Category Archives: Campaign4Change

Whitehall’s legacy ICT here to stay?

Posted on 11/09/2013 | 1 comment

By Tony Collins

Well done to the National Audit Office for reporting in detail on some of central government’s legacy ICT. It’s clear the NAO found the research difficult, in part because some of the system performance information it was seeking had to come from suppliers because it was not held by departments.

This gives a hint of the extent to which departments such as HMRC and the Department for Work and Pensions are in the hands of IT companies.

The NAO report Managing the risks of legacy ICT to public service delivery suggests, but doesn’t say explicitly, that legacy ICT contracts are here to stay.

Attempts by the Cabinet Office to make large cuts in the costs of central government IT will be thwarted to some extent by the reliance of departments on big suppliers and big systems. Says the NAO

“A particular risk is that departments dependent on legacy ICT will find it more challenging to achieve the business transformation envisaged by the Government in its digital strategy.”

[But there appears to be little anyone can do about it.]

The NAO report says that major change that involves underlying ICT will “create a new set of risks which will increase as the degree of system change increases”.

HMRC and the Department for Work and Pensions still rely on Fujitsu mainframes with the VME operating system, which was originally developed in the 1970s to run ICL mainframes.

These are some of the NAO’s other findings:

– “We estimate that in 2011-12 at least £480bn of the government’s operating revenues and at least £210bn of non-staff expenditure such as pensions and entitlements were reliant to some extent on legacy ICT.”

– “Managing the risk of legacy ICT has also prevented some government bodies from reducing their dependency on a few large ICT suppliers, reducing competition and increasing the risk to value for money.”

– “Departments with the largest legacy ICT estates have found it challenging to achieve value for money and improve customer service. For example:

• In 2009, HMRC described its 600 systems as “complex, ageing and costly”… By the end of 2011-12, HMRC had switched off 65 legacy applications…”

• Within DWP, we have previously found that administrative errors within the benefits system were, in part, caused by poor communication between its network of some 140 systems.  However, the Department is now rationalising its ICT estate with a view to reducing the number of ICT applications by 2017.

– “The administration cost involved in using legacy ICT can be considerable. The cost of operating HMRC’s VAT collection service is £430m per annum and the cost of the DWP pension payment service is £385m per annum.”

– Eight key legacy ICT risks are:

• Disruption to service continuity. Legacy ICT infrastructure or applications are prone to instability due to failing components, disrupting the overall service. Failure of the legacy ICT may be more difficult to rectify due to the complexity or shortage of components.

• Security vulnerabilities. Older systems may be unsupported by their suppliers, meaning the software no longer receives bug fixes or patches that address security weaknesses. The system may not therefore be able to adapt to cyber threats.

• Vendor lock-in. Legacy ICT systems are often bespoke and have developed more complexity over time to the extent that only the original supplier will have the knowledge to support them.

• Skills gaps. Specific skills in old programming languages may be required that are not widely available. Staff working with legacy ICT over a long period will have often developed a depth of understanding of the system that is difficult to replace.

• Manual workarounds. More manual processing can be required due to the lack of functionality within the system or its inability to interface with other systems. Examples of workarounds include performing detailed calculations outside the system on spreadsheets; re-entering data on to other systems or having to manually check for processing and input errors.

• Limited adaptability. New business requirements may not be supported by the legacy ICT. These may include requirements such as the provision of digital channels, the provision of real-time information and not being able to process transactions in a new way.

• Hidden costs. The true cost of operating the system may not be known. Workarounds to the system and the cost of the additional manual processes may not be recorded. By not having all the information available at the right time, legacy ICT may not be able to provide real-time performance information which could lead to poor decision-making.

• Business change. Due to the complexity or the limited availability of the skills required, change may be difficult, lengthy to implement and costly. This makes it difficult for the business to be responsive and changes may have to be prioritised.

–  “A potential ninth risk is that legacy ICT may be less energy efficient than modern systems.”

VME

-“ The legacy ICT we reviewed in DWP and HMRC both have origins that predate the internet and use technology based on Fujitsu’s Virtual Machine Environment (VME) operating system. Some of the applications using VME process the data in batches. Jobs are set serially such as checking the credibility of the amounts declared on VAT returns. Such a mode of operation would be incompatible with a fully digital service and so these applications may require replacement or modification. A fully digital service would then enable online end-to-end processes with systems that respond in real-time.

– “The current supplier of VME, Fujitsu, has announced that it will support the current version of VME until 2020. After this, organisations have the choice of moving to alternatives or extending VME applications by using Fujitsu’s planned managed service.”

Can legacy ICT be replaced?

–  “The scale and importance of both services, combined with the materiality of the public money they administer, have deterred both departments from replacing these systems. Neither department [HMRC or DWP] had considered replacing their legacy ICT with a completely new end-to-end service. Instead they built new functionality around existing processes or systems, replacing an existing paper-based system

“In both organisations we found that the ICT and business functions could have worked more closely together to develop a longer-term strategy for a complete end-to-end service. In addition, we found a lack of data that would enable management to assess the full cost of service and performance.”

Supplier lock-in?

– “HMRC has found it challenging achieving a ‘whole customer’ view, as its customer data is stored across a number of legacy ICT systems. Perpetuating the use of older systems creates challenges for sustaining the right technical skills, for improving customer service.”

–  “The scale, age and complexity of DWP and HMRC legacy ICT has meant that only a small number of large ICT suppliers are able to support them as they are far too complex for a small- or medium-sized business to maintain. This will be an important consideration when preparing for contract end points, even more than the age of the technology. The government has recognised the issue of vendor lock-in by announcing plans for the creation of common ICT infrastructure. Through greater separation of the business application from the physical hardware, the aim is to reduce reliance on individual vendors.”

Lack of data?

– The average number of major faults in the system is the number logged as severity 1 or 2 meaning that 10 per cent of users are unable to access the service or there is a failure of overnight processing or an inability to produce printed output for the public. DWP monitors the performance of its system on a four- or five-week period rather than calendar months. It was unable to provide us with detailed performance reports for the period under review but obtained the average quoted above from the supplier.

–  “Determining whether the management of legacy ICT within DWP and HMRC incurs hidden costs has proved challenging. DWP’s financial data was comprehensive but it lacked effective measures to assess overall service performance, quality of process activity and the reliability of its legacy ICT. This will make it difficult for DWP to robustly plan for the longer term.”

– “HMRC was still providing us with data in the very late stages of finalising this report and several months after it had originally been requested. For financial data, the late provision of data has prevented us from verifying that costs are on a consistent basis with other departments and forming clear conclusions. For performance information, we saw indications that HMRC has a good set of data that it uses in its day-to-day management. However, we were unable to fully confirm this finding or obtain sufficient data to allow us to conclude on the performance of the VAT service. The challenges we faced in obtaining data from HMRC suggest that it may face challenges in planning for the longer term robustly.”

NAO report: Managing the risks of ICT legacy to public service delivery

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Posted in BT, Campaign4Change, Capgemini, change management, DWP, Fujitsu, HMRC, Legacy ICT, managing change, managing outsourced services, npfit

A reason many govt IT-enabled projects fail?

Posted on 11/09/2013 | 6 comments

By Tony Collins

Last week’s highly critical National Audit Office report on Universal Credit was well publicised but a table in the last section that showed how the Department for Work and Pensions had, in essence, passed control of its cheque-book to its IT suppliers, was little noticed.

The NAO  in 2009 reported that the Home Office had handed over £161m to IT suppliers without knowing where the money had gone.

Now something similar has happened again, on a much bigger scale, with Universal Credit. The National Audit Office said last week that the Department for Work and Pensions has handed over £303m to IT suppliers. The NAO found that the DWP was unclear on what the £303m was providing. Said the NAO

“The Department does not yet know to what extent its new IT systems will support national roll-out … The Department will have to scale back its original delivery ambition and is reassessing what it must do to roll-out Universal Credit to claimants.”

After paying £303m, the “current programme team is developing new plans for Universal Credit,” said the NAO.

Surprising?

More surprising, perhaps, are the findings by PWC on its investigations into the financial management of Universal Credit IT. I and others in the media little noticed the summary of PWC’s work when I first read the NAO report.

PWC’s findings in the NAO’s report are in figure 15 on page 36. The table summarises PWC’s work on Linking outcomes to supplier payments and financial management. This is some of what the NAO says

– Insufficient challenge of supplier-driven changes in costs and forecasts because the programme team did not fully understand the assumptions driving changes.

– Inadequate controls over what would be supplied, when and at what cost because deliverables were not always defined before contracts were signed.

– Over-reliance on performance information that was provided by suppliers without Department validation.

– The Department did not enforce all the key terms and conditions of its standard contract management framework, inhibiting its ability to hold suppliers to account.

– Insufficient review of contractor performance before making payments – on average six project leads were given three days to check 1,500 individual timesheets, with payments only stopped if a challenge was raised.

– 94% of spending was approved by just four people but there is limited evidence that this was reviewed and challenged.

– Inadequate internal challenge of purchase decisions; ministers had insufficient information to assess the value for money of contracts before approving them.

– the presentation of financial management information risked being misleading and reducing accountability.

– Limited IT capability and ‘intelligent client’ function leading to a risk of supplier self-review.

– Charges were on the basis of time and materials, leaving the majority of risks with the Department.

Comment

How can civil servants knowingly, or through pressure of other work, effectively give their suppliers responsibility for the sums they are paid? This is a little like asking a builder to provide and install a platinum-lined roof, then giving it the authority to submit invoices up to the value of its needs, which you pay with little or no validation.

On BBC Newsnight this week, Michael Grade, a past chairman of the BBC Board of Governors, told Jeremy Paxman about the Corporation’s corporate culture. 

“I think the BBC suffers more and more from a lack of understanding of the value of money. A cheque comes in every April – for £3.5bn – and if you don’t have to earn the money, and you have that quantity of money, it is very hard to keep to keep a grip on the reality of the value of money.

“If you run a business, if you own a business, you switch the lights out at 6 O’Clock. Everybody’s gone. You walk around yourself. You own the business. It’s your money. You have earned it the hard way. The culture of the BBC of late has been, definitely, a loss of the sense of the value of money.”

Does this help to explain why so many government IT-enabled change programmes fail to meet expectations? One can talk about poor and changing specifications, over-ambitious timescales, poor leadership and inadequate accountability as reasons that contribute to failures of public sector IT-enabled change programmes.

But, at bottom, is there simply too much public money available and too few people supervising payments to suppliers? Is it asking too much of senior civil servants and ministers to treat public money as their own? Is there a lack of the reality of the true value of money, as Michael Grade says when he refers to the BBC?

It is perhaps inconceivable that any private company would spend £303m and not be sure exactly what it is getting for the money.

It may also be inconceivable that a private company would accept supplier-driven changes in costs and forecasts without fully understanding the assumptions driving those changes.

And would a private company not control what is to be supplied, when it is to be delivered and at what cost? Would it not define what is to be delivered before contracts are signed?

Would a private company not check properly whether submitted invoices are fully justified before making payments?

Perhaps central government is congenitally ill-suited to huge IT-based projects and programmes and should avoid them – unless ministers and their officials are prepared to accept the likelihood of delays of many years and costs that are many times the amounts in the early business cases. They would also need to accept that success, even then, is not guaranteed, as we know from the NPfIT.

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Posted in Agile, Campaign4Change, change management, DWP, Government IT, IT-related failures, managing outsourced services, npfit, outsourcing, private sector lessons for the public sector, procurement, project management, public sector, public services, PWC, supplier relationships, Universal Credit

Will Universal Credit ever work? – NAO report

Posted on 05/09/2013 | 8 comments

By Tony Collins

Today’s National Audit Office report Universal Credit: early progress is one of most excoriating the NAO has published on a government IT-enabled project or programme.

Iain Duncan Smith, secretary of state for work and pensions, has already responded to the NAO report by implying it is out of date and that the problems are in the past. This is a standard government response to well researched and highly critical NAO reports.

But the authors of the NAO report have pointed to some UC problems that are so fundamental that it may be difficult for any independent observer to credibly regard the project’s problems as historic. Says the NAO:

“The Department [DWP] is unable to continue with its ambitious plans for national roll-out until it has agreed the future service design and IT architecture for Universal Credit.”

So can the UC project ever be a success if, years after its start, there is no agreed design or IT architecture? Says the NAO

“The Department may also decide to scale back the complexity and ambition of its plans.”

Although the DWP has spent more than £300m on UC IT, mostly with the usual large IT suppliers, complex claims cannot yet be handled without manual work and calculations.

In February 2013, the Cabinet Office’s Major Projects Authority reviewed Universal Credit and raised “serious concerns about the programme’s progress”, says the NAO report. “The review team was concerned that the pathfinder [pilot project] could not handle changes in circumstances and complex cases which had to be dealt with manually, and that this meant the pathfinder could not be rolled out to large volumes.”

The Independent says the DWP gave false assurances on the project’s progress. The Daily Mail says the scheme has got off to a “disastrous start”.

The NAO’s main findings:

 Is £303m spent on IT value for money?

 “At this early stage of the Universal Credit programme the Department has not achieved value for money. The Department has delayed rolling out Universal Credit to claimants, has had weak control of the programme, and has been unable to assess the value of the systems it spent over £300m to develop [up to the end of March 2013].

“These problems represent a significant setback to Universal Credit and raise wider concerns about the Department’s ability to deal with weak programme management, over-optimistic timescales, and a lack of openness about progress.”

A projected IT overspend of £233m?

The NAO puts the expected cost of implementing Universal Credit to 2023 at £2.4bn. The spend to April 2013 is £425m, including £303m on the IT. The planned IT investment in the current spending review period from the May 2011 business case was £396m, but the December 2012 business case puts the planned IT investment in the current review period at £637m – and increase of £233m, or 60%. The DWP wants to make changes elsewhere in its budgets to accommodate the extra IT spend.

Ministers and DWP spokespeople have said repeatedly that the project is within budget.

Some of the IT spend breakdown

– Core software applications including a payment management component  – £188m

– Interface with HMRC real time information – £10m

– Case management module – £6m

– Licences – £31m

– Supplier support – £26m

– Hardware, telephony and changes to old systems – £50m

– Departmental staff costs on the Business and IT Solution team – £29m.

– Staff contractors provided by suppliers to support departmental staff  – £26m.

Main IT suppliers – spend to end of 2012/13

– Accenture. Software design, development and testing including: interview system; evidence capture, assessment and verification; and staff contractors – £125m

– IBM. Software design, development and testing including: real time earnings; process orchestration and payment management; and staff contractors – £75m

– HP. Hardware and legacy system software, and staff contractors – £49m

– BT. Telephony. It also supplied specialist advice on agile development methods – £16m

A further £9m was spent on live system support costs provided by HP; bringing total spending with suppliers to £312m, says the NAO.

 Is the IT high quality or not?

The NAO report suggests there may be conflicting views between those in DWP who believe the IT is high quality and others who are not so sure.

“The Department believes that the majority of the built IT is high quality, but has not been fully developed and cannot support scaling up the programme as it stands. Some assessments have commented that systems are inflexible or over-elaborate.”

Will the IT support a national roll-out?

The NAO says it’s uncertain that the IT can support full national roll-out of Universal Credit without further work and investment.

“The Department does not yet know to what extent its new IT systems will support national roll-out. Universal Credit pathfinder systems have limited function and do not allow claimants to change details of their circumstances online as originally intended. The Department does not yet have an agreed plan for national roll-out and has been unclear about how far it will build on pathfinder systems or replace them.”

Will timetable and scope have to change further?

“The Department will have to scale back its original delivery ambition and is re-assessing what it must do to roll-out Universal Credit to claimants. The current programme team is developing new plans for Universal Credit. Our experience of major programmes supported by IT suggests that the Department will need to revise the programme’s timing and scope, particularly around online transactions and automation.”

Over-optimism?

“It is unlikely that Universal Credit will be as simple or cheap to administer as originally intended. Delays to roll-out will reduce the expected benefits of reform…”

Rushed?

“ The ambitious timetable created pressure on the Department to act quickly…”

Open to fraud?

“The Department’s current IT system lacks the ability to identify potentially fraudulent claims. Within the controlled pathfinder environment, the Department relies on multiple manual checks on claims and payments. Such checks will not be feasible or adequate once the system is running nationally.

“Without a system in place, the Department will be unable to make the savings it had planned, by reducing overpayments from fraud and error. In December 2012, it estimated these savings to be worth £1.2 billion per year in steady state.”

Separately the NAO states that there have been “unanticipated security problems from putting transactions online”. The DWP may now scale back all that was planned to be online.

In January 2013 the technical director of CESG and other reviewers said that the UC security solution was “over-complex” and could have conflicted with DWP plans to encourage people to claim online.

Delay in national roll-out

“The Department has delayed rolling out Universal Credit nationally. The Department will not introduce Universal Credit for all new out-of-work claims nationally from October 2013 as planned. Instead it will add a further six pathfinder sites from October 2013

 “Pause UC immediately”

In early 2013 the Cabinet Office’s Major Projects Review Group noted that the Department had not addressed issues with governance, management and programme design despite their having been raised in previous reports. The Authority “recommended that the Universal Credit programme be paused immediately”.

All  post-2015 plans under review

The original plans were for UC roll-out to finish by late 2017. All statements by officials and Iain Duncan Smith have confirmed this 2017 deadline. In fact, says the NAO, all milestones beyond the start of 2015 are “currently under review” including:

• National roll-out of all new claims

• Closedown of tax credits new claims

• Roll-out of Pension Credit Plus on Universal Credit platform

• Completion of claimant migration

The NAO says the DWP has considered completing the roll-out beyond 2017.

Complete rethink needed

 The Cabinet Office’s Major Projects Authority reviewed and reported on Universal Credit in February 2013. The Authority’s found that:

“Universal Credit Programme needs a complete rethink of the delivery approach together with streamlining potentially over-elaborate solutions.”

A separate review of the project by Capgemini in January 2013 and a “Reset IT stocktake” in April 2013 concluded that the UC “architecture is of limited extensibility”.

Pathfinders of limited value

“The pathfinder lacks a complete security solution. Claimants cannot make changes in circumstances online. This increases the need for manual work as changes must be made by telephone. The pathfinders also require more staff intervention than planned, because of reduced automation and links between systems.”

100 day planning period

 “In May 2013, the Department appointed the current senior responsible owner [Howard Shiplee] to lead the Universal Credit programme. The team is now conducting a ‘100-day planning period’, which will end at the end of September 2013. The Department will then submit a new business case to HM Treasury, and ask for ministerial sign-off for delivery plans in late 2013.”

Secrecy – even internally?

“The reset took place between February and May 2013. The reset team included departmental, Cabinet Office and Government Digital Services staff. The reset team developed an extensive set of materials as part of a ‘blueprint’ covering design and implementation, and 99 detailed recommendations. The reset team shared the blueprint with the Department’s Executive Team who approved it at each stage of its development. The Department shared the blueprint with a small number of people but did not initially share it widely.”

A £34m write-off – so far

“The Department has acknowledged that it needs to write off some of the value of its Universal Credit IT assets. By the end of 2012-13, the Department had spent £303m on its IT systems and created assets which it valued at £196m – a difference of £107m. But the DWP has decided to write-off £34m – 17% – though it may increase the size of the write-off later.

“The Department is conducting further impairment reviews of the value of its Universal Credit IT assets before finalising its 2012-13 accounts.” The £34m write-off was based on a “self-assessment which it asked its suppliers to conduct”.

Number of claimants well below planned level

“In its October 2011 business case, the Department expected the Universal Credit caseload to reach 1.1 million by April 2014, but reduced this to 184,000 in the December 2012 business case.”

Planned savings down by nearly £500m

“The cost to government of implementing Universal Credit will be partly offset by administrative savings. In December 2012, the Department estimated that a three-month delay in transferring cases from existing benefits to Universal Credit would reduce savings by £240m in the current spending review period and by £247m after April 2015.”

 Anyone know who decided on October 2013 for planned UC roll-out?

 “The Department was unable to explain to us why it originally decided to aim for national roll-out from October 2013. It is not clear whether the Department gave decision-makers an evaluation of the relative feasibility, risks and costs of this target date.”

 Agile … with a 1,000-strong team?

“In 2010, the Department was unfamiliar with the agile methodology and no government programme of this size had used it. The Department recognised that the agile approach would raise risks for an organisation that was unfamiliar with this approach. In particular, the Department

• was managing a programme which grew to over 1,000 people using an approach that is often used in small collaborative teams;

• had not defined how it would monitor progress or document decisions;

• needed to integrate Universal Credit with existing systems, which use a waterfall approach to managing changes; and

• was working within existing contract, governance and approval structures.

“To tackle concerns about programme management, the Department has repeatedly redefined its approach. The Department changed its approach to ‘Agile 2.0’ in January 2012. Agile 2.0 was an evolution of the former agile approach, designed to try to work better with existing waterfall approaches that the Department uses to make changes to old systems.

“After a review by suppliers raised concerns about the achievability of the October 2013 roll-out the Department then adopted a ‘phased approach’ and created separate lead director roles for the pathfinder (phase 1), October roll-out (phase 2) and subsequent migration (phase 3).

“The Cabinet Office does not consider that the Department has at any point prior to the reset appropriately adopted an agile approach to managing the Universal Credit programme.”

Anyone know how UC is meant to work?

“The source of many problems has been the absence of a detailed view of how Universal Credit is meant to work. The Department has struggled to set out how the detailed design of systems and processes fit together and relate to the objectives of Universal Credit.

“This is despite this issue having been raised repeatedly in 2012 by internal audit, the Major Projects Authority and a supplier-led review. This lack of clarity creates problems tracking progress, and increases the risk that systems will not be fit for purpose or that proposed solutions are more elaborate or expensive than they need to be…

“The Department was warned repeatedly about the lack of a detailed ‘blueprint’, ‘architecture’ or ‘target operating model’ for Universal Credit. Over the course of 2011 and the first half of 2012, the Department made some progress but did not address these concerns as expected.

“By mid-2012, this meant that the Department could not agree what security it needed to protect claimant transactions and was unclear about how Universal Credit would integrate with other programmes. These concerns culminated, in October 2012, in the Cabinet Office rejecting the Department’s proposed IT hardware and networks.

“ Given the tight timetable, unfamiliar programme management approach and lack of a detailed operating model, it was critical that the Department should have good progress information and effective controls. In practice the Department did not have any adequate measures of progress.”

High turnover among IT leaders?

“Including the reset and the current director general for Universal Credit, the programme has had five different senior responsible owners since mid-2012.

“The Department has also had high turnover in important roles other than the senior responsible owner. The Department has had five Universal Credit programme directors since 2010.”

The NAO said that the director of Universal Credit IT was “removed from the programme in late 2012 and the Department has replaced the role with several roles with IT responsibilities”. During and since the ‘reset’ the Government Digital Service has helped to redesign the systems and processes supporting transformation.

Good news culture and a fortress mentality

“The culture within the programme has also been a problem…Both the Major Projects Authority and a supplier-led review in mid-2012 identified problems with staff culture; including a ‘fortress mentality’ within the programme. The latter also reported there was a culture of ‘good news’ reporting that limited open discussion of risks and stifled challenge.”

“Inadequate control of suppliers”

The Department had to manage multiple suppliers. Three main suppliers – Accenture, IBM and HP – developed components for Universal Credit. The Department commissioned IBM to act as an Applications Development Integrator from January 2012, providing some oversight and overall management of IT development, but creating risks of supplier self-management.

The NAO found that there were inappropriate contractual mechanisms; charges were on the basis of time and materials, leaving the majority of risks with the Department. The NAO said there were “inadequate controls over what would be supplied, when and at what cost because deliverables were not always defined before contracts were signed.”

There was “over-reliance on performance information that was provided by suppliers without Department validation”. And weak contractual relationships with suppliers meant that the DWP “did not enforce all the key terms and conditions of its standard contract management framework, inhibiting its ability to hold suppliers to account”

Said the NAO:

“Various reviews have criticised how the Department has managed suppliers. In June 2012, CESG reported the lack of an agreed, clearly defined and documented scope with each supplier setting out what they should provide. This hampered the Department’s ability to hold suppliers to account and caused confusion about the interactions between systems developed by different ones. In February 2013, the Major Projects Authority reported there was no evidence of the Department actively managing its supplier contracts and recommended that the Department needed to urgently get a grip of its supplier management.”

Suppliers paid without proper checks

“The Department has exercised poor financial control over the Universal Credit programme. The Department commissioned an external review in early 2013 of financial management in Universal Credit. The review found several weaknesses including poor information about the basis for supplier invoices, payments being made without adequate checks and inadequate governance and oversight over who approved spending. The review team checked a sample of invoices against the timesheets of suppliers and found no evidence of inappropriate charging, although timesheet information is not complete and cannot be linked to specific activity…”

The NAO went on to emphasise that there was “insufficient review of contractor performance before making payments. “On average six project leads were given three days to check 1,500 individual timesheets, with payments only stopped if a challenge was raised.”

The NAO added that inadequate internal challenge of purchase decisions meant that ministers had “insufficient information to assess the value for money of contracts before approving them”.

50 people on the UC programme board

“The programme board acts as the programme’s main oversight and decision-making body… The programme board has been too large and inconsistent to act as an effective, accountable group. Over the course of 2012, the programme board had 50 different people attending as core members…

“The board did not have adequate performance information to challenge the programme’s progress. In particular, while the board had access to activity measures for IT system development, it could not track the actual value of this activity against spending.

“In the absence of such measures of progress, the board relied on external reviews to assess progress. Such external reviews were not sufficiently frequent for the board to use them as a substitute for timely, adequate management information.”

Programme board disbanded

 “… during the reset [Feb-May 2013], [the DWP] suspended the programme board entirely.

Failure to act on recommendations

“From mid-2012, it became increasingly clear that the Department was failing to address recommendations from assurance reviews… the key areas of concern raised by the Major Projects Authority in February 2013 had appeared in previous reports.

“From mid-2012, the underlying concerns about how Universal Credit would work meant that the Department could not address recommendations from assurance reviews; it failed to fully implement two-thirds of the recommendations made by internal audit and the Major Projects Authority in 2012. Without adequate, timely management information, the Department relied on periodic external assurance reports to assess progress.”

Ceasing work for national roll-out

“By late 2012, the Department had largely stopped developing systems for national roll-out and concentrated its efforts on preparing short-term solutions for the pathfinder…”

Slippery Parliamentary answers

The NAO lists almost imperceptible changes in the language of Parliamentary answers on Universal Credit.

In 2011 the DWP said in a Parliamentary answer that “all new applications” for out-of-work financial help would be treated as a UC claim; and in November 2012 the DWP said in a Parliamentary reply that in October 2013 it would start to migrate claimants from the old system to the new. But by June 2013 the DWP’s line had changed. By then it was saying in a Parliamentary reply that Universal Credit will “progressively roll-out” from October 2013 with all those who are entitled to UC claiming the new benefit by 2017. In fact all new applications for out-of-work help are not being treated as a UC claim. The NAO says that new claimants in the pathfinder must be “single, without children, newly claiming a benefit, fit for work, not claiming disability benefits, not have caring responsibilities, not be homeless or in temporary accommodation, and have a valid bank account and National Insurance number”.

Will UC ever work?

“ …it is still entirely feasible that it [UC] goes on to achieve considerable benefits for society. But to do so the Department will need to learn from its early mistakes.

“As it revises its plans the Department must show it can: exercise effective control of the programme; develop sufficient in-house capability to commission and manage IT development; set clear and realistic expectations about the timescale and scope of Universal Credit; and, address wider issues about how it manages risks in major programmes.”

**

Margaret Hodge MP, Chair of the Public Accounts Committee, says of the NAO report:

“The Department for Work and Pensions has made such a mess of setting up Universal Credit that the Major Projects Authority had to step in to rescue the programme.

“DWP seems to have embarked on this crucial project, expected to cost the taxpayer some £2.4bn, with little idea as to how it was actually going to work.

“Confusion and poor management at the highest levels have already resulted in delays and at least £34m wasted on developing IT. If the Department doesn’t get its act together, we could be on course for yet another catastrophic government IT failure.

“This damning indictment from the NAO gives me no confidence that we will see the £38 billion of predicted benefits between 2010-11 and 2022-23. Vulnerable benefit claimants need a secure system they can rely on.”

NAO report – Universal Credit: early progress

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Posted in Accenture, Agile, BT, Campaign4Change, Capgemini, change management, excessive secrecy, Government digital Service, Government IT, HP, IBM, IT-related failures, Major Projects Authority, managing outsourced services, openness and transparency, Oracle, procurement, project management, public sector, public services, Universal Credit

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Sandwell Council and BT to agree “exit plan” on outsourcing contract

Posted on 28/08/2013 | 2 comments

By Tony Collins

Sandwell council and BT have agreed to work out an exit plan to their “partnership”, in which services will transfer back to the council in March 2014.

The 15-year £300m deal, which was signed in 2007, is being cut short by seven years. The outsourcing deal includes ICT, HR, project management, finance, procurement, and customer service.

The Express and Star reports a memo to council staff saying

“Discussions between the council and BT have been taking place to determine the way in which the current contractual arrangements will be brought to a close to both parties’ mutual satisfaction.

“As the 30-day notice period ends [Sandwell served a termination notice on BT on 16 July 2013], we will be entering into a transitional period.

“During this time, BT will continue to manage Transform Sandwell and deliver services. Also during this period, BT and the council will work on an agreed exit plan which will prepare all relevant services for handover in March 2014.”

The memo said that it would be at that point that any arrangements for staff working for Transform Sandwell to legally transfer their contracts would take effect.

The council’s ruling cabinet decided to begin the process to end the BT contract because it now has fewer workers, due to redundancies prompted by government cuts.

The authority wanted to pay BT less to reflect the reduced volume of work. It has also been unhappy with BT’s service and began dispute proceedings last September.

Forward-looking

On its website BT describes Sandwell as a “forward-looking” council. BT has used its “Transform Sandwell” partnership as a reference site for prospective outsourcing customers.

 BT’s website publicity about Transform Sandwell reads much like the statements made by other councils and their outsourcing supplier in the early years of a partnership.  

BT says the  council saw “leading edge CRM technology as crucial in enacting all elements of the Sandwell formula”. 

BT’s website continues:

“A thriving, sustainable, optimistic and forward-looking community – that’s where Sandwell Council aims to be in 2020.

“Powering that journey is one of the UK’s most exciting regeneration programmes, with well over £1 billion of inward investment. It’s a significant undertaking. Nearly 300,000 citizens give Sandwell the fourth highest population density of 34 districts in the West Midlands.

“Against that backdrop, Transform Sandwell is a 15-year strategic partnership between BT and Sandwell Council. It seeks to revolutionise how Sandwell does business and delivers public services – with a remit that includes ICT, HR, project management, finance, procurement, and customer service.

“The Transform Sandwell partnership has delivered a £45 million investment in technology, a new regional business centre, and the creation of hundreds of new jobs.

“Not only having to meet the needs of Sandwell and its citizens, Transform Sandwell also needs to fulfil government demands. One example of the latter is for councils to meet citizens’ needs as far as possible the first time they call, in pursuit of cost savings and better use of resources.

“Meanwhile the move from comprehensive performance assessment (CPA) to comprehensive area assessment (CAA) requires councils to gather more customer feedback on their performance. In both cases, the contact centre holds the key.

“The key is to ensure that more of people’s needs are met in a single interaction, while making better use of self-service and electronic channels. Similarly, gathering customer feedback means making the most of day-to-day interactions rather than labour-intensively creating new ones.”

Local government has moved on

Council leader Darren Cooper said it was in both organisations’ interests to end the Transform Sandwell partnership. He said

“The world of local government has moved on significantly since 2007. We now need a different plan.”

TechMarketView’s John O’Brien said BT will now be doing all it can to salvage the situation and the potential reputational harm.

“This case shows the complexities of managing long-term IT/BPO deals, where client requirements can change so dramatically during the course of the programme. Local government will be particularly challenging right now because of the ongoing cutbacks to public spending.

“Such large, long-term deals are increasingly out of favour in local government today. Instead councils are moving  towards smaller more select sourcing of services from a variety of suppliers, particularly as their first generation deals come up for renewal.”

Comment

Clearly Sandwell has done its sums and decided it will be better off without BT. 

Could any 15-year outsourcing deal cope with all major changes over that period? HMRC’s outsourcing deals with HP and then Capgemini have coped well over 19 years so far – with no catastrophic lapses in service and the suppliers’ being able to help handle much policy-based change. But HMRC has had the money to spend vastly more than it originally intended.  

Sandwell needs to spend as a little as it can and BT is not a charity. At the start of  big local authority outsourcing deals it is usual for both sides to gush publicly about savings,  investment in transformation, and new jobs. But at some point the supplier needs to make money.

However the contract is configured, perhaps with council staff working more efficiently on the supplier’s other contracts, the outsourcing deal needs to turn in a profit – even if the pre-contract PowerPoint graph shows costs reducing over the whole term of the deal. 

The danger with single-supplier long-term outsourcing deals is that the council, in essence, receives a loan from the supplier to enable, almost from the start, a simultaneous service transformation, cost cutting and new jobs. But the supplier must recoup the money at some point.      

A single-supplier outsourcing deal can seem to get a council out of a hole. It offers savings and transformation at a time the council most needs them. Who cares about the latter period of an outsourcing deal when none of the original participants are likely to be around to be answerable for a poor deal?

It would take an extraordinarily strong public service ethos for councillors and officers to reject a supplier’s promises that look so attractive in the early years.

It is unclear what costs Sandwell will have to pay to end the deal. Will it have to pay BT compensation for its investments in the contract, as well as exit costs? 

 

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Posted in BT, Campaign4Change, CRM, legal disputes, local government, managing outsourced services, operational issues, outsourcing, public-private partnerships

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Universal Credit IT working well claims DWP

Posted on 21/08/2013 | 2 comments

By Tony Collins

Staff in job centres working on Universal Credit system are writing jobseekers’ personal information down on paper because their IT systems are so “clunky and cumbersome”, Dame Anne Begg, chair of the Commons’ Work and Pensions Committee, told Civil Service World.

“When we visited the Bolton Jobcentre Plus the IT system seemed clunky and cumbersome,” Begg said. Staff making appointments for UC applicants at the Bolton pilot scheme “had to write out some of the [jobseekers’] personal details, just to transfer them from one computer system to another. That’s something that we would have expected to be ironed out.”

The handwriting of jobseekers’ details “could lead to transposing errors”, she said.  Further, the Universal Credit IT system doesn’t allow jobseekers to save their data midway through an online application, Begg said.  She warned that this will penalise those who don’t own computers, who will have to remember to take all of their personal details in one batch to open access computers such as those at local libraries.

But a spokesperson for the Department for Work and Pensions said:

“The IT supporting Universal Credit is working well and the vast majority of people are claiming online. Making a claim to Universal Credit in one session… helps ensure the security of a claimant’s information.”

Last month a leaked survey of staff at the Department of Work and Pensions who are working on Universal Credit programme found dishonesty, secrecy, poor communications, inadequate leadership and low morale.

[ Computer Weekly reports that the DWP placed just 0.5% of its Universal Credit IT spending directly with SMEs, and that the department’s major suppliers – Accenture, Atos, BT, IBM, Capita, HP and SCC – subcontracted little to SMEs. “The Universal Credit supply chain flowed downstream mostly to multinational technology suppliers such as Oracle, Nuance, Genband and RedHat.” Most Universal Credit IT spending has gone to Accenture, IBM and HP: £57m, £41m and £34m respectively, between January 2011 and May 2013.]

Comment

While keeping secret internal reports on the Universal Credit IT project, and while all the signs are that Universal Credit’s IT is in trouble – it’s easier to handle claims at least in part by hand – the DWP’s senior officials, spokespeople and Iain Duncan Smith are telling the public and Parliament that all is well.

Perhaps the next logical step is that they come onto the public stage in costume to tell us nursery tales, while playing stock characters who sing, dance, and perform skits. Maybe then they’ll be more believable.

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Posted in Accenture, Agile, Campaign4Change, Capita, DWP, excessive secrecy, IBM, managing change, openness and transparency, Oracle, procurement, public sector, public services, Universal Credit

Has 2 decades of outsourcing cut costs at HMRC?

Posted on 12/08/2013 | 2 comments

By Tony Collins

If HMRC’s experience is anything to go by, outsourcing can, in the long-term, at least triple an organisation’s IT costs.

When Inland Revenue contracted out its 2,000-strong IT department to EDS, now HP, in 1994 it was the first major outsourcing deal in central government.

Costing a projected £1.03bn over 10 years the outsourcing was a success, according to the National Audit Office in a report in March 2000. The deal  enabled Inland Revenue to bring about changes in tax policy to a tight timetable, said the NAO’s Inland Revenue/EDS Strategic Partnership – Award of New Work.

But costs soared for vague reasons. Something called “post-contract verification” added £203m to the £1.03bn projected cost over 10 years. A further increase of £533m was because of “workload increases including new work”. Another increase of £248m was put down to inflation.

By now the deal with HP had risen from £1.03bn to about £2bn.

When the contract expired in 2004, HM Revenue and Customs and HP successfully transferred the IT staff to Capgemini. The new 10-year contract from 2004 to 2014 (which was later extended 2017) had a winning bid price of £2.83bn over 10 years.

So by 2004 the costs of outsourcing had risen from £1.03bn to £2.83bn.

The new contract in 2004 was called ASPIRE – Acquiring Strategic Partners for Inland Revenue. HMRC then added £900m to the ASPIRE contract for Fujitsu’s running of Customs & Excise systems. By now there were about 3,800 staff working on the contract.

The NAO said in its report in July 2006  – ASPIRE, the re-competition of outsourced IT services – that Gateway reviews had identified the need for a range of improvements in the management of the contract and projects.

Now costing £7.7bn over 10 years

The latest outsourcing costs have been obtained by Computing. It found that annual fees paid to Capgemini under ASPIRE were:

  • 2008/09:  £777.1m
  • 2009/10:  £728.9m
  • 2010/11:  £757.8m
  • 2011/12:  £735.5m
  • 2012/13:  £773.5m

So IT outsourcing costs have soared again. The original 10-year costs of outsourcing in 1994 were put at £1.03bn. Then the figure became about £2bn, then £2.83bn, then £3.7bn when Fujitsu’s contract was added to ASPIRE. Now annual IT outsourcing costs are running at about £770m a year – £7.7bn over 10 years.

So the original IT running costs of Inland Revenue and Customs & Excise have, under outsourcing contracts, more than tripled in about two decades.

Comment:

What happened to the prevailing notion that IT costs fall over the long-term, and that outsourcing brings down costs even further?

Shouldn’t HMRC’s IT costs be falling anyway because of reduced reliance on costly Fujitsu VME mainframes, reductions in data centres, modernisation of PAYE, and the clearance of time-consuming unreconciled items on more than 10 million tax files?

HMRC knows how much profit Capgemini makes under “open book” accounting. It’s a margin of about 10-15% says the NAO. Lower margins are for value-added service lines and higher margins for riskier projects. If the overall target profit margin of 12.3% is exceeded, HMRC can obtain an equal share of the extra profits.

There were 10 failures costing £3.25m in the first 15 months. Capgemini refunded £2.67m in service credits in the first year of the contract.

It’s also worth mentioning that Capgemini doesn’t get all the ASPIRE fees. It is the lead supplier in which there are around 300 subcontractors – including Fujitsu and BT.  Capgemini pays 65% of its fees to its subcontractors.

The outsourcing has helped to enable HMRC to bring in self-assessment online and other changes in tax policy. But HMRC’s quality of service generally (and not exclusively IT) is mixed, to put it politely.

The adjudicator for HMRC who intervenes in particularly difficult complaints identifies as particular problems the giving out of inaccurate information and recording information incorrectly.

She says in her 2013 annual report:

“I am disappointed at the number of complaints HMRC customers feel they need to refer to me in order to get resolution. My role should be to consider the difficult exceptions, not handle routine matters that are well within the capability of departmental staff to resolve successfully. At a time of austerity it is also important to note that the cost of dealing with customer dissatisfaction increases exponentially with every additional level of handling.”

RTI

There are complaints among payroll companies and specialists that real-time information  is not working as well as HMRC has claimed. There seems to be growing irritation with, for example, HMRC’s saying that companies owe much more than they do actually owe. And HMRC has been sending out thousands of tax codes that are wrong or change frequently – or both.

HMRC says it has made improvements but the helpline is appalling. It’s not unusual for callers to wait 30 minutes or more for an answer – or to hang on through multifarious automated messages only to be cut off.

That said there are signs HMRC is, in general, improving slowly. Chief executive of HMRC since 2012 Lin Homer is more down-to-earth and slightly more willing to own up to HMRC’s mistakes than her predecessors, and the fact that RTI and the modernisation of PAYE has got as far as it has is creditable.

But is HMRC a shining example of outsourcing at its best, of outsourcing that cuts costs in the long term? No. A decade of HP and a decade of Capgemini has shown that with outsourcing HMRC can cope, just about, with major changes in tax policy to demanding timetables. But the costs of the outsourcing contracts in the two decades since 1994 have more than tripled.

What about G-Cloud? We look forward to a change in direction from the incoming head of IT Mark Dearnley (if he has much say).

**

A Deloitte survey “The trend of bringing IT back in-house” dated February 2013, said that 48% of respondents in its Global Outsourcing and Insourcing survey 2012 reported that they had terminated an outsourcing agreement early, or for cause, or convenience. Those that took IT services back in-house mentioned cost reduction as a factor. Deloitte said factors included:

– the need for additional internal quality control due to poor quality from the outsourcer

– an increase in the price of service delivery through scope creep and excessive change orders.

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Posted in Accenture, BT, Campaign4Change, change management, CIO, Fujitsu, G-Cloud, Gateway reviews, Government IT, HMRC, IT projects, IT-related failures, managing outsourced services, operational issues, outsourcing, oversight, procurement, project management, public sector, public services, public-private partnerships, supplier relationships

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Universal Credit IT – is the DWP still deceiving itself and the public?

Posted on 07/08/2013 | 6 comments

By Tony Collins

A leaked survey of staff at the Department of Work and Pensions who are working on Universal Credit programme found dishonesty, secrecy, poor communications, inadequate leadership and low morale.

So has the department’s culture changed little over 35 years?

One respondent to the latest UC staff survey wrote: “After 29 years of service this has been the most soul destroying work I have done. There is too much dishonesty and no one ever admits to making a mistake.”

Another comment: “I have never worked somewhere where decision-making was so apparently poor at senior levels…and communications from that level was totally nonexistent.”

Another: “There is a divisive culture of secrecy around current programme developments and very little in the way of meaningful messages for staff or stakeholders explaining what will happen and when.”

Another: “This is the third review in 16 months, no rollout plans, no confidence in going forward and stakeholders losing confidence in our ability to deliver.”

One respondent to the survey complained that stress was damaging people’s health.

The Government Digital Service is helping with UC but one employee in the survey says this has not been well received, according to Computer Weekly. “The involvement of GDS and the apparent secrecy around what they’re doing is bad for morale”.

Some of the interim results of the staff survey were in an email to UC programme staff on 23 July from the DWP’s business change director, a civil servant. The email said there was “much room for improvement”.

 A DWP spokesman implied that the concerns were not ones that reflected a decades-old culture within the department . He said: “A new management team with clear strategic leadership is in place led by Howard Shiplee, one of the UK’s leading experts in delivering major projects including the Olympic Park. As a part of this, we are working with staff to understand the issues they were facing, just as any responsible employer would.”

DWP’s history of deceiving itself and the public

In 1982, the DWP (then the DHSS) abandoned “Camelot” – its attempt at the computerisation of welfare benefits. Around £6m was written off. Camelot stood for computerisation and mechanisation of local office tasks. While it was failing senior managers were assuring their bosses that all was going well.

Camelot’s having  been abandoned because it was too complex and ambitious, the government launched, in 1984, a much more ambitious programme to unify benefits systems. It was called Operational Strategy. It was several times the size of Camelot; and it too proved a financial disaster.

When an MP Eric Deakins asked a senior Whitehall official whether the projected costs of Operational Strategy – then put at £713m – were likely to rise in real terms, the official replied: “No, they are unlikely to rise in real terms the equipment costs if anything are going to come down.”

A £1.9bn cost increase

Ten years later, on 5 May 1994, the then benefits minister Nicholas Scott confirmed to the House of Commons that the costs of Operational Strategy had risen by £1.9bn – from £713m to £2.6bn, which included £315m for consultancy.

Yet at the time, in the 1980s, ministers were portraying Operational Strategy as a success, as Iain Duncan Smith today writes and speaks about the Universal Credit project.

In the 1980s the then welfare benefits minister John Moore said that Operational Strategy “has arrived ahead of schedule, within budget” – exactly what Duncan Smith has been saying about Universal Credit.

But Operational Strategy proved to be not just a financial failure. [At one point the project occupied more than 360 consultants who were staying in the finest hotels on a more or less permanent basis, some of them claiming the sort of expenses parodied in Evelyn Waugh’s “Scoop”. ]

The technical hopes for the system went unrealised. Moore had said that at “the touch of a button” benefits staff would be able to “call up the information they require”.  A claimant would be treated as a “whole person” – staff would be able to view a claimant’s welfare entitlements on one system without, say, logging off income support to go into the separate pension system.

Even today, 30 years on, welfare benefit systems remain largely separate – which is one reason for Universal Credit which is supposed to merge six systems into one.

UC trials too small to prove anything?

Duncan Smith can claim UC is a success because existing welfare claimants are being kept off the new technology. Even when the UC systems are due to start going live nationally in October  2013 the numbers of claimants will be so small their claims could be calculated by hand or using a spreadsheet.

If the UC system remains inadequately tested until after the general election in 2015 – which looks likely –  and then proves unfit for purpose, will ministers and senior officials have any responsibility or accountability for problems that first arose in a previous administration?

Comment:

It seems likely that Universal Credit’s £300m IT systems will be redesigned. There are some signs the IT is already in the process of being “reset”.  But secrecy on the project ensures that the public, Parliament and particularly the opposition will not have the full facts on which to judge the project’s success or otherwise.

If IT work has been aborted what is the cost and have major suppliers been paid regardless?

Universal Credit could end up like Camelot and the Operational Strategy  which failed to meet expectations – unless, perhaps, ministers and officials break with tradition and change the DWP’s age-old culture.

Dishonesty, secrecy, poor communications, inadequate leadership and low morale have characterised the welfare benefits administration for decades. Will a new project leader make much difference? Howard Shiplee who becomes the fourth person to run UC in six months may be world’s most inspirational and talented project leader.

But in trying to change the DWP’s secretive culture he stands without climbing gear at the foot a mountain that’s as wide and high as the eye can see.

David Cameron and the Cabinet Office minister Francis Maude could force a change of culture at the DWP – at least make it publish its consultancy reports on the progress or otherwise of UC – but they would need the support of Duncan Smith who seems as stuck in the old departmental culture as Moore was in the 1980s.

Replace Duncan Smith?

It would probably help if Cameron replaced Duncan Smith with an outsider who could see the organisation’s faults. But Duncan Smith will probably not go until the general election.  Maybe then UC could start to make genuine progress, though the DWP’s culture may always put its management of big projects at a disadvantage.

**

An authoritative account of how and why Operational Strategy did not meet expectations is given by Helen Margetts in Information Technology in Government – Britain and America.

A further account of Operational Strategy is here.

“Crash”, which was written by David Bicknell and me, has a chapter on a series of IT failures at the DWP.

Universal Credit IT reset?

Continuing problems on Universal Credit IT?

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Posted in Campaign4Change

Will HMRC’s new £180,000-a-year IT chief want to stay?

Posted on 01/08/2013 | 6 comments

By Tony Collins

HMRC has appointedMark Dearnley as its new Chief Digital and Information Officer Mark Dearnley who is CIO at Vodafone.

He’ll join HMRC in October – perhaps at a time when the UK’s biggest companies will have gone live with RTI [real-time information] and at a time when there may be increased criticism over how well the new system works – or doesn’t. [Criticisms of aspects of RTI are becoming more trenchant despite the system’s good start.]

Dearnley will take control of a £500m-a-year IT operation that seeks to serve 45 million individuals, 4.8 million businesses and 65,000 HMRC employees. He will be responsible for implementing HMRC’s £200m digitisation programme and accelerating the planned delivery of online services for all taxpayers. He will also lead HMRC’s physical, personnel and information security.

Dearnley has been CIO at Vodafone UK since 2010 with responsibility for IT supporting 19 million customers. He led a programme to overhaul Vodafone’s business-critical information systems and was named Oracle Global Business Unit CIO of the Year in 2012 for this achievement. He restructured Vodafone’s IT operating model and introduced Cloud-based technologies into the mobile operator.

David Gauke, Exchequer Secretary to the Treasury, said:

“It is an indication of the scale and seriousness of the Government’s digital ambition that one of the UK’s most experienced CIOs is leaving the private sector to take on this major role.

“Mark Dearnley’s appointment to HMRC is evidence that Government has the cutting-edge challenges that can attract the very best leaders in IT to public service.”

HMRC Chief Executive, Lin Homer, said:

“Mark is an exceptionally experienced CIO, with strong leadership and change management skills as well as an accomplished technical background across a spectrum of IT disciplines. HMRC has already embarked on an ambitious programme of digitisation to provide taxpayers with modern online services and Mark is the right person to deliver that for the UK.”

Dearnley said:

“I have spent my entire career in the private sector, mostly in customer-facing businesses. But no private business in the UK can match the customer base, scale or complexity of HMRC, which makes this role irresistible. I am thrilled to have been appointed and can’t wait to get started.”

HMRC says that Dearnley was recruited through a fair and open competition under the Government’s business appointment procedures for senior civil servants. The recruitment process was overseen by the Civil Service Commissioner, who led a panel that included two Permanent Secretaries and a Non-Executive Director.  David Camerson approved the appointment.

The annual salary for Dearnley’s director general role is £180,000.

Before Vodafone Dearnley spent six years at Cable and Wireless as CIO and in other senior IT roles. He also spent three years at Boots the Chemists, first as COO for the start-up of Boots.com and latterly as programme director.

He has a degree in electrical and electronic engineering from Brunel University and is a Fellow of the Institute of Engineering and Technology and British Computer Society.

Comment:

Few good senior IT people in central government departments seem to last long. Those from the private sector who have taken high-profile IT jobs in central government but not stayed include Phil Pavitt, Steve Lamey, Joe Harley and James Gardner.

Could it be that the public sector has a muddy, bureaucratic culture of careless, resistant-to-interference spending that is so incompatible with private sector values that a long stay becomes inconceivable?

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Posted in Campaign4Change

Ban the “g” word from outsourcing lexicon?

Posted on 25/07/2013 | 2 comments

By Tony Collins

Is the word “guaranteed” as in “guaranteed savings” just spin –  perhaps the most misused word  in the lexicon of outsourcing? Should it be banned by general voluntary agreement?

It’s commonly used when suppliers are bidding for council contracts; and it is used almost as much by cabinet councillors when they are marketing an outsourcing proposal to fellow councillors and the public.

 It was used a lot by BT in its bid marketing documents that were shown to Cornwall councillors before  they signed a contract with the company. Cornwall’s ruling councillors last year, too, used the phrase “guaranteed savings” to batter their outsourcing critics. 

These are mentions of “guaranteed” from a single marketing document – BT’s Cornwall Council Briefing Strategic Partnership for Support Services, October 2012

– “£149.6m of guaranteed savings”

–  “jobs supported by formal commitments and guarantees on delivery along with clarity on the nature and type of jobs”

– “Guaranteed savings of £60.6m year Core Contract Savings Years 1-10”

– Contractual guarantees for both job creation and performance levels reached

– sales and marketing team and guarantees – £2mpa

But when “guaranteed” faces its most critical test –  in a legal dispute – it appears to mean little or nothing. It’s not a contractual word. [That’s wrong. It is a contractual word says Ali Mehmet in a comment at the end of this blog.]

Somerset County Council portrayed the lowered costs of outsourcing as guaranteed when it contracted out IT and other services to the IBM-owned “Southwest One” joint venture.

Said an IBM-sponsored article on Southwest One in 2008, a year after the joint venture was formed,

“The contract calls for guaranteed [the article’s emphasis] lower costs for service delivery. IBM knows it can lower costs for the partners’ processes, so all three government agencies come out ahead. So do citizens.”

In the end the claimed savings were not achieved, the contract between the council and IBM went into a legal dispute which was settled at a cost to the council of £5.9m, and Somerset’s Cabinet member for resources, David Huxtable, told the BBC last week:

“It was a very complex contract and lots of the savings were predicated on an ever-increasing amount of money being put into public services and we know in the last four years that has gone into reverse.”

Barnet Council uses the word “guaranteed” liberally as it prepares to outsource its New Customer Services Organisation [NCSO] to Capita in a 10-year £320m contract which is part of the One Barnet transformation programme. Says a Barnet statement on the choice of Capita as preferred supplier for NCSO: 

“The contract is worth £320 over ten years and guarantees a saving to the council of £126 million over that period.”

Guarantees are subject to …

The g word may have little meaning in a contract because it is usually tied to variables – such as level of spend – which the public and most councillors rarely ever know the detail of, because the contract is kept confidential.

And against what – subjective? – basis, and baseline, are the guaranteed savings measured? Again it is in the commercially confidential contracts.

Once in a legal dispute between outsourcing supplier and customer, lawyers will argue over the sense, meaning and purpose of contractual guarantees that are subject to an ambiguous string of variables.

 If political parties made manifesto commitments that were “guaranteed” would anyone believe them? If a double-glazing salesmen offered security and thermal insulation that was guaranteed would anyone believe them? 

So why are ruling councillors so inclined to believe outsourcing bidders when they sprinkle their documents with the “g” word? How does it come to mean so much at the pre-contract stage – and nothing afterwards?

A ban on the “g” word? 

If a voluntary ban on the “g” word, at least with reference to outsourcing and related proposals, would be a good idea, please let me know when you see it used and, most likely, abused.  tony@tonyrcollins.co.uk

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Posted in BT, Campaign4Change, IBM, IT-related failures, jargon, legal disputes, local government, public sector, public services

Firecontrol disaster and NPfIT – two of a kind?

Posted on 23/07/2013 | 5 comments

By Tony Collins

Today’s report of the Public Account Committee on the Firecontrol project could, in many ways, be a report on the consequences of the failure of the National Programme for IT in the NHS in a few years time.

The Firecontrol project was built along similar lines to the NPfIT but on a smaller scale.

With Firecontrol, Whitehall officials wanted to persuade England’s semi-autonomous 46 local fire authorities to take a centrally-bought  IT system while simplifying and unifying their local working practices to adapt to the new technology.

NPfIT followed the same principle on a bigger scale: Whitehall officials wanted to persuade thousands of semi-autonomous NHS organisations to adopt centrally-bought technologies. But persuasion didn’t work, in either the fire services or the NHS.

More similarities

The Department for Communities and Local Government told
the PAC that the Firecontrol control was “over-specified” – that it was unnecessary to have back-up to an incident from a fire authority from the other side of the country.

Many in the NHS said that NPfIT was over-specified. The gold-plated trimmings, and elaborate attempts at standardisation,  made the patient record systems unnecessarily complicated and costly – and too difficult to deliver in practice.

As with the NPfIT, the Firecontrol system was delayed and local staff  had little or no confidence it would ever work, just as the NHS had little or no faith that NPfIT systems would ever work.

Both projects failed. Firecontrol wasted at least £482m. The Department of Communities and Local Government cancelled it in 2010. The Department of Health announced in 2011 that the NPfIT was being dismantled but the contracts with CSC and BT could not be cancelled and the programme is dragging on.

Now the NHS is buying its own local systems that may or may not be interoperable. [Particularly for the long-term sick, especially those who have to go to different specialist centres, it’s important that full and up-to-date medical records go wherever the patients are treated and don’t at the moment, which increases the risks of mistakes.]

Today’s Firecontrol report expresses concern about a new – local – approach to fire services IT. Will the local fire authorities now end up with a multitude of risky local systems, some of which don’t work properly, and are all incompatible, in other words don’t talk to each other?

This may be exactly the concern of a post-2015 government about NHS IT. With the NPfIT slowly dying NHS trusts are buying their own systems. The coalition wants them to interoperate, but will they?  

Could a post-2015 government introduce a new (and probably disastrous) national NHS IT project – son of NPfIT – and justify it by drawing attention to how very different it is to the original NPfIT eg that this time the programme has the buy-in of clinicians?

The warning signs are there, in the PAC’s report on Firecontrol. The report says there are delays on some local IT projects being implemented in fire authorities, and the systems may not be interoperable. The PAC has 

” serious concerns that there are insufficient skills across all fire authorities to ensure that 22 separate local projects can be procured and delivered efficiently in so far as they involve new IT systems”.

National to local – but one extreme to the other?

The PAC report continues

“There are risks to value for money from multiple local projects. Each of the 22 local projects is now procuring the services and systems they need separately.

“Local teams need to have the right skills to get good deals from suppliers and to monitor contracts effectively. We were sceptical that all the teams had the appropriate procurement and IT skills to secure good value for money.

“National support and coordination can help ensure systems are compatible and fire and rescue authorities learn from each other, but the Department has largely devolved these roles to the individual fire and rescue authorities.

“There is a risk that the Department has swung from an overly prescriptive national approach to one that provides insufficient national oversight and coordination and fails to meet national needs or achieve economies of scale. 

Comment

PAC reports are meant to be critical but perhaps the report on Firecontrol could have been a little more positive about the new local approach that has the overwhelming support of the individual fire and rescue authorities.  

Indeed the PAC quotes fire service officials as saying that the local approach is “producing more capability than was expected from the original FiReControl project”. And at a fraction of the cost of Firecontrol.

But the PAC’s Firecontrol Update Report expresses concern that

– projected savings from the local approach are now less than originally predicted

– seven of the 22 projects are running late and two of these projects have slipped by 12 months

– “We have repeatedly seen failures in project management and are concerned that the skills needed for IT procurement may not be present within the individual fire and rescue authorities, some of which have small management teams,” says the PAC.

On the other hand …

The shortfall in projected savings is small – £124m against £126m and all the local programmes are expected to be delivered by March 2015, only three months later than originally planned.

And, as the PAC says, the Department for Communities and Local Government has told MPs that a central peer review team is in place to help share good practice – mainly made up of members of fire and rescue authorities themselves.

In addition, part of the £82m of grant funding to local fire services has been used by some authorities to buy in procurement expertise.

Whether it is absolutely necessary – and worth the expense – for IT in fire services to link up is open to question, perhaps only necessary in a national emergency.

In the NHS it is absolutely necessary for the medical records of the chronically sick to link up – but that does not justify a son-of-NPfIT programme. Linking can be done cheaply by using existing records and having, say, regional servers pull together records from individual hospitals and other sites.

Perhaps the key lesson from the Firecontrol and the NPfIT projects is that large private companies can force their staff to use unified IT systems whereas Whitehall cannot force semi-autonomous public sector organisations to use whatever IT is bought centrally.

It’s right that the fire services are buying local IT and it’s right that the NHS is now too. If the will is there to do it cheaply, linking up the IT in the NHS can be done without huge central administrative edifices.

Lessons from FireControl (and NPfIT?) 

The National Audit Office identifies these main lessons from the failure of Firecontrol:

– Imposing a single national approach on locally accountable fire and rescue authorities that were reluctant to change how they operated

–  Launching the programme too quickly without applying basic project approval checks and balances

– Over optimism on the deliverability of the IT solution.

– Issues with project management including consultants who made up half of the management team and were not effectively managed

MP Margaret Hodge, chair of the Public Accounts Committee, today sums up the state of Firecontrol

“The original FiReControl project was one of the worst cases of project failure we have seen and wasted at least £482 million of taxpayers’ money.

“Three years after the project was cancelled, the DCLG still hasn’t decided what it is going to do with many of the specially designed, high-specification facilities and buildings which had been built. Four of the nine regional control centres are still empty and look likely to remain so.

“The Department has now provided fire and rescue authorities with an additional £82 million to implement a new approach based on 22 separate and locally-led projects.

“The new programme has already slipped by three months and projected savings are now less than originally predicted. Seven of the 22 projects are reportedly running late and two have been delayed by 12 months. We are therefore sceptical that projected savings, benefits and timescales will be achieved.

“Relying on multiple local projects risks value for money. We are not confident that local teams have the right IT and procurement skills to get good deals from suppliers and to monitor contracts effectively.

“There is a risk that the DCLG has swung from an overly prescriptive national approach to one that does not provide enough national oversight and coordination and fails to meet national needs or achieve economies of scale.

 “We want the Department to explain to us how individual fire and rescue authorities with varied degrees of local engagement and collaboration can provide the needed level of interoperability and resilience.

“Devolving decision-making and delivery to local bodies does not remove the duty on the Department to account for value for money. It needs to ensure that national objectives, such as the collaboration needed between fire authorities to deal with national disasters and challenges, are achieved.”

Why weren’t NPfIT projects cancelled?

 NPfIT contracts included commitments that the Department of Health and the NHS allegedly did not keep, which weakened their legal position; and some DH officials did not really want to cancel the NPfIT contracts (indeed senior officials at NHS England seem to be trying to keep NPfIT projects alive through the Health and Social Care Information Centre which is responsible for the local service provider contracts with BT and CSC).

PAC report on Firecontrol

What Firecontrol and the NPfIT have in common (2011)

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