Category Archives: HMRC

Some of the strengths and weaknesses in GovIT – Phil Pavitt

Posted on 19/11/2014 | 1 comment

By Tony Collins

Phil Pavitt was CIO at HM Revenue & Customs. He left two years ago and arrived at Specsavers via Aviva where he was global director of IT transformation.

At HMRC he was a main board member, responsible for all technology across the estate, delivering the change agenda, and managing a total annual IT budget of more than £1bn.

Now he has given an interview to Government Computing in which he talks about his role at Specsavers but also some of the challenges faced by those who are responsible for IT in central government.

He:

–  applauds the Government Digital Service’s (GDS) role in increasing digital traction, but believes the putting down of CIOs has been unnecessary and counter-productive.

– laments a lack of attention to legacy systems. “Name me the departments that have revolutionised themselves and their legacy engines. There’s not many to name. But the front end looks really really good. But who is going to change that legacy because one day that disconnect will be huge? They [GDS] are playing into the hands of the big SIs [systems integrators] who will turn out and say, ‘You’ll have to swap it out, and only we can do it.

“So I think there’s an interesting fundamental dichotomy that will eventually appear where the front of government will look really good and rightly so, and the back of government increasingly becomes expensive, archaic and out of date. And that’s going to be a problem.”

Pavitt also talks about the challenges faced by SMEs when trying to do business with departments, and the role of big suppliers, the so-called systems integrators.

Phil Pavitt’s interview in Government Computing.

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Posted in CIO, Government digital Service, Government IT, HMRC

Universal Credit project costs reach £36,222 per claimant (excluding the claim)

Posted on 17/11/2014 | 4 comments

By Tony Collins

Iain Duncan Smith has told MPs that the costs of the Universal Credit project are £652m to March 2014 – which is about £36,222 per successful claimant.

The figure includes the money paid to the DWP’s Universal Credit IT suppliers which was £303m by the end of 2012/13.  An updated figure will be published in a UC report by the National Audit Office due to be published near the end of this month.

The costs of Universal Credit per successful claimant are disproportionately high for an IT-enabled programme that has been running for more than three years because numbers on the system are small.

If the UC programme were complete, at a forecast cost of £1.8bn, and the predicted 7.7 million people were receiving the benefit, the scheme’s delivery costs per claimant would be only about £234.

As at October 2014 17,850 people were on the Universal Credit caseload.  IDS told the Work and Pensions Committee on 5 November, in a hearing that lasted more than 2 hours,  that the costs of UC were £652m by March 2014.

That works out at about £36, 222 per successful UC claimant.

Total delivery costs for the programme are expected to be £1.8bn, down from an original prediction of £2.4bn, IDS told the committee.

IDS and the DWP hope many more successful claimants will be added to the systems next year when Universal Credit is rolled out to all jobcentres and local authorities across the country. But the scheme is subject to growing uncertainties, as the DWP’s permanent secretary Robert Devereux and IDS made clear to the committee.

DWP drops firm end date for UC

When an MP put it to IDS that he no longer has a concrete end date for when  7.7 million people will be on UC, he paused. Then he said the plan was for UC to be complete “by the end of 2018”. He gave no commitment and did not deny that there is no concrete end date.

“Er yes, yeah,” replied IDS. “We do envisage UC being complete by the end of 2018. That’s our plan.”  He said that UC would handle singles, couples, then families. In the meantime the DWP is developing an “end-state digital process” that will deliver benefits for claimants and the departments.

“The roll-out gives us phenomenal understanding of what we need to do to make sure the digital service ultimately comes in and completes that process properly. There is a de-risking of the process.”

UC may never be fully automated

Another uncertainty for UC is its ability to handle an estimated 1.6 million changes per month to people’s claims.

Changes in circumstances are handled manually at present.

Robert Devereux, permanent secretary at the DWP, told the committee that the UC systems are, for some claimants,  part manual, part automated. Devereux said:

“The peculiar nooks and crannies with individual circumstances  – we have deliberately not tried to code every permutation as we go along. We are trying to make sure it can be safely delivered within costs in a sensible fashion.

“It would not be sensible to code every possible permutation back at the start while you are still learning.  There are different elements of the system, some of which will be [digital] all the way through, some which are not.”

The committee chair Dame Anne Begg questioned whether UC will ever work effectively if manual processing is applied to some of the 7.7 million claimants. She received no clear answer.

Comment

It’s a good thing that the DWP is going slowly and cautiously but a spend of £652m to March 2014 per UC recipient does not seem cautious at all. If the project is being run on agile principles of fail early and fail cheaply, can this sum be justified?

On a more positive note IDS has stopped quoting a firm end date for UC. At first the DWP was saying UC would be completed by the end of 2017, then IDS said the programme would be “essentially complete” by the end of 2017.  Now he is saying it may be complete by the end of 2018 but is giving no commitment. His caution is probably because the NAO’s update on UC later this month will suggest that the programme is unlikely to be delivered in any certain time period. Nobody can say with authority or credibility when UC’s implementation will be complete.

It’s also a good thing that the DWP is conceding that UC can never be fully automated. It doesn’t make sense spending disproportionate sums on automating calculations that can be done more cheaply by hand.  But if the exceptions prove the rule UC could prove much more expensive to implement than planned.

UC is a good idea in theory but the next government needs to do a full review of its financial and practical feasibility, which the present government is unlikely to do.

Universal Credit could be complete by 2018 – Government Computing

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Posted in Accenture, BT, Campaign4Change, change management, DWP, Government IT, HMRC, HP, IBM, IT projects, Major Projects Authority, National Audit Office, Real-Time Information, Universal Credit

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Whitehall has taken on 100 technology experts over past year

Posted on 29/08/2014 | Leave a comment

By Tony Collins

The Cabinet Office says that government departments have taken on more than  100 IT experts over the past year.

The Government Digital Service (GDS) led the recruitment as part of a plan to raise technology-related skills in the civil service.

One appointment is of former Credit Suisse CIO Magnus Falk as the Government’s new Deputy Chief Technology Officer, reporting to Government CTO Liam Maxwell. Other recent technology recruits include:

  • MOJ Chief Technology Officer Ian Sayer, who was Global Chief Information Officer at Electrolux; and
  • Government Chief Technical Architect Kevin Humphries, former Chief Technical Architect at Qatarlyst.

Chief Digital Officer appointments include:

  • HMRC Chief Digital and Information Officer Mark Dearnley, formerly CIO of Vodafone;
  • MOJ CDO Paul Shelter, who previously co-founded two start-ups and was CTO for banking at Oracle;
  • ONS’s Laura Dewis, Deputy Director Digital Publishing, who was Head of Online Commissioning at The Open University;
  • Jacqueline Steed, former Managing Director and CIO for BT Wholesale, who starts as CDO at the Student Loan Company next week; and
  • DWP CDO Kevin Cunnington, who was previously Global Head of Online at Vodafone.

Comment

It’s encouraging that the Cabinet Office, through the GDS, is overseeing the recruitment of IT leaders in government departments. It means the recruits will see their roles as cross-governmental. In the past the civil service culture has required that CIOs show an almost filial respect for their departmental seniors.

It’s a good idea that GDS tries to change age-old behaviours from within by recruiting technology experts with a wide range of experience from the private sector. But how long will they last?

Their challenge will be converting the words “transformation”, “innovation” and “fundamental change” from board papers, press releases, strategy documents, and conference speeches, into actions.

New deputy CTO role in central government – Government Computing

 

 

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Posted in BT, Campaign4Change, CIO, DWP, Government IT, HMRC, Home Office, Ministry of Justice, Oracle

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Capgemini and Fujitsu pocket “incredible” £1.2bn profits from HMRC

Posted on 22/07/2014 | 1 comment

By Tony Collins

In an outsourcing deal of then unprecedented size Inland Revenue contracted out about 2000 IT staff and services to EDS – now HP – in 1994.

The deal was worth about £1bn over 10 years. Later Inland Revenue joined with Customs & Excise and became HM Revenue and Customs. As part of the merger HP took over Customs’ IT which was largely run by Fujitsu. The £1bn outsourcing contract with HP turned into a £2bn deal.

In 2004 the merged contracts were called “Aspire” and Capgemini took over staff and IT services from HP in a 10-year deal expected to be worth between £3bn and £5bn.  The contract was later extended by 3 years to 2017.

Today a National Audit Office report Managing and replacing the Aspire contract says the deal is worth £10.4bn to Capgemini and Fujitsu.

Margaret Hodge, chairman of the Committee of Public Accounts, says of the NAO report on the Aspire contract:

“HMRC’s management of Aspire, its most important contract which provides 650 IT systems to help HMRC to collect tax, has been unacceptably poor.

“While it may have secured a good level of IT service in the end, by the time the contract ends in 2017 HMRC will have spent £10.4 billion – more than double what it initially expected to spend.

“What’s worse, it has spent £5 billion of this total without first checking whether other providers could deliver a better deal, even though it had evidence that it was paying above market prices.

“It is deeply depressing that once again a government contract has proved better value for the private companies involved than for the taxpayer, with Capgemini and Fujitsu pocketing an incredible £1.2 billion in combined profits – more than twice the profit HMRC expected.

“Its own lack of capability meant HMRC was over-reliant on providers’ technical expertise, undermining its ability to act as an intelligent customer on behalf of the taxpayer.

“HMRC is planning to replace the Aspire contract in 2017, but its new project is still half-baked, with no business case and no idea of the skills or resources needed to make it work. All of this gives me little confidence that HMRC’s senior team has the capability to manage large and complex contracts.”

“More changes than normal”

The NAO found that in more than 80% of projects, HMRC and Capgemini changed the agreed scope, time or budget. Says the NAO report:

“One feature of the cooperative approach between HMRC and Capgemini has been a willingness on both sides to make changes once the extensive planning is complete and budget, scope and timing has been agreed commercially.

“These changes are made through formal governance processes and usually help to educe risk. Some change is to be expected as part of good project management.

“However, we consider that HMRC and Capgemini made more changes than normal on projects after the point at which budgets, scope and timing had been commercially agreed. The degree of change makes it very difficult to hold the Aspire suppliers to account for their performance across the portfolio of projects.”

Managing and replacing the Aspire contract – NAO report

Good summary of NAO report at Computerworlduk

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Posted in Campaign4Change, Capgemini, Fujitsu, Government IT, HMRC, outsourcing

HP’s tacit threat to government not to bid for contracts?

Posted on 03/07/2014 | Leave a comment

By Tony Collins

HP has written to the Treasury  questioning whether it is worthwhile competing for contracts if the Government is no longer interested in doing business with multinationals, says The Independent.

Cabinet Office minister Francis Maude is encouraging departments to spend more with SMEs and be less reliant on a small number of major IT suppliers. He wants departments to avoid signing long-term contracts which lock-in ministers to one major supplier.

The Independent says:

“In a striking case of Goliath accusing David of bullying, the American giants Microsoft and Hewlett Packard have complained that they are being unfairly picked on by the Cabinet Office minister Francis Maude.

“…the Government’s largest IT supplier Hewlett Packard has written to the Treasury to express its concern at plans by Mr Maude to award more Government contracts to smaller suppliers.

“At the same time Microsoft is fighting a rearguard action against the Cabinet Office to protect the million pounds it gets each year from Whitehall by selling popular Office programmes such as Word and Excel.

“Both companies are concerned that they are being singled out by ministers as unpopular and easy targets in their rhetoric about cutting public sector waste…

“Microsoft is attempting to prevent the Government from migrating its own computer systems from those that rely on the multinational to open-source documents that are free to use…

“Both companies look set to be disappointed – at least unless there is a change in Government. Mr Maude is understood to be looking to next year – when a significant number of big IT contracts are up for renewal – to push ahead with the new policy that could significantly denude the profits of IT multinationals.”

A Cabinet Office spokesman said it was unaware of HP’s letter to the Treasury and added: “We value the contribution companies of all sizes make to the UK economy, driving innovation, growth and jobs.”

A spokeswoman for HP told The Independent:  “HP is a proud and long-standing supplier of IT products and services to Her Majesty’s Government and provides vital public services to UK citizens.  We maintain an ongoing dialogue with government about our programme of work.”

A report by the Institute for Government Government Contracting:  Public data, private providers says that HP is the largest supplier to government with earnings in excess of 1.7bn in both 2012 and 2013.

In 2013, 86% (£1.49bn) of HP’s revenue from central government came from a DWP contract to supply infrastructure and systems for DWP and its job centres. “This contract is likely to be the largest single non-defence contract in central government,” says the Institute.

Capgemini, BT and Capita were the next largest suppliers to central government. Capgemini’s work is mainly from HMRC through the “Aspire” contract which is worth about £850m a year.

Departments are more open than they used to be but the Institute found big gaps in the information provided.

These gaps include:

– Contractual transparency –  contracts and contractual terms, including who will bear financial liabilities in the event of failures

– Information about how well contractors perform, allowing a vital assessment of value for money

– Supply chain transparency – information including the proportion of work subcontracted to others, terms of subcontracting (particularly levels of risk transfer), and details on the types of organisation (for example, voluntary and community sector organisations) in the supply chain.

Comment

What concerns Maude and his team is not the existence of major suppliers in central government contracts but the reliance by central departments on long-term contracts that lock-in ministers and lead to costly minor changes.

Nobody wants the major suppliers to stop bidding for contracts. What’s needed is for departments to have the in-house expertise to manage suppliers adroitly, and not to be adroitly managed by their suppliers which seems to be the position at present.

Thank you to openness campaigner Dave Orr for the information he sent me which helped with this article.

The IT giants who fear losing the government’s favour

Opening the door to data transparency

 

 

 

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Posted in BT, Campaign4Change, Capita, DWP, excessive secrecy, Government IT, HMRC, HP, Institute for Government, managing outsourced services, open source, open standards, openness and transparency, supplier relationships

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Judge refuses DWP leave to appeal ruling on Universal Credit reports

Posted on 30/04/2014 | 28 comments

By Tony Collins

An information tribunal judge has unexpectedly refused consent for the Department of Work and Pensions to appeal his ruling that four reports on the Universal Credit programme be published.

The ruling undermines the DWP’s claim that there would be “chilling effect” if the reports were published.

The judge’s decision, which is dated 25 April 2014, means the DWP will have to publish the reports under the FOI Act  – or it has 28 days to appeal the judge’s refusal to grant consent for an appeal.  The DWP is certain to appeal again. It has shown that money is no object when it comes to funding appeals to keep the four reports secret.

In 2012 John Slater, who has 25 years experience working in IT and programme and project management, had requested the UC Issues Register, Milestone Schedule and Risk Register. Also in 2012 I requested a UC project assessment review by the Cabinet Office’s Major Projects Authority.

Last month the “first-tier” information tribunal ruled that all four reports should be published. It rejected the DWP’s claim that disclosure would inhibit the candour and boldness of civil servants who contributed to the reports – the so-called chilling effect.

The DWP sought the tribunal’s leave to appeal the ruling, describing it as “perverse”. It said the tribunal had wholly misunderstood what is meant by a “chilling effect”, how it is manifested and how its existence can be proved.

It claimed the misunderstanding and the perverse decision were “errors of law”.  For the first-tier tribunal’s finding to go to appeal to the “Upper Tribunal”, the DWP would have needed to prove “errors in law” in the findings of the first-tier tribunal.

Now Judge David Farrer QC says his tribunal has understood the chilling effect but found no evidence that it was relevant to the four reports in question. Indeed the judge implies that if the chilling effect existed there would be evidence of it.

“The so-called chilling effect implies Government departments and other public authorities have by now extensive experience of decisions requiring them to disclose information which they sought to withhold for the reasons advanced by DWP here,” says the judge in dismissing the DWP’s request for permission to appeal.

“If the chilling effect is a widespread and damaging result of the fear of disclosure, there is every reason for central government to investigate the matter, enabling a government department to present a case based on its research.

“Quite apart from that, those receiving reports, conducting discussions and reading advice might be expected to observe, over a period, any trend in changing style and content of their colleagues` written work, so as to be able to present examples and relate them to the perceived threat of disclosure.

“Obviously the form of document will remain the same but it is hard to believe that the experienced observer could not spot and demonstrate a general loss of trenchancy, of innovation or of boldness in the content over a period if that were indeed the effect of possible public exposure.

“Such changes would constitute ‘concrete and specific effects’, adopting DWP`s wording.”

Although the reports requested under the FOI Act are now old – they date back to 2011 – their publication could throw light on how much DWP ministers and civil servants knew about the many problems with Universal Credit IT at a time when the department was issuing unswervingly positive press releases about the UC programme.

Judge Farrer hinted that DWP ministers and civil servants could have misled the public about the real state of UC programme.

Having read the four reports in question, the judge said in his ruling that the Tribunal was “struck by the sharp contrast with the unfailing confidence and optimism of a series of press releases by the DWP or ministerial statements as to the progress of the Universal Credit Programme during the relevant period”.

At the information tribunal in January 2014 a senior civil servant Sarah Cox, on behalf of the DWP, spoke on the supposed effects of disclosure on the candour and boldness of reviewers.

But the Tribunal noted that a Starting Gate review of Universal Credit was published [in 2011] which the DWP had refused to release under FOI. The Information Tribunal noted that Ms Cox did not suggest that the revelation of this document had inhibited frank discussion within the Universal Credit programme.

The Tribunal said reports such as the risk register and project assessment review are important indicators of the state of a project. Their disclosure can give the public a chance to test whether ministers and civil servants are giving out correct information on the state of a project.

This week the judge says that the Tribunal “read and heard the evidence of Ms. Cox, considered the subject matter and the withheld material, took account of her experience, applied its own experience of these cases and its commonsense and, on this issue, found her testimony unpersuasive, as it was entitled to do.”

In conclusion the judge says the Tribunal “rejects the claim that its handling of the ‘chilling effect’ issue involved an error of law.”

Comment:

The DWP was claiming in 2012 that all was well with the UC programme when in reality they knew there wasn’t even an agreed project plan.

That is a good reason for the DWP to want to keep the reports secret – but the main reason its senior civil servants want to stop publication is tradition. The DWP does not publish any of its reports on the state of big IT-enabled projects and programmes.

It’s perhaps because the DWP has always buried itself under the covers of secrecy that it is so imperious – to the point of arrogance – in its handling of FOI requests and appeals. It acts like an institution that is not used to having outsiders, including the information tribunal and National Audit Office – peep into its affairs.

Perhaps this is why the NAO found that the UC programme was being managed so badly. When complex institutions operate in secrecy and without effective day to day scrutiny standards can continue to fall to a point when even the best leaders are powerless to intervene.

There may come a time – if that time hasn’t been reached already – when the DWP will be held together, and only remain credible in the eyes of the public and Parliament, because of the solid work of its major IT suppliers that have been there for decades, bolstered by a plethora of media announcements and ministerial assurances.

We are certainly getting the media announcements and ministerial statements, but without the publication of reports on UC’s progress, do the official pronouncements mean anything at all?

FOI ruling judge refuses DWP leave to appeal

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Posted in Accenture, Campaign4Change, change management, DWP, Government IT, HMRC, HP, IBM, IT-related failures, Major Projects Authority, managing outsourced services, openness and transparency, procurement, public sector, public services, Universal Credit

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Does RTI go-slow have implications for Universal Credit?

Posted on 14/04/2014 | Leave a comment

By Tony Collins

HM Revenue and Customs’ “Real Time Information” project appears to work fairly well much of the time but delays and problems over the last few days have created extra work and angered some payroll specialists.

One payroll specialist said the problems have been “a nightmare” and another said: “I could cry”.

Submissions under RTI are generating, on occasions, hundreds of unexpected emails, clogging corporate inboxes. Payroll specialists have been left unsure if PAYE submissions have been validated or not.

In February HMRC stood accused of acting on inaccurate information in harassing some employers, and issuing misleading guidance on RTI.

Employers and their payroll specialists have until the 22nd of each month to submit their end of month PAYE submissions and cleared electronic payments. This month’s submissions may put an extra burden on HMRC’s systems because they will usually include end-of-year declarations for the 2013/14 year.

One angry payroll specialist emailed Ruth Owen, Director General Personal Tax at HM Revenue and Customs. Owen replied:

“As you say, this is being worked on by the IT team. And let me apologise again for the frustration caused by our delays. We are trying to get it sorted as quickly as we can.

“In answer to your question about the deadline, we will obviously not be applying penalties if customers have missed the deadline due to technical problems in our systems but hopefully we can resolve the problems well in advance of the deadline.”

A separate HMRC statement to software developers said: “

“We are aware that some customers making submissions to the live Government Gateway are experiencing delays before receiving a validation response advising whether or not the submission passed full validation. This is currently being investigated by our IT partners and your customers should not attempt to re-submit their returns until the result of the original submission is known.”

Comment

RTI generally works well but the year-end is always a big test for HMRC’s systems. If RTI is already struggling to cope – while there is only a trickle of Universal Credit claims – will it cope when millions are claiming UC?

It’s yet another uncertainty for UC, and another good reason for the Department for Work and Pensions to publish its UC risk and progress reports. Some chance.

 

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Posted in Campaign4Change, Capgemini, DWP, Government IT, HMRC, Real-Time Information, Universal Credit

BBC World at One’s focus on Government IT

Posted on 28/01/2014 | 5 comments

By Tony Collins

The lead item on BBC R4’s World at One on Friday was about Government IT contracts.

On the programme were the government’s Chief Procurement Officer Bill Crothers, Cabinet Office minister Francis Maude, the chairman of the Public Accounts Committee Margaret Hodge, the UK IT Association, and me.

Some of the points made:

–  Bill Crothers gave an example of what he called “abuse” by some big IT suppliers. He said a young man who works for him lost his power cable. The supplier quoted £65 for a replacement. The price should have been £5 or £6.  When Crothers queried it, the supplier justified its price on grounds of security. Crothers could not believe that a power lead had security implications so he questioned the price again and received several pages of explanation from the supplier, which he did not read. Eventually the supplier “was good enough to reduce the price to £37”.

– HMRC was charged £30,000 for changing some text on its website.

– Francis Maude said a DWP team and a further 12 people from the Cabinet Office’s Government Digital Service had built – in only three months – a prototype of a digital solution to support the introduction of Universal Credit. The system cost just over £1m, he said. [Separately big IT suppliers at DWP have been paid £303m up to March 2013 for Universal Credit work.] Maude declined to predict the outcome of the “twin-track” work on the UC project.

– Some big legacy systems may soon need replacing – those that pay about £60bn a year in state pensions and collect nearly £100bn a year in VAT. “Those are going to be big projects,” said Margaret Hodge. “I don’t think we have seen the end of big projects, or the end of disasters.”

World at One in detail

Presenter Shaun Ley and BBC political correspondent Ross Hawkins focused on government IT because of an announcement by the Cabinet Office that it is drawing the line on “bloated and wasteful IT contracts”. The Cabinet Office was pitching its announcement as marking a “massive change,” said Hawkins.

Ley said Francis Maude announced the safeguards  in an attempt to ensure that IT contracts don’t become multi-billion pound failures. He said that the abandoned NPfIT had cost close to £10bn.

Hawkins quoted the UK IT Association as saying that  government did not know how to do deals with smaller suppliers. On the government’s relationship with big suppliers UKITA said the government was like a “battered wife or husband who doesn’t seem to know how to leave.”

Appalling

Hawkins said Crothers has the air of a man going to war. Crothers’ conclusion on the way things are at the moment:

“This is about the oligopoly, the cluster of big suppliers that have had it took good for too long. It’s reflective of monopolistic or oligopolistic behaviour.  It is not acting as if they are in hungry and in a competitive market.  That’s appalling.”

Universal Credit

Hawkins asked Francis Maude how confident he was that what was being put in place on Universal Credit would work.

“I hope it will work,” said Maude. “The digital solution was created by a team within DWP with a dozen or so GDS [Government Digital Service] staff assisting.

“They created a working prototype for a digital solution within 3 months at a cost of only a bit over £1m. That certainly can be basis of a successful long-term solution.”

Hawkins [to Maude] “I asked you whether you were confident the approach with DWP would work and you said you hoped it would. That suggests to me that maybe you are not (confident).”

Maude: “N0-one knows with these things. Anyone who says you are certain everything is going to succeed … the way we do things now is build something quickly, test it, prove it, test it with users, and so you can’t have certainty about any of these outcomes.”

Outsourcing failures

Hawkins said “We have had story after embarrassing story about outsourcing failures [such as the] government being charged for tagging dead people … now ministers  have an interest in coming out on the front foot and just for once being on the attack and having a whack at the IT companies.

“You don’t need to be a political genius to work out why they would like to do that rather than be endlessly explaining themselves after embarrassing stories in the papers.”

Ley (to me): “Is this the best way to deal with the problems government has experienced? The journalist Tony Collins has written widely  about project failures in IT in both the public and private sectors.”

I replied that big companies have sometimes charged a lot to make small software changes.  The Cabinet Office’s “red lines” were a good idea though they were a formalising of restrictions that had been in place some time.

The Cabinet Office doesn’t have the power to make changes happen because departments are accountable to Parliament for their spend and so don’t want much interference from the Cabinet Office. But the Cabinet Office is right to try and reduce the amounts spent on big projects.

Ley: “What will be the effect of breaking up contracts?”

I said I hoped the Cabinet Office’s restrictions would bring about a change in culture in departments against the assumption that big is beautiful. Big projects should be split into components which would give SMEs a greater involvement and could reduce the risks of projects failing.

More project disasters?

Hodge gave her reaction to the Cabinet Office’s restrictions in the context of the Universal Credit project.

“Francis Maude and Cabinet Office have been trying really hard to get some sense into the way that project has developed. But sadly the news we have had lately suggests to me that they have failed. It is about £400m so far on IT.

“What went wrong there was that the department [DWP] thought it [UC] was a big IT project instead of thinking:  we are going to be changing our business; we are going to get 6 benefits rolled into one. They [the DWP] have not written off that money [£303m] which is what my committee thinks they should have done, because they want to save face. Down the line I think we’ll see some disasters there.

“There are a lot of projects around  government, what are called legacy projects, where old systems need to be replaced . They are big projects – pensions in DWP where £60bn is given out a year;  VAT receipts  in HMRC where nearly £100bn is collected. Those are going to be big projects. I don’t think we have seen the end of big projects, or the end of disasters.”

Ley: “What about breaking them up into smaller projects? Won’t that reduce potential risks?”

Hodge: “The important thing is what Tony Collins was saying to you. What we find is that the skills don’t exist within departments, either to commission the IT properly or to manage the suppliers once they have the IT in place.

“We are about to examine the army recruitment contract – I think that is what we’ll find.  The MoD hasn’t got the skills to manage it.

Ley: “Do you welcome the ending of automatic contract extensions?”

“I warmly welcome that. This is a small step in the right direction. Having an expert as we have in Bill Crothers in the Cabinet Office is really important. What we haven’t got are skills in the departments. It is not like a business. If it was, Bill Crothers would probably run IT across the whole of government. Our departments run in silos. They haven’t got the skills. They have this demand for big, big programmes in the future and I don’t think we have seen, sadly, the end of IT disasters.”

Update

Thank you to Dave Orr for drawing my attention to an excellent piece on the World at One item by procurement expert Peter Smith who concludes:

“… There is a big issue – large suppliers have not covered themselves in glory, but small suppliers just can’t develop huge systems for DWP or MOD.

“The large suppliers must have a role, but we have to manage these contracts better. And the answer can’t just be a small hit squad in Cabinet Office. This needs real capability development across government, which we haven’t really seen as yet in a coordinated fashion.”

BBC World at One – Government IT contracts

Bill Crothers on BBC Radio 4 – suppliers get another good kicking

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Posted in DWP, Government digital Service, Government IT, HMRC, IT projects, IT-related failures, managing outsourced services, MoD, npfit, outsourcing, procurement, project management, public sector, public services, reducing cost strategically, supplier relationships, Universal Credit

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Universal Credit: more IT uncertainties

Posted on 11/12/2013 | 4 comments

By Tony Collins

Shortly after IDS was in the House of Commons yesterday defending his handling of the Universal Credit project – taking an all is well approach – the National Audit Office issued a report that drew attention to the scheme’s uncertainties, write-offs on IT so far of £41.3m, and the five-year depreciation of a further £91m spend on IT that may not be used after the migration from legacy, or transitional, UC systems to in a new “digital” solution.

The legacy Universal Credit  IT infrastructure is a blend of existing DWP IT and technology adapted to UC.

The DWP had originally expected to depreciate the £91m over 15 years but, suggests the NAO, the legacy Universal Credit IT infrastructure may be of little use after 2017/2018.   

Says the NAO:

“…  the underlying issue [is] that the Department has spent £91.0 million on assets that will only support a limited service for 5 years, with clear consequences for public value.”

On what the NAO report calls the “longer-term programme uncertainties” it says that the “overall cost of developing assets to support Universal Credit is subject to considerable uncertainty”.

It adds:

“The Department acknowledges  … that there is uncertainty over the useful economic life of the existing Universal Credit software pending the development of the alternative digital solution and uncertainty over whether Universal Credit claimants will be able to migrate from the current IT infrastructure to the new digital solution by December 2017.”

The NAO’s report on the DWP’s 2012/2013 accounts also notes the uncertainties with the new digital solution. Says the NAO:

“At this early stage in its development, there are uncertainties over the exact nature of the digital solution, and in particular:

– How it will work;

– When it will be ready;

– How much it will cost; and

– Who will do the work to develop and build it.

A Ministerial Oversight Group has approved a spend of between £25m and £32m on the new digital UC solution up to November 2014. DWP officials and suppliers plan to build a core digital service that will deliver to 100 people by then, after which it will assess the results of that work and consider whether to extend the service to increasing numbers.

The NAO suggests that some of the money spent on the new digital solution may also end up being written off.  Says its report:

“As the Department develops the digital solution, so it will start to recognise some of the costs incurred as assets. Without clear and effective management, in the future the Department may also find it needs to impair some of these new digital assets.”

At a hearing of the Work and Pensions Committee on Monday Iain Duncan Smith depicted the write-off of £40m on UC software code so far as normal for any large organisation in the private or public sector that embarks on a major software-based programme.  IDS said that private sector organisations typically write off a third of the money spent on software on a large project. About £120m has been spent on writing UC software code so far.

Amyas Morse, head of the NAO,refers in his report to the “considerable sums that the Department is proposing to invest in a programme where there are significant levels of technical, cost and timetable uncertainty”.

He adds:

“I reiterate both the conclusion and recommendations from my report in September. The Department has to date not achieved value for the money it has incurred in the development of Universal Credit, and to do so in future it will need to learn the lessons of past failures …”

In a short debate on UC in the House of Commons yesterday Rachel Reeves, Shadow Work and Pensions secretary, suggested Iain Duncan Smith was in denial about being in denial.  She put points to him he did not answer directly.

She said that IDS had told the House of Commons on 5 September 2013 that UC will be delivered in time and on budget. On 14 October IDS made the same claim. Reeves said:

“How on earth can this be on time when in November 2011 he [IDS] said:  ‘All new applications for existing benefits and credits will be entirely phased out by April 2014.’

“We have now learned that this milestone will only be reached in 2016. Will the secretary of state confirm that this is a delay of 2 years? … How can the secretary of state say that Universal Credit will be on budget when even by his own admission £40.1m is being written off on IT [software code]? What budget heading was that under?”

Reeves said IDS also revealed on Monday that another £90m will be written off by 2018. She added:

“ …The underlying problem is surely that the secretary of state has not resolved key policy decisions before spending hundreds of millions of pounds on an IT system… the secretary of state is in denial. Doubtless he’ll deny he is in denial….

IDS replied:

“ I said all along and I repeat: this programme essentially [jeers] is going to be on time. By 2017 some 6.5m people will be on the programme receiving benefits.”

He added that UC will roll out without damaging a single person. “The waste we inherited was the waste of people who didn’t listen, rushed programmes and implementing them badly.”

Dame Anne Begg, chair of the Work and Pensions Committee, said that IDS promised UC would be digital by default. “It isn’t,” she said.

“He promised that all new claims would be on UC by May 2014. They won’t…  So why should anyone believe him when he says that delivery of UC is now on track?”

IDS replied: “The proof of this will be as we roll it out…”

Comment

IDS is doing what he has to do: defend the UC project at all costs; and the NAO is doing what it needs to do: highlight the uncertainties and wasted spending.  If IDS admits to his doubts and concerns the opposition will jump on him. At least he is not being kept in the dark any longer by his senior civil servants.  He has his own reliable information – via Howard Shiplee – and from the NAO.  In 2011 he commissioned his own independent “red team” review which led to the pilot Pathfinder projects.

But the uncertainties highlighted by the NAO’s report today could be said to tacitly confirm that the transfer of all relevant claimants to UC project is unlikely to be complete before 2019/2020 at the earliest.  That’s probably not something anyone in government could own up to before the 2015 general election.

And even his advisers may not tell IDS that big government IT projects can be defined by the exceptions. IDS told MPs yesterday that Pathfinder projects indicated that 90% of people are claiming universal credit online and 78% are confident about their ability to budget with monthly payments. That’s 10% who don’t claim online and 22% who may not be able to manage with monthly payments. Will the high number of exceptions prove a show-stopper?

There’s a long way to go before officials and ministers can have confidence in UC IT. But, unlike the NPfIT which had little support in the NHS, most of those involved in the UC project want it work. That could make all the difference. 

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Posted in Accenture, Agile, Campaign4Change, Government IT, HMRC, HP, IBM, Major Projects Authority, open source, open standards, openness and transparency, Real-Time Information, Universal Credit

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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