?"
"Well...You see we couldn't get the IT system working at all, so people turned off their computers. The electricity saving was enormous! Plus since we couldn't get IT working, well we got rid of the IT workers. HUGE Savings!"
As far as I am concerned a GOOD thing.
What we should have is the situation we had when I lived in Melbourn (south of Cambridge not Derbyshire or Australia). In Melbourn they had a single library, served the college (where it was located) and was open in the evening for the locals. One set of books, one set of shelves, one set of rent, one set of heating, one set of staff.... for both school and public. Other councils could do a hell of a lot worse than copy that. My current local council has 4 libraries in one town, one for the locals, one for the college and 2 for the two middle schools. All with computers, all with shelves, all with books, all with staff and all heated. The one for the public is actually rented off the private sector for a HUGE rental, is right in the centre of the shopping centre and therefore practically unused because you either have to add the books to your shopping bags or pay a ludicrous parking fee (and tbh the parking fee means less and less people are in the shopping centre anyway.... especially as it is now a combination of estate agents, fast food, charity, mobile phone shops with nothing of interest left at all).
Here in nottinghamshire they instigated a new 'savings' scheme by preventing out-of-area people using their recycling scheme (local tip to you and me). All 'customers' wanting to use their 'facilities' had to register and they were going to check to see if you were registered using a hand held device scanning your numberplate.
The claimed 'savings' were based on figures from a limited survey performed 10 (yes ten) years ago. Anyone like to guess the additional costs of the handheld devices, the registration process, the server to run it all and the communications needed to join it all together? From an FOA request there were no actual figures of how they turned those numbers of people being turned away into actual costs that were going to be saved.
Now it has been running a few months, no-one I know has had their numberplate scanned. Best of all if you live out of the area, all you have to do is choose a random address and name and register your vehicle to that address. No checks are made that your car is registered to that address. I know 'cos I did it!
So 'savings'. Yeh right.
"Here in nottinghamshire they instigated a new 'savings' scheme by preventing out-of-area people using their recycling scheme (local tip to you and me). All 'customers' wanting to use their 'facilities' had to register and they were going to check to see if you were registered using a hand held device scanning your numberplate."
Have they combined it with tweaking specs for trailers, vehicles etc? Restricted what you're allowed to take (e.g. no rubble)? And have they then found the 'savings' impact of the fly-tipping everyone outside the council predicted?
"Other issues ranged from the IT service needing to improve its "advisory function"."
Stop disagreeing and implement that cool cloud thingy we saw on the TV last night.
"slow responsiveness of IT strategic advice being a barrier to service delivery, inflexibility and lack of an agile approach around security and hardware."
Why can't you connect the Apple Air I asked (forced) you to buy me (out of your budget) to the office remotely without me having to log in all the time?
"Further, the report highlighted a lack of accurate performance data for IT;"
Techies love spending two minutes opening a case to log their time for something that took twenty seconds to fix.
"a lack of out of hours IT support;"
A) We told you how much it would cost and you said no.
B) No, you cannot only pay them for the time they are on a call rather than the time they are waiting for one and unable to do anything else.
"insufficient notice given for system upgrades and down times;"
You will not let us do this stuff at night or the weekends because that costs too much in facilities overtime and it is going to break if we don't sort it now.
"and poor coverage for WiFi in some of the buildings."
We told you it would not work in the basement without adding more APs and you said nobody used it so don't bother. Then you put some offices down there.
Seriously, the reason that restructuring these things into 'managed services' is doomed to fail is that there is no way to get rid of the people that need to be changed - they just migrate onto the new carousel, whether its Strategic Health Authorities changing to CCGs / CSU / Shared services / partnerships.
The ever present belief that the public sector can save money by out sourcing stumbles on two fundamental blocks.
1. Capital investment is mandated, but supported by capital charges. So any service being invested in needs to find revenue money to offset the capital charges. Capital grants also incur capital charges so getting the money for any significant investment is a non starter if there's no revenue coming with it. In fact, there are buckets of capital money knocking around, but you can only spend it if you can provide a revenue cost saving so capital investments wind up being made off other cost centres revenue budgets. I've seen VoIP implementations with hundreds of handsets that have been snuck in without any design or even an outline strategy because the funding was available to be manipulated.
2. The premise of successful outsourcing is that you can define what you want, specifically enough to be able to get it. When these specifications land on [Crapita or whoever], they respond with a proposal that is commercially viable for them. If the specification has been written by a talentless fool it can include nonsense metrics that fuck up the opportunities to salvage anything worthwhile.
If the basic funding model is crippled and the senior staff are 'lifers' that have floated to the top of every attempt to mix it up then you either get [whoever or Crapita] being engaged to draft the spec/strategy or the buzzword bingo metrics of 'lifers' who have bluffed for years and are cueing up a nightmare for their successors.
There is no carrot for the capable staff, so all that's left is stick .... and when its outsourced, the staff get TUPE'd across and then fucked over to provide the 'measured' but lesser service [at a profit].
If the current budget is much less than £1500 per PC or the staffing ratio is less than 22 IT per 1000 end users (for organisations of more than 750 staff) and you have an information centric business then you cannot make radical savings by outsourcing. Of course, if your staff are hand weaving carpets or tanning leather in a bucket then your inputs and thresholds and therefore mileage will be different.
AC, well its because it became a rant!
/rant
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