Category Archives: IT projects

How to cost-justify the NPfIT disaster – forecast benefits a decade away

Posted on June 7, 2013 | 2 Comments

By Tony Collins

To Jeremy Hunt, the Health Secretary, the NPfIT was a failure. In an interview with the FT, reported on 2 June 2013, Hunt said of the NPfIT

“It was a huge disaster . . . It was a project that was so huge in its conception but it got more and more specified and over-specified and in the end became impossible to deliver … But we musn’t let that blind us to the opportunities of technology and I think one of my jobs as health secretary is to say, look, we must learn from that and move on but we must not be scared of technology as a result.”

Now Hunt has a different approach.  “I’m not signing any big contracts from behind [my] desk; I am encouraging hospitals and clinical commissioning groups and GP practices to make their own investments in technology at the grassroots level.”

Hunt’s indictment of the NPfIT has never been accepted by some senior officials at the DH, particularly the outgoing chief executive of the NHS Sir David Nicholson. Indeed the DH is now making strenuous attempts to cost justify the NPfIT, in part by forecasting benefits for aspects of the programme to 2024.

The DH has not published its statement which attempts to cost justify the NPfIT. But the National Audit Office yesterday published its analysis of the unpublished DH statement. The NAO’s analysis “Review of the final benefits statement for programmes previously managed under the National Programme for IT in the NHS” is written for the Public Accounts Committee which meets next week to question officials on the NPfIT. 

A 22 year programme?

When Tony Blair gave the NPfIT a provisional go-ahead at a meeting in Downing Street in 2002, the programme was due to last less than three years. It was due to finish by the time of the general election of 2005. Now the NPfIT  turns out to be a programme lasting up to 22 years.

Yesterday’s NAO report says the end-of-life of the North, Midlands and East of England part of the NPfIT is 2024. Says the NAO

“There is, however, very considerable uncertainty around whether the forecast benefits will be realised, not least because the end-of-life dates for the various systems extend many years into the future, to 2024 in the case of the North, Midlands and East Programme for IT.”

The DH puts the benefits of the NPfIT at £3.7bn to March 2012 – against costs of £7.3bn to March 2012.

Never mind: the DH has estimated the forecast benefits to the end-of-life of the systems at £10.7bn. This is against forecast costs of £9.8bn to the end-of-life of the systems.

The forecast end-of-life dates are between 2016 and 2024. The estimated costs of the NPfIT do not include any settlement with Fujitsu over its £700m claim against NHS Connecting for Health. The forecast costs (and potential benefits) also exclude the patient administration system Lorenzo because of uncertainties over the CSC contract.

The NAO’s auditors raise their eyebrows at forecasting of benefits so far into the future. Says the NAO report

“It is clear there is very considerable uncertainty around the benefits figures reported in the benefits statement. This arises largely because most of the benefits relate to future periods and have not yet been realised. Overall £7bn (65 per cent) of the total estimated benefits are forecast to arise after March 2012, and the proportion varies considerably across the individual programmes depending on their maturity.

“For three programmes, nearly all (98 per cent) of the total estimated benefits were still to be realised at March 2012, and for a fourth programme 86 per cent of benefits remained to be realised.

There are considerable potential risks to the realisation of future benefits, for example systems may not be deployed as planned, meaning that benefits may be realised later than expected or may not be realised at all…”

NPfIT is not dead

The report also reveals that the DH considers the NPfIT to be far from dead. Says the NAO

“From April 2013, the Department [of Health] appointed a full-time senior responsible owner accountable for the delivery of the [the NPfIT] local service provider contracts for care records systems in London, the South and the North, Midlands and East, and for planning and managing the major change programme that will result from these contracts ending.

“The senior responsible owner is supported by a local service provider programme director in the Health and Social Care Information Centre.

“In addition, from April 2013, chief executives of NHS trusts and NHS foundation trusts became responsible for the realisation and reporting of benefits on the ground. They will also be responsible for developing local business cases for the procurement of replacement systems ready for when the local service provider contracts end.”

The NAO has allowed the DH to include as a benefit of the NPfIT parts of the programme that were not included in the original programme such as PACS x-ray systems.

Officials have also assumed as a benefit quicker diagnosis from the Summary Care Record and text reminders using NHSmail which the DH says reduces the number of people who did not attend their appointment by between 30 and 50 per cent.

Comment

One of the most remarkable things about the NPfIT is the way benefits have always been – and still are – referred to in the future tense. Since the NPfIT was announced in 2002, numerous ministerial statements, DH press releases and conference announcements have all referred to what will happen with the NPfIT.

Back in June 2002, the document that launched the NPfIT, Delivering 21st Century IT for the NHS, said:

“We will quickly develop the infrastructure …”

“In 2002/03 we will seek to accelerate the pace of development …

“Phase 1 – April 2003 to December 2005 …Full National Health Record Service implemented, and accessible nationally for out of hours reference.”

In terms of the language used little has changed. Yesterday’s NAO report is evidence that the DH is still saying that the bulk of the benefits will come in future.

Next week (12 June) NHS chief Sir David Nicholson is due to appear before the Public Accounts Committee to answer questions on the NPfIT. One thing is not in doubt: he will not concede that the programme has been a failure.

Neither will he concede that a fraction of the £7.3bn spent on the programme up to March 2012 would have been needed to join up existing health records for the untold benefit of patients, especially those with complex and long-term conditions.

Isn’t it time MPs called the DH to account for living in cloud cuckoo land? Perhaps those at the DH who are still predicting the benefits of the NPfIT into the distant future should be named.

They might just as well have predicted, with no less credibility, that in 2022 the bulk of the NPfIT’s benefits would be delivered by the Flower Fairies.

It is a nonsense that the DH is permitted to waste time on this latest cost justification of the NPfIT. Indeed it is a continued waste of money for chief executives of NHS trusts and NHS foundation trusts to have been made responsible, as of April 2013, for reporting the benefits of the NPfIT.

Jeremy Hunt sums up the NPfIT when he says it has been a huge disaster. It is the UK’s biggest-ever IT disaster. Why does officialdom not accept this?

Instead of wasting more money on delving into the haystack for benefits of the NPfIT, it would be more sensible to allocate money and people to spreading the word within Whitehall and to the wider public sector on the losses of the NPfIT and the lessons that must be learnt to discourage any future administrations from embarking on a multi-billion pound folly.

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Posted in Atos, BT, BT Health, Campaign4Change, change, change management, CSC, e-health, excessive secrecy, Fujitsu, health records, IT projects, IT-related failures, legal disputes, Major Projects Authority, managing change, managing outsourced services, NHS, npfit, public sector, public services, Summary Care Record

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Francis Maude boasts of £10bn savings but …

Posted on June 3, 2013 | Leave a comment

By Tony Collins 

This morning Cabinet Office minister Francis Maude held a press conference with his senior officials to announce that civil servants have radically changed the way they work to save £10bn in 2012/13.

The savings are nearly £2bn higher than originally planned and, according to the Cabinet Office, have been “reviewed and verified” by independent auditors.

With a little journalistic licence Maude says: “…we are on the way to managing our finances like the best-run FTSE100 businesses.”

The breakdown of the £10bn savings:

Procurement   £3.8bn
Centralisation of procurement for common goods and services  £1.0bn
Centrally renegotiating large government contracts  £0.8bn
Limiting expenditure on marketing and advertising, consultants and temporary agency staff   £1.9bn
Transformation savings   £1.1bn
IT spend controls and moving government services and transactions onto digital platforms  £0.5bn
Optimising the government’s property portfolio  £0.6bn
Project savings   £1.7bn
Reviewing performance of major government projects  £1.2bn
Taking waste out of the construction process  £0.4bn
Workforce savings   £3.4bn
Reducing the size of the Civil Service   £2.2bn
Increasing contributions to public sector pensions   £1.1bn

Comment

It’s good news and the figures don’t seem plucked out of thin air which sometimes happens when central government announces savings.

The big question is whether the savings are sustainable. Maude has inspired the Cabinet Office’s Efficiency and Reform Group to be motivated and hard-working. But bringing about long-term change in Whitehall – as opposed to restricting consultancy contracts and cutting annual costs of supplier contracts by reducing what’s delivered – is like peddling uphill. How long can you do it without losing motivation and energy? It’s not just parts of the civil service that are resistant to the savings agenda – it is also some IT suppliers, according to Government Computing.

It’s likely that only profound changes in central government operations and working practices will outlast the next general election. At the moment the civil service is like a rubber band that has been stretched a little. It wants to return to its standard shape, which the next government may allow it to do.

The National Audit Office said in its report in April 2012 on the Efficiency and Reform Group in 2011/12:

“Savings to date have differing degrees of sustainability.”

The NAO also said this:

“It is not fully clear how ERG intends to make the reforms necessary to secure enough savings over the rest of the spending review. ERG has yet to translate its ambition for saving £20 billion by 2014-15 into more detailed plans.

“ERG has made progress in developing strategies across its wide range of responsibilities, and is focusing on core activities likely to produce savings. However, until recently ERG’s focus has mainly been on the savings themselves, with less emphasis on delivery of the longer-term changes and improvement in efficiency necessary to make them sustainable.”

And this:

“Departments have still tended to lack a clear strategic vision of what they are to do, what they are not, and the most cost-effective way of delivering it. Much of departments’ 2014-15 savings are likely to come from further reductions in staff. Sustainability of these savings will depend on developing skills and working in new ways while maintaining staff motivation and engagement.”

But the NAO was generally positive about the ERG’s contribution to savings.

“ERG’s actions to date, particularly its spending controls, have helped departments deliver substantial spending reductions.”

We hope the Cabinet Office’s diligent efforts continue  – sustainably.

Efficiency and Reform 2012/13 savings. Summary report.

Some suppliers still resistant to change? – Government Computing.

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Posted in Campaign4Change, capacity building, change, change management, Cloud, Cloud Computing, consultants, cost reduction, culture, G-Cloud, Government IT, Green IT, IT projects, Major Projects Authority, managing change, procurement, project management, public sector, public services, reducing cost strategically

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Report on status of big Gov’t projects to be published at last

Posted on May 9, 2013 | Leave a comment

By Tony Collins

The Telegraph reports that the Cabinet Office’s Major Projects Authority is about to publish its first annual report – and it will reveal the status of schemes that include Universal Credit, says the article.

The Cabinet Office said in 2011 that the MPA’s annual report would be published by the end of December that year. In 2012 Sir Bob Kerslake, head of the civil service, told the Public Accounts Committee’s Conservative MP Richard Bacon that the MPA’s annual report would be published in June 2012.

But senior departmental  civil servants have objected repeatedly to the red-amber-green “traffic light” status of projects being published, which contradicts the wishes of Kerslake and Francis Maude, the Cabinet Office minister.

One reason for the delay in publishing the MPA annual report is that Maude and Kerslake have been weighing objections to the reporting of the red-amber-green status against the need for departmental cooperation to implement civil service reforms.

From the Telegraph article it appears that Maude has persuaded (or forced) departmental heads to accept the publication of the traffic light status on big and risky projects. The Major Projects Authority reviews IT and other projects costing more than £50m.

The Telegraph says the MPA annual report will reveal Government troubleshooters’ concerns about multi-billion pound projects like the Universal Credit.

The article says the MPA annual report will show that about a third of projects it has reviewed are late or over budget. Says the Telegraph: “Government sources said that the MPA will show that management of big projects has improved significantly since 2010, when two-thirds of programmes were in trouble.

“But the report, expected later this month, will confirm that Whitehall ‘still has a long way to go’ to improve its handling of major projects, a source said.”

The article adds that publication of the annual report “follows a lengthy internal struggle between ministers and civil servants about the disclosure of problems with big Government schemes”.

Some ministers, says the article, are privately concerned that civil servants are bad at managing big, expensive projects but repeatedly cover up their failings and refuse to tell ministers about problems.  Disclosing “candid” assessments about big projects will improve management, ministers believe.

The Telegraph says that a “new publication scheme that will start later this month” will publicly rate each project at red, amber, or green. 

Each central department will be told to publish details of its major projects every six months, including the red-amber-green ratings and the data behind them, says the article.

The Telegraph quotes as a coalition source as saying: “Releasing a candid report about Whitehall’s major projects is a big and brave step for Government…”

Management of big projects better but still generally poor? 

Lord Browne, a lead non-executive in the Cabinet Office and the man appointed to recruit business leaders to Whitehall departmental boards, has criticised the management of major projects as “worryingly poor”.

He said that insufficient attention was given to identifying risks in the planning stage, and that there had been a “consistent failure” to appoint leaders with the right skills and experience.

Browne said the creation of the Major Projects Authority (MPA) in the Cabinet Office in 2011 had improved their delivery, but “nobody ever intervenes in a poor project soon enough” and that warning signs were often ignored or under-reported.

He called for an “ongoing and rigorous review process with real teeth” which would monitor measures of progress and call “time out” on failing projects, allowing them either to be fixed or stopped.

Browne said the government could learn from the private sector, where projects are scrutinised to a “very high standard” before work begins. In line with this, he suggested that the MPA should have a strengthened “stage-gate approval process” to ensure that projects achieve objectives.

He said that projects should not be allowed to begin until a team with the right skills – including a leader who had previously delivered a large, complex project – had been identified.

He also suggested that the MPA nominate leaders and veto unsuitable candidates. He said that expensive projects should “never be seen as a personal development opportunity”.

He advocated using pay, benefits and bonuses to give team members incentives to work on the project “until appropriate milestones are reached”. This, Browne said, had been key to the success of major projects delivered by the private sector.

Departments still sceptical of Maude’s reforms?

Meanwhile the FT has reported that Maude’s attempts to inject commercial acumen into Whitehall by putting leading business figures on departmental boards is failing to live up to its billing, with some departments rarely consulting their external non-executive directors.

The FT says that the Treasury department’s supervisory board met only once in the year to April 2012, according to a report by Insight Public Affairs, a consultancy. The energy department’s board met twice, compared to 15 meetings in the transport department, reflecting the inconsistent involvement of non-executive directors.

John Lehal, managing director of Insight Public Affairs, said the ad hoc manner in which departments held board meetings reflected the need for greater accountability – as underlined by the Treasury’s failure to engage its non-executives.

Comment

At long last the Major Projects Authority, under the straight-talking Australian David  Pitchford, will publish its annual report; and it may contain more detail on major projects than has been published by any government.

As departments fear public embarrassment more than any other sanction, publication of the traffic light status of projects – with the underlying detail – should genuinely discourage the starting of ill-considered projects.

Although the MPA annual report is much delayed Maude has succeeded in getting agreement for it to be published. Provided it contains enough detail to allow the status of projects to be judged by armchair auditors, it should begin to make a real difference.

Telegraph article

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Posted in change management, Gateway reviews, Government IT, IT projects, IT-related failures, Major Projects Authority, openness and transparency, project management, public sector, public services, Real-Time Information, Universal Credit

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Decline of the great British government IT scandal

Posted on May 7, 2013 | 4 Comments

This is a guest post by SA Mathieson, writer of Card declined: how Britain said no to ID cards, three times over .

Whatever happened to the great British government IT scandal?

In the 2000s, such events kept many journalists gainfully employed. Careers were built around the likes of the NHS National Programme for IT and identity cards. But their numbers have fallen away – both the scandals and the journalists – as this government’s programme of austerity reaches even this area of spending.

In seriousness, despite the fact that there are fewer juicy stories, the apparent decline in the number of government IT scandals is clearly a good thing for Britain. But why has it come about; and is it real, or are there problems below the surface?

The Labour government of 1997 to 2010 had a weakness for big IT projects. Some of this stemmed from a creditable wish to modernise the state, but some came from a starry-eyed over-estimation of what IT could do. This may have been generational: its leaders, in particular Tony Blair, liked the sound of IT but had little experience of using it. Mr Blair’s former communications head Alastair Campbell tells a good anecdote about getting a first text message from his former boss after they had left power… sent a word at a time.

Asking too much of IT had serious implications: neither Mr Blair nor a stream of home secretaries ever addressed the serious concerns about the reliability of biometric technology, on which the national identity scheme was heavily dependent, with David Blunkett once telling the Today programme that the scheme would make “the theft of our identity and multiple identities impossible. Not nearly impossible, but impossible”.

Nor did they realise that IT is better at sharing information than securing it – until HM Revenue and Customs lost 25 million people’s personal data on unencrypted discs in the government’s internal mail service in 2007. This over-confidence in technology and security led to other ‘surveillance state’ projects, such as the ContactPoint database of all children and the e-Borders system to monitor all international journeys (the former abolished, the latter only partially implemented with a third of journeys still not covered). 

Mr Blair and his colleagues also ignored what any good technology leader will tell you: that a successful IT project is really about people, organisations and processes. The NHS National Programme for IT did not fail because of IT – parts of it worked fine, and replacement contracts for its N3 broadband network and NHSmail email service are currently being purchased.

The National Programme’s failure came in trying to push individual NHS trusts, which differ enormously, into installing homogenous patient record software.

Implementing such software is difficult enough in one trust – mainly because highly-skilled medical practitioners don’t take kindly to being told what to do, rather than because of insurmountable IT problems – but is still a better bet than trying to impose systems from above.

The present government has learnt that lesson, setting a timescale for electronic patient records’ introduction but leaving trusts to do the work. If some trusts fail to meet this, the result will be local IT scandals rather than a great British one. This is also the level of accident-prone attempts by local government and police forces to outsource IT, such as Somerset’s Southwest One entanglement with IBM.

By downsizing the surveillance state, such as ditching ID cards and stepping back from greatly increased internet monitoring, as well as introducing the likes of Iain Duncan Smith’s Universal Credit in a sensibly incremental fashion,  this government has reduced the likelihood of UK-wide disasters. But while the great British IT scandal has declined, it is not dead. It is just more likely to take place at a local level, away from the national media and political spotlight.

SA Mathieson’s book, Card declined: how Britain said no to ID cards, three times over, reviews the attempts and failures of governments over the last three quarters of a century to introduce identity cards in Britain, focusing on the Identity Cards Act passed in 2006 and repealed in 2010, an issue he covered as a journalist from start to end. It is available as an e-book for £2.99 (PDF  or Kindle and in print for £4.99. 

This article also appears on SA Mathieson’s website.

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Posted in Government IT, IT projects, IT-related failures, NHS, npfit, Universal Credit

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Could HMRC have a major IT success on its hands?

Posted on April 17, 2013 | 9 Comments

By Tony Collins

It’s much too soon to say that Real-Time Information is a success – but it’s not looking  like another central government IT disaster.

A gradual implementation with months of piloting, and HMRC’s listening to comments from payroll professionals, software companies and employers, seems to have made a difference.

The Cabinet Office’s high-priority attempts to avoid IT disasters, through the Major Projects Authority, seems also to have helped, by making HMRC a little more humble, collegiate and community-minded than in past IT roll-outs. HMRC is also acutely sensitive to the ramifications of an RTI roll-out failure on the reputation of Universal Credit which starts officially in October.

On the GOV.UK website HMRC says that since RTI started on 6 April 2013 about 70,000 PAYE [pay-as-you-earn] returns have been filed by employers or their agents including software and payroll companies.

About 70,000 is a small number so far. HMRC says there are about 1.6 million PAYE schemes, every one of which will include PAYE returns for one or more employees. About 30 million people are on PAYE. Nearly all employers are expected to be on RTI by October 2013.

The good news

 Ruth Owen, HMRC’s Director General Personal Tax, says:

“RTI is the biggest change to PAYE in 70 years and it is great news that so many employers have started to report PAYE in real time. But we are under no illusions – we know that it will take time before every employer in the country is using RTI.

“We appreciate that some employers might be daunted by the change but …we are taking a pragmatic approach which includes no in-year late filing penalties for the first year.”

It hasn’t been a big-bang launch. HMRC has been piloting RTI for a year with thousands of employers. Under RTI, employers and their agents give HMRC real-time PAYE information every time the employee is paid, instead of yearly.

When bedded down the system is expected to cut administrative costs for businesses and make tax codes more accurate, though the transitional RTI costs for some businesses, including training, may be high and payroll firms have had extra costs for changes to their software.

RTI means that employers don’t have to complete annual PAYE returns or send in forms when new employees join or leave.

The bad news

The RTI systems were due to cost £108m but HMRC’s Ruth Owen told the Treasury sub-committee that costs have risen by tens of millions:

“… I can see that it [RTI] is going to cost £138m compared with £108m. I believe that is going to go up again in the scale of tens of millions.”

She said that in October 2012.

Success?

The Daily Telegraph suggested on Monday that RTI may be “ready to implode”.

But problems with RTI so far seem to be mainly procedural and rule-based – or are related to long waits getting queries answered via the helpline – rather than any major faults with the RTI systems.

In general members of the Chartered Institute of Payroll Professionals report successes with their RTI submissions, and some comment on response times being good after initial delays at around the launch date.

Payroll software supplier Sage says the filing of submissions has been successful. There was a shaky start, however, with HMRC’s RTI portal being under maintenance over the weekend.

Jonathan Cowan from the Sage Payroll Team said: “There was understandable confusion and frustration over the weekend with businesses unable to file due to HMRC site issues.”

Accountingweb’s readers have had many problems – it said RTI “stumbled into action –  but few of the difficulties are, it seems, serious. “Have I missed something, but RTI despite all the commotion doesn’t seem that bad,” says an accountant in a blog post on the site.

Payrollworld says RTI problems have been minor. “The launch of Real Time Information (RTI) has encountered a number of minor issues, though payroll suppliers broadly report initial filing success.”

Comment

It’s not everyday we report on a big government IT project that shows signs of succeeding. It’s too early to call RTI a success but it’s difficult to see how anything can go seriously wrong now unless HMRC’s helplines give way under heavy demand.

It’s worth remembering that RTI is aimed at PAYE professionals – not the general public as with Universal Credit. Payroll specialists are used to solving complex problems. That said, RTI’s success is critical to the success of Universal Credit. A barrier to that success has, for now, been overcome.

Perhaps HMRC’s RTI success so far shows what a central department can achieve when it listens and acts on concerns instead of having a mere consultation; and it has done what it could to avoid failure. They’re obvious precepts for the private sector – but have not always in the past been characteristics of central government IT schemes such as the NPfIT.

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Posted in Campaign4Change, change management, cost reduction, culture, DWP, Government IT, HMRC, IT projects, Major Projects Authority, managing change, npfit, public sector, public services, Real-Time Information, Universal Credit

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Somerset County Council settles IBM dispute – who wins?

Posted on March 28, 2013 | 5 Comments

By Tony Collins

Somerset County Council has settled a High Court legal dispute with IBM-led Southwest One. It will bring some services back in-house.

The Conservative leader of Somerset council John Osman said, “This agreement will save Somerset residents millions of pounds and will make the contract fit for the future.”

Osman added that the agreement involves settlement of Southwest One fees, which the council had been withholding, for a mutually- agreed sum.

“Most importantly the cancelling of the gainshare agreement will save Somerset County Council residents millions of pounds in the future as those sums can now be kept by the Council,” said Osman.

But as the deal includes payment of an undisclosed sum by the council to Southwest One it is unclear which side is the beneficiary in the dispute. [See Dave Orr comment on this post.]

The council says the settlement will bring benefits for the council including securing “greater strategic control and capacity back with SCC  in terms of Procurement, Property and ICT”.

The agreement also “removes some barriers to ensure successful delivery of our Change Programme – with greater alignment to the operating model, commissioning capacity, service reviews, and technology enablers.”

And the settlement allows officers to focus on improving services rather than on a series of disputes.

Southwest One had issued a writ against the council – what the authority calls a “substantial claim” – and a date for a High Court hearing was set provisionally for November 2013.  Yesterday [March 27 2013] the council agreed to settle the High Court claim, and an unspecified number of other disputes.   

IBM, Somerset County Council, Taunton Deane Borough Council, and Avon and Somerset Police set up Southwest One as a joint venture company in 2007.  IBM  owns 75% of the company.

Somerset’s officers said in a report yesterday:

“Following a series of discussions between the Council and Southwest One we are now in a position to settle the disputes and the Procurement legal proceedings against SCC will cease.

“The agreement includes a settlement payment to SWO which is substantially lower than the claim against SCC and releases payments to SWO that were held by SCC as part of the dispute.”

Somerset County Council will take back several services and about 100 people who had been seconded to Southwest One. The council says that taking back staff and services will “reduce the potential for further disputes and align those services much closer to the operating model the Council has adopted”.

Services returning to SCC include:

• Strategic and Operational Procurement
• Property Services
• Estates Management
• ICT Strategic Management including some web management posts
• Some business support posts for the above functions

The council says there will be little change in day to day activities and no changes to locations of staff. Somerset’s staff will have their secondments terminated and revert to the council’s terms and conditions.

The High Court action was because of a disagreement  about the quality of Southwest One’s procurement service and what payments Southwest One was entitled to as a result of savings made through the joint venture.

Secrecy

Whereas a High Court hearing would have been open to the public, the sum paid by Somerset to IBM as part of the settlement,  and the risks of bringing staff and services back in-house, are being kept confidential because of what the council calls “commercial sensitivity”.

Risks

Some of the settlement’s main risks for the council are listed in yesterday’s report:

• The confidential nature of the discussions held to secure an agreement has
meant that full consultation with a wide range of officers and partners has not
been possible.
• The transfers of staff and functions will take place during the new financial
year. The proposed transfers create some risk due to SAP changes required.
• There will be some risks in the hand-over of programmes of work.
• Despite all efforts to mitigate risks to services, it is possible that some
disruption may occur. Transition workshops are planned to identify and preempt such instances, which significantly reduces the risk.
• Implications for partners have also been estimated. It is possible that partners
may take a different view of the implications for them.

Blame

Osman blamed the previous Liberal Democrat administration for the problems which he said were owing to the way the contract was worded, the actions of the previous Lib Dem administration transferring services to Southwest One that should never have transferred and the failure to clarify the savings sharing element of the agreement. Osman said this was the “equivalent of the Lib Dems writing a blank cheque”.

The 10-year joint venture, which started in 2007, will continue. 

Comment:

As the terms of the settlement and the risks associated with transferring staff and services back in-house are being kept secret nobody outside an inner circle of the council can know how bad the joint venture and the dispute have been for Somerset council’s taxpayers.

If anything is clear it is that IBM held the dominant legal hand all along. It issued a High Court claim, and now it has received a payment from the council.

It seems to be a feature of big council outsourcing deals and joint ventures that councillors are easily swayed by promises of enormous savings, often upfront savings, and are not too concerned about the risk of things going wrong because they won’t be in office when or if any mud hits the fan.

Yesterday Cornwall Council’s Interim CEO, along with the Chairman of Cornwall Partnership Foundation Trust and the Director of Finance at Peninsula Community Health signed a contract for a joint venture with BT.

As Andrew Wallis, an independent councillor in Cornwall, says

“Lets hope the Council does not regret this day.”

The Southwest One joint venture was flawed joint venture from the time a rushed contract riddled with literals was signed in the early hours of a Saturday morning in 2007.  For years afterwards, Somerset Council has been trying to dig itself out of a hole. It is now near the surface – except that yesterday’s council report says there is a potential for further disputes. 

Will other councils learn from Somerset’s experiences? Cornwall’s deal shows that any learning will be very limited.

And the secrecy that tends to go with big outsourcing deals and joint ventures means that a small group of councillors can sign joint ventures and outsourcing contracts without proper accountability  - and can settle any legal disputes later without accountability, and indeed with impunity.

Whenever a  major supplier offers a council large upfront savings from an outsourcing deal or a joint venture why would the authority’s inner circle of councillors say no?

Thank you to campaigning Somerset resident and former county council employee Dave Orr who provided the links and information that made this post possible.

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Posted in Campaign4Change, IBM, IT projects, IT-related failures, law, legal disputes, local government, managing change, managing outsourced services, outsourcing, public-private partnerships, SAP, supplier relationships

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Don’t fire staff before going live – lessons from a SAP project failure

Posted on February 13, 2013 | Leave a comment

By Tony Collins

When an NHS chief executive spoke at a conference in Birmingham about how he’d ordered staff cuts in various departments in advance of a patient administration system going live – to help pay for the new system – it rang alarm bells.  

This is because more staff are usually needed to cope with extra workloads and unexpected problems during and after go-live. That’s a lesson BT and CSC gradually learned from Cerner and Lorenzo go-lives under the National Programme for IT. It’s also a lesson from some of the case studies in “Crash”.

The trust chief executive who was making the speech was managing his go-live outside of the NPfIT. He didn’t seem to realise that you shouldn’t implement savings in advance of a go-live, that the go-live is likely to cost much more than expected, and that, as a chief executive, he shouldn’t over-market the benefits of the new system internally. Instead he should be honest about life with the new system. Some things will take longer. Some processes will be more laborious.

Bull-headed

If the chief executive is bull-headedly positive and optimistic about the new IT his board directors and other colleagues will be reluctant to challenge him. Why would they tell him the whole story about the new system if he’d think less of them for it? They would pretend to be as optimistic and gung-ho as he was. And then his project could fail.

Much of this I said when I approached the trust chief executive after his speech. It wasn’t any of my business and he’d have been justified in saying so. But he listened and, as far as I know, delayed the go-live and applied the lessons.

Disaster

Now a SAP project disaster in the US has proved a reminder of the need to have many extra people on hand during and after go-live – and that go-live may be costlier and more problem-laden than expected.

The Post-Standard reported last month that a $365m [£233m] system that was intended to replace a range of legacy National Grid’s payroll and finance IT has led to thousands of employees receiving incorrect payments and delayed payments to suppliers. Some employees were not paid at all and the company ended up issuing emergency cheques.

Two unions issued writs on behalf of unpaid workers, and the Massachusetts attorney general fined National Grid $270,000 [£172,500] for failing to comply with wage laws. New York’s attorney general subpoenaed company records to investigate.

Hundreds assigned to cope with go-live aftermath

National Grid spokesman Patrick Stella said the company has assigned hundreds of employees, including outside contractors, to deal with problems spawned by the new system. Many of them have been packed into the company’s offices in Syracuse in the state of New York. Others are dispersed to work at “payroll clinics,” helping employees in crew barns or other remote locations.

For more than a year National Grid worked to develop a new system to consolidate a patchwork of human resource, supply chain and finance programs it inherited from the handful of U.S. utilities it has acquired. The system, based on SAP, cost an estimated $365m, according to National Grid regulatory filings.

Stella said the glitches to be expected when a complex new system goes live were exacerbated in the wake of Sandy, when thousands of employees worked unusual hours at unusual locations. “It would have been challenging without Hurricane Sandy,” Stella said.

SAP software woes continue to plague National Grid.

Payroll blunder.

National Grid struggles to fix payroll problems.

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Posted in BT, BT Health, Campaign4Change, Cerner, CSC, IT projects, IT-related failures, NHS, npfit, SAP

Lessons from Birmingham Council’s joint venture with Capita

Posted on December 4, 2012 | 3 Comments

By Tony Collins

A report on Service Birmingham – Capita’s joint venture with Birmingham City Council – shows that the deal has been largely successful so far but that trust and relationships may be breaking down in some areas.

The “High-Level” review of Service Birmingham by the Best Practice Group could be read in two ways: as a qualified endorsement of the deal so far, or as a warning that a deteriorating relationship in some areas could end up, in years to come, as a legal dispute.

The report’s authors suggest that the council and Capita have little choice but to make improvements given that the contract lasts another nine years. They say:

“Given the fact that the commercial partnership has a further nine years to operate, there is an inherent risk that unless a core focus for both parties is re-established, the commercial trust between BCC [Birmingham City Council and SB [Service Birmingham] will continue to deteriorate.

“Neither party will benefit from the relationship if this situation is permitted to manifest itself.”

In another part of its report the Best Practice Group says:

“BCC and SB seemed to overcome early challenges in their relationship by having a ‘great common cause’. The Council entered into this relationship in 2006 because it had the foresight to realise it had to fundamentally transform how it operated in order to improve social outcomes for its population…

“Now the transformation has largely been successful and the initiatives are almost complete, the level of innovation seems to have stalled and the relationship has deteriorated. Somewhere in the fire-fighting, both BCC and SB have lost sight of the next ‘great common cause’ – the fact that the Council needs to further reduce the cost of ICT service delivery by £20m per annum. This will require some significant ‘outside the box’ thinking about how to achieve from both BCC and SB.”

Below are verbatim extracts from the Best Practice Group’s report which highlight some of the lessons arising from of the joint venture so far. The sub-headings (in italics) are mine.

Extracts from Best Practice Group’s report:

Service Birmingham charges a fee even when the council implements services outside the joint venture – poor value and reputedly poor practice?

“SB has an on-going contractual duty to ensure it provides independently benchmarked best value in the services it delivers to BCC [Birmingham City Council]. As part of these arrangements, BCC can request specific third party services (outside SB’s own delivery capability) with SB applying a fee for ‘contract management’.

“However, these situations vary considerably, raising the question of how to maximise value. The contract management fee would be considered high value when BCC gives SB a service outcome it wants to achieve, and SB researches the market, provides options and recommendations to BCC, sources the best value vendor, and ensures the solution is implemented and the business outcomes achieved.

“In other situations, BCC already knows the outcome to be achieved, how to achieve it and who the best value vendor is, and can implement the solution itself. However, the same contract management percentage still applies to these cases. This causes resentment for the service area involved because they cannot see how SB has added to the process, and in real terms, is perceived by BCC as very poor value. Although the sums involved are minimal compared with the relationship’s overall cost, it is highly visible as an area of poor value and reputedly bad practice, and needs to be realigned.”

Service Birmingham needs to make a significant return for its shareholders

“Given the relationship challenges between BCC and SB, there are a couple of fundamental points to address, namely that: (a) certain individuals within the Council need to understand that SB is not a social enterprise, a public sector mutual, or a charity, and needs to make a significant return on its capital for its shareholders, and (b) SB needs to understand that the Council is in a significantly deteriorating financial position due to Government cutbacks.”

SB drops its prices when challenged

“There have been statements made by a number of the officers in the Council that SB drops its prices when challenged, especially when the Council has investigated alternative industry offerings. SB have suggested that it is only when the challenge arises that initial data is clarified and therefore, more focused pricing can be provided.”

A hardened commercial stance in some circumstances?

“… these obvious and immediate savings are now being met with a hardened commercial stance for anything that falls outside of the core deliverables by SB.”

The cloud imposes hidden costs for SB

“Regardless of whether a scale of mark-up can be achieved, one issue that is clear from the interviews undertaken is that SB/BCC needs to educate the BCC service areas at all levels around what the contract management mark-up actually buys for the Council from SB. At present, for example, there is a lack of understanding within BCC service areas that having ‘cloud’ delivered solutions within the overall portfolio does still incur hidden costs for SB in supporting the overall infrastructure and managing the intermediate fault–reporting service.”

Staff survey on SB – mixed results

“With regards to the survey, 63% stated that they talk ‘positively’ about SB to their colleagues. Slightly less, 59%, believe SB understands the requirements and support needed to deliver the Council’s services. However, when asked if they would naturally think to contact SB for help and advice in situations where they were thinking about undertaking new ICT related work, only 33% of the Council respondents said that they would…

“When asked the direct question of how satisfied they were overall with the service delivered by SB, only 15% of the respondents felt that the service was less than satisfactory. However, only 10% believed that it was excellent with 39% rating it as satisfactory and 36% rating the service received as good.”

Project concerns

“There is a feeling which was voiced by several interviewees from the Council that project implementation often runs behind schedule and ultimately it is the ‘loudest project to shout’ which will then have the scarce resources allocated to it at the cost of other projects.”

Lack of commercial trust

“…there are elements of the KPI [key performance indicator] reporting received from SB that BCC need clarity on . This, coupled with the general lack of commercial trust between the parties and the fact that BCC have shown that SB have reported some data incorrectly (after discussion around interpretation), means that the KPIs are not fully aligned to the business outcomes BCC now needs to achieve in the current financial climate.”

Seeds of a possible legal dispute in future years between the two sides?

“One point that should be highlighted is that we believe there is a misalignment between both parties view of what partnership working actually entails. From the perspective of some service areas within BCC, they view certain individuals within SB as uncooperative. In a similar vein, there are certain individuals within SB who view specific BCC staff also as uncooperative. It should be noted that these individuals within both BCC and SB are in the minority.

“However, such un-cooperation is manifesting itself into a perception of a lack of commercial trust in both camps. Some BCC individuals are not really taking into account, or understanding, that SB is a commercial organisation that has a majority shareholding by a publically listed company. Its commercial shareholders need to see financial returns from SB that increase annually…

“In the early stages, the working relationship was put firmly on the rails by having a ‘great common cause’. The transformation requirements of BCC were so fundamental, it seems many differences of opinion were set aside and both parties worked very hard to overcome the obstacles in ensuring the transformation was successful. Largely, that was achieved. Now that the original transformation process has almost all been completed, the parties working relationship seems to have deteriorated in certain instances. This pattern of behaviour is normal in most strategic vendor relationships.”

SB more expensive than the average in certain areas?

“SB appear to be significantly more expensive than average in the areas of voice, data and converged service provision (KPI-17). The most significant of the three costs provided is the provision of Data services where SB are the worst value of all of the respondents in the SOCITM survey with a cost of £227 per data outlet (capital + support) compared to a median of £118. At the time of writing this report, no clarification had been provided as to the reasons for the significant difference between the SB provided cost and the survey median. When KPI-17 is reviewed as a cost per user, SB fairs much better across the service types. It has a cost of £321 per user compared to a median of £290 per user. However if you consider that this £31 per user per year, it actually represents over £600k per annum above average.”

Council concerns over SAP work going abroad

“Different parties within BCC perceived that in the interest of cost savings, SB was passing some work on SAP projects to an off-shore organisation, rather than using the UK workforce. It should be noted that the contract allows for the off-shoring of SAP work, but only where such work does not adversely impact jobs in the UK.

“A high level review of the SAP project work has identified that SAP work has only been off-shored when the UK workforce does not have the required expertise. In addition, we requested specific evidence from individuals to support their view that work was being off-shored that could have been undertaken by the UK workforce, but this could not be provided.”

The Council was paying for unused phone lines

“… Ultimately, the Council kept receiving invoices from the line provider for what were essentially unused telephone lines. The process ceased promptly after BCC and SB addressed the escalation of the issue.”

Stagnating innovation could widen the divide between the two sides

“It is clear that both parties will continue to feel significant frustration until they can resolve how to share the innovation process, provide resources to help the generation of sound business cases and provide formalised and comprehensive feedback to allow for the implementation of suggestions. These suggestions need to become acceptable to the Council as realistic deliverable solutions. If this does not happen, then innovation between the partners will continue to stagnate, driving a widening divide between the organisations.”

KPIs not always useful?

In the case of the BCC and SB agreement, despite an abundance of KPIs being in place, the Council perceives the contract could be better aligned in order to maximise the behaviours from SB that it needs.

Comment:

The report gives the impression that those running the joint venture must overcome the many problems because the contract still has nine years left to run. Both sides, it seems, are locked into the relationship. In some areas it works. In others it doesn’t.

Capita, clearly, has been trying hard to make the relationship work. Some within the council have too. Some are not so enthusiastic and have been “making noise” according to the report’s authors. Do those making a noise have a point, or are they simply making trouble against the joint venture? The report suggests removing those making a noise. But will that remove some of those who are providing an independent challenge?

So far the relationship has been largely successful; and the survey of staff is generally positive. But there are signs of serious trouble. Innovation is stagnating, the council’s finances are deteriorating and Capita needs to make a profit from the venture. Are these fundamental incompatibilities? Will the relationship really last another nine years, especially if there is more political change within the council?

High-Level Review of Service Birmingham

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Posted in Campaign4Change, Capita, Cloud, Cloud Computing, cost reduction, G-Cloud, innovation, IT projects, local government, managing change, managing outsourced services, operational issues, outsourcing, project management, public services, public-private partnerships, reducing cost strategically, SAP, shared services, supplier relationships

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Lessons from a government agile success

Posted on October 29, 2012 | 5 Comments

By Tony Collins

Some central government departments spend a great deal with large suppliers on the development and maintenance of their websites (more on this in a separate post).  They could save millions of pounds if they followed the example of the Government Digital Service (and were not locked into mega-outsourcing contracts that include website development).

Agile teams within the GDS are responsible for GOV.UK, which largely replaces Directgov and offers a one-stop site for government services and information.

Simple, clear, fast

The guiding principles for GDS’s agile teams were “simple, clear, fast”. Lessons from the open-source project are on the GDS website. These are some of them:

“When things get tough and you want to go back to old ways, go more agile, not less”.

Less is more (a rare attribute for a government IT project).

Use independently-verifiable data to track your programme

Agile can work at scale. “We’ve embraced it culturally and organisationally…”

The Cabinet Office minister Francis Maude said:

“In stark contrast to the way IT has been delivered in government in the past, GOV.UK can rapidly accommodate new standards for development and security, catering to emerging technologies and user requirements quickly and effectively. It has been built the way Amazon built Amazon, and in the way that BA transformed their online business, by being agile, iterative and focused on users.

“GOV.UK has also been built using open source technology, which means we don’t have to pay expensive software licensing costs.”

Comment:

A good result for the Government Digital Service. Will others in central government follow?

What we’ve learnt about scaling agile – Government Digital Service

Agile can fix failed GovIT says lawyer

 

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Posted in Agile, Campaign4Change, Government digital Service, Government IT, innovation, IT projects, managing change, open source, public sector, public services, reducing cost strategically, software licensing

Somerset’s dispute with IBM is “escalating”.

Posted on October 22, 2012 | 3 Comments

By Tony Collins

Somerset County Council says in a paper due to be discussed next week that its dispute with the IBM-led Southwest One joint venture is “escalating” and that there is a need to “restore a deteriorating relationship with a supplier”.

The poor relationship is in contrast to the mutually content position in 2008, one year after Somerset signed its unique, ground-breaking deal with IBM. At that time Somerset refused a request by Unison for a copy of the business case for Southwest One saying, “We can record, however, that all our cost and performance criteria within the business case were met or exceeded”.

Now Southwest One and the council are in a legal dispute on several fronts. The council’s paper for its cabinet meeting next week says:

“The history of Southwest One [SWo] poor performance is continuing; during 2012 the Client Team have been holding SWo to account; resulting in the serving of 8 contractual notices to SWo.

“Over the past 3 weeks SWo have commenced disputes on several other matters, issuing further financial claims and disputing Somerset County Council’s warning notices.

“With a number of escalating disputes, we need to take action to:

• Conduct proceedings

• Respond to these disputes and restore a deteriorating relationship with a strategic supplier.

• Seek to improve value for money and service performance and ensure it is fit for purpose.

• Continue to assertively manage Southwest One to ensure it meets its contractual obligations.

• Maintain Partner relationships

Somerset’s officers recommend to the cabinet that:

“The Leader of the Council authorises the Chief Executive, Deputy County Solicitor, Director of Finance & Performance and other relevant SCC officers to serve and proceed with the defence and any counterclaim, to carry out all subsequent steps in the litigation process and any engagement in connection with the disputes.”

The paper  adds:

“It is also recommended that the Leader of the Council and the Chairman of Scrutiny Committee agree urgency in respect of the above recommendation…

“The Deputy County Solicitor is authorised to institute defend or settle any legal proceedings and to lodge an appeal. This report seeks authorisation to be given to SCC officers to serve and proceed with the Defence and any Counterclaim, to carry out all subsequent steps in the litigation process and any engagement and commit to financial considerations (such as legal costs) in connection with the disputes…

“Due to the contractually binding timetable for resolving disputes SCC officers need a mandate. Risks will be reported and managed through SCC’s governance arrangements.”

A budget exists to support the council’s approach.

The report says that the council is in disagreement with Southwest One over the quality of the procurement service and what payments it is entitled to as a result of savings made by getting better deals through the joint venture. “We had hoped we would be able to settle this through negotiations, but unfortunately that has not been the case.”

Comment:

In mid-2007, about two months before Somerset signed its deal to set up Southwest One with IBM, an external consultancy report on the proposals by consultants “Maana” praised the “immense amount of research and thinking” that went into the IBM bid.

It said that the “whole of the procurement process, from market investigation to preferred bidder selection has been well planned and executed”. Maana added:

“The evaluation process has been more extensive, well thought through and executed than any we have seen before.”

And look what happened to the best laid plans. Many saw at the time that the joint venture was too complicated and put too much responsibility IBM’s way, but the council pushed aside their concerns.

Who now is responsible for the failure of Southwest One? Nobody.

Thank you to Dave Orr whose information made this article possible.

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Posted in Campaign4Change, IBM, IT projects, IT-related failures, legal disputes, local government, managing change, outsourcing, oversight, Politics, procurement, public services, risk, shared services