Category Archives: managing outsourced services

How to identify a high-risk supplier – Cabinet Office works out details

By Tony Collins

Francis Maude, the Cabinet Office minister, has agreed mechanisms for officials to identify high-risk suppliers where “material and substantial underperformance is evident”.

On his blog Spend Matters, Peter Smith has published parts of a letter from Maude.

Where under-performing suppliers are identified “departments will be asked to engage with the Cabinet Office at each stage of any procurement process involving the affected supplier to ensure that performance concerns are taken fully into account before proceeding”.

The implication is that the Cabinet Office will draw up a blacklist of bad suppliers which departments will take account of when buying. Smith says that two suppliers are already on the blacklist.

Comment: 

For more than 20 years the trade press has identified the same suppliers in a succession of failed or failing IT-based projects but poor performance has never been taken seriously into account.

This is usually because the suppliers argue that the media and/or Parliament has got it all wrong.  Departments, it appears, will always prefer a potential supplier’s version to whatever is said in the media or in Parliament.

The Office of Government Commerce, now part of the Cabinet Office, kept intelligence information on suppliers but it seems to have made no difference in procurements.

It is unlikely the Cabinet Office’s blacklist will rule out any suppliers from a shortlist. As Smith says, suppliers will claim that any problem was all the fault of ministers or civil servants who kept changing their minds, were not around to make key decisions, or didn’t understand the nature of the work.

But still the blacklist is a worthwhile innovation. At least one big IT supplier has made a habit of threatening to withdraw from existing assignments when officials have refused to revise terms, prices or length of contract. The blacklist will strengthen the negotiating hand of officials.

The challenge for Maude will be persuading departments to take the blacklist idea seriously.

Peter Smith, Spend Matters.

All change at the DH, CfH and on NPfIT – or not?

By Tony Collins

Katie Davis is to leave as interim Managing Director of NHS Informatics, says eHealth Insider which has seen an internal memo.

.The memo indicates that Davis “intends to focus on being a full-time mother to her two children”.

She joined the Department of Health on 1 July 2011, on loan from the Cabinet Office where she was Executive Director, Operational Excellence, in the Efficiency and Reform Group.

Before that she was Executive Director of Strategy at the Identity and Passport Service in the Home Office.

The memo indicates that the director responsible for the day-to-day delivery of NHS programmes and services, Tim Donohoe, will take-over Davis’ role until NHS Connecting for Health shuts down at the end of March 2013.

CfH’s national projects look set to move to the NHS Commissioning Board in Leeds, while its delivery functions will move to the Health and Social Care Information Centre.

Davis had told eHeath Insider that her priorities included concluding a piece of unfinished business on the NPfIT – the future of the [CSC] local service provider deal for the North, Midlands and East.

Comment:

Davis has been a strong independent voice at the Department of Health. Partly under her influence buying decisions have passed to NHS trusts without penalties being paid by the NHS to NPfIT local service provider CSC.

It is a little worrying, though, that high-level responsibility for the rump of the NPfIT – CSC’s contracts, Choose and Book, the Spine, Summary Care Record and other centrally-managed projects and programmes – may fall to David Nicholson, Chief Executive of the NHS.

Labour appointed Nicholson in 2006 with a brief that included making a success of the NPfIT. He has been the NPfIT’s strongest advocate.

Indeed a confidential briefing paper from the Department of Health to the then PM Tony Blair in 2007 on the progress of the NPfIT said:

“… much of the programme is complete with software delivered to time and to budget.”

It is difficult to see the NPfIT being completely dismantled under David Nicholson. It’s probable that CfH will be shut down in name but recreated in other parts of the NHS, while the NPfIT programmes and projects run down very slowly.  It’s even conceivable that CSC’s and BT’s local service provider contracts will be extended before they are due to expire in 2015/16.

A comment on eHealth Insider says:

“My understanding is that NPfIT is leaving us with a legacy of ancient PAS systems barely fit for purpose which cost a fortune to operate and which will transfer to a massive service charge once national contracts end. That’s if you don’t count the most expensive PACS system in the universe. And I wonder what Lorenzo cost?”

It’s hard to argue with that. Meanwhile the costly NPfIT go-lives are due to continue, at Imperial College Healthcare NHS Trust, for example.

End game for Davis and CfH announced.

IBM won bid without lowest-price – council gives detail under FOI

By Tony Collins

Excessive secrecy has characterised a deal between IBM and Somerset County Council which was signed in 2007.

Indeed I once went to the council’s offices in Taunton, on behalf of Computer Weekly, for a pre-arranged meeting to ask questions about the IBM contract. A council lawyer refused to answer most of my questions because I did not live locally.

Now (five years later) Somerset’s Corporate Information Governance Officer Peter Grogan at County Hall, Taunton, has shown that the council can be surprisingly open.

He has overturned a refusal of the council to give the bid prices. Suppliers sometimes complain that the public sector awards contracts to the lowest-price bidder. But …

Supplier / Bid Total cost over 10 years
BT Standard bid £220.552M
BT Variant Bid £248.055M
Capita Standard Bid £256.671M
Capita Variant Bid £267.687M
IBM Standard Bid £253.820M
IBM Variant Bid £253.820M

The FOI request was made by former council employee Dave Orr who has, more than anyone, sought to hold Somerset and IBM to account for what has turned out to be a questionable deal.

Under the FOI Act, Orr asked Somerset County Council for the bid totals. It refused saying the suppliers had given the information  in confidence. Orr appealed. In granting the appeal Grogan said:

“I would also consider that the passage of time has a significant impact here as the figures included under the exemption are now some 5 years old and their commercial sensitivity is somewhat eroded.

“Whilst, at the time those companies tendering for the contract would justifiably expect the information to be confidential and that they could rely upon confidentiality clauses, I am not able to support the non-disclosure due the fact that the FOI Act creates a significant argument for disclosure that outweighs the confidentiality agreement once the tender exercise is complete and a reasonable amount of time has passed.

“I therefore do not consider this exemption [section 41] to be engaged. Please find the information you requested below…”

[In my FOI experience – making requests to central government departments – the internal review process has always proved pointless. So all credit to Peter Grogan for not taking the easy route, in this case at least.]

MP Ian Liddell-Grainger ‘s website on the “Southwest One” IBM deal.

IBM struggles with SAP two years on – a shared services warning.

Council accepts IBM deal as failing.

Was Audit Commission Somerset and IBM’s unofficial PR agents?

RBS/Natwest: Some lessons from the IT crash – Bank of England Governor.

By Tony Collins

Sir Mervyn King, Governor Bank of England, promised today that there would be a “very detailed inquiry” once problems at RBS/Natwest are back to normal.

Such a report would be unusual because the cause or causes of IT-related crashes in the public and private sectors are usually kept secret unless in rare cases a legal action comes to court.

Mervyn King told the Treasury Committee today:

“Once the current difficulties are over then we will need the FSA to go in and carry out a very detailed investigation to find out first of all what went wrong but even more importantly why it took so long to recover.

“Computer systems will always go wrong from time to time. The important things are your back-up systems and the time it takes to implement recovery. As of now we have kept in very close touch. My office was in touch with senior RBS management right through the weekend. Our banking director was in touch with RBA and FSA on this right since this problem began … It is still going to take time to catch up, to get back to normal.

“The important thing now is that we provide whatever support is needed to let them put it right. Once it is back to normal then we must carry out a very detailed inquiry.

“To my mind, one of the big lessons from this is that it shows everyone is how important the basic functions of banking actually are: what can go wrong when the system of payments from person to another is interrupted. Fortunately it has been one bank, albeit a very big bank, and customers of that bank have been affected, and of course customers of other banks have been affected, and payments have not gone through.

“I hope this is a reminder, a demonstration, to everyone, for example, of what might have happened if we had not rescued RBS in the autumn of 2008. The whole payment system would have collapsed. [It is] why it is so important to ensure you have a banking system where the people running it are completely focused on this essential service function of banking to provide … customers with a functioning payment system.

Learning from supermarkets.

“I have been driven by the belief that the nature of banking and providing these kinds of services is very different from investment banking operations. Those are important but they are very different. When you go out and see how supermarkets operate, the senior management is utterly focused on ensuring that the IT systems, the ordering systems, the delivery system, works hour by hour. That is very important to ensure that that is true of the banking system as well…”

Comment:

History  is, to some extent, the story of the unforeseen, in which case a published report on the cause of the problems at RBS/Natwest could be helpful to other banks and major organisations whose ageing systems are vulnerable to an unforeseen failure of huge proportions.

A published report on the crisis may show systemic management failures. The mere fear of such a report would be an added deterrent – additional to potential losses and payments of compensation – to any bank that does not give the attention it should to operational systems, even when those systems support a retail banking operation that may represent a small part, perhaps only 2% of a bank’s balance sheet.

It is ironic that RBS is publicly owned. Will the IT disaster now be added to the list of other public sector failures? Did RBS, now in the public sector, drop its IT-related standards and caution in part because the commercial imperative was absent?

Natwest/RBS – what went wrong?

Natwest/RBS – what went wrong?

By Tony Collins

Outsourcing to India and losing IBM mainframe skills in the process? The failure of CA-7 batch scheduling software which had a knock-on effect on multiple feeder systems?

As RBS continues to try and clear the backlog from last week’s crash during a software upgrade, many in the IT industry are asking how it could have happened.

Stephen Hester, RBS’s boss, told the BBC today:

“In simple terms there was a software change which didn’t go right. Although that was put right quickly there then was a big backlog of things that had to be reprocessed in sequence. That got on top of our technical teams … it is like the landing path at Heathrow. Once you get out of sequence it takes a time to get back into sequence even if the original fault is put right.

“Our people are working incredibly hard … I am pleased to report that as of today RBS and Natwest systems are operating normally.

“We need to make sure they stay normal for the next few days. There is still some significant catch-up today, much less tomorrow and so on as we go through the week.”

The immediate technical cause of the problems might not have been too difficult for those inside the bank to establish – but finding out how and why it happened, why processes were not in place to stop a backlog of work building up, and why testing of the upgrade did not pre-empt the failure may take weeks and possibly months to establish.

Attributing blame could take many years. After BSkyB appointed EDS to supply a CRM system in 2000, and the project failed, it was ten years later before a court reached a judgment on blame. The cause of the failed project was never definitively established.

Official cause of system crash

The official cause of RBS/Natwest’s problems was given at the weekend by Susan Allen, Director of Customer Services, RBS Group which includes Natwest and Ulster Bank. She told Paul Lewis of BBC’s Moneybox programme:

“Earlier this week we had a problem in our overnight backup. So a piece of software failed that started all the updates that happened to our systems overnight.

“What that has meant practically is that information on customers’ accounts has not been updated… It is horrendous.

“The underlying problem has been fixed, so the computer software that failed has been replaced. That is in and working. The challenge we now have is bringing all the systems back up and working through all the data that should have been gone through over the last three nights …

“We have 12 million customers in Natwest and RBS and just over 100,000 in Ulster Bank. So it is affecting a serious number of people. It is having a terrible impact.

“We are encouraging all of our customers to call us, come and see us in our branches … we have branches open late .. and have doubled the number of people on the phone. Call centres are open 24 hours a day.”

Call centres use 0845 numbers which are chargeable for some. Lewis asked, Why are you making people pay to fix a problem that’s your fault?

“Customers should not be having to pay for those calls,”replied Allen. “If that is a problem for people we will take a look at that.”

Lewis: Will you re-imburse people for their calls?

“Absolutely. We recognise there will be lots of different expenses as a result of this. We apologise and want to make sure they are not out of pocket. If people have got claims they should put them through to us…we will need the information to deal with the claims.”

Lewis: Will you refund charges by credit card companies for late payments?

“We will. We will… we will make sure nobody is out of pocket… in one instance we got cash in a cab to a customer’s home… clearly we trust our customers so if we can see that somebody has a certain amount coming in every week we will give them money against that. So we ask people to come in and bring identification with them such as their bank card, we will do what we can to help.

“We will look after our customers. We realise this has had a huge impact on people. We are not underestimating it … clearly there are things that have gone wrong and we cannot put everything right.”

Lewis: How much damage has this done to the reputation of the bank?

“Time will tell. For us it is pretty devastating. We pride ourselves on being a bank that really cares about our customers and wants to deliver great service. We absolutely mean it.”

Lewis: Should you get a bonus?

“We only get performance bonuses when we perform and this has not been a good performance.”

Comment:

Her explanation of the cause of the IT crash is unclear but otherwise Susan Allen’s answers to Paul Lewis’s questions were exemplary. Her openness and unaffected humility is surely the best way to handle a PR crisis. Small comfort for the millions affected though.

Technical cause of the crash?

Some of those commenting to The Register appear to have a good knowledge of RBS systems. There are suggestions RBS has lost some important IBM mainframe software skills in outsourcing.

One or two have suggested that the crash was caused by a failure of the bank’s CA-7 batch scheduling software. In February RBS had an “urgent requirement” in Hyderabad, India, for people with four to seven years experience of CA7.

One comment on The Register said that RBS runs updates on customer accounts overnight on an IBM mainframe, via a number of feeder systems that include BACS. “The actual definitive customer account updates were carried out by a number of programs written in assembly language dating back to about 1969-70, and updated since then. These were also choc-full of obscure business rules … and I do not believe anyone there really knew how it all worked anymore, even back in 2001…

“Of course the moral is complex mainframe systems require staff with the skills, and in this case, the specific system knowledge to keep things smooth. The fewer of these you have, the more difficult it is to recover from problems like this.”

Robert Peston, the BBC’s Business Editor, asks whether outsourcing was to blame.

“In my conversations with RBS bankers, there is an implication that outsourcing contributed to the problems – though they won’t say whether this is an issue of basic competence or of the complexities of co-ordinating a rescue when a variety of parties are involved.”

An RBS spokesperson told The Register that the software error occurred on a UK-based piece of software.

Some lessons from the crisis – Bank of England Governor.

How CIOs and IT suppliers view GovIT change

By Tony Collins

CIOs and IT suppliers give their views on Government ICT in an authoritative report published today by the Institute for Government

Inside the wrapper of generally positive words, a report published today on government ICT by the Institute for Government suggests that major change is unlikely to happen, despite the best efforts of  CIOs and the Cabinet Office minister Francis Maude.

The report “System upgrade? The first year of the Government’s ICT strategy”  says progress has been made. But its messages suggest that reforms are unlikely to  amount to more than tweaks.

These are some of the key messages in the report:

If the minister and CIOs cannot direct change who can?

–          “… while the Minister for the Cabinet Office and government CIO are viewed as being responsible for delivering the ICT strategy (for example by the Public Accounts Committee) they currently lack the full authority to direct change.”

Not so agile

–           “While just over half of government departments may be running an agile project, there were concerns that these were often very minor projects running on the fringe of the departments.”

–          “We heard concerns from the supplier community and those inside government that in some areas projects may be being labelled as ‘agile’ without having really changed the way in which they were run.”

–          “CIOs should question whether they are genuinely improving the ways that they are working in areas such as agile, or whether they are just attaching a label to projects to get a tick in the box,” says the Institute for Government.

Savings not real?

–          “There was also an element of challenge to the savings figures provided by government. For example, some from government and the supplier community questioned whether the numbers represented genuine savings or just cuts in the services provided or deferred expenditure. “

–          “Others … cautioned that project scope creep or change requests could reduce actual savings in time. It was pointed out that the NAO [National Audit Office] will scrutinise whether savings have been achieved in future, which was seen as a clear incentive for accuracy – but there were, nonetheless, concerns that pressure to provide large savings figures meant that inadequate attention might be paid to verifying the savings …”

CIOs want faster ICT progress

–          “Among the CIOs we interviewed, there was a clear recognition that government ICT needed to improve.  ‘You expect an Amazon experience from a government department…’ ”

Lack of money good for change

–          “As one ICT lead noted, a lack of money was ‘always helpful’ in driving change as it promoted cross-government solution-sharing and led to more rigour in approving new spend.”

–          “Both ICT leaders and suppliers felt that the ICT moratorium had been a helpful stimulus for increased focus on value for money.”

–          “Though some of the larger suppliers felt bruised by the ‘smash and grab’ of initial interactions with the Coalition government, there was a recognition that the moratorium had been about ‘stopping things which were inappropriate’”.

GDS challenges norms

–          “New ways of working in the new Government Digital Service and the opening up of government through the Transparency agenda were also seen as providing a challenge to existing norms.”

–          The new Government Digital Service (GDS) is providing an example of a new way of doing things, and was pointed to by those inside and outside of government as embodying mould-breaking attitudes, using innovative techniques and … delivering results on very short timescales. Several interviews mentioned being invigorated by the positive approach of the GDS and their focus on delivering services to meet end-user needs.

ICT so poor staff circumvent it

–          “Public servants are increasingly frustrated that the ICT they use in their private lives appears to be far more advanced than the tools available to them at work. Indeed, there are already examples of employees circumventing the ICT that government provides them as they attempt to perform their job more effectively: creating what is known as a system of ‘shadow ICT’ that creates significant challenges for maintaining government security, collaborative working and government knowledge management.”

Joined-up Govt impossible?

–          “The possibility that departmental incentives continue to trump corporate contributions is further suggested by our survey results. Individuals do not yet feel that corporate contributions are valued or rewarded … elements of the [ICT] strategy call for departments to give up an element of autonomy and choice for the ‘greater good’. Several CIOs expressed concerns that by adopting elements of the strategy that were being developed or delivered by another department, they would end up having to accept a service that had been designed  around the needs of a different department.”

–          “Similarly, there were concerns that the host department would be at the top priority in the event of any problems or opportunities to develop services further. This speaks to a strongly department-centric culture. Suppliers noted, for example, that certain parts of government were still happy to ‘pay a premium for their autonomy’.”

–          “… the vast majority of those we spoke to suggested that departmental interests would almost always ultimately trump cross-government interests in the current government culture and context.”

–          “CIOs felt that they would be rewarded for delivery of departmental priorities – not pan-government work …”

CIO Council frustrations

“CIOs noted that there could be a discrepancy between what got agreed at the old CIO Council meetings and what people actually went away and did. Larger department CIOs also expressed frustration that – despite holding the largest budgets and carrying the largest delivery risks – their voices could easily be outweighed by the multitude of other people round the table.”

“The delivery board model [which has superseded CIO Council] has been recognised by both big and small departments as pragmatically dealing with both sides of this issue. Larger departments now form part of an inner-leadership circle, but with this recognition of their clout comes additional responsibility to own and drive through parts of the strategy… the challenge will now be to ensure that the ICT strategy doesn’t become a ‘large department-only’ affair and that other ICT leads can be effectively engaged.”

Canny suppliers?

–          The majority of ICT leads …stated that they believed the ICT strategy would benefit their department and government as a whole. This confidence was less apparent in the attitudes of suppliers who were, on the whole, more sceptical of government’s ability to drive change, though again generally supportive of the direction of travel.

A toothless ICT Strategy is of little value?

–          “…There was also a lack of clarity on how different elements of the [ICT] strategy would be enforced. As one ICT leader commented … ‘Is this a mandatable strategy or a reference document?’ ”

–          … “there are risks that the strategy could be delivered in a way that still doesn’t transform ICT performance.”

Francis Maude an asset

–          “Government ICT has also been a priority of the Minister for the Cabinet Office, Francis Maude – giving the [change] agenda unprecedented ministerial impetus. He has been a visible face of ICT to many inside and outside of government, from demanding departmental data on ICT to being heavily involved in negotiations with ICT suppliers. Though few of his ministerial colleagues appear as passionate about improving government ICT, the CIOs we interviewed overwhelmingly expressed confidence that they would receive the support they needed to implement the changes in ICT.”

Smaller-budget CIOs out of the loop?

–          “With the CIO Council in hiatus for most of the last year, the CIOs of smaller departments felt out of the loop …”

Most ICT spending is outside SW1

–          “Suppliers and other ICT leaders pointed out, rightly, that the vast majority of ICT expenditure happens outside SW1 – with agencies, local government and organisations like primary care trusts and police forces still determining much of the citizen and workforce experience of ICT.”

SMEs still left out?

–          “Smaller suppliers … were generally encouraged that government was trying to use more contractual vehicles which would be open to them – but noted that it was ‘still extremely difficult to get close to government as an SME’.”

Who knows if use of ICT is improving?

–          “Government still lacks the information it needs to judge whether use of ICT across government is improving.”

System upgrade? The first year of the Government’s ICT Strategy.

Too early to claim success on GovIT – Institute for Government

How London IT director saves millions by buying patient record system.

By Tony Collins

An NHS organisation in London has bought an electronic patient record system for less than a third of the cost of similar technology that is being supplied by BT to other trusts in the capital and the south of England.

The £7.1m purchase by Whittington Health – a trust that incorporates Whittington Hospital near Archway tube station – raises further questions about why the Department of Health is paying BT between £31m and £36m for each installation of the Cerner Millennium electronic patient record [EPR] system under the NPfIT.

Whittington Health is buying the Medway EPR system from System C which is owned by McKesson. The plan is for the EPR to operate across GP, hospital and social care boundaries.

It will include a patient portal. The idea is that patients will use the portal to log on to their Whittington Health accounts, see and save test results and letters, and manage outpatient appointments on-line.

In a board paper, Whittington Health’s IT Director Glenn Winteringham puts the case for spending £7.1m on a single integrated EPR.  Winteringham puts the average cost of  System C’s Medway at £8m. This cost, he says, represents “significant value for money” against the average deployment costs for the NHS Connecting for Health solution (Cerner Millennium) for London of £31m. In the south of England the average cost of Cerner Millennium is £36m, says Winteringham in his paper.

He also points out that the new EPR will avoid costs for using “Rio” community systems. The NPfIT contract with BT for Rio runs out mid 2015. “From this date onwards the Trust will incur an annual maintenance and support cost. Implementing the EPR will enable cost avoidance to the [organisation] of £4m per year to use RIO (indicative quotes from BT are £2m instance of RIO and the [organisation] has 2 – Islington and Haringey).

BT’s quote to Whittington for Rio is several times higher than the cost of Rio when supplied directly by its supplier CSE Healthcare Systems. A CSE competitor Maracis has said that, during a debrief, it was told that its prices were similar to those offered by CSE Healthcare for a Rio deployment – then less than £600,000 for installation and five years of support.

In comparison BT’s quote to Whittington for Rio, as supplied under the NPfIT, puts the cost of the system at more than fifteen times the cost of buying Rio directly.

In short Whittington and Winteringham will save taxpayers many millions by buying Medway rather than acquiring Cerner and Rio from BT.

Why such a price difference?

The difference between the £31m and £36m paid to BT for Cerner Millennium and the £8m on average paid to System C could be partly explained by the fact that Whittington (and University Hospitals Bristol) bought directly from the supplier, not through an NPfIT local service provider contract between the Department of Health and BT. Under the NPfIT contract BT is, in essence, an intermediary.

But why should an EPR system cost several times more under the NHS IT scheme than bought outside it?

Comment:

Did officials who agreed to payments to BT for Cerner and Rio mistakenly add some digits?

Whittington’s purchase of System C’s Medway again raises the question – which has gone unanswered despite the best efforts of dogged MP Richard Bacon – of why the Department of Health has intervened in the NHS to pay prices for Rio and Cerner that caricature profligacy.

Perhaps the DH should give BT £8m for each installation of Cerner Millennium and donate the remaining £21m to a charity of BT’s choice. The voluntary sector would gain hundreds of millions of pounds and the DH could at last be praised for spending its IT money wisely.

Whittington buys Medway and scraps Rio – E-Health Insider

NHS IT supplier “corrects” Health CIO’s statements

MP seeks inquiry into BT’s £546m NHS deal

NPfIT go-live at Bristol – trust issues apology

Are SIAMs the new SIs?

In this guest blog, John Jones and John Pendlebury-Green, co-founders of strategic sales architects Landseer Partners, take a look at the development of a new generation of outsourcing in ICT and the creation of a new breed of integration and manageement specialists dubbed ‘SIAMs’. This article is also carried on Landseer Partners’ website.

We now live in an age of austerity where we have to live within our means and this includes the Government  which has just announced the need for Departments to find a further £16bn in savings. 

All Departments and Agencies are having to make real year-on-year cuts to their budgets – effectively having to do  the same for less money for some considerable time to come.  This is leading to new models for the delivery of services (third generation outsourcing) as Government becomes more about “policy and strategy” and leaves the delivery of public services to the private sector.

Industry has already played a major part in first and second generation of outsourcing including what is now more commonly called “outcome-based contracting”. 

The recent contract awards of new prison builds and operations similar to the likes of G4S and Interserve provide exemplars of outcome-based contracting. The Work Programme Initiative at the Department of Work and Pensions is another relatively recent example of second generation outsourcing with payment linked directly to outcomes.  Lessons learned are only now emerging as to the efficacy of these contracts.

What is interesting is that now we are starting to witness a new third-generation of outsourcing in ICT – Service Integration and Management (SIAM).  The consequences for the ICT Industry and the delivery of ICT within and to Government are likely to be profound. 

At Landseer Partners, we believe that the shape and players of the ICT market will change significantly in the next two to five years.  The net effect on the role of existing System Integrators (SI) is likely to be significant.

So what is SIAM all about and, importantly, what will make SIAM a success and its implications for the big SIs?

SIAMs are the ICT Managing Agent for the Customer

So, what are SIAMs – well, for starters, there is no agreed de facto industry definition of what a SIAM is. Rather, there are emerging trends in the private sector and in the current government procurements at the Ministry of Justice (MoJ) and the Foreign and Commonwealth Office (FCO) that identify key characteristics of what Service Integrators and Management Services may look like. 

For instance, the MoJ and FCO both plan to award contracts to SIAM providers that can successfully demonstrate the ability to integrate services and manage a number of Tower service providers that (typically) provide one or more commoditised services of: data hosting, LAN/WAN provision, Applications Management and Support and some Security related services.  Importantly, the SIAMs will be characterised by:

  • Taking the risks for “end to end” delivery of the services and their continuing operations
  • Creating new commercial constructs to balance risk versus delivery
  • Not necessarily holding direct contracts with the Tower service providers
  • Providing full 24/7 service desks to support national and global needs of the customer
  • Working hand-in-glove and be contract-managed by the retained Intelligent Client Function (or Informed Partner as they are sometimes known) of the Contracting Authority

In effect, the UK public sector is now requesting what has long happened in the construction industry; they are looking to award contracts to Managing Agents to help deliver and manage critical  ICT services back to Departments/Agencies.

Expected Benefits

So, with the advent of SIAMs  what are the expected benefits?  Reading the prospectuses of the government procurements we would expect the benefits to be large and varied and include:

  • Reduced cost of ICT services to the commissioning Department/Agency – this might come about by greater efficiencies in programme delivery; but significant cash savings are also expected as staff are transferred move to more cost-effective private sector pensions schemes
  • Better risk management with continuous incentives to improve service quality to users
  • Greater innovation by the SIAMs, possibly by the use of niche SMEs which will assist with more agile delivery and innovation methods

The Future

Given the real lack of experience and reliable data on the likely impact of the creation of SIAMs it is difficult to say at this particular time whether SIAMs will effective in the longer term]– will SIAMs be effective in the longer term?  Will they help to drive down cost of ICT services?  Will they help in the delivery of better public services?

Landseer Partners’s view is that, although it is early days, SIAMs are likely to be here to stay, at least in the foreseeable future. The status quo, keeping large in-house Intelligent Customer Functions and Service Desk provision, is  neither desirable nor efficient and future procurements will build on the lessons learned from the current MoJ and FCO procurements.

The key thing now is for System Integrators to recognise that change is in the air, that different business models are appearing and that, to be in the market, a change in attitude, behaviours and delivery will be needed in order to become Service Integrators and Managing Agents to Government.

Cerner project over budget by 100 times amount of local heart monitor donations

By Tony Collins

When the Lord Mayor of Bristol presented a cheque for £20,000 to buy 10 cardiac monitors for local hospitals he could not have known that NHS officials were quietly spending more than 100 times that amount on an over-budget Cerner project.

A charity, the Frenchay Cardiac Support Group, raised the £20,000 through a shop and fund-raising events. It was 100th the amount  of the overspent element on a project to install an NPfIT Cerner patient administration system at the North Bristol NHS Trust.

Officials at NHS Connecting for Health and the Trust may consider it unfair of Campaign4Change to compare a charity donation with the unplanned extra costs of an IT-enabled change programme. But whereas North Bristol is accountable to local patients and fund-raisers for the £20,000 donation, it has no duty to explain to its patients (or anyone) how or why it has spent £5m on a Cerner project that was expected to cost the Trust about £3m.

The figures are buried deep in the Trust’s latest board papers. There has been no discussion of the overspend during the public part of the Board’s March meeting. Nor was it mentioned on the Board’s agenda for the meeting.

What the Trust says

The Trust declined our invitation to explain the overspend saying that it has commissioned a review of the Cerner project by PWC. Its statement to us said:

“North Bristol NHS Trust has commissioned an independent review into the issues surrounding the implementation of its new electronic patient record system. This will be carried out by PricewaterhouseCoopers LLP.  The outcome of the review will be published in due course.  We do not feel it is appropriate to comment further until the conclusion of the review, which is expected to take several weeks.”

The Trust’s papers say that the majority of capital spending in January and February was on the Cerner project. The anticipated spending on the project will be more than £5m which would see the Trust considerably overspent because of the difficulties encountered, say the papers.

The same Board papers put the Trust’s IM&T overspending at about £2.3m. This is on top of the hundreds of millions of pounds that NHS Connecting for Health is paying BT to install Cerner at sites in the south of England, including north Bristol.

Comment:

NHS Trusts across London and the south of England are expected to install new Cerner systems in the coming years. London is in the midst of a major procurement, as is the south. If the disruption is as serious as in some earlier implementations thousands of patients will be affected. So what?

At North Bristol the NPfIT implementation of Cerner has gone seriously awry. Besides the duplication of medical records, disruption to appointments, and, for the first time, the missing of a two-week wait target for cancer patients, there have been at least 16 clinical incidents; and the Trust’s papers say there has been a “significant increase in DNA [Did Not Attend an appointment] rates since the implementation of Cerner”.

Time heals?

Does it matter? It will all settle down in time say NHS officials.

Indeed some in the NHS and the scientific community in general have a view that taking known risks are part and parcel of achieving Progress. If lives are lost pushing back frontiers of knowledge it is for the greater good. Hence the justification for risks taken in launches of the Space Shuttle and building new designs of bridges, tunnels and aircraft.

The greater good

It’s a philosophy not lost on officials at NHS Connecting for Health. Go-lives of electronic patient record systems will be disruptive and may even affect the care and treatment of patients. But it’s for the greater good and the damage won’t last too long. Besides, if the health of any individual patients is affected, this will be supposition: no official evidence will exist.

So should patients fear the implementation of new hospital-wide systems? It’s a little like the early flights of commercial aircraft. Most flights will go without incident but now and again a passenger jet will crash.

One difference between aircraft crashes and hospital IT implementations is that crashes are usually investigated by law, and lessons applied by regulatory authorities to make flying safer. The NHS has no duty to investigate or apply lessons from its IT-related mistakes. Which is one reason that the lessons from the Cerner implementation at Nuffield Orthopedic Centre in Oxford in 2005 have still not been learned. For example there were important differences in the way the Nuffield’s staff and doctors worked, and the way the system was designed to work.

Who would want to fly in an aircraft that hasn’t been certified as safe? So should patients experience an NHS that has uncertified patient record systems?

In aircraft crashes deaths are obvious. There is often a clear cause and effect. In the NHS there is no certification of IT systems. A hospital can go live with whatever systems it wants, whatever the effect on patients. Indeed the reporting of any damage to patients is down to the Trusts. That’s a clear conflict of interest – like relying on the builders of a supertanker to report the effects on wildlife and fish of an oil spillage.

It’s time for a change.

It’s time for the NHS – and the Department of Health and particularly NHS Connecting for Health – to get professional about hospital-wide IT implementations.

It’s time for regulation and certification, minimum standards of safety and independent reporting of disasters.

Links:

Does Hospital IT need airline-style certification?

Halt NPfIT Cerner projects says MP

NPfIT Cerner installation at Bristol as “more problems than anticipated”

Why is North Bristol Cerner project so expensive?

An ongoing IT crisis case study – North Bristol NHS Trust

Lessons from Cerner go-live at Nuffield in 2005.

How do you create successful software development teams? (Part 2: Outsourcing)

By David Bicknell

I recently reported on a roundtable organised by the Dutch software specialist Software Improvement Group (SIG) which set out to determine what makes successful teams in software development.

The roundtable featured two specialists in creating specialist teams: Andrew de la Haye, chief operating officer, at RIPE Network Co-ordination Centre (RIPE NCC), one of five Regional Internet Registries (RIRs) providing Internet resource allocations, registration services and coordination activities that support the operation of the Internet globally; and author and management expert Kevan Hall, chief executive of Global Integration.

In Part One of the discussion, which focused on creating excellent teams in software development, we examined teamwork, Agile empowerment, a commitment to quality, remote working and getting the right level of teamwork.

In this part of the discussion, we focused on managing multi-disciplinary teams, structure, reducing waste, and outsourcing.

Managing multi-disciplinary teams

Kevan Hall pointed out that when you’re working in a multi-disciplinary environment – for example, if you’re building a very complex piece of kit with tens of thousands of bits – there is a point at which you need to have some co-ordination.

But he added, “There is also a big part of the work where I’m an engineer off doing actual work or I’m somewhere writing code. And that’s not teamwork.  If we have this mentality that everything we do is a team, then we can’t make a decision until the next meeting. I distinguish between a team, which is kind of truly interdependent i.e. if you’ve got multi-disciplinary skills, R&D etc,  you really need to work collaboratively, tightly, and you can’t do it on your own, you need teamwork. But most work isn’t like that: most work is me doing my stuff.

“And therefore a simple hub and spoke group of organisations might be much simpler to do that. When you’re working globally, or virtually, that’s much, much easier because in a hub and spoke structure, if I want to talk to you, I just pick up the phone.  If I’m in a team, I have to go into all your Outlook diaries and hope that in the next month, you’ve got some time where we can at least all get on the phone.

“So hub and spoke is much simpler for virtual teams and for remoteness and those kind of things. So when we are  working collaboratively that’s when we really need to focus because it’s really expensive and quite hard to do.”

Waste reduction and communication

Andrew de la Haye from RIPE explained the need for what he describes as ‘waste reduction.’

“One of the things we do as standard culture in our software teams is every three to four months we do waste reduction sessions. So in the old methodology, you do retrospectives. You start a sprint – a sprint is two weeks – you deliver to the business, and after that, the team sits together and then they discuss what went well and what should be improved in the next sprint. And as a larger group in the whole department, we get them together once every four months for an hour or two at the most and we say, ‘OK. Where is waste? Where do we see waste?”

“And most of the time it is not coding or the real work they do, most of the time it is in the communications area.  And we try to get rid of it. So we changed the team from 2 x 6 to 3 x 4 people. It’s just part of our being to look at the waste we created after the last period and where can we improve. And they became  much more efficient and effective.”

According to Kevan Hall, one of the things you often see with teams is the ‘community decay curve’.

“When you have a team, virtual or not, you have a kick off and everyone’s very enthusiastic. And then you start doing the work, and it’s quite hard. And then you come to the end of something and you’ve succeeded and you have a celebration. Successful virtual teams create a rhythm. For our teams, it’s a year. You have a long old slog and there is a ‘periodicity’ of communication. A software team is perfect because you have a closure, a learning opportunity, a celebration and then you go and do it again. If it’s longer than that, then you have to think about other things that are going to have an impact, like a conference call or a coaching call.

“Even worse, if you’re managing a remote organisation or a remote supplier, the risk is that you only call them when you need something or you’ve got a problem. So they don’t really look forward to your next call. ‘Oh, no. Look who’s on the phone.’ You demotivate people just by your number coming up. It’s about keeping that rhythm. It’s a bit like an ECG. You’ve got to create those peaks to keep motivation high.

“Social media has a very powerful role to play in virtual teams, because it’s much easier to share the other things that I’m doing rather than just project updates. I also like Instant Messenger because if you have people in Asia you can see that they’re ‘on’ and to me it’s just like passing someone in the corridor. It’s the virtual coffee machine. Occasionally, people will see say, ‘If you’re there, can we have a quick call?’ And it’s another part of the rhythm for me – like keeping the heartbeat going.”

Outsourcing

“I used to sell a lot of outsourcing,” said Andrew de la Haye. “But I haven’t seen it really working (teamwise). One of the issues with outsourcing is the commitment bit, which is very important in my teams. My people are committed to me because they know me, and they know what the company stands for. If you outsource to somebody, who are they committed to? You hope that they are committed to the organisation they’re working for, but they’re certainly not committed to you. And they are probably more committed to themselves, especially in India because people move around like crazy.

“So one of the issues with outsourcing is the lack of commitment, I think. I don’t see a solution to that. There are two ways of outsourcing: outsourcing commodity items, where there is a new version of SAP and people need to upgrade. That kind of stuff. That’s good enough – it will work fine. But if you truly need to build applications and you need to work together with a company to create business value, and that’s what a lot of outsourcing is about as well, I haven’t seen it working.

“I tried it again last year, and I gave a company a chance. I had a really good relationship with this consulting firm and they told me that they had an excellent team in India, and ‘Let’s try this project just for a three-month trial.’ And it was more or less the only project in the last five years that went belly-up.”

As Kevan Hall pointed out, when you’re managing across distance, culture, time zones, working through technology, and commercial considerations, outsourcing is so much more complex.

“One of the things we see a lot with clients who have outsourced is what I call the balance of trust and control. Because I don’t know you and I don’t trust you, I tend to control you. And so we go out to India and we have these incredibly heavy processes which we beat you up to make sure you follow without any sense of initiative or change, and then you start complaining that the Indians don’t have any initiative and don’t innovate.

“Well, you’ve told them not to and they’ve very smart people, albeit with higher turnover, and then you’re finding that problem of ‘how do we build trust?’ So many organisations outsource processes and spend an enormous amount of time on process, but they don’t have the travel budget to even go and meet the people who are doing a service for them.

“So how are you ever going to build a relationship? You wouldn’t do it in your own business. So doing it in an even more complex environment…how’s that going to work?”

“You have to look at the type of activity being outsourced,” said Dr Joost Visser, SIG’s Head of Research . “There is a lot of success in outsourcing in all sort of activities. In software application development where you are trying to create business value and where people are being creative, like in the automotive industry, thinking of the next engine or concept car, I think that by basically taking the team you need and pulling it out over locations and over time zones, you’re creating a challenge for the teamwork you need for that activity.”

There is another factor: the customer, suggested Kevan Hall.

“If you decided that you’re going to bring your development team into one place and therefore take away one barrier to complexity, which is distance, which makes a lot of sense, then aren’t you just exporting that level of complexity to the customer? Because they still have to manage with the fact that they still have stakeholders spread around the world in different time zones and different cultures. And they’ve got complex needs. It’s OK for you now. But is that the right thing to do for the customer?

“Human Resources has done that. They’ve gone to specialist centres and business partners. And all that’s done is that the business partner has to manage all the complexity rather than the organisation.”

How do you create successful software development teams? (Part 1)