Category Archives: change

Some success in cutting Whitehall costs

By Tony Collins

The coalition government, Cabinet Office, Treasury, departments and agencies have succeeded in cutting central government costs, according to a National Audit Office report published today.

The NAO found that “in particular, large reductions have been made in spending on consultants, temporary staff, property and information technology” in 2010-11.

Departments cut their spend on consultants by £645m in – a real-terms reduction of 37%, said the NAO which also identified “£537m reduced capital spending on IT-related items”.

Unlike some previous reports of the NAO that have questioned the credibility of officialdom’s claims of savings, the NAO’s latest report “Cost reduction in central government: summary of progress” found that the savings claimed by the Cabinet Office, Treasury and government were usually genuine.

Where departments have cut costs by cancelling IT projects or having contracts renegotiated – as opposed to simplifying and streamlining the way they work – the NAO was unsure whether the savings could be sustained.

Said the NAO

“Central government departments took effective action in 2010-11 to reduce costs and successfully managed within the reduced spending limits announced following the 2010 election.

“This resulted in a 2.3% real-terms reduction in spending within departments’ control, compared with 2009-10. Some £3.75bn or around half the reduction was in areas targeted by the Efficiency and Reform Group for cuts in back‑office and avoidable costs.”

Are IT cuts sustainable without a change in working practices?

The NAO said:

 “The fall of 35 per cent in IT capital spend is partly the result of decisions to permanently halt or reduce spending on specific projects, and partly the result of action to reduce the costs of IT products and services including through contract renegotiation.

“However, it is unlikely that IT capital spending will remain at this lower level in total, given the key role of IT and online services in increasing productivity.”

The NAO mentioned the actions of some departments by name.

–          The Home Office cut costs in part by “significant reductions in IT, estates and consultancy spending”.

– HM Revenue & Customs, the Department for Work and Pensions and the Ministry of Defence aimed to secure the bulk of cost reductions from within their organisations. HM Revenue & Customs has established comprehensive governance arrangements to reduce costs, with a central team and programme management infrastructure. The Department for Work and Pensions put in place a transformation programme board in May 2011 to oversee the redesign of its corporate centre and broader cultural change. “However, it cannot finalise plans beyond 2011-12 as they depend on the future business model after the introduction of Universal Credit,” said the NAO. The DWP’s finance team has provided ‘What the Future Holds’ updates and interactive briefings for staff.

– The NAO said it “identified strong leadership as a key factor in the success of the Foreign and Commonwealth Office’s cost reduction efforts”.

– The Centre for Environment, Fisheries and Aquaculture Services within the Department for Environment, Food and Rural Affairs “held sufficiently detailed information to be able to challenge its project managers to reduce costs without affecting services”. The NAO said the “resulting savings identified from some 200 projects made up 30 per cent of the Agency’s efforts to meet their efficiency savings target”.

In July 2011, the Cabinet Office’s Efficiency and Reform Group reported to the Public Accounts Committee that it had helped save some £3.75bn through various initiatives. “Our analysis of the audited accounts of the 17 main departments confirms that spending in the areas targeted was reduced on this scale”, said the NAO.

Comment

The NAO report shows that within some departments officials are cutting costs by simply reducing grants but some parts of central government are making an effort to do things differently.

We hope the coalition and Cabinet Office keep up the pressure for cost-cutting because, in IT alone, the potential savings are in the billions. The NAO report shows there has been a good start. We hope that the officials who are achieving lasting success will pass on their learning experiences to those who are struggling to make cuts sustainable.

NAO report Cost reduction in central government – a summary of progress

Why thinking beyond ‘If it ain’t broke, don’t fix it’ might pay business dividends

By David Bicknell

Most organisations in the public sector are continuing to reduce their costs. 2012 brings a continued diet of re-asserting control of costs and delivering operational savings to cope with a challenging economic landscape.

But a conversation with York-based services and solutions company Trustmarque recently raised a new phrase, and one that is perhaps blindingly obvious, and which applies to both public and private sectors: cost avoidance.

As an IT organisation it is worth asking yourself whether you really need to purchase a product or service. Can you find an alternative strategy? If you don’t have to buy something, then don’t buy it. Or find a better way of spending the money to deliver structural change that benefits the business. 

Sometimes organisations miss an opportunity to bring their technology up to date and change the way they work. Their conservative approach never drives real change.

It is vendors like Trustmarque’s role to help such organisations plan, source, deploy and manage their IT infrastructure with an end goal of reducing their costs and delivering operational savings. In Trustmarque’s case, it is a highly successful approach which just led to the company’s best-ever year and won it the Services Provider of the Year title for 2011 in the CRN Channel Awards.

It is an approach that has also worked for its customers: Plymouth City Council, by upgrading to Windows 7, tackled change by creating a more flexible, mobile way of working – and saved itself £494,000 in licensing fees.

Sometimes you have to think big to win big. And thinking in terms of ‘cost avoidance’ rather than the cliche ‘reducing costs’  – though that doesn’t necessarily mean not spending at all – and going beyond an, ‘If it ain’t broke, don’t fix it,’ approach just might help some realise their cost goals, and at the same time, change their organisations for the better.

As Agile as a John Deere tractor

By David Bicknell

Thanks to Rally Software’s Agile Blog for a pointer to a Computerworld post about the use of Agile development at the tractor maker John Deere & Co.

It seems that John Deere has moved 800 software developers into an Agile development process  in around a year.

This involved recreating the company’s software development effort around new teams that included developers, systems engineers, customer support and marketing personnel, testers, all working closely together.

It is ironic that although  John Deere’s software development work is incremental through an Agile approach that is designed to deliver speed, innovation, quality, customer focus and teamwork,  the company’s actual move to adopt Agile as a development philosophy was more of a Big Bang approach than an incremental one, and was partly designed to overcome any resistance.

DWP defends £316m HP contract

By Tony Collins

The Department for Work and Pensions could lead the public sector in technical innovations. It has had some success in cutting its IT-related costs. It has also had some success so far with Universal Credit, which is based on agile principles.

It has further launched an imaginative welfare-to-work scheme , the so-called Work Programme, which seeks to get benefit claimants into jobs they keep.

Despite media criticism of the way the scheme has been set up – especially in the FT – a report by the NAO this week made it clear that the DWP has, for the most part, taken on risks that officials understand.

Some central government departments have updated business cases as they went through a major business-change programme and not submitted the final case until years into the scheme, as in parts of the NPfIT.

But the DWP has implemented the Work Programme unusually quickly, in a little more than a year, by taking sensible risks.  The NAO report on the scheme said the business case and essential justification for the Work Programme were drawn up after key decisions had already been made. But the NAO also picked out some innovations:

– some of the Work Programme is being done manually rather than rush the IT

– suppliers get paid by results, when they secure jobs that would not have occurred without their intervention. And suppliers get more money if the former claimant stays in the job.

– the scheme is cost-justified in part on the wider non-DWP societal benefits of getting the long-term unemployed into jobs such as reduced crime and improved health.

So the DWP is not frightened of innovation. But while Universal Credit and welfare-to-work scheme are centre stage, the DWP is, behind the safety curtain, awarding big old-style contracts to the same suppliers that have monopolised government IT for decades.

Rather than lead by example and change internal ways of working – and thus take Bunyan’s steep and cragged paths – the DWP is taking the easy road.

It is making sure that HP, AccentureIBM and CapGemini are safe in its hands. Indeed the DWP this week announced a £316m desktop deal with HP.  EDS, which HP acquired in 2008, has been a main DWP supplier for decades.

DWP responds to questions on £316m HP deal 

I put it to the DWP that the £316m HP deal was olde worlde, a big contract from a former era. These were its responses. Thank you to DWP press officer Sandra Roach who obtained the following responses from officials. A DWP spokesperson said:

“This new contract will deliver considerable financial savings and a range of modern technologies to support DWP’s strategic objectives and major initiatives such as Universal Credit.

“The DWP has nearly 100,000 staff, processing benefits and pensions, delivering services to 22 million people.

“DWP is on schedule to make savings of over £100m in this financial year for it’s Baseline IT operational costs, including the main IT contracts with BT and HPES [Hewlett Packard Enterprise Services].

“All contracts have benchmarking clauses to ensure best value for money in the marketplace.

“The five year contract was awarded through the Government Procurement framework and has been scrutinised to ensure value for money.”

My questions and the DWP’s answers:

Why has the DWP awarded HP a £316m contract when the coalition has a presumption against awarding contracts larger than £100m?

DWP spokesperson: “The Government IT Strategy says (page 10) ‘Where possible the Government will move away from large and expensive ICT projects, with a presumption that no project will be greater than £100m. Moving to smaller and more manageable projects will improve project delivery timelines and reduce the risk of project failure’.

“HM Treasury, Cabinet Office and DWP’s commercial and finance teams have scrutinised the DWP Desktop Service contract to ensure that it represents the most economically advantageous proposition.”

What is the role, if any for SMEs ?

DWP: “There are a number of SMEs whose products or services will form part of or contribute to the DWP Desktop Service being delivered by HP, for example ActivIdentity, Anixter, AppSense, Azlan, Click Stream, Cortado, Juniper Networks, Quest Software, Repliweb Inc, Scientific Computers Limited (SCL), Westcon etc.”

Why is there no mention of G-Cloud?

DWP: “Both the new contract and the new technical solution are constructed in such a way as to support full or partial moves to cloud services at DWP’s discretion.”

Comment:

For the bulk of its IT the DWP is trapped by a legacy of complexity. It is arguably too welcoming of the safety and emollients offered by its big suppliers.

The department is not frightened by risk – hence the innovative Work Programme which the NAO is to be commended on for monitoring at an early stage of the scheme. So if the DWP is willing to take on sensible risks, why does it continue to bathe its major IT suppliers in soothingly-large payments, a tradition that dates back decades? What about G-Cloud?

DWP reappoints HP on £316m desktop deal

DWP signs fifth large deal with HP

“DWP awards Accenture seven year application services deal”

“DWP awards IT deals to IBM and Capgemini”

A few suggested blog posts – on change at Kodak, the rise of Splunk and a culture clash in China

By David Bicknell

Browsing over the weekend, I came across a few posts about change management and cultural change that caught my eye and are worthy of passing on.

A couple are from the Harvard Business Review, and one is taken from IT-Director.com.

The Harvard Business Review items cover the innovation and transformational change issues involved in the continued demise of Kodak and the cultural issues that anyone who has plans to do business in China may have to get to grips with. The IT-Director article covers the growing reputation of Splunk, a real-time operational intelligence specialist that collects and indexes machine data and which has potential in the growing ‘Big Data’ marketplace.

G-Cloud – it’s starting to happen

By Tony Collins

Anti-cloud CIOs should “move on” says Cabinet Office official, “before they have caused too much harm to their business”.

For years Chris Chant, who’s programme director for G Cloud at the Cabinet Office, has campaigned earnestly for lower costs of government IT. Now his work is beginning to pay off.

In a blog post he says that nearly 300 suppliers have submitted offers for about 2,000 separate services, and he is “amazed” at the prices. Departments with conventionally-good rates from suppliers pay about £700-£1,000 a month per server in the IL3 environment, a standard which operates at the “restricted” security level. Average costs to departments are about £1,500-a-month per server, says Chant.

“Cloud prices are coming in 25-50% of that price depending on the capabilities needed.”  He adds:

“IT need no longer be delivered under huge contracts dominated by massive, often foreign-owned, suppliers.  Sure, some of what government does is huge, complicated and unique to government.  But much is available elsewhere, already deployed, already used by thousands of companies and that ought to be the new normal.

“Rather than wait six weeks for a server to be commissioned and ready for use, departments will wait maybe a day – and that’s if they haven’t bought from that supplier before (if they have it will be minutes).  When they’re done using the server, they’ll be done – that’s it.  No more spend, no asset write down, no cost of decommissioning.”

Chant says that some CIOs in post have yet to accept that things need to change; and “even fewer suppliers have got their heads around the magnitude of the change that is starting to unfold”.

“In the first 5 years of this century, we had a massive shift to web-enabled computing; in the next 5 the level of change will be even greater.  CIOs in government need to recognise that, plan for it and make it happen.

“Or move on before they have caused too much harm to their business.”

He adds: “Not long from now, I expect at least one CIO to adopt an entirely cloud-based model.  I expect almost all CIOs to at least try out a cloud service in part of their portfolio.

“Some CIOs across government are already tackling the cloud and figuring out how to harness it to deliver real saves – along with real IT.  Some are yet to start.

“Those that have started need to double their efforts; those that haven’t need to get out of the way.”

Cloud will cut government IT costs by 75% says Chris Chant

Chris Chant’s blog post

Transition Institute’s weekly round-up of mutuals and spin-out stories

By David Bicknell

Here is a link to the Transition Institute’s weekly round-up of mutuals and public sector spin-out stories.

NB The link  on the Transition Institute site to the Public Service article on procurement change and SMEs on 13th January doesn’t work. The link below does, however.

Pace of procurement change frustrates innovative SMEs

Temenos confirms end of T24 IT project with Queensland Treasury Corporation

By David Bicknell

The Swiss banking software supplier Temenos has responded to overnight coverage of the end of an IT project with the Queensland Treasury Corporation in Australia.

Queensland Treasury Corporation said it had changed tack on the T24 project after experiencing problems developing a core banking system.

Temenos said today, “Temenos can confirm that the T24 project at Queensland Treasury Corporation (QTC) has been terminated. This decision was taken by QTC based on a change of requirements, which had become more specific; as a result it wanted an approach that was more in line with these unique requirements.

“It has therefore decided to run its IT upgrade in house. Temenos is pleased to have had the opportunity to assist QTC with their IT renewal project, and has enjoyed a constructive and mutually amicable relationship with the organisation.”

QTC, which manages public sector debt and investments, told the Brisbane Times it was now developing its own system and insisted it would be able to do so within the existing $27 million project budget. The organisation defended its handling of the IT contract, saying it has now acquired additional in-house capabilities.

The story had been extensively covered in the Australian IT and banking press earlier today.

QLD Treasury terminates failed IT overhaul

QLD Treasury Corp abandons core IT project

Queensland Treasury Corporation tears up Temenos T24 contract

CSC to change hands in 2012?

By Tony Collins

Techmarketview analyst Tola Sargeant who has followed the NPfIT closely, and particularly the ups and downs of CSC, says the implications for CSC of the government’s tough stance against the company are “dire”. She adds:

“Indeed, we wouldn’t be at all surprised to see CSC change hands in 2012 as a result”.

Maude gets tough 

Within the Department of Health and CSC in May last year executives were confident a new memorandum of understanding under the NPfIT would be signed.

Now the Government, in the form of the Cabinet Office minister Francis Maude, has declined so far to sign any new deal with CSC. This is the way CSC put it in a filing to the SEC, the US regulators, on 27 December 2011:

“… Since mid-November 2011, the parties [Department of Health, Cabinet Office and CSC) have been engaged in further discussions relating to the MOU [Memorandum of Understanding], which have included discussions regarding a proposed contract amendment with different scope modifications and contract value reductions than those contemplated by the MOU.

“However, CSC recently was informed that neither the MOU nor the contract amendment then under discussion would be approved by the government.

“Notwithstanding the failure to reach agreement, CSC anticipates that the parties will continue discussions in January 2012 regarding proposals advanced by both parties reflecting scope modifications and contract value reductions that differ materially from those contemplated by the MOU.

“As a result of the circumstances described above, CSC has concluded, as of the date of this filing, that it will be required to recognize a material impairment of its net investment in the contract in the third quarter of fiscal year 2012.

“Until CSC and NHS conclude their on-going discussions concerning a possible contract amendment, including any scope modifications and contract value reductions that might be part of any such amendment, the Company is unable to estimate the amount of such impairment.

“However, depending on the terms of such an amendment or if no amendment is concluded, such impairment could be equal to the Company’s net investment in the contract, which, as of November 30, 2011, was approximately £943m ($1.5bn).

“Additional costs could be incurred by CSC depending on the nature of such an amendment, or if no amendment is concluded. The Company is unable to estimate the amount of such additional costs; however, such costs could be material.”

Why the Cabinet Office has left draft MoU unsigned?

The non-signing of a new deal with CSC is the firmest indication so far that the Cabinet Office is prepared to bring a rigorous, independent scrutiny to big IT projects and contracts.

Though the DH had wanted to sign a new deal with CSC, at least to assure continued support and upgrades to the few NHS trusts that have installed CSC and iSoft’s “Lorenzo” patient records system,  Maude is said to have seen a new deal with CSC as rewarding the company for failings in the past.

Also Cabinet Office officials regarded the terms of a new deal with CSC as unattractive. One Cabinet Office official wrote in a memo dated March 2011 that CSC’s proposals would mean a reduction in Trusts using CSC IT from the original number of 220 Trusts to 80.

 “My view is that, on the face of it, while the additional savings are appealing, the offer is unattractive. This is because the unit price of deployment (per Trust) under offer roughly doubles the cost of each deployment from the original contract.

“Ultimately, we [Cabinet Office] are not convinced the [Department of] Health commercial team are approaching this in the best way.”

It is possible that a new deal for signing was put before Maude – and went unsigned. Had any appeal gone to the Prime Minister David Cameron it is highly likely he would have given his full backing to Maude.

David Cameron’s view?

Cameron may be delighted that at least £2bn remains uncommitted to the NPfIT and could be saved by not signing a new deal with CSC.

Conservative MP Richard Bacon, a member of the Public Accounts Committee who has become an authority on the NPfIT, said of CSC’s warning of write-offs on the Programme:

“It was always a worry that the Department of Health was initially keen to sign a new deal with CSC that would have been poor value. Now it seems the Cabinet Office has done its job as an independent scrutineer and has made sure the interests of taxpayers are protected.

“This shows how important it is for the Cabinet Office to have the final say on big Government IT-based projects.”

What does CSC’s plight mean for the NHS?

NHS trusts have long wanted open competitive tendering and now, to a large extent, they have it. More than a dozen acute trusts are likely to tender for major systems replacements this year which is a big increase on the annual rate for past years.

Some iSoft and Cerner sites may also seek to renew contracts or find replacement systems. CSC, which may be lifted of the burden of meeting high-priced NPfIT commitments, may be a strong competitor in the UK health market.

One problem for NHS trusts will be finding enough strong candidates for their shortlists. They may look to the US market – but end up with products that need anglicising, which will be risky process.

Techmarketview says that what is doom and gloom for CSC is an opportunity for others. Rival suppliers “will be cheered by the prospect of more NHS Trusts procuring systems that CSC should have delivered by now”.

School report on Govt ICT Strategy – a good start

By Tony Collins

In a review of progress on the Government’s ICT Strategy after six months, the National Audit Office says that the Cabinet Office has made a “positive and productive start to implementing the Strategy”.

The NAO says that at least 70 people from the public sector have worked on the Strategy in the first six months though the public sector will need “at least another 84 people to deliver projects in the Plan”.

The UK Government’s ICT Strategy is more ambitious than the strategies in the US, Australia, Netherlands and Denmark, because it sets out three main aims:

– reducing waste and project failure

– building a common ICT infrastructure

– using ICT to enable and deliver change

The US Government’s ICT Strategy, in contrast, encompasses plans for a common infrastructure only – and these plans have not produced the expected savings, says the NAO.

In a paragraph that may be little noticed in the report, the NAO says that senior managers in central government have plans to award new ICT contracts (perhaps along the pre-coalition lines) in case the common solutions developed for the ICT Strategy are “not available in time”.

The NAO report also says that “suppliers were cautious about investing in new products and services because of government’s poor progress in implementing previous strategies”.

Of 17 actions in the Strategy that were due by September 2011, seven were delivered on time. Work on most of the other actions is underway and a “small number” are still behind schedule says the NAO.

The NAO calls on government to “broaden the focus to driving business change”.

Some successes of the UK’s ICT Strategy as identified by the NAO:

* The Cabinet Office has set up a small CIO Delivery Board led by the Government CIO Joe Harley to implement the ICT Strategy. The Board’s members include the Corporate IT Director at the DWP, CIOs at the Home Office, MoD, HMRC, Ministry of Justice and Department for Health, together with key officials at the Cabinet Office. The departmental CIOs on the Board are responsible directly to Francis Maude, Minister for the Cabinet Office, for implementing the ICT Strategy in their departments and are accountable to their own minister. No conflicts have arisen

* Senior managers in central government and the ICT industry are willing to align their strategies for ICT with new cross-government solutions and standards but need more detail.

*  Some suppliers have offered help to government to develop its thinking and help accelerate the pace of change in ICT in government.

* The Cabinet Office intended that delivering the Strategy would be resourced from existing budgets. Staff have been redirected from other tasks to work on implementing the Strategy. “We have found collaborative working across departmental boundaries. For example HMRC and the MoD have combined resources to develop a strategy for greener ICT. Teams producing the strategies for cloud computing and common desktops and mobile devices have worked together to reduce the risk of overlap and gaps.

* The BBC has shown the way in managing dozens of suppliers rather than relying on one big company. For BBC’s digital media initiative, the Corporation manages 47 separate suppliers, says the NAO.

* The Cabinet Office intends that departments will buy components of ICT infrastructure from a range of suppliers rather than signing a small number of long-term contracts; and to make sure different systems share data the Cabinet Office is agreeing a set of open technical standards.

* Some of the larger departments have already started to consolidate data centres, though the NAO said that the programme as a whole is moving slowly and no robust business case is yet in place.

* The Cabinet Office is starting to involve SMEs. It has established a baseline of current procurement spending with SMEs – 6.5% of total government spend – and hopes that the amount of work awarded to SMEs will increase to 25%. Government has started talking “directly to SMEs”, says the NAO.

Some problems identified in the NAO report:

* Cloud computing and agile skills are lacking. “Government also lacks key business skills. Although it has ouitsourced ICT systems development and services for many years, our reports have often stated that government is not good at managing commercial relationships and contracts or procurement.”

* Suppliers doubt real change will happen. The NAO says that suppliers doubted whether “government had the appropriate skills to move from using one major supplier to deliver ICT solutions and services, to managing many suppliers of different sizes providing different services”.

* The Government CIO Joe Harley, who promoted collaboration, is leaving in early 2012, as is his deputy Bill McCluggage. The NAO suggests their departures may “adversely affect” new ways of working.

* The NAO interviewed people from departments, agencies and ICT suppliers whose concern was that “short-term financial pressure conflicted with the need for the longer-term reform of public services”.

* The culture change required to implement the Strategy “may be a significant barrier”.

* The Cabinet Office acknowledges that the government does not have a definitive record of ICT spend in central government (which would make it difficult to have a baseline against which cuts could be shown).

* The Cabinet Office has not yet defined how reform and improved efficiency in public services will be measured across central government, as business outcomes against an agreed baseline.

**

Amyas Morse, head of the National Audit Office, said today: ” ICT is going to play an increasingly important role in changing how government works and how services are provided.

“The Government’s ICT Strategy is in its early days and initial signs are good. However, new ways of working are as dependent on developing the skills of people in the public sector as they are on changes to technology and processes; the big challenge is to ensure that the Strategy delivers value in each of these areas.”

NAO report:  Implementing the Government ICT Strategy: six-month review of progress.