THE business case for Herefordshire Council’s customer service IT system was not backed by "robust analysis" and is unlikely to have met its £1.6 million savings target.
A report out today (Monday) says the project’s financial analysis alone was neither transparent nor "fully realistic".
Findings from the report are due to be debated by the council’s audit and corporate governance committee next week.
In January this year, a whistleblower raised concerns about the system and its implementation with the council’s external auditor Grant Thornton.
The subsequent investigation under the Public Disclosure Act found that the business case for the IT-based Customer Relationship Management (CRM) system was not "fully owned" by all parts of the council.
Nor were the estimated cashable savings of £1.6 million identified in the business case backed by "robust analysis".
The report finds that those savings were, in fact, were premised on centralising services and cutting back office staff in individual departments.
CRM as a project did not subsequently extend to all of the services envisaged within the business case, making it "unlikely" that key elements of its cashable savings have been realised, the report says.
However, the procurement processes around are found to have been "appropriate".
Crucial to the council’s concept of a shared front office function, CRM went live in 2011 through a contract the council awarded to Ciber (UK) Ltd.
But the report reveals that CRM did not offer complete visibility of all customer information or allow proactive responses to customer data - which were key elements of the original plan.
The council concedes that CRM has only been partially successful and that its momentum has stalled.
Cuts are one reason cited for that stalling, with the council no longer able to fund the full implementation of the project.
Back office savings which were supposed to be delivered by CRM were "probably" delivered by other means the council says.
The Council's model - on which CRM was based – of providing services to meet all customer demand has changed to constraining demand and promoting self-service where practicable.
With insufficient corporate and departmental support to extending CRM further its was, the report says, difficult to gauge whether the £1m spent on the project so far provided value for.
The original £1.5 million budget for CRM was subsequently under spent by £500,000 because the original business case was not fully implemented, with the system now possibly over engineered for its current use.
Preparation of the business case for CRM was overseen by the council’s then assistant director for customer services and communications - who acted as project executive - supported by a senior supplier and a day-to-day project manager who prepared the project initiation document which set out estimated net cost savings.
The report finds that it was "unclear" as to where the overall benefits of CRM were derived beyond actual baseline revenue reductions in the cost of service or in the cost of project work already planned, savings that could be made through avoidance of future costs, or quality or productivity gains that cannot be equated to a direct revenue reduction.
As such, the report says, the bulk of the cashable benefits arose in savings on back office costs through cutting staff as services were centralised.
The investigation found no evidence of any independent report or cost benefit evaluation of the project carried out by the council’s finance department - although there was finance input into preparation of the relevant financial information.
Instead, the project was IT led with the "robustness" of the business case weakened.
The report found that despite the promised of non-cashable benefits from the project, those benefits needed to be weighed against the costs and savings arising from the project.
This, the report said, was not possible as the financial analysis was neither transparent, owned by all parts of the Council, nor fully realistic.