To note the findings of a recent Public Interest Disclosure Act (PIDA) investigation completed by external audit and to note the management actions arising.

External Auditors, Grant Thornton UK LLP, presented the findings of a recent Public Interest Disclosure Act (PIDA) investigation concerning the implementation of the council’s IT based customer relationship management (CRM) system and an agreed management action plan as a result of its findings.

Grant Thornton looked at two broad areas in its investigation, procurement and implementation of the CRM system, and made the following key points from the report:

·         The business case for the project was very ambitious and not fully owned by parts of the council.

·         The estimated savings in the business case of £1.6million were not supported by robust analysis. However it is difficult for the exact savings to be calculated.

·         There is no evidence to suggest the procurement was not carried out properly.

·         The senior officers involved in the project are no longer employed by Herefordshire Council. Every co-operation has been given to the investigation by the current senior officers.

·         The CRM system in place is reasonably effective. However, it does not deliver all that was envisaged. It does not extend to all areas of the council and its partners, and it does not join up customer data to give a proactive response system.

·         The cost of the implementation was £1million, an underspend of £0.5million. It is difficult to gauge if this was value for money as, although the system is over engineered for its current use, the spend is not incommensurate with an IT system of this kind.

·         When looking at why the system has not delivered, the following conclusions were made –

o   The world changed, for example the Primary Care Trust was abolished.

o   The impact of austerity on the authority.

o   Changes in senior management.

o   The model of required customer service changed.

o   Corporate changes were not recognised.

·         An action plan has been written with 5 key points, all of which have been agreed by the management board.

Grant Thornton UK LLP pointed out an error in their report. On page 9 the Annual Costs total figure should read £671,540 rather than £1,820,383. Grant Thornton confirmed that an amended version of the report would be sent to committee members as soon as possible.

Grant Thornton UK LLP confirmed the report and action plan has been shared with the complainant and that they are broadly satisfied with its content.

The following points were raised by members during the resulting discussion:

·         Staff turnover has meant projects fail to continue or be driven through when staff leave. The driving factor needs to be projects rather than people.

·         Contracts should have flexibility within them to enable the authority to cope when changes happen.

·         With major projects the whole council needs to own the business case.

·         What is being done to improve what is currently in place for CRM?

·         Concerns were raised with the action plan. Members felt more details are needed to give assurance that the same mistakes will not happen again and that lessons have been learnt.

Following discussion from members, it was decided a Task and Finish Group should be created to scope and research work on governance structures, systems and procedures relating to procurement and projects. The membership of this group is to be confirmed at the briefing meeting on 23 September 2014 and circulated to all members prior to the next meeting on 29 September 2014.

The Assistant Director Governance pointed out that since the CRM implementation took place new senior officers are in post and now follow updated procedures. Members requested a report to the committee meeting on 26 November 2014 to give a perspective on what is done differently now and the current processes and procedures.

The Committee wished to commend the whistle blower for bringing the issue to the council’s attention.

Resolved: That

(a)       The external audit report, including agreed management action plan, at Appendix 1 be noted.

(b)       The Audit and Governance Committee form a Task and Finish Group to scope and research work on governance structures, systems and procedures relating to procurement and projects, to include matters such as avoiding over reliance on any individual and incorporating ‘what if’ challenges.

(c)       The Assistant Director, Governance brings a report to the committee on 26 November 2014 explaining what is now done differently with major projects within the organisation since the CRM implementation.