Herefordshire Council stands by present major project processes after "flawed and aggressive" implementation of key IT system

But the council’s response to its own audit and governance committee tacitly accepts project management failings  failures inherent in the implementation of the system known as CRM came down to project management.

The committee is due to formally hear the council’s response on November 26.

An investigation into CRM, instigated by a whistleblower under the Public Interest Disclosure Act, was undertaken by the council’s external auditors Grant Thornton earlier this year.

The concerned the procurement and implementation of CRM between 2009-2011.

As reported by the Hereford Times, Grant Thornton produced a report – presented to audit and corporate governance in   September – that found no evidence of impropriety in the procurement  process, but did find some areas where lessons could be learned for future major  project implementation.

The committee set up task group to research governance structures, systems and procedures relating to procurement and projects, including the avoidance of over reliance on any individual.

A new report now outlines what the council is doing differently with major projects since CRM.

That report says there is “good reason” to believe that the failures identified by Grant  Thornton are “unlikely to be repeated”.

The report says the present senior management team - Chief Executive, Directors and Assistant Directors - is

fewer in number and  different in make-up compared to 2010, with changes at all levels.

Though no comment is made on the 2010 team, the current team is said to have a “very clear sense” of the authority’s priorities and its future direction.

Today, as in the case of the 2010, significant service changes are discussed at management board level before being the subject of reports for  member decision.

Again, no comment is made on how matters were in 2010, but, today, such discussions are said to be inclusive and open, with officers attending encouraged to discuss issues and concerns.

As a result, the report says, decisions tend to be “implemented consistently” across directorates.

Grant Thornton noted an apparent absence of any independent report or cost benefit evaluation for CRM saying financial

analysis was “neither transparent, owned by all parts of the Council, nor fully realistic”.

The committee will hear that in the four years since 2010, the council has “generally” become more experienced in procuring goods and services and “better able” to projecting the likely savings.

Sustained year on year budget reductions since 2010 have resulted in a “more realistic and robust” approach to budgeting and the projection of savings.

Grant Thornton found a “lack of corporate consultation” over the preparation of the business case for CRM, overseen by the former assistant director for customer services and communications who acted as  project executive with support from colleagues.

Projected savings were based on a roll out across all the council’s departments and services which did not happen.

According to Grant Thornton, the reason why is straightforward and able to be avoided in future.

 The report says there was a lack of corporate consultation with the appearance of the relevant service departments - where the reductions in staff costs would arise - were properly consulted on the efficacy of the proposals or the robustness of the calculated savings.

BACKGROUND - CRM

In September, Grant Thornton called  the implementation of CRM “aggressive and flawed” to the extent that tensions rose between between management and staff.

This tension was especially evident in the council’s contact centre – the frontline for customer service.

A whistleblower who raised concerns related to the system claimed that these concerns were not fully followed up by senior councillors and officers.

These findings put to the council’s audit and governance committee.

The report to the committee said the business case for CRM  was not backed by "robust analysis" and is unlikely to have met its intended £1.6 million savings target.

Financial analysis for the project was  neither transparent nor "fully realistic" the report said.

The committee called for formal updates - within the next six months - on progress addressing issues identified in the report and set up a task group to  further examine the report’s findings.

 Members accepted that more needed to be done with the council’s current whistleblowing policy to make council staff confident of coming forward.

The CRM complainant – who remains anonymous - raised a number of concerns informally about the procurement and implementation of the project with senior officers and members of the Council over a period of time.

It is alleged that these concerns were not followed up in all instances by senior  members and officers.

Those officers who lead the CRM project are no longer with the council.

The complainant was reluctant to share relevant evidence with an investigation by the council’s external auditor Grant Thornton for fear of compromising their anonymity, making it difficult to verify the validity of the concerns expressed.

As a result, Grant Thornton advised the council – through the report – that it “may wish” to ensure its internal complaints procedures are “well understood and robust.”

The CRM whistleblower went to Grant Thornton in January this year.

A subsequent investigation  under the Public Disclosure Act found that the business case for 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, while 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.

Evidence also suggested that the “aggressive” implementation of CRM may have  impacted on staff working particularly in the Contact Centre and that this resulted in tension between management and staff.  

However, the procurement processes around CRM were 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.

CRM was the subject of an options paper put to the council in November 2009, with an outline business case presented for acceptance the following February.

The relevant customer strategy was approved in May 2010 and the business case backed - with a benefits model - in October 2010.

But the report reveals that CRM subsequently 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 money.

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.

The report does not address allegations of bullying believed to stem from the implementation of CRM, allegations that the council has said political leaders were “not required”  to know about – in line with bullying cases within the authority.

This stance was confirmed in a statement issued to the Hereford Times as a formal response from former council leader Cllr John Jarvis and current leader Cllr Tony Johnson  as to how much they knew of bullying allegations “hushed up” by secret settlement and severance payments.

The payments were bound by confidentiality clauses meaning little detail can currently be made public.

Senior councillors - including political group leaders - have told the Hereford Times that they either had no formal - or informal briefings - on the bullying allegations or related payments made to resolve them in 2012 and 2013 or did not recall being given any indication of circumstances.

The overview and scrutiny committee was not given the opportunity to analyse the way in which the allegations were handled or resolved.

A combined total for the related pay outs is thought to run into six figures.

As reported by the Hereford Times, the council refuses to release even a ballpark figure for the payments and is backed by the Information Commissioner’s Office (ICO) in refusing to release all but the most basic details of the allegations and resolutions. 

This ruling means  sum spent on settlement and severance payments to resolve allegations said to involve between 10 and 20 staff cannot be confirmed.