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By | Guardian Government Computing 17th February 2012 08:02

Southwest One gets £10m IBM loan amid 'staggering' losses

Joint venture is failing on several fronts, Somerset council leader says

The leader of Somerset county council, Ken Maddock, has said that Southwest One is failing to deliver, that its accounts show "staggering losses" of £31.5m and "failures to hit modest savings targets".

Southwest One was set up in 2007 as a joint venture between IBM, Somerset county council, Taunton Deane borough council and Avon and Somerset police to modernise the public sector bodies' business processes.

Maddock told a council meeting: "It is failing to deliver promised savings; failing to cope with a changing financial landscape; failing to be flexible enough to adapt in challenging times and provide the best possible value for money."

The Southwest One "continuing failure" was not about staff, Maddock said, but "about the contract, the complications, the failed technology, the missed opportunities, the lack of promised savings".

The joint venture received a £10m loan from IBM, its most recent accounts show.

A Southwest One spokeswoman said in a statement: "Southwest One has implemented a new model designed to improve its financial footing from 2012 onwards. As part of the new model, IBM has taken security over future funding.

"This is common in a business relationship. Detailed financial information is contained in the 2010 accounts."

The accounts show the joint venture had pre-tax losses of £31.5m for the year ended 31 December 2010. The loss "reflects the extended transformation timeline, the impact of market conditions and the impairment of the deferred transition costs asset", a directors' report, contained in the accounts, adds.

The financial situation also reflects the joint venture's difficulties in reaching the efficiency levels needed to produce savings, according to the report.

In June last year Somerset county publicly criticised Southwest One in a report which found the joint venture "could do better", highlighting that some savings targets had not been met as well as problems with the introduction of a new SAP system.

Last September Colin Port, Avon and Somerset's chief constable left the board of the joint venture because of the potential for conflict of interest.

This article was originally published at Guardian Government Computing.

Guardian Government Computing is a business division of Guardian Professional, and covers the latest news and analysis of public sector technology. For updates on public sector IT, join the Government Computing Network here.

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