Local government authorities should outsource commoditised IT functions such as desktops, networks and datacentres while retaining control of technology strategy in-house, according to a new report from consultant Deloitte.

This will allow it to ensure that IT is being used in the most innovative way while keeping down costs – something that is difficult to do with a bulk outsourcing deal, the report says.

"For far too long, local government has tended to view IT as a black art that is better performed by external contractors," said Costi Perricos, author of the report.

"The result has been failed outsourcing contracts and the growth of disparate IT domains that lack centralised control and adequate governance."

Many bad IT projects are the result of poor communication and a lack of central strategy according to Deloitte, which has worked with a number of authorities on their IT strategies.

Maintaining in-house control of strategy will allow authorities to ensure the value of IT is being harnessed.

Authorities should establish a board that includes directors and suppliers to make IT-related decisions, according to the report.

This will allow IT staff to communicate costs in lay terms and make clear that transformational projects, though costly in the short term, may lead to huge savings in the longer term.

It will also allow authorities to focus on the business strategy that IT will support, rather than investing in technology for its own sake.

In addition, requirements from central government for all authorities to cut costs means that they must look carefully at reusing their existing IT systems for more functions, as well as being prepared to share systems with neighbouring authorities.

"Authorities are being asked to share resources and the good news for authorities embarking on such journeys is that the potential for savings is real," says the report.

It estimates that sharing resources in a co-ordinated fashion could shave as much as 15 per cent off costs in the long term.