Richmond and Wandsworth councils have confirmed the appointment of Capita Local Government to provide a new joint finance system which it is hoped will save local taxpayers around £6.8m.
Capita was named as the preferred bidder in February, but it has taken several months to finalise the agreement.
The services company will migrate Richmond and Wandsworth to its Integra finance system to support accounts payable and accounts receivable functions.
The system aims to deliver time savings by speeding up invoice processing and other tasks, while also offering a range of business intelligence tools to better manage suppliers.
The contract is for an initial six years, with the option of another four. It is one of the first jointly procured contracts, and the councils claimed that they combined buying power to secure a better deal.
The councils will also work together on a new framework to promote and sell the managed service to other local authorities.
This forms part of a wider strategy at the two London authorities in forming a shared workforce to serve both boroughs.
Council officers will be jointly employed by both authorities, reporting to a single chief executive. The councils claim that this will deliver savings of around £10m a year for each council.
The councils emphasised that they will continue to be separate bodies with their own elected councillors, cabinets and leaders.
Jointly procured shared services ventures by different local authorities are few and far between because of their complexity, according to John O'Brien, a research director at TechMarketView.
"The Tri-borough managed service programme between the local boroughs of Westminster, Kensington & Chelsea and Hammersmith & Fulham, which uses Unit 4's Agresso platform, is arguably the only other one today. But it has proved a complex programme with significant implementation challenges," he said.
"Capita has the potential to turn this to its advantage, so long as it delivers on the execution."
Islington and Camden councils may disagree with O'Brien, as they have a successful shared services ICT deal, but similar arrangements, such as between Huntingdonshire and Cambridgeshire, haven't worked out.
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