Sunday, 13 February 2011

The next big scandal to hit Barnet Council?

The story starts here -,3800003425,39128143,00.htm - with the award of an £8 million pound contract to LogicaCMG to update the Councils computer system in 2005.  Alarm bells should have rung when the then Council Leader, Mike Freer announced 
The deal is one of the biggest projects the council has ever undertaken. It is a further step towards modernising Barnet council and making it a business-like borough that manages its resources efficiently and effectively, enabling it to provide excellent services to local people
Basically the deal was to replace a number of the council's ageing legacy systems with a SAP-based platform. So did Mike Freer do his homework about what happens if SAP based computer systems don't work properly? If he had, maybe he'd have read this article - - This tells the story of how a SAP based system cost MFI £46 million in losses. The story  broke in 2004, the year before Freer signed the deal for Barnet to use SAP. In  the article there is a rather interesting quote from the suppliers of SAP (for avid followers of Mike Freer does this have a familiar ring?).
SAP has not commented on the exact cause of the problems except to say that it is not the actual SAP software that is at fault.
So the Barnet system which was introduced in 2005 at a cost of £8 million, and has been knocking around for 6 years. How much are Barnet Council still paying? Well Mr Reasonable has added up the latest set of invoices and for the first nine months of the year, it's approx £2 million. By my estimate, assuming that this ongoing maintenenace has remained the same since the system was introduced (it is more likely that it would diminsh, but who knows), that is £16 million extra.  Given that the original project was only meant to be for £8 million, in effect the system has cost three times what Freer announced in 2005 (again no surprise).

But that is only the half of it. As the MFI report makes clear, the real costs weren't in the software and support, but in the fact it didn't work. Expensive manual workarounds would have to be put into place to ensure that the problems caused by system glitches do not impact the running of the council. How much will this have cost the taxpayer of Barnet? How has this been dealt with in the accounts?

My assumption is that Barnet Council are paying LogicalCMG for expert IT consultants to maintain the system. If the figure is £2.5 Million - what do you get for that. Former Councillor Richard Weider suggested to me that a figure of £1,500 a day was low for such consultants. Assuming we use this, Logica is getting paid £2.5 million a year for six and a half people (each one cost £375,000 per annum). Now given that they've been hanging around for six years, how ow much would Barnet have to have paid, if they'd employed the staff directly. I went to Jopserve and did a quick search on jobs for SAP specialists - - The salary range was £40-80 K per annum, depending on grade & level. Lets assume we go for the very best on £85 K per annum. You'd get six and a half people for under £600,000 (say £750K with benefits). Look at it another way, for the £2.5 million they are spending on LogicaCMG they could get 29 members of staff on top dollar. Now of course, I'm guessing as to how much Barnet are paying these consultants. For all I know, the work is outsourced to a Bangalore IT centre and they've got hundreds of people on £10 a day. The bottom line is that it isn't working properly and it from the scant information in the public domain, it has cost us, the taxpayer a fortune. Given that it is a good example of what Council Leader Lynne Hillan hopes to bring to Barnet with the Future Shape program, I call on her to publish the original business case, the original projected savings and the real costs. If I'm completely wrong and Mike Freer's brainchild has saved the people of Barnet a fortune, then they can demonstrate it easily (it would be odd though that they need such an expensive team to maintain it, if it does work). If it has been a financial disaster, then they should admit that they lack the project management skills to properly implement such large scale outsourcing projects and concentrate on delivering real savings within the existing setup.

One interesting item from the article about MFI - it said that COO Gordon MacDonald and finance director Martin Clifford-King were sacked as a result. Apparently the man who lead the Barnet SAP project was Nick Walkley, he too has a different job now. He's CEO of the whole Council and the man driving Future Shape.


baarnett said...

That's an excellent piece of writing, worthy of the best of Private Eye.

If you have got anything wrong, let them come back at you.

I suspect there would be just an embarrassed silence instead.

baarnett said...

A leaflet being distributed in Cairo just now says:

"Don't forge paperwork.
Don't drive the wrong way.
Don't drive quickly to be cool, while putting lives at risk.
Don't enter through the exit door at the metro.
Don't harass women.
Don't say, 'It's not my problem.'
Consider God in your work.

We have no excuse anymore."

Some lessons for the current Barnet regime amonst that.