The latest Delegated Powers Report is one which seeks authorisation to purchase new servers for the regulatory services department (planning, development, environmental health). Now we aren’t talking about that much money - £27,500 certainly when compared to the dreaded SAP system which has cost millions. However what is interesting is that they have chosen the cheaper option to get them through the next 18 months. There is an option which will deliver a complete solution but the report notes that this option would only be chosen if the systems is to “remain council responsibility in to the foreseeable future” and that “bearing in mind the One Barnet programme due for Regulatory Services in 2012” they have gone for the cheaper option. Now I have dealt with outsourcing companies for many years and they are prepared to invest - often that is the key driver for outsourcing. However their own Internal Rate of Return (IRR) required to justify investment is often high - some companies I have dealt with look for an IRR of 20%+. They have to recover that investment somehow and it ends up in the charges. Basically you end up using them as an expensive bank and in most cases that just doesn't make sense. I know money is tight now but like a lot of those PFI schemes, trading investment today for much higher future payments just doesn't make economic sense.
What really worries me is that the council are forcing through this outsourcing agenda even though I am not sure they have fully thought it through. The evidence is at best flimsy and it could end up costing us millions to sort out in the future.
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