Some wise words from Andy Green, CE of Logica, on lessons from the NPfIT and other failures
By Tony Collins
Andy Green, chief executive of Logica, speaking to the BBC’s Evan Davis about the NHS National Programme for IT, NPfIT, said:
“It is a stupid thing for the supply chain to have answered, and it’s a stupid thing for the customer to have asked for.”
Green, who joined Logica as CEO in January 2008, said he was in one of the bidders for the NPfIT when he was at BT.
The plan, he said, had been to put the same system into every hospital but later foundation hospitals were able to opt out of the NPfIT.
“Half way through [the NHS IT programme] foundation hospitals were invented, and suddenly foundation hospitals did not have to go with what the NHS said at all”.
He added: “There were fundamental errors in the whole procurement process, and then real difficulty in delivering what had been promised.”
Evan Davis said the NHS IT scheme had cost billions, achieved little and had been running for years. He asked Green: “What’s the story?”
Green said some things went well including the supply of a network that connects pharmacies and doctors. But …
“What had been promised by the supply chain was fantastic software that had not been designed yet that was going to completely revolutionise hospitals and delivering that proved to be horrendous… in the end it is foolish to set out on a programme that is going to take seven years with a fixed procurement up front, which says we all know everything about it …”
Green spoke of the need for the supplier to understand exactly what the customer wants and whether it is deliverable before the parties agree to draw up a project specification.
“I think the world is beginning to learn about incrementalism. Let’s do something that we can all see and understand.
“Some of our clients we now work with in common teams – we call it co-management – and only when we have worked out exactly what is going to work in the client, and we can deliver, do we specify it as a project.
“Those things tend to go a lot better. We have got used to the fact that we don’t know everything.”
Luke Johnson, who is a former chairman of Channel 4, criticised IT suppliers for not getting it right often enough. “I have bought quite a lot of projects and been involved as a customer many times… As a customer it is a very scary thing because clearly you are not an expert. Your providers are experts and yet they do not seem to be able to get it right often enough it seems to me, given how much they charge.”
Green said there is a high failure rate in the IT industry. “The client sets out one view at the beginning and then they have to change. The sensible defence to this is the partitioning into smaller items and relationships.
“We bluntly always think of our clients over the long run. You need to know people so that you can sit down and have a decent conversation. Too often when these things start to go wrong everybody runs for the contract. Experienced buyers and sellers do not do that: they run for each other and they talk it through, and they work it out, and they put it back on track.
“It’s value that matters. It’s doing something that really changes Patisserie Valerie’s business. [Luke Johnson is chairman of Patisserie Valerie.] What can you do that would transform that. If you can get that done, then if it over-runs by 20% it probably does not matter.”
Luke Johnson: “It depends how much money you’ve got.”
Phil Smith of Cisco said government often has the biggest problems because “they squeeze so much in procurement there is little good value and goodwill left”.He said that on good projects problems are tackled by cooperation but “if every piece of value has been squeezed out before you procure it, your only option is to get something back from it”.
Beware procurement experts
Johnson said if procurement experts take control, and their mantra is to save money, it can often lead to trouble. “I fear that in many aspects of business, it gets down exclusively to price rather than value.
“Quality is out the window. They [procurement experts] can show a saving so they have justified their bonus but the supplier may be rubbish.”
Green said government is in a difficult position when a project starts to go wrong. “You are stuck in a procurement and the poor individual responsible is almost certainly facing a union or a consumer group or a doctor who doesn’t want the thing to happen anyway.”
Evan Davis made the valid point that the costs of projects in the public sector have to be underestimated to get approved. Realistic estimates would be rejected as too costly.
“… The person who is championing this project has to demonstrate to superiors that it is not too expensive. It is only by taking the cheapest bid and starting the thing off that you can sell the project higher up and of course down the line it costs a heck of a lot more.”
Luke Johnson: “We all know in many sectors there are providers that will take things at cost or even less with a view that they will somehow bulk it out and make a margin on the way. They know the client will need variations.
Innovation means taking risks
Luke Johnson: “If you want an innovative society, if you want one that is willing to take risks, to generate new technologies, new jobs, new businesses, then it involves failures and cock-ups.
“I think the British have got vastly better in recent years in accepting that as part of the journey and that is incredibly healthy.”