Category Archives: operational issues

Hospital group wins $106m settlement in Cerner dispute

By Tony Collins

 A US health organisation Trinity Medical Centre has won a $106m settlement in  a legal dispute with Cerner, which is one the main suppliers of patient record systems to NHS trusts in London and the south.

Under the NPfIT BT has installed Cerner at trusts that include the Royal Free, London, Barnet and Chase Farm Hospitals NHS Trust, Weston Area Health NHS Trust, Barts Health NHS Trust, North Bristol NHS Trust and more recently at Croydon Health Services NHS Trust.

The Wall St Journal says a clinical patient accounting program Trinity bought from Cerner in 2008 was defective and didn’t deliver the promised benefits, which Cerner disputed. Trinity sought about $240m in damages; Cerner estimated $4m.

The companies agreed to submit the dispute to arbitration which began in October 2013.

Cerner said it “strongly disagrees” with the award and believes the claim was based on unique circumstances. It called the award the only material judgment against Cerner in its 34-year history.

US lawyer Michael Dagley says his firm won a $106m settlement for North Dakota-based Trinity Medical Centre in an arbitration case against Cerner.

The firm says that Trinity alleged in 2012 that patient accounting software and other services purchased from Cerner were defective, producing thousands of billing errors.

“We think it’s tremendously significant because it represents the first major victory that we’re aware of by a health care provider against a software vendor,” Dagley said in a statement.

“Providers are under pressure to automate and vendors are under pressure to offer integrated products. Providers want one vendor for all their IT needs, so the vendors have this incentive to deliver software to the market as quickly as possible, and that can lead to products being introduced that are immature and defective, which in health care, can cause tremendous damage.”

Last year Cerner said it believed the chance of a material loss related to the matter was remote and it had 147 hospitals and 735 clinics using the patient accounting program.

Despite the settlement Cerner’s share price has held up well.

Trinity Medical Centre is a non-profit organisation with about 2,700 employees.

Dare anyone criticise this IT project – with the CEO as leader?

By Tony Collins

Croydon Health Services NHS Trust has had mixed success with its go-live of the Cerner Millennium system.

It is said to be a technical success but last week board members of the Croydon Clinical Commissioning Group expressed concerns about ongoing problems with the system.

Fouzia Harrington, director of quality and governance told the Croydon Advertiser: “The implementation [of Cerner] itself went well in technical terms, but there have been some implications about how it has been used by staff.

“It’s had far more impact in terms of the time it takes to book people in, for example. There have also been implications in terms of lost information about patients.

“There has been a lack of information about hospital activity, which has an impact on finances and, potentially,the quality of services patients are receiving…”

David Hughes, a lay member of the board, was not satisfied with that reassurance.

“You say that no harm has occurred,” he said,  “but while we’ve had no direct incident so far, patient care has definitely suffered.

“You talk about increased waiting times and there’s a risk that harm may occur because of the difficulty in getting in touch with clinicians who actually know what is going on with the patient.

“I’m very concerned from a quality point of view that our main provider has a serious problem with its information systems.”

Hughes called for action. Although the trust may not be aware of an incident yet it may “come out through further investigation that there has been”.

Some waiting times have increased,  the CCG cannot be certain of exact levels of activity at the hospital, and missing information has made it difficult to commission some services.

The concerns were raised at a board meeting on Tuesday.

Dr Tony Brzezicki, chairman of the CCG, said new system would eventually lead to improvements.  “Hospital patients had five sets of notes before. That in itself posed a risk that Cerner will mitigate,” he said.

“However, there have been administrative delays which mean longer waiting times for patients.There are also issues for the service to primary care which is a significant risk. Some of the problems have been resolved though I am concerned at the time scale because they are certainly impacting on my practice.”

Success

John Goulston is the Croydon Health Services NHS Trust CEO. One of his previous jobs was as Programme Director of the London Programme for IT at NHS London. The LPfIT was formerly part of the National Programme for IT. 

As well as CEO, he chairs the trust’s Informatics Programme Board which has taken charge of bringing Cerner Millennium to Croydon’s community health services and the local University Hospital, formerly the Mayday.

Goulston reported to his board that the Cerner go-live – on 30 September and 1 October last year – was a success.

“Our partners Cerner, BT and Ideal have commented that the Trust has undertaken one of the most efficient roll-outs of the system they have worked on, with more users adopting the system more quickly and efficiently than other trusts … the success we have achieved to date is the result of the efforts of every single system user and all staff members,” said Goulston.

Goulston has said the trust deployed the “largest number of clinical applications in a single implementation in the NHS”. 

The Department of Health provided central funding, and the trust paid for implementation “overheads”.  The Health and Social Care Information Centre was the trust’s partner for the go-live.

The Croydon Advertiser asked Croydon Health Servicesa series of questions about Cerner, including its cost to the NHS, but was sent a short statement.

A spokesman told the Advertiser the system would improve patient administration and means that nurses have access to “quality, detailed information” when delivering care.

He added: “During the initial switch over of systems in September while staff were getting used to the system, some patients did need to wait slightly longer to check in for their clinic appointments.

“The trust has maintained and surpassed our 18 week referral to treatment targets from the initial roll out.”

Croydon’s response

Campaign4Change put some questions to the Croydon trust. These are the questions and its responses: .

Is the trust being completely open – taking seriously the duty of candour –  about problems arising from the Cerner Millennium go-live?

“The Trust takes its duty of candour on all issues very seriously; we believe that transparency is essential in running a modern NHS organisation. We are held to account by our board at public meetings, where the public are able to attend and question our senior management team, by our local health overview and scrutiny committee and our commissioners.

“Recent press coverage on CRS Millennium appeared in the local press when the system was discussed in a public meeting of our commissioners.”

As the CEO is leading the Cerner Millennium project, does this make it difficult for trust staff and trust directors to say anything even mildly critical about the implementation?

“Staff opinions on the implementation of CRS Millennium, both positive and negative, are welcomed by the Trust. Staff have given their frank opinions of the system directly to the Chief Executive both in our monthly all staff meetings and at the open staff engagement surgeries held by our Chief Executive and Chairman. All staff opinions are taken seriously and are acted upon appropriately.”

Given the CEO’s enthusiasm for the implementation is there a special onus on the press office to defend the implementation and play down problems? [I note that the Croydon Advertiser implied its questions had not been answered, and that the Trust gave a short statement instead.]

“The communications team respond to and facilitate a large number of external requests, including from the media, in a transparent, timely and appropriate manner. This same approach is followed on questions about CRS Millennium.

“CRS Millennium will bring about many improvements to patient care and Trust efficiency and we are enthusiastic about communicating these; it is unfortunate that recent press coverage did not consider these positive benefits in any depth.”

A comment on the Croydon Advertiser’s website says:

“When I checked in to out-patients I supplied all my personal details; however the post code I gave was declared invalid by the new system. That filled me with confidence. I also gave my contact as a mobile; however they tried to ring me using an old landline number.”

Comment

It’s generally accepted that having a high-level sponsor for an IT project is essential but when the lead is the CEO, does that make it difficult for people to challenge and constructively criticise?

A “good news” culture tends to prevail – as happened on Universal Credit, on the BBC’s Digital Media Initiative, and within the Department of Health on the NPfIT. Nobody dared to speak the whole truth to power. The truth tends to surface only when a new administration takes over or, in the case of Universal Credit, the minister obtained his own independent reports on project progress.

Campaign4Change put it to the Croydon trust that board directors see reports on the Cerner implementation only every two months and much can happen in the intervening period. This it did not deny.

Even if the trust’s directors met daily would they dare to challenge the CEO? And will the full facts  ever emerge? Things could be much better than CCG directors believe  – or much worse.

After nearly every major NPfIT implementation of the Cerner Millennium system in London and beyond (such as North Bristol) the facts were scarce, and reassurances that no patients had come to harm were plentiful. 

Here we go again?

**

Should lessons have been learned from these Cerner go-lives?

Barts and The London

Royal Free Hampstead

Weston Area Health Trust

Milton Keynes Hospital NHS Trust

Worthing and Southlands

Barnet and Chase Farm Hospitals NHS Trust

Nuffield Orthopaedic

North Bristol.

St George’s Healthcare NHS Trust

University Hospitals of Morecambe Bay NHS Foundation Trust

Birmingham Women’s Foundation Trust

NHS Bury

GPs asked to contact hundreds of patients who may have missed treatment after hospital’s cancer referrals blunder  – Pulse

London LMCs alert over Imperial cancer waits mix-up – Pulse.

GPs kept in the dark over hospital cancer blunder – Pulse

 IT system has increased waiting times and led to lost patient data.

Patient records go-live success – or NPfIT failure

Patient records go-live “success” – or a new NPfIT failure?

By Tony Collins

John Goulston says the go-live of a new patient records system at his trust is a “success”.

He should know. He’s Chief Executive of Croydon Health Services NHS Trust. He’s also chair of the trust’s Informatics Programme Board which has taken charge of bringing Cerner Millennium to Croydon’s community health services and the local University Hospital, formerly the Mayday.

He was formerly Programme Director of the London Programme for IT at NHS London – a branch of the NPfIT.

In a report two weeks ago Goulston said the trust deployed the “largest number of clinical applications in a single implementation in the NHS”. Croydon went live with Cerner Millennium on 30 September and 1 October 2013.

Said Goulston in his report:

“Administrative functions do not engage clinicians; providing them with a suite of clinical functionality has been justified as each weekday approx. 1,000 staff are logged on and using the system. CHS [Croydon Health Services] has in Phase 1 deployed, in addition to patient administration, the largest number of clinical applications in a single implementation in the NHS England.”

BT helped install Millennium at Croydon under the National Programme for IT.  The trust’s spokesman says the Department of Health provided central funding, and the trust paid for implementation “overheads”.  The Health and Social Care Information Centre was the trust’s partner for the go-live.

The Centre is the successor for Connecting for Health. It has taken on CfH’s officials who continue to help run the NPfIT contracts with BT and  CSC.

Goulston said that Cerner and BT have paid tribute to the trust which installed Millennium in A&E, outpatients, secretarial support and cancer services, and elsewhere.

“Our partners Cerner, BT and Ideal have commented that the Trust has undertaken one of the most efficient roll-outs of the system they have worked on, with more users adopting the system more quickly and efficiently than other trusts … the success we have achieved to date is the result of the efforts of every single system user and all staff members,” said Goulston.

Best Cerner implementation yet?

Optimistic remarks about their launch of Cerner Millennium were also made in 2012 by executives at the Royal Berkshire NHS Foundation Trust.  Their optimism proved ill-judged.

Of the Millennium go-live at Royal Berkshire, trust executives said that it “had been considered to be the best implementation of Cerner Millennium yet and that despite staff misgivings, the project was progressing well”.   This positive message should be disseminated, they said.

Months later they told the Reading Chronicle of patient safety issues and a financial crisis arising from the Millennium implementation.

A Royal Berkshire governors Rebecca Corre was quoted as saying: “There is a patient safety issue when staff write down observations and then there is an hour before they can get it onto the computer. If it is an experienced nurse, they may pick up a problem, but others may not.”

Ed Donald, Chief Executive of Royal Berkshire was quoted as saying:

“Unfortunately, implementing the EPR [electronic patient record] system has at times been a difficult process and we acknowledge that we did not fully appreciate the challenges and resources required in a number of areas.”

Are executives and managers at Croydon Health Services NHS Trust  now similarly afflicted with an unjustified optimism about the success of their Cerner go-live?  

Past consequences of NPfIT go-lives hidden?

The Department of Health has claimed benefits for the NPfIT of £3.7bn to March 2012 but there have been trust-wide failures: thousands of patients have had their appointments, care or treatment delayed by difficulties arising from past implementations of patient record systems under the NPfIT.  For thousands of patients waiting time standards have been exceeded or “breached” because of disruption arising from troubled go-lives.

In nearly every case trusts made it difficult for the facts to come out publicly. Vague or unexplained fragments of information about the consequences of the NPfIT implementation appeared  in different board papers over several months. The facts only emerged after a journalistic investigation that required scrutiny of many board papers and follow-up questions to the trust’s press office.

So Campaign4Change investigated Croydon Health’s implementation of Cerner Millennium to see if the Francis report’s call for a “duty of candour” over mistakes and problems in the NHS have made any difference to the traditional fragmentation of facts after NPfIT go-lives of patient record systems.

The Francis report called for “openness, transparency and candour“.  Trusts were told not to hide sub-standard practices under the carpet. The health secretary Jeremy Hunt said it can be “disastrous” when bad news does not emerge quickly and the public are kept in the dark about poor care.

To my questions about the Cerner Millennium implementation Croydon trust’s spokesman always responded promptly and tried to be helpful. But it appears that trust executives have given him limited information about consequences of the go-live, and have preferred to indulge the “good news” NHS culture that Jeremy Hunt warned about.

On being asked what problems the trust has faced since the go-live the spokesman gave various answers that made no mention of the problems.

“All of our staff received training on the system, and we are continuing to offer our teams support as it is embedded.”

What of the problems arising from the implementation, and has the board been fully informed?

“Millennium has featured regularly on the Corporate Risk Register presented to each Part 1 Board meeting.   In addition, implementation has received detailed confidential consideration at Part 2 of Board meetings, (which is why you won’t find it in our public board papers).”

Given Francis’s call for duty of candour,  should the trust be more open about its problems?

“The initial roll out for CRS Millennium was introduced over three days at the Trust, with a phased approach.  We did this to ensure the system was working in each department, before introducing it in another area.

“We are monitoring waiting time performance and records management so we can identify any issues if they emerge. The system is still being introduced in some services and when this is completed we will be able to assess the overall programme,” said the spokesman.

Does Croydon’s unwillingness to give in its statements to me any details of problems indicate that the culture of a lack of transparency in the NHS will be hard to change, no matter how many times Jeremy Hunt talks about the need for candour when things go wrong?

The spokesman:

“I’d like to be clear about the Trust’s approach:

  • The Trust board has been cited on the roll out of CRS Millennium and any potential risks throughout the process.  As I previously noted, the board received an update in September.  The board meeting, which will take place on Monday of next week, will receive a further update from the Chief Executive.  The papers from this meeting will be published on our website and the meeting takes place in public;
  • A meeting chaired by the Chief Operating Officer has reviewed any operational matters arising on a daily basis.  This is an internal meeting for clinicians and managers which has informed the implementation process;
  • Patients and visitors to the hospital have been kept fully appraised of the introduction of the system and were made aware that they may experience some delays to the check-in process while staff became familiar with the new computer system;

“These actions would suggest that the Trust has been transparent in its approach.  You are welcome to review the board papers when they are published.”

Serious problems now emerge

Croydon did indeed publish its board papers on 25 November 2013 – which is to its credit because not all NHS trusts publish timely board papers.

But it’s mostly in the small print of various board papers that details emerge of Millennium-related problems. The shortcomings are mentioned as individual items rather than in a single, detailed Cerner Millennium deployment report.  This leaves one to question whether trust directors have an overview of the seriousness of the difficulties arising from its implementation of a new patient records system.

These are some excerpts from deep inside Croydon’s latest board papers:

Breaches in waiting time standards

– “CRS Millennium (Cerner) Deployment -Network downtime – Week 1.  In particular, the significant network downtime in week 1 (BT N3 problem) led to no electronic access to Pathology and Radiology which resulted in longer waits for patients in the Emergency Department (ED) leading to a large number of breaches. This was a BT N3 problem which has been rectified with BT providing CHS with the required scale of N3 access (>600 concurrent users and >1,600 users on any day – which is the largest network usage of any trust in England).”

– • “Hospital Based Pathways: The deployment of CRS Millennium was a particular challenge in the month across the multiple service areas within the Directorate of A&E, Surgery and Maternity.

• “Cancer & Core Functions: With the implementation of CRS Millennium, the open pathways part of RTT [referral to treatment – patient waiting times) may fail the standard – validation will be completed after the narrative for this report… “

Excessive waits in A&E

– “The main drivers adversely affecting the performance in the month [October 2013) for A&E were the deployment of CRS Millennium and the commencement of winter pressures due to the seasonality change.  A&E  4-Hour Total Time in Department Target: 95.00%. Actual: 91.57%.”

Over budget

“The Trust position as at October is an adverse variance of £4.1m. This is a significant deterioration on the Month 6 position. The movement is mainly due to a significant reduction in income mainly as a result of operating issues caused by the Cerner deployment (£0.9m)…  Actual £14.8 (£14.8)m; Budget £10.7m; Variance £4.1m.”

“Cerner Millennium: Plan YTD [year-to-date] £245,000; Actual YTD  £621,000;

Significant loss in income

“… A new patient administration system was deployed in the Trust on the 30th September and 1st October (Cerner Millennium). The deployment has resulted in significant loss in income in September and October £ 1.1m. Trust performance on Activity Planning Assumptions and Key Performance Indicators is substantially worse than plan …”

Extra costs

“Medical £412k and admin £148k agency levels continue to be high due to cover for vacancies, annual leave, sickness and release of staff for Cerner training. The Trust has also incurred additional costs associated with the Cerner deployment (£600k) including overtime payments to administration staff and training costs.”

Bid to recover Cerner costs?

“… The Trust is currently forecasting a deficit position of £17.8m, which is £3.3m off the plan submitted to the NHS Trust Development Authority. This is a £3m movement from the month 6 forecast and is as a result of operational issues caused by the Cerner deployment. The current projected impact is an additional costs £1.7m and a loss in activity £1.1m . An application is to be made to recover the additional cost/losses relating to the Cerner deployment [of £2.9m] …”

HSCIC support for delays

“Cerner Millennium – Revised implementation date to Sept 2013 (achieved) ,with resultant additional costs including additional PC requirements of £146k, specialist support services £300k, procurement costs £91k, data cleansing costs £200k.

“Health& Social Care Information Centre (HSCIC) has confirmed support for the delayed implementation will be provided, accounting treatment of support to be confirmed with Department of Health.”

More money to stabilise operational position?

“As a result of operational issues caused by the Cerner deployment , Income is significantly reduced in October. The forecast assumes that the Trust will resume normal operating levels from November and that an element of the income lost will be will be recovered in the latter part of the year. A business case is being submitted to the Trust Board for additional investment in Cerner to stabilise the operational position.

“If there are further operational issues due to the Cerner deployment then this will significantly impact on the year end forecast…”

Over-optimism?

Principal risk -reporting output from Cerner is not accurate or timely. Officer in charge: CEO. Before go-live risk scores: June 2013 – 16; July – 16; Aug  – 10; Sept – 10. After go-live risk score (for Oct): 20 [high risk of likelihood and consequences]

Principal risk – operational readiness following the implementation of Cerner. Officer in charge: COO.  Before go-live risk score 15. Post go-live: 20. Risk rating before go-live – Green. After go-live – Red.

Red risks

Corporate Risk Assurance Framework

Nine risks are reported as Red [two of which relate directly to Millennium]:

“… Reporting output from Cerner is not accurate or timely. Data migration was successful. However reliance on external provider as internal knowledge has not yet been fully gained. A data quality dashboard with exception reporting is in place.

“… Operational readiness following the implementation of Cerner CRS Millennium impact conveyed to Trust Development Authority e.g. ED [Emergency Department] reporting and cost overruns

Risk scores

– Failure of CRS millennium to deliver anticipated benefits – 12. Officer in charge: CEO

– Reporting output from Cerner is not accurate or timely – 20. Officer in charge: CEO

– Operational readiness following the implementation of Cerner – 20. Officer in charge: COO

Croydon’s trust’s response to problems

Said John Goulston, Croydon’s CEO, in his latest [November 2013] report to the board of directors:

“The issues being encountered now with CRS Millennium are not due to any lack of integration testing with legacy applications or testing of workflow. They can be attributed to changing from a 25 year old Patient Administration System (Patient Centre) which did not require working in real time, was simple and intuitive to use, easily configurable and flexible to our needs.

“CRS Millennium’s patient administration functions are almost the complete opposite and the language used is new for our staff i.e. conversations, encounters etc. For our staff it has been a big ask for them to step into and up to such a complex application.”

He added: “The benefits of the new system are that each patient will have a single accurate electronic record that can be viewed and kept up-to-date by hospital and community clinical staff. This will eventually mean less time searching for patient notes, missing documentation and duplicating patient information…

“As with any massive change, there are still some challenges to tackle in making the system work effectively for every single user, in a diverse and complex organisation.

“However the success we have achieved to date is the result of the efforts of every single system user and all staff members. I would like to thank all our staff for their hard work in getting the Trust to this important stage.”

The trust spokesman gave me this statement on the problems:

“The Trust board has been given regular reports on the roll out of CRS Millennium and any potential risks throughout the process, not least through its regular reviews of the Corporate Risk and Board Assurance Frameworks.  As I previously noted, the board received a specific update in September.

“As you already know, November’s board meeting received a further update from the Chief Executive.  The papers from this meeting were published and the meeting takes place in public;  Those attending are invited to put forward questions.

“A meeting chaired by the Chief Operating Officer continues to review operational matters.  This is an internal meeting for clinicians and managers which has informed the implementation process;

“Patients and visitors to the hospital have been kept fully appraised of the introduction of the system and were made aware that they may experience some delays to the check-in process while staff became familiar with the new computer system;

“As you highlight from the board report, Cerner & BT noted that ‘the Trust has undertaken one of the most efficient roll-outs of the system they have worked on’   The papers also note some operational challenges as the system was rolled out.  These have been addressed as part of the daily meetings I reference above – these are mainly concerned with users familiarising themselves with the system and have been addressed through the support and training staff received.

“In terms of the costs, the introduction of CRS Millennium has been supported by central funding from the Department of Health with the Trust paying the implementation overheads.   These costs are a matter of public record and the Trust publishes annual Accounts as part of its Annual Report.”

Comment

When you go into hospital it’s reassuring to know the directors will be well informed and open about problems that could affect you.

The approach of Croydon Health Services NHS Trust to openness about its problems is not reassuring. It is no better or worse than other trusts that have implemented Cerner’s Millennium. In fact the timely publication of its board papers means it is more open than some.

But it should not require a time-consuming journalistic investigation to establish the consequences for patients of an NPfIT go-live. It has required just such an investigation after the go-live of Millennium at Croydon.

Board directors will not have the time to dig for, and piece together, information about internal problems that could delay patient appointments, treatment and care. They need the unpalatable facts in one place. Croydon Health Services has failed to make it easy for patients or board directors to see what has gone wrong.

NPfIT deployments at other trusts have led, cumulatively, to thousands of patients having appointments that were disrupted, or who had to wait longer to be seen than necessary, or whose records were not available, or who were seen with another patient’s records.

In shying away from telling the whole truth trusts take their cue from the top: the Department of Health has always made it hard to establish facts about anything to do with the NPfIT.  Said the Public Accounts Committee in its report The National Programme for IT in the NHS: an update on the delivery of detailed care records systems in July 2011:

 “It is unacceptable that the Department [of Health] has neglected its duty to provide timely and reliable information to make possible Parliament’s scrutiny of this project.

“Basic information provided by the Department to the National Audit Office was late, inconsistent and contradictory.”

Unanswered questions

Croydon has questions to answer, such as how many breaches of waiting time standards it has had, and may still be having, due to problems arising from the go-live. Other unanswered questions:

– What does a “a large number of breaches” in the Emergency Department mean? Have each the patients affected been told?

– Why are the risks related to the implementation much higher after go-live than before, given that the trust has had years to prepare for the go-live, and the many lessons it could have learned from other trusts?

– Exactly what problems are still affecting patients?

In a post-Francis NHS, Jeremy Hunt has demanded openness about mistakes and problems. There is an agreed need for change – but how can Hunt change an NHS culture – indeed a public sector culture – in which senior executives, in troubled IT implementations, will always emphasise the good news over the bad, perhaps hoping the bad will always remain hidden?

More IT-based megaprojects derail amid claims all is well

By Tony Collins

If one thing unites all failing IT-based megaprojects in the public sector it is the defensive shield of denial that suppliers and their clients hold up when confronted by bad news.

It has happened in the US and UK this week. On the Universal Credit  project, the minister in charge of the scheme, Lord Freud, accepted none of the criticisms in a National Audit Office report “Universal Credit: early progress”.   In a debate in the House of Lords Lord Freud quoted from two tiny parts of the NAO report that could be interpreted as positive comments.

“Spending so far is a small proportion of the total budget … and it is still entirely feasible that [universal credit] goes on to achieve considerable benefits for society,” said Lord Freud, quoting the NAO report.

But he mentioned none of the criticisms in the 55-page NAO report which concluded:

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

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

And a shield of denial went up in the US this week where newspapers on the east and west coast published stories on failing public sector IT-based megaprojects.  The LA [Los Angeles] Times said:

As many as 300,000 jobless affected by state software snags

“California lawmakers want to know why Deloitte’s unemployment benefits system arrived with major bugs and at almost double the cost estimate. The firm says the system is working.”

The LA Times continued:

“Problems are growing worse for the state’s Employment Development Department after a new computer system backfired, leaving some Californians without much-needed benefit cheques for weeks.”

The Department said the problems affected 80,000 claims but the LA Times obtained internal emails that showed the software glitches stopped payment to as many as 300,000 claimants.

Now lawmakers are setting up a hearing to determine what went wrong with a system that cost taxpayers $110m, almost double the original estimate.

Some blame the Department’s slow response to the problems. Others point the finger at a Deloitte Consulting.

The LA Times says that Deloitte has a “history of delivering projects over budget and with problematic results”. Deloitte also has been blamed, in part, for similar troubles with upgrades to unemployment software in Massachusetts, Pennsylvania and Florida, says the paper.

“We keep hiring the same company, and they keep having the same issues,” said Senator Anthony Cannella.  “At some point, it’s on us for hiring the same company. It’s faulty logic, and we’ve got to get better.”

In 2003 California planned to spend $58m upgrading its 30-year-old unemployment benefits system. By the time the state awarded Deloitte the contract in 2010  the cost estimate had grown by more than $30m.

The Department handed out $6.6bn to about 1 million unemployed Californians in 2012. The software was expected to ease the agency’s ability to verify who was eligible to receive benefits.

Problems began when the Department transferred old unemployment data to the new system. The software flagged claims for review — requiring state workers to manually process them.

The LA Times says that officials thought initially the workload would be manageable, but internal emails showed the agency was quickly overwhelmed. Phone lines were jammed. For weeks, the Department’s employees have been working overtime to clear the backlog.

A poor contract?

In a contract amendment signed two months ago California agreed to pay Deloitte $3.5m for five months of maintenance and operations costs. Those costs should have been anticipated in the contract said Michael Krigsman, a software consultant who is an expert on why big IT-based contracts go awry. He told the LA Times:

“It’s a striking oversight that maintenance was not anticipated at the beginning of the contract when the state was at a much stronger negotiation position.”

By the time the middle of a project is reached, the state has no choice but to stick with Deloitte to work out bugs that arise when the system goes live, he said.

System works

Loree Levy, a spokeswoman for the Department, said the system is working, processing 80% of claims on time. As for the troubles, she said, “There is a period of transition or adjustment with any large infrastructure upgrade like this one.”

Deloitte spokeswoman Courtney Flaherty said the new California system is working and that problems are not the result of a “breakdown or flaw in the software Deloitte developed”.

System not working?

While there seems to be no project disaster in the eyes of the Department and Deloitte Consulting, some of the unemployed see things differently. One wrote:

“I am a contract worker who had to fight for my unemployment benefits. I won my case and yet they still cannot pay me… It’s been more than 3 weeks since I won my appeal and as of this moment, I am owed 13 weeks of back payments. To add insult to injury, they cannot send me current weeks to certify and they refuse to even try to help me to get back into the online system.

“I blame Deloitte, but it is California that carries the heaviest burden of fault… We’re nearing November and they still haven’t fixed an issue that began over Labor Day? Nonsense!

“This is untenable for everyone affected …We are owed reparations as well as our money at this point. It’s a funny word, affected. That means families and individuals are going hungry but can’t get food stamps or welfare. It means evictions and repossessed cars. It means destroyed credit, late fees, years of turmoil and shame for people already dealing with unemployment. Shame on you California.”

Another wrote:

“ … Not communicating is NOT an answer. Unemployed individuals caught up in the nightmare were told to be patient.  Rents and other expenses were still accumulating.  But [when you] add on additional fees: late fees, restoral fees, interest fees, etc…….you get the picture.

“Dear Governor Brown,

“Please reimburse me for all additional fees I’ve had to absorb to survive this fiasco.  You are going to make me payback any overpayments, but ignore the cost to the unemployed taxpayer.  This is  appears to unfair.  Perhaps Deloitte should pay us back from their contracted funds before they receive their final payment.  I am saving all of my receipts to deduct from my 2013 tax return.

“BTW Gov Brown – I am still waiting on additional payments as of today and DMV registration for my vehicle was due on 10/20/13.  Are you going to waive the penalty for late payment? Am I the only one with this question?”

Scrutiny

California’s state Assembly has set a date of 6 November 2013 for a hearing into the Department’s system upgrade.

“We’re going to look at EDD, the contractors and others to see how the system broke down so we can avoid this in the future,” said Henry Perea, chair of the Assembly’s Insurance Committee, which has oversight over the jobless benefits program.

On its website Deloitte says:

“Deloitte continues to help EDD [Employment Development Department] transform the level of service it provides to unemployed workers and improve the quality of information collected by EDD. The next time unemployment spikes, California should be ready to meet the increased demand for services.”

Massachutsetts IT disaster?

On the opposite coast the Boston Globe reported on an entirely separate debacle (which also involved Deloitte):

          None admit fault on troubled jobless benefits system

“… even with the possibility that unemployed workers could face months more of difficulties and delays in getting benefits, officials from the Labor Department and contractor, Deloitte Consulting of New York, testified before the Senate Committee on Post Audit that the rollout of the computer system was largely a success.

“‘I am happy with the launch,’ said Joanne F. Goldstein, secretary of Labour and Workforce Development, noting that she would have liked some aspects to have gone better.

“Mark Price, a Deloitte principal in charge of the firm’s Massachusetts business, acknowledged that software has faced challenges during the rollout, but insisted, ‘We have a successful working system today. ‘’’

NPfIT shield

A shield of denial was up for years at the Department of Health whose CIOs and other spokespeople repeatedly claimed that the NPfIT was a success.

Comment

If you didn’t know that Universal Credit IT wasn’t working, or that thousands of people on the east and west coasts of the US hadn’t been paid unemployment benefits because of IT-related problems, and you had to rely on only the public comments of the IT suppliers and government spokespeople, you would have every reason to believe that Universal Credit and the jobless systems in Massachusetts and California were working well.

Why is it that after every failed IT-based megaproject those in charge can simply blow the truth gently away like soap bubbles?

When confronted by bad news, suppliers and their customers tend to join hands behind their defensive shields. On the other side are politicians, members of the public affected by the megaprojects and the press who have all, according to suppliers and officials, got it wrong.

Is this why lessons from public sector IT-based project disasters are not always learned? Because, in the eyes of suppliers and their clients, the disasters don’t really exist?

None admit fault on troubled jobless benefit system

State fired Deloitte

Complaints continue despite claims system is under control

As many as 300,000 affected by California’s software problems

California’s predictable fiasco?

Who polices police IT reports?

By Tony Collins

The police, and civil and public servants in central government, the NHS and local authorities criticise journalists for biased reporting – taking selected facts out of context.

They’re sometimes right.  Journalists working for national newspapers can draft an article that is diligently balanced only to find, by the time it’s published, it leaves out facts which would have complicated, blunted, or contradicted the main points.

It’s one thing for this to happen in the world of journalism. You don’t expect public bodies to report on their own affairs with a partiality that rivals out-of-context reporting by some newspapers.

But it appears to be happening so regularly that one-sided self-reporting on organisational performance may be becoming the norm in the public sector.

In the NHS subjective, positive reporting in board papers – where managers tell directors what they think they want to hear – could help to explain why Cerner patient record implementations have, for years, gone badly wrong for the same reasons.

In recent months reports without balance have been published on the performance of Avon and Somerset Police’s IT outsourcing contract with IBM. 

Somerset County Council, Taunton Deane Borough Council and Avon and Somerset Police  are minority shareholders in a private company, Southwest One,  which is owned by IBM.

Confusingly, Taunton Deane Borough Council issued positive reports about its successful partnership with Southwest One – and then it decided to take some services back in-house.

Now it has emerged – only as a result of FOI requests by Somerset resident and campaigner Dave Orr – that two independent organisations, the National Audit Office, and HM Inspectorate of Constabulary, have commented positively on Avon and Somerset Constabulary’s partnership with Southwest One, based entirely on the unaudited opinions of the police force itself.

SAP

From his FOI requests Orr learned that the Avon and Somerset’s outsourcing deal with Southwest One has not gone entirely as expected. The National Audit Office’s FOI team has released notes of a joint visit by the NAO and HM Inspectorate of Constabulary to Avon and Somerset police in December 2012.  The visit was to find out about how well Southwest One was delivering services to the police force.  

The NAO’s notes are positive in parts. They say that performance has improved considerably since the implementation of the contract.

“Implementation of SAP improving the accounts close-down process, initial issues being resolved and a good quality of service being provided regularly.”

But there is another side to the story that is not reflected in the published accounts of Avon and Somerset’s relationship with Southwest One. The NAO’s [unpublished] field notes say:

“Fewer than expected benefits have been realised from IT due to the considerably different security requirements of the Police compared to the Councils.

“It also took a long time for SAP to be implemented. There has yet to be a duty management system implemented by SWOne which is part of the contract… SAP would have benefited from some pre-launch testing or piloting.”

A letter to Orr from the Home Office appears to confirm that Avon and Somerset Police’s participation in Southwest One is an unequivocal success.

“The private sector can help to deliver police support services better and at lower cost. Every pound saved means more money for the front line, putting officers on the streets…

“In its report “Policing in Austerity: rising to the challenge [2013] Her Majesty’s Inspectorate of Constabulary identified the Southwest One partnership as being a key element in achieving savings for Avon and Somerset Constabulary while ensuring better procurement, streamlining business support processes, and ensuring better use of police officer time.

“The report also noted that the Southwest One collaboration was the first of its kind for policing in England and Wales and that to date, no other force has delivered this level of partnership with local authorities.”

A little of the other side of the story comes in the last sentence of the Home Office letter to Orr which says: “We understand that Avon and Somerset Constabulary continues to work closely with IBM to resolve any technical difficulties and improve the services provided by Southwest One.”

Indeed a table on page 155 of HMIC ‘s 2013 report Policing in austerity: rising to the challenge indicates that Avon and Somerset Constabulary has one of the worst records of any police force when it comes to savings delivered between 2010/11 and 2012/13. [Table: Key indicators of the challenge – quartile analysis.]

Southwest One began a 10-year contract providing services to Avon and Somerset Police in 2008. The services included enquiry offices, district HR, estates, financial services, site administration, facilities, corporate human resources, information services, purchasing and supply, and reprographics. The contract involves 554 seconded staff.

Comment

Police forces, councils, the NHS and central government departments need  a few Richard Feymans to report on their organisation’s performance. Feynman was a gifted scientist, MIT graduate and noble prize winner who was chosen as a commissioner to report on the cause , or causes, of the Challenger Space Shuttle “O” rings accident on 28 January 1986.

He reported with such independence of mind and diligence that his hard-hitting findings were not considered acceptable to be included in the main report of the Presidential Commission of inquiry into the accident.  Feynman had to be content with having his findings published as an appendix to the Commission’s report – and an edited appendix at that.  

He suggested in his book “What do you care what other people think?” that his appendix was the only genuinely balanced part of the official inquiry report. 

“For a successful technology, reality must take precedence over public relations, for Nature cannot be fooled,” said Feynman.

One of his questions was whether “organisation weaknesses that contributed to the [Shuttle] accident [was] confined to the solid rocket booster sector, or were they a more general characteristic of NASA.”

One of Feynman’s conclusions:

“It would appear that, for whatever purpose – be it for internal or external consumption – the management of NASA exaggerates the reliability of its product to the point of fantasy.”

If such exaggeration happens at NASA it can happen in UK police force IT reports, and in board papers on the performance of councils and NHS trusts.

When journalists get it wrong it’s usually to their eternal regret. In the public sector positive unbalanced reporting is so “normal” that hardly anyone involved realises it’s a deviant practice. The US author Diane Vaughan coined a phrase for such corporate behaviour.  She called it the normalisation of deviance.  

It’s surely time for public bodies to move away from the norm and start reporting on their performance, and the performance of their outsourcing other private sector contracts, with balance, objectivity and independence of mind.   

If managers knew that reports on the progress of their contracts would be audited for impartiality and competence over organisational self-interest, perhaps they would have a greater incentive to avoid badly thought through outsourcing deals and IT implementations.

Is this why some council and NHS scandals stay hidden for years?

NAO report “Private sector partnering in the police service”

Dave Orr’s HMIC FOI requests and answers

NAO’s FOI responses on Avon and Somerset Police

Glasgow’s “major” health IT problem – a welcome openness

By Tony Collins

On its website this morning NHS Glasgow and Clyde, Scotland’s largest health board, has published an update about IT problems that technical staff have been unable to resolve. It says:

“Despite the best efforts of our IT technical staff who have worked throughout the night we have as yet been unable to resolve the problem. We have however been able to put in place a fix which we believe will ensure that chemotherapy patients are not affected by the continued IT issue.

“Unfortunately however there will still be some patients whose planned appointments today will be affected and we are currently in the process of assessing which patients this will impact upon. As soon as this has been identified we will contact the patients direct. Emergency care services are unaffected.

“We are continuing to work to get the system back on line as soon as possible and would like to apologise again to those patients who have been inconvenienced. A further update will be issued later this morning.”

The board issued its first bulletin yesterday evening.

“NHS Greater Glasgow and Clyde experienced a major IT problem this morning. Our technical staff are working flat out resolve this. However as a result, we have had to postpone a number of operations, chemotherapy sessions and outpatient appointments.

“There was also some delay in calls to our switchboard being answered. The problem relates to our networks and the way staff can connect to some of our clinical and administrative systems.

“We can reassure patients affected that their care will be rescheduled at the earliest opportunity. We are extremely sorry for the inconvenience that this has caused and we are doing everything possible to return services to normal as quickly as possible.”

The board issued statistics on those affected.

“In total we have postponed: 288 outpatient appointments, four planned inpatient procedures, 23 day cases and 40 chemotherapy treatments.”

The board told the BBC that the problems might have affected up to 10 major hospitals.

Comment

NHS Glasgow and Clyde’s timely statements over its problems would suggest that Scotland is much more open about IT-related difficulties than any trust in England where web bulletins, when there are any after IT problems, are usually about patients who have not been affected.

Scottish Conservative health spokesman Jackson Carlaw is right to say that NHS Greater Glasgow and Clyde “has been quick to admit to a serious problem”.

Trusts in England could learn something from NHS Glasgow and Clyde about openness and sound crisis management.

Croydon trust plans Cerner go-live in secret

Taunton council to bring some outsourced services back in-house?

By Tony Collins

A week after praising the Southwest One joint venture with IBM, officers at Taunton Deane Borough Council are recommending bringing some services back in-house.

Last week a report to councillors said:

 “Service delivery for TDBC, viewed in the round, is broadly on track. The majority of services perform well or extremely well (eg Customer Services). We do have concerns in some areas and we are working closely with the services in question to remedy the issues.”

Now Penny James, Chief Executive of the council, has written to staff about bringing services back in-house.

“Dear All

The Corporate & Client Services Team has over the past few months with the assistance of Southwest One (SWO) reviewed the services being provided to TDBC under our contract with SWO.

“The review has considered whether, in the light of the decisions taken by Somerset County Council to remove a number of their services from SWO and by Avon and Somerset Police to remove Property Services, TDBC [Taunton Deane Borough Council] should also consider whether services should be removed…

“The review concludes that it would be prudent for TDBC to bring back in-house the following service areas: Corporate Administration, Design & Print, Facilities Management, Finance Advisory, HR Advisory (including Learning and Development) and Property Services.  These are all services where TDBC has largely lost the benefit of shared service delivery.”

James says a formal decision will require the agreement of councillors after consultation with staff directly affected by the potential changes. The consultation will end on 31 October and a decision will be taken by the full council on 12 November 2013.

“Should the members agree to the return of these services the necessary changes are likely to be implemented early in 2014,” says James.

In a statement to Taunton’s Corporate Scrutiny Committee last week, local resident Dave Orr, who has campaigned for the full truth over the Southwest One venture to be made public, told Taunton’s councillors that the council had borrowed £3.65m in 2008 to buy SAP from IBM and Southwest One.

“That debt was to be paid out of procurement savings and should have been paid off 18 months ago. Instead, almost £1m of the debt for SAP is left, incurring interest charges that are reducing funding for our Council services.”

Orr said in the statement that Southwest One has continued to make losses and IBM has disposed of its global customer service business which adds to uncertainty over the future of the joint venture.

“Will Southwest One survive to the end of contract in 2017 or will parent company actions by IBM from the USA bring about an earlier demise? What is Taunton Deane’s response to this added uncertainty and risk?

He concluded: “Don’t throw any more money away in South West One – we can’t afford it.”

Why does truth on Universal Credit emerge only now?

By Tony Collins

For nearly a year the Department for Work and Pensions, its ministers and senior officials, have told Parliament that Universal Credit IT is on track and on budget.

Together with DWP press officers, they have criticised parts of the media and some MPs for suggesting otherwise.

Now the truth can be held back no longer: the National Audit Office is expected tomorrow to report on UC’s problems. Ahead of that report’s publication, and perhaps to take the sting out of it, work and pensions secretary Iain Duncan Smith has allowed Howard Shiplee, the latest DWP lead on delivery of UC, to own up to the project’s difficulties.

IDS has given permission for Shiplee to write an article for the Telegraph on the UC project. Every word is  likely to have been checked by senior DWP communications officers.

It’s the first time anyone on the UC project has publicly acknowledged the project’s difficulties though, as with nearly every government response to critical NAO reports, the administration depicts the problems as in the past. Shiplee’s article says

“… it’s also clear to me there were examples of poor project management in the past, a lack of transparency where the focus was too much on what was going well and not enough on what wasn’t and with suppliers not managed as they should have been.

“There is no doubt there have been missteps along the way. But we’ve put that right…

“I’m not in the business of making excuses, and I think it’s always important to acknowledge in any project where things may have gone wrong in order to ensure we learn as we go forward.

“To that end, the key decision taken by the Secretary of State to reset the programme to ensure its delivery on time and within budget has been critical.

“When David Pitchford arrived from the Major Projects Authority earlier this year, at the Secretary of State’s request, he began this process in line with those twin objectives…

“I’ve also ensured that as a programme we have a tight grip on our spending, and I have put in place a post for a new Director who will be dedicated to ensuring that suppliers deliver value for money. I am confident we are now back on course and the challenges are being handled.”

Parliament has a right to ask why nearly every central government IT project that goes wrong – whatever the government in power – is preceded for months and sometimes years in the case of the NPfIT by public denials.

From the over-budget and fragmented Operational Strategy project for welfare benefits in the 1980s, to the repeatedly delayed and over budget air traffic control IT at the New En Route Centre at Swanwick, Hampshire, and the abandoned Post Office “Pathway” project in the 1990s, to the failed National Programme for IT – NPfIT –  in the NHS in the last decade, ministers and senior officials were telling Parliament that all was well and that the project’s critics were misinformed. Until the facts became only too obvious to be denied any longer.

These are some of the reassurances ministers and DWP officials have been giving Parliament and the media about the UC project. None of their statements has given a hint of the  “missteps along the way” that Shiplee’s article refers to now.

House of Commons, 20 May 2013

Universal Credit (IT System)

Clive Betts (Lab): What assessment he [the secretary of state for work and pensions] has made of the preparedness of the universal credit IT delivery system.

Iain Duncan Smith: The IT system to support the pathfinder roll-out from April 2013 is up and running…

Betts: I thank the Secretary of State for that answer, but will he confirm that three of the pathfinders are not going ahead precisely because the computer system is not ready? …

Duncan Smith: The hon. Gentleman is fundamentally wrong. All the pathfinders are going ahead. The IT system is but a part of that, and goes ahead in one of the pathfinders. The other three are already testing all the other aspects of universal credit and in July will, essentially, themselves roll out the remainder of the pathfinder, and more than 7,000 people will be engaged in it. All that nonsense the hon. Gentleman has just said is completely untrue.”

**

BBC – 9 Sept 2012

 “A Department for Work and Pensions spokeswoman said: “Liam Byrne [Labour] is quite simply wrong. Universal Credit is on track and on budget. To suggest anything else is incorrect.”

**

Iain Duncan Smith, House of Commons, 20 May 2013

“This [Universal Credit] system is a success. We have four years to roll it out, we are rolling it out now, we will continue the roll-out nationwide and we will have a system that works—and one that works because we have tested it properly.”

Howard Shiplee – FT July 2013

“… Howard Shiplee, who has led UC since May, denied claims from MPs that the original IT had been ‘dumped’ because it had not delivered. ‘The existing systems that we have are working, and working effectively,’ he said. He added, however, that he had set aside 100 days ‘not to stop the programme, but to reflect on where we’ve got to and start to look at the entire total plan’.”

**

DWP spokesperson 16 August 2013

“… a DWP spokesperson said: “The IT supporting Universal Credit is working well and the vast majority of people are claiming online.”

**

Howard Shiplee Work and Pensions Committee, House of Commons, 10 July 2013.

“…The pathfinder, first of all, has demonstrated that the IT systems work…”

Mark Hoban, DWP minister, House of Commons, 6 March 2013.

The shadow Secretary of State has been touting this story for months. No it has been longer than that. The last outing was in today’s Guardian. I want to make it clear that nobody has walked off the project; all the contractors are in place and the project is on schedule to be delivered at the end of April. Now, if he thinks the idea is good in theory, it is about time he supported it. It is working and the contractors are in place, doing the job and ensuring that the pilots will be up and running at the end of April.”

[Hoban’s response was to a question on whether personnel or contractors at Accenture, Atos Origin, Oracle, Red Hat, CACI or IBM UK had been stepped down, or in any way notified by the Department, that they were to suspend work on Universal Credit. The main IT contractors for UC are Accenture, Hewlett Packard and BT plus input from Agile specialists Emergn. The DWP awarded UC IT contracts without any specific open competitive tender.]

Comment

On this site various posts have questioned whether Iain Duncan Smith has been getting the whole truth on the state of the UC IT project. He repeatedly went before MPs of the Work and Pensions Committee and gave such confident reassurances on the state of the UC project that it was difficult to believe that he knew what was really going on.

What we now know about the UC project’s “missteps along the way” shows, if nothing else, how gullible ministers are in believing their officials.

It is hard or impossible to believe that officials would lie but it is probable they would tell their ministers what they want to hear – and IDS has been in no mood to hear about problems.

Every big IT-based project in government that is failing ends up in a pantomime. From the back of the auditorium the media and MPs shout out when they receive leaks about problems. “Look behind you – there’s chaos,” they call out to departmental ministers and officials who don’t look behind them and reply “Oh no there isn’t!”

One reason this pantomime is repeated over decades is that independent reports on the progress or otherwise on big IT-based projects and programmes in central government are kept under departmental lock and key.  Even FOI requests for the keys consistently fail

So it’s usual for ministers and officials to answer media and Parliamentary questions about departmental projects without fear of authoritative contradiction.

Until the NAO is in imminent danger of publishing  a revealing report.

Perhaps it’s a lack of openness and accountability that contributes to IT-enabled change projects in central government going seriously awry in the first place.

With openness would come early and public recognition of a scheme that’s too ambitious to be implementable. With secrecy and the gung-ho optimism that seems to pervade projects like Universal Credit many on the project pretend to each other and perhaps even themselves that it’s all doable, while money continues to be thrown away.

When will the pantomime of misinformation and long-delayed revelation stop? Perhaps when Whitehall becomes genuinely open and accountable on the progress or otherwise of its IT-enabled projects. In other words: never.

Thank you to David Moss for drawing my attention to Howard Shiplee’s article in the Telegraph.

Time for truth on Universal Credit

Millions of pounds worth of secret DWP reports

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

By Tony Collins

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

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

The Express and Star reports a memo to council staff saying

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

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

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

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

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

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

Forward-looking

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

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

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

BT’s website continues:

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

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

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

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

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

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

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

Local government has moved on

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

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

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

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

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

Comment

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

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

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

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

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

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

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

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

 

Has 2 decades of outsourcing cut costs at HMRC?

By Tony Collins

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

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

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

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

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

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

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

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

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

Now costing £7.7bn over 10 years

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

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

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

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

Comment:

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

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

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

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

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

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

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

She says in her 2013 annual report:

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

RTI

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

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

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

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

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

**

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

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

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