Category Archives: private sector lessons for the public sector

What Mutualism means for Labour

Posted on 27/10/2011 | Leave a comment

By David Bicknell

It’s interesting that when a word starts to be linked with a trend or movement, everyone wants to be associated with it.

That’s beginning to be the case with mutuals. Now the Labour Party has seen an opportunity to put its definition on what mutuals are, with the publication of a new pamphlet from the Policy Network, called ‘What mutualism means for Labour.’

The Policy Network blog says this:

“The Conservatives, with their rhetoric of the “big society”, seem to have displaced Labour as the “party of ideas”. Their emphasis on empowering communities and decentralising power arguably reflects a cooption of traditional social democratic language and an encroachment on the ideological terrain of the centre-left. Many see mutualism as the left’s answer to the “big society” and a key pillar in Labour’s political economy. However, our definition of mutualism remains unclear and the means to achieve its goals intangible.

“This pamphlet sets out to develop a clear vision of what mutualism means for Labour and how it can be used to drive forward the social democratic project. It brings together prominent thinkers, politicians and strategists to lay down ideas on how mutuals and co-operatives can serve as models of post-crisis reform in both the private and public sectors. ”

Comment

Given that there are employees who want to set up mutuals, a practical, how- to guide might have been more useful, both to the mutuals themselves as well as to Labour in defining its mutuals credentials. Instead, although this pamphlet has some good essays, it is undermined in places by the usual anti-Thatcher fare that’s great for the Labour Party Conference, but not much practical use to anyone else.

“It is Thatcherism disguised as mutualism – witness the recent case of the awarding of a large NHS contract to a private provider. (Virgin Healthcare) rather than an employee-owned enterprise (Central Surrey Health). David Cameron made much play of the work of Central Surrey Health and indeed praised it publicly as an ideal example of what the ‘big society’ stands for. Yet when it came to the crunch, the progressive mutual organisation was gazumped by the private provider, just as Margaret Thatcher would have loved all those years ago.”

There’s also a dig at No 10’s Director of Strategy, Steve Hilton – “We need to authoritatively restate our values of co-operation, solidarity and mutualism in order to expose the difference between our vision of society and our opponents’. The difference between an authentic tradition, built upon the secure foundations of a century’s worth of history, and a ‘tradition’ built upon an overlap in one of Downing Street strategist Steve Hilton’s Venn diagrams.”

Knockabout stuff, but Punch & Judy politics and of little practical help to today’s fledgling mutuals. 

Is this really what mutualism means for Labour?  On the face of it, not much then.

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Posted in Campaign4Change, mutualisation, mutuals, private sector lessons for the public sector, public sector, public services, social enterprise

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Why the private sector is keen to be a Good Samaritan to new mutuals

Posted on 25/10/2011 | Leave a comment

By David Bicknell

There is a growing trickle of blogs, comments and discussions emerging around the idea of mutual joint ventures.

The mutuals concept has captured the imagination, even if precisely how they are going to be created; fund themselves; stand on their own two feet and compete in the commercial market has yet to evolve fully. And it will take some time.

Never one to pass up an opportunity, the private sector is now keen to offer itself as a Good Smaritan, lending a helping hand in helping mutuals get off the ground.

As a recent well-written paper from the Business Services Association puts it,  “…several barriers exist to realising the Government’s vision for mutuals. New mutuals spinning out of the public sector will face significant resource challenges – in terms of both expertise in areas such as human resources, finance and business planning, and start-up capital. Raising necessary capital will be a persistent problem for staff looking to form a mutual but lacking a trading history.

“A recent survey of British employee-owned companies found that one-third had difficulty accessing finance. Similarly, a number of studies have noted the “steep learning curve” faced by public sector employees when having to create a business plan, plot income generation for future years and develop marketing strategies – skills commonly required in the private sector. Partnering with a private sector provider through a mutual joint venture could offer a way of overcoming these barriers.”

Inevitably, there is a degree of self-interest here. As the Business Services Association guide  states, “there is a clear appetite amongst BSA members to enter joint venture agreements with, or as part of, new mutuals spinning out of the public sector.

“At the BSA-Pinsent Masons LLP 2011 annual lecture, Minister for the Cabinet Office, the Rt Hon Francis Maude said that the Government was open to hearing about new models from private providers partnering with mutuals to deliver public services. This put the ball firmly in the private sector’s court to consider how to rise to the Government’s challenge.”

It adds that the aim of the paper is therefore to be constructive, not to issue a list of requests for clarity or new demands of the Government, but rather how to work with the existing legislative landscape to make mutual joint ventures happen.

Nothing wrong with that idea. Joint ventures with the private sector may well turn out to be the way forward, provided the key words are mutual and joint. It is in no-one’s interests for a joint venture to be dressed up as a takeover.  As the title of the BSA’s document appositely puts it, it’s about “Making Mutuals Work.”

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Posted in Campaign4Change, mutualisation, mutuals, private sector, private sector lessons for the public sector, public sector, public services, social enterprise

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Government’s new ICT plan – the good, bad and what’s needed

Posted on 24/10/2011 | 3 comments

By Tony Collins

There is much to commend the 102-page Government’s ICT Strategy – Strategic Implementation Plan”.  Its chief assets are the touches of realism.

In the past Cabinet Office documents have referred to the billions that can be cut from the annual government IT spend of £15bn-£20bn. This document is different.

In promising a saving of just £460m – and not until 2014/15 – Cabinet Office officials are not being ambitious, but neither are they making impossibly unrealistic claims. [The press release refers to £1.4bn of savings but there’s no mention of that figure in the document itself.]

The Implementation Plan also points out that the oft-quoted annual government IT spend of £16bn-£17bn is not spending in central government IT alone but includes the wider public sector: local government, devolved administrations and the NHS. The Implementation Plan concedes that there is “no definitive or audited record of ICT spending in central government for 2009/10”, but it adds, “the best estimates suggest this to be around £6.5bn in central government…”

Now at last we have a figure for the cost of central government IT. But we’re also told that the Cabinet Office has no control or strong influence over most of the ICT-related spending in the public sector. The document says:

“Though implementation is not mandatory outside central government, Government will work with the wider public sector to identify and exploit further opportunities for savings through greater innovation, and sharing and re-use of solutions and services.”

That said the document has some laudable objectives for reducing ICT spending in central government. Some examples:

–         50% of central departments’ new ICT spending will be on public cloud computing services – by December 2015. [Note the word “new”. Most departmental IT spending is on old IT: support, maintenance and renewal of existing contracts.]

–         First annual timetable and plans from central government departments detailing how they will shift to public cloud computing services – by December 2011.

–         Cost of data centres reduced by 35% from 2011 baseline – by October 2016. [What is the baseline, how will the objective be measured, audited and reported?]

Drawbacks:

It is a pity the document to a large extent separates IT from the rest of government. If simplification and innovation is to be pervasive and long-lasting senior officials need to look first at ways-of-working and plan new IT in parallel with changes in working practices, or let the IT plans follow planned changes.

Not that this is a black-and-white rule. Universal Credit is an essentially IT-led change in working practices. The technology will cost hundreds of millions to develop – an up-front cost – but the simplification in benefit systems and payment regimes could save billions.

Another problem with the Implementation Plan is that it is in essence a public relations document. It is written for public consumption. It has little in common with a pragmatic set of instructions by a private sector board to line managers. Too much of the Cabinet Office’s Implementation Plan is given over to what has been achieved, such as the boast that “an informal consultation to crowd source feedback on Open Standards has taken place…” [who cares?] and much of the document is given over to what the civil service does best: the arty production of linked geometric shapes that present existing and future plans in an ostensibly professional and difficult-to-digest way.

And many of the targets in the Implementation Plan parody the civil service’s archetypal response to political initiatives; the Plan promises more documents and more targets. These are two of the many documents promised:

“Publication of cross-government information strategy principles – December 2011” …

“First draft of reference architecture published – December 2011.”

Platitudes abound: “Both goals are underpinned by the need to ensure that government maintains and builds the trust of citizens to assure them that the integrity and security of data will be appropriately safeguarded.”

There is also a lack of openness on the progress or otherwise of major projects. There is no mention in the Implementation Plan of the promise made by the Conservatives in opposition to publish “Gateway review” reports.

What’s needed

More is needed on specific measures to be taken by the Cabinet Office when departmental officials resist major reform. The promise below is an example of what is particularly welcome because it amounts to a Cabinet Office threat to withhold funding for non-compliant projects and programmes.

“Projects that have not demonstrated use of the Asset and Services Knowledgebase before proposing new spend will be declined.

“Departments, in order to obtain spend approval, will need to move to adopt mandatory common ICT infrastructure solutions and standards, and spending applications will be assessed for their synergy with the Strategy.”

But these threats stand out as unusually unambiguous. In much of the Implementation Plan the Cabinet Office is in danger of sounding and acting like PITO, the now-disbanded central police IT organisation that had good intentions but could not get autonomous police forces to do its will.

Unless Cabinet Office officials take on more power and control of largely autonomous departments – and overcome the uncertainties over who would take responsibility if all goes wrong – the Implementation Plan could turn out to be another government document that states good intentions and not the means to carry them through.

It’s as if the Cabinet Office has told departmental officials to drive at a maximum speed of 50mph when on official business to cut fuel costs. Will anyone take notice unless the speed limit is monitored? It’s the policing, monitoring and open objective reporting of the Implementation Plan’s intentions that will count.

Otherwise who cares about nameless officials making 100 pages of boasts and promises, even if the proof-reading is impressive and the diagrams look good if you don’t try to follow their meaning?

SMEs and agile to play key role as Government launches ICT plan.

Cabinet Office’s Government ICT Strategy – Strategic Implementation Plan.

Puffbox analysis of Implementation Plan.

Is there a useful job for the Cabinet Office?

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Posted in Campaign4Change, change, change management, Cloud, Cloud Computing, collaboration, G-Cloud, Government IT, improving communications, innovation, open source, openness and transparency, private sector lessons for the public sector, procurement, public sector, public services, reforms, supplier relationships, Uncategorized

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Fiddling savings on shared services? Officialdom in need of reform

Posted on 21/10/2011 | 3 comments

 By TonyCollins

An NAO report today suggests that some officials are fiddling projected savings figures from a shared services deal involving seven research councils.

It all began so well. A Fujitsu press release in 2008 said:

“UK Research Councils to implement shared services with Fujitsu. £40 million project will generate cost and efficiency savings across the organisations.”

An executive who representedFujitsu Services’ was quoted in the press release as saying at the time:

“Fujitsu is consistently proving that it can deliver effective shared services infrastructures and is playing a vital role in driving forward the transformational government agenda through shared services.

“Organisations that adopt a shared services approach can experience genuine economies of scale and reduction in costs which can be essential in their drive for continuous improvement.

Twenty-one months later Fujitsu and Research Councils UK parted company. The 10-year shared services contract began in August 2007. It was terminated by mutual consent in November 2009.

A revealing report, which is published today by the National Audit Office, shows how, despite the best intentions by the Cabinet Office to improve the management of IT-related projects and programmes, and decades of mistakes to learn from, some officials in departments are still making it up as they go along.

The worrying thing in the NAO report is not only what happened in the past – few will be surprised that the NAO report characterises the shared services deal as lacking professionalism. What’s worrying is officialdom’s more recent disregard for the truth when claiming savings for its shared services arrangements.

The NAO’s report”Shared Services in the Research Councils” suggests that officials manipulated – some could say fiddled – projected savings figures.

The NAO also found that officials awarded a £46m shared services contract to Fujitsu which came second in the bid evaluation. Exactly how the contract came to be awarded will be investigated soon by MPs on the Public Accounts Committee.

Origins of shared services contract  

In 2004 a review led by the Government adviser Peter Gershon suggested that the public sector should save money by sharing support services such as IT, HR and finance. In 2006 officials at the Department of Trade and Industry (now the Department for Business, Innovation and Skills) encouraged their colleagues at seven research councils to set up a shared service centre, which they did.

The UK Research Councils is an important organisation. In 2009/10 it spent £3.7bn, mostly on giving research grants to universities, the European Space Agency and other organisations. Its biggest recipient of grants is the Medical Research Council.

Fujitsu contract

Public servants appointed Fujitsu in August 2007 to put in place the ICT systems to underpin the shared service centre in a ten-year contract worth £46m. Fujitsu came second in the initial bid evaluations.

The NAO said that the bidding process produced a shortlist of three companies including Fujitsu. Said the NAO:

“The initial weightings applied by the [bid] panel had placed Fujitsu second: although the bid had scored well on quality, it was 19 per cent more expensive than the cheapest bid.”

An independent review commissioned by the project board backed the evaluations which put Fujitsu second. But the bid panel and the project board had concerns about the evaluation. The supplier chosen in the evaluation – which the NAO refuses to name – did not score well on quality requirements.

It appears that the bid panel and the project board preferred Fujitsu.

Mathematical error

Then officials happened to spot a mathematical error in the bid scoring. The corrected scoring left Fujitsu on top, as the new preferred bidder.

Said the NAO:

“… a mathematical error was identified by a member of the project team that changed the order of the preferred suppliers, leaving Fujitsu as the front runner

“The [bid] panel reconvened to discuss this but, rather than re-performing in full the quantitative and qualitative analysis and submitting this to independent review, it decided to appoint Fujitsu on the basis of a vote.

“In September 2007 the gateway review team concluded that the incident had weakened the value of the overall process and had left the project at risk of challenge.”

User requirements unclear

Full delivery was due in September 2008 but the project team and Fujitsu “quickly encountered difficulties, resulting in contract termination by mutual consent in November 2009”.

The NAO said there was “miscommunication between the parties about expectations and deliverables, primarily because design requirements had not been sufficiently defined before the contract started”.

Fujitsu consequently missed agreed milestones. “Fujitsu and the Centre told us that the fixed-rate contract awarded by the project proved to be unsuitable when the customers’ requirements were still unclear.”

Officials paid Fujitsu a total of £31.9 million, of which £546,000 related to termination costs. Despite the payments to Fujitsu, parts of the system were withdrawn and rebuilt in-house.

Overspend on Fujitsu contract

The NAO found there were “significant overspends on design and build activities and the contract with Fujitsu.”

At least £13m wasted on Fujitsu deal

Said the NAO:

“Had the Fujitsu contract worked as planned, we estimate that the additional £13.2m design and build costs … would not have been needed. In addition the project management overspend of £9.1m would have been lower, as, after termination of the Fujitsu contract, a significant overhead in managing contractors was incurred by the project.”

Fujitsu out – Oracle in

The breakdown in relations with Fujitsu led to the appointment of Oracle as supplier of the grants element of the project. “The contract with Oracle suggested that lessons had been learnt by the project following its experience with Fujitsu, with greater effort given to specifying the design upfront,” said the NAO.

Did officials know what they were doing?

In deciding how to share services the research councils came up with six options including setting up a centre run jointly by the councils or joining with another public sector agency such as one supplying the NHS.

But two of the options including the NHS one were dropped without proper analysis, said the NAO. The remaining four options were each given a score of one to three, against seven criteria. “The scores appear to be purely judgemental with no quantified analysis,” said the NAO.

Even if the six options had been properly appraised, the evaluation would have failed because it did not include a “do-minimum” option as recommended by HM Treasury.

“Overall, the quality of options appraisal was poor,” said the NAO.

Fiddling the figures?

 The NAO found that:

–         Initial estimates were of zero projected procurement savings from shared services. But by the time the first draft of the business case had been written the projected savings had soared to £693.9m.

–         When this project board queried this figure the research councils’ internal audit service scaled down the figure to £403.7m – but this included £159.3m of savings that internal audit had concluded were not soundly based.

–         Since the shared services centre began officials have recorded procurement savings of £35.2m against the business case and while of these are valid savings some are not. The NAO investigated 19 high-value savings that represented 40% of savings recorded to the end of 2010 and found that 35% “should not be claimed against the project investment”.

–         The research councils have been “unable to provide paperwork to substantiate the claimed saving”.

–         Savings claimed were indistinguishable from normal business practice such as disputing costs claimed by a supplier.

–         Clear evidence exists that the budget holder had no intention or need to pay the higher price against which the saving was calculated

–         Last month the research councils claimed that savings were £28m higher than they had reported previously owing to errors in the original numbers. But the NAO found that the councils were unable to reconcile fully the two sets of numbers; had not used a single method for calculating benefits or tracked these effectively; and had not included £7m of spending incurred by the councils. “Overall, this review has highlighted that Councils have not put in place proper processes to track benefits and forecast future operational savings,” said the NAO.

–         Further, investments needed to deliver projected savings have not been included in calculations.

–         Double counting. A revised target for projected procurement savings procurement “includes elements of double counting …”

Other NAO findings:

–        Four Gateway review reports of progress on setting up the shared services centre, including a review which put the project at “red – immediate action needed”, were not fully followed up. 

–         There was no evidence of intervention by the Department for Business, Innovation and Skills when it became clear the shared services project was likely to overspend.

–         The shared services centre has begun to match the pre-shared services payment performance of the research councils but a high number of invoices was on hold at the end of July 2011 because of problems with the end-to-end processes. About 5,900 invoices were on hold, awaiting payment, in July 2011, which was 21 per cent of all invoices due to be paid in that month. The reason for the delay was being investigated.

–         Despite the shared services arrangements, some research council staff were at times running parallel systems, or managing their businesses without adequate data.

–         In July 2011 the shared services centre had 53 key performance targets to meet but was only able to measure activity against 37 of them and of these met only 13..

–         Five of the seven research councils did not file annual accounts on time in 2011 in part because functions in the finance ICT system were not delivered by the project.

Some good news

Said the NAO:

“The grants function and its associated ICT system developed by the project has allowed the Councils to replace older systems that were increasingly at risk of failing. This is of critical importance, given that the processing of research grant applications lies at the heart of what the Councils do. The single grants system has the potential to make it easier for the Councils to collectively modify their processes in the future…”

Comment

The commendably thorough NAO investigation has shown once again how badly departments and their satellites are in need of independent Cabinet Office oversight when it comes to major IT-related projects. In that respect thank goodness for the Cabinet Office’s Major Projects Authority. But how much influence can it really have? How much influence is it having?

This NAO report suggests that some officials are fiddling the figures without a care for professional accounting practices. Double counting, not including full costs in projected savings calculations, not having paperwork to support figures and other such administrative misdemeanours indicates that some officials are making up savings figures as they go along.

What is to be done when some departments and their agencies are not to be trusted in managing major projects?

NAO report on shared services at seven research councils

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Posted in Campaign4Change, change, change management, collaboration, Government IT, improving communications, legal disputes, managing change, openness and transparency, outsourcing, private sector lessons for the public sector, procurement, public sector, public services, reforms, research, Uncategorized

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An NHS success story – what’s to learn from it?

Posted on 06/09/2011 | Leave a comment

By Tony Collins

IM&T at Trafford General Hospital makes visits to hospital safer for patients and gives managers the information they need to monitor the work of clinicians. Even doctors like the advanced technological environment and come up with ideas for improvements. So what lessons can be learnt? Here are four:

–           Be in control of your IT suppliers. Too often in the public sector it’s the other way around

–           Don’t buy from suppliers that seem excessively secretive and talk much about their proprietary information – which may include your data. Know their systems well enough to produce the reports you want, when you want them and in the format you want, rather than wait for your information to be given to you when the suppliers want to give it, and in their format.

–           Don’t impose change. Have the push come from the business users [in Trafford’s case clinicians] who understand what technology can do for them.

–           Keep IT in the background – not centre stage.

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Posted in change, change management, collaboration, innovation, managing change, NHS, npfit, openness and transparency, private sector lessons for the public sector, public sector, public services, SME, supplier relationships, Uncategorized

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Excerpts from report on GovIT: Recipe for rip-offs – time for a new approach

Posted on 28/07/2011 | 3 comments

By Tony Collins

Today’s comprehensive report on the government’s use of IT is replete with strong and important messages, particularly on the domination of government IT by a small number of large suppliers, so-called systems integrators.

That said, Techmarketview, which tracks developments in the IT supplier market, has today attacked the report of the Public Administration Select Committee.  Techmarketview’s analyst Georgina O’Toole concedes she has not looked carefully at the full report but says she is irritated by the summary’s sensationalism.

It may be worth remembering that Parliamentary committees compete with each other for media attention. A bland report will be pointless: it won’t be read. Today’s report of the PASC, though, seeks more often than not to give the balacing view whenever it says something tendentious.  

For ease of explanation the Committee’s report “Recipe for rip-offs – time for a new approach” refers to government as if it were a single entity.

But government is, to some extent, at war with itself. The Cabinet Office is trying to have more influence over departments, in encouraging them to use SMEs,  adopt agile methods, simplify working practices and cut costs; and while the Cabinet Office has a mandate from David Cameron to enforce its wishes, in practice departments are giving strong reasons for not acting:

-long-term contracts are already in force

– EC procurement rules mean that SMEs cannot be preferred over other suppliers

– SMEs give insufficient financial assurances and could go bust at any time

– there are not enough internal staff and skills to manage a plethora of smaller companies

– existing (large) suppliers employ hundreds of SME as subcontractors.

There’s a particularly telling passage in the PASC report. It gave details of an exchange between the Department of Work and Pensions and Erudine, an SME. The Committee was given details of the exchange during a private session.

Erudine had given the department a way of migrating a legacy system onto a more modern, cheaper platform, which could generate potential savings of around £4m a year.

A senior DWP IT official rejected the proposal and suggested that the department was maintaining an interest in SMEs for political reasons – the government’s wish for 25% of contracts to be given to SMEs. This was part of what the DWP official said to Erudine:

“.. we have as you know an ‘interest’ in having SMEs present and working in the department for good political reasons. So you have other value to us … purely political.

“You guys need to be realistic. I will be very candid with you […] it is a huge amount of bother to deal with smaller organisations. Huge. And we wouldn’t necessarily do that because it doesn’t make our lives simpler.”

The Department declined to comment on the exchange and said the views expressed did not represent its own. It told the Committee that in 2009/10 SMEs made up 29.3% of their supplier base, either as a prime contractor or a subcontractor.

The Committee welcomed this assurance from the Department but added:

“… this account does suggest that attitudes at official level risk undermining ministers’ ambitions to increase the number of SMEs Government contracts with directly”.

These are other extracts from the PASC report:

Overcharging by large suppliers – an obscene waste of public money?

They [SMEs] also alleged that a lack of benchmarking data enabled large systems integrators (SIs) to charge between seven  to ten  times more than their standard commercial costs.

**

Having described the situation as an “oligopoly” it is clear the Government is not happy with the current arrangements. Whether or not this constitutes a cartel in legal terms, it has led to the perverse situation in which the governments have wasted an obscene amount of public money.

The Government should urgently commission an independent, external investigation to determine whether there is substance to these serious allegations of anti-competitive behaviour and collusion. The Government should also provide a trusted and independent escalation route to enable SMEs confidentially to raise allegations of malpractice.

Vested interests suppress innovation?

We received suggestions from some SMEs that the major systems integrators used legacy systems as leverage to maintain their dominance. Some SMEs reported that there were solutions that could easily transfer data from old platforms, but that a combination of risk aversion and vested interests prevented these solutions being adopted

Large IT contractors are “not performing well”

The Government’s analysis has shown that its large IT contractors are not performing well. A Cabinet Office review in September 2010 of the performance of the 14 largest IT suppliers found that none of them were performing to a “good” or “excellent” level, with average performance being a middling “satisfactory with some strengths”. Some were performing significantly worse.

Openness would help to cut costs

Making detailed information on IT expenditure publicly available for scrutiny would enhance the Government’s ability to generate savings, by allowing external challenge of its spending decisions.

The Government has already taken steps to provide more information about IT projects and expenditure in general, especially through the work of the Transparency Board and its publication of contracts on Contract Finder. To realise the full benefits of transparency, this is not sufficient. More information should be made public by default.

It should publish as much information as possible about how it runs its IT to enable effective benchmarking and to allow external experts to suggest different and more economical and effective ways of running its systems

Will government objectives be achieved?

We received numerous reports from SMEs about poor treatment by both Government departments and large companies who sub-contract government work to SMEs. There is a strong suspicion that the Government will be diverted from its stated policy and that its objective will not be achieved.

The drawbacks of using SMEs as subcontractors to large suppliers

“… subcontracting could lead to the Government paying a high price as it had to cover the margin of both the sub and prime contractor.

**

SMEs approached us informally to express concerns based on their own experiences of subcontracting. We heard of cases where systems integrators [large IT suppliers] had involved SMEs in the bidding process so they could demonstrate innovation, only for the SME to be dropped after award of contract.

In some of these cases SMEs felt that they have provided innovative ideas which had then been exploited by the larger systems integrators. We were also told by SMEs that by subcontracting with an SI they were barred from approaching government directly with ideas that might allow it to radically transform its services and reduce costs. This was because systems integrators did not want the Government to be provided with ideas that could result in them losing business, or having to reduce costs.

“… When we put these [SME] concerns to the Government we were told that their contracting arrangements did not stop subcontractors speaking directly to Departments…However, during our private seminar with SMEs, we were told that this did not reflect their experiences. SMEs reported that they were instructed to approach the systems integrator first in order to obtain permission to talk to a Department and that some Departments refused to deal with them directly.

**

We take seriously the concerns expressed by many SMEs that by speaking openly to the Government about innovative ideas they risk losing future business particularly if they are already in a sub-contracting relationship with a systems integator.

Government should deal directly with SMEs

The Government should reiterate its willingness to speak to SMEs directly, and commit to meeting SMEs in private where this is requested. We recommend that the Government establish a permanent mechanism that enables SMEs to bring innovative ideas directly to government in confidence, thereby minimising the risk of losing business with prime contractors.

Is government policy shutting out SMEs even more?

“…the Government has been moving to act as a single buyer to obtain economies of scale… This approach can be counter-productive. The effect of demand aggregation can be to aggregate supply, further concentrating contracts in the hands of a few large systems integrators.

Departments are following instructions from the Cabinet Office Efficiency and Reform Group to switch away from their existing direct SME contracting arrangements in favour of centralised procurement models. This would mean that SMEs would become tier 2 suppliers behind selected large suppliers, preventing SMEs from contracting directly with departments. The Cabinet Office has confirmed that:

Spend is being channelled into three current channels: a) existing framework contracts where spot buying is undertaken centrally (this is known as Home Office Cix), b) department-specific arrangements based on their unique needs (such as FCO’s arrangements with Hays) and c) an existing contract with Capita, owned and managed by DWP and available to all government departments.

It is unclear to us how narrowing the supply channels will create a more open and competitive market. The nature of this supply-side aggregation of SMEs under large contracts appears to be in direct contradiction of the policy articulated by the Minister when he indicated his desire to encourage Departments to secure more direct contracting with SMEs.

“… the Government’s plan to act as a single buyer appears to be leading to a consolidation towards a few large suppliers. This could act against its intention to reduce the size of contracts and increase the number of SMEs that it contracts with directly. We are particularly concerned with plans to move SME suppliers to an “arm’s length” relationship with Government. The Government needs to explain how it will reconcile its intentions to act as a single buyer, secure value for money and reduce contract size to create more opportunities for SMEs.

Procurement barriers for SMEs

The way procurement currently operates favours large companies that can afford to commit the staff and resources to navigate the convoluted processes. It also encourages the Government to confine discussions to as few potential contractors as possible.

If the Government is serious about increasing the amount of work it awards to SMEs it must simplify the existing processes

**

We recommend that the Government investigate the practices which seem unintentionally to disadvantage SMEs. When contracts and pre-qualifying questions are drawn up thought must be given to what impact they could have on the eligibility and ability of SMEs to apply for work, and whether separate provision should be made for SMEs. We believe it would be preferable if the default procurement and contractual approach were designed for SMEs, with more detailed and bespoke negotiation being required only for more complex and large scale procurements.

Have Departments the people and skills to handle more SMEs?

Increasing the use of SMEs will place extra pressure on departments. The management of smaller organisations is currently outsourced to the large systems integrators.

For example the Aspire framework provides HMRC with access to over 200 IT suppliers. Mr Pavitt, HMRC Chief Information Officer said that:

“managing those individually would be quite a heavy bandwidth for a Government department”.

It is not clear that Departments are willing to take on the additional work that contracting directly with SMEs implies even where this could yield significant savings…

Ministers need to ensure their officials have the skills, capacity and above all the willingness to deliver on ministerial commitments to SMEs.

On agile methods:

“… greater use of agile development is likely to necessitate behaviour changes within Government. As agile methodology requires increased participation from the business to provide feedback on different iterations of the solution, departments will need to release their staff, particularly senior staff with overall responsibility of the project, to allow them to participate in these exercises.

Agile development is a powerful tool to enhance the effectiveness and improve the outcomes of Government change programmes. We welcome the Government’s enthusiasm and willingness to experiment with this method. The Government should be careful not to dismiss the very real barriers in the existing system that could prevent the wider use of agile development.

We therefore invite the Government to outline in its response how it will adapt its existing programme model to enable agile development to work as envisaged and how new flagship programmes will utilise improved approaches to help ensure their successful delivery….

The Government will have to bear in mind the need to facilitate agile development as it renegotiates the EU procurement directive and revises the associated guidance.

Need for more people with the right skills to manage suppliers

Managing suppliers is as important as deciding who to contract with in the first place. To be able to perform both of these functions government needs the capacity to act as an intelligent customer. This involves having a small group within government with the skills to both procure and manage a contract in partnership with its suppliers.

Currently the Government seems unable to strike the right balance between allowing contractors enough freedom to operate and ensuring there are appropriate controls and monitoring in-house.

The Government needs to develop the skills necessary to fill this gap. This should involve recruiting more IT professionals with experience of the SME sector to help deliver the objective of greater SME involvement.

When disaster strikes is anyone responsible?

We are concerned that despite the catalogue of costly project failures rarely does anyone – suppliers, officials or ministers – seem to be held to account. It is therefore important that, when SROs do move on they should remain accountable for those decisions taken on their watch, and that Ministers should be held accountable when this does not happen.

Open source and open standards

Recent initiatives such as the Skunkworks team, dotgovlabs, data.gov.uk, and the Alphagov project suggest that the Government is moving in this direction

Government should omit references to proprietary products and formats in procurement notices, stipulating business requirements based on open standards. The Government should also ensure that new projects, programmes and contracts, and where possible existing projects and contracts, mandate open public data and open interfaces to access such data by default..

Report’s conclusion

“… The last 10 years have seen several failed attempts at reform. The current Government seems determined to succeed where others have failed and we are greatly encouraged by its progress to date.

“Numerous challenges remain and fundamentally transforming how Government uses IT will require departments to engage more directly with innovative firms, to integrate technology into policy-making and reform how they develop their systems.

“The fundamental requirement is that Government needs the right skills, knowledge and capacity in-house to deliver these changes. Without the ability to engage with IT suppliers as an intelligent customer – able to secure the most efficient deal and benchmark its costs – and to understand the role technology can play in the delivery of public services, Government is doomed to repeat the mistakes of the past.”

Links:

Jerry Fishenden, adviser to the PASC, gives his view of the report.

Today’s Public Administration Committee report: Recipe for rip-offs – time for a new approach

Government reliance on large IT suppliers is recipe for rip-offs.

Government IT rip-offs – surely time for a new approach – my view of the report

Techmarketview on the report

Good analysis of PASC report – Centre for Technology Policy Research.

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Posted in Agile, Campaign4Change, collaboration, improving communications, innovation, managing change, open source, outsourcing, private sector lessons for the public sector, public sector, public services, reforms, supplier relationships, Uncategorized

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Lessons from an IT crisis – Tesco Bank

Posted on 06/07/2011 | 8 comments

By Tony Collins

In a crisis customers want truth and openness. So was Tesco Bank truthful and open when a data migration left its customers locked out of their accounts? As its chief executive Benny Higgins says:“The test of an organisation is what they do when things go wrong.”

This is the story of how Tesco Bank handled a crisis – what it did well and not so well – and what the public sector can learn from the difficulties. 

Many large companies – and government departments – go through IT-related crises. How they deal with them could determine whether their reputation and credibility suffer lasting damage.

Below is one of is one of most useful case studies in recent years. It’s a study of what happened on a day to day basis when IT changes at Tesco Bank locked out thousands of their customers from their online accounts – and the Bank’s helpline couldn’t cope with the volumes of calls. The Bank was accused of not telling the truth to the media and its customers, and of being in IT chaos.

In the way it handled the matter Tesco Bank unwittingly copied the way some central government departments act when faced with an IT-related crisis by, for example, comparing the small number of people affected with the high number who are unaffected, an approach that can belittle the experiences of the thousands who suffer the consequences of poor customer service.

By looking back over the period of the crisis at Tesco Bank it’s possible to draw out the mistakes that would otherwise be lost in the melee of the media reports on how the debacle affected individuals. Just as quickly as the media picks up and reports on a crisis, it can quickly forget all about it when new stories take priority.

For the thousands of Tesco Bank customers unable to log into their accounts, the crisis will not be quickly forgotten. Some have said they will remove their money from the Bank, if they have not done so already, and some will be seeking compensation. The crisis may remain a stain on the reputation and credibility of Tesco Bank for years.

In a personal tweet, the presenter of BBC R4’s Money Box Paul Lewis, who has done much to bring the Tesco Bank story to public attention, summed up his reading of the Bank’s handling of its crisis: “An apology but no real understanding of how to deal with a big mistake”.

So what did Tesco Bank get wrong and how should it have reacted?

Tesco Bank did some things well.  It:

 –          engaged with the media. George Gordon, the Edinburgh-based head of communications at Tesco agreed to be interviewed on BBC R4’s Money Box Live on Wednesday 22 June, day two of the crisis. A few days later, on Saturday 25 June, Tesco Bank’s CEO Benny Higgins went on Money Box to answer questions from the programme’s presenter Paul Lewis. [Tesco Bank also responded quickly to my questions.]

–          apologised to customers, gave out information about the numbers of people affected and conceded that its service to customers had been unacceptable.

–          said it would deal with requests for compensation on a case by case basis, and made this clear on its website.

–         set up a Q&A on its website to help customers with log-in problems

–          eventually unlocked customer accounts and elicited praise from some customers for its helpfulness in doing so

What it didn’t do well. It: 

 –          continued to tell customers the technical problems were sorted when many people still could not access their bank or savings accounts. Customers accused the bank of not telling the truth. One, on BBC R4, asked Tesco Bank’s head of communications why the Bank was “lying” to customers.

–          told customers that calls to its helplines had been answered in an average of 15 minutes when, the next day, it took Moneybox’s Paul Lewis 54 minutes to get through.

–          used, initially, an 0845 number on its helpline which for some customers was a premium-rate number.

–          apologised for its poor customer service but at no point answered directly any questions about whether it had given out inaccurately positive information.

–          allowed an in-store customer whose “Clubcard Plus” credit card transaction was declined to face embarrassment and blame rather than say the problem was Tesco Bank’s fault.

–           compared numbers of customers locked out of their accounts with the apparently much larger number who had successfully logged in

–          suggested some customers were at fault, saying that in a typical week up to 1,000  people will have trouble logging on because they “have inaccurate security credentials in their possession … do not have the right details”.

–          might have underestimated the volumes of attempted log-ins on the first operational day after a major migration of customer accounts from one system to another. It’s unclear whether testing before go-live took a pessimistic view on possible volumes of log-ins.

Anatomy of an IT crisis – how it unfolded and how Tesco Bank responded

Wednesday 15 June 2011

ComputerworldUK.com reveals that Tesco Bank is in the final stages of moving customer accounts from one system to another. The Bank plans “imminently” to switch customers from the old Royal Bank of Scotland systems to its own computers. Tesco Bank had bought RBS three years before to provide an alternative to the familiar customer service failings of High Street rivals.

Tesco Bank says in a financial statement that it “continues to make good progress and is now in the final stages of the transition to its own systems and infrastructure”. Tesco Bank launched in 1997 and has 6.5 million customers. It offers savings accounts, loans and credit cards.

Weekend 18/19 June

Tesco switches 605,000 savings accounts and 320,000 personal loan accounts from Royal Bank of Scotland to Tesco Bank’s systems.

Monday 20 June

Tesco Bank’s online services are unavailable for 12 hours to all customers – nobody with Tesco Bank can access their savings or loan accounts

Tuesday 21 June

Tesco bank systems are down again, this time for six hours. Complaints start to mount, some from people who say that the Bank is not telling the media the truth.  ComputerworldUK.com has 52 comments after it reports that some Tesco Bank customers cannot access their accounts while the bank undergoes system migration to its Fiserv Signature bank platform. The BBC quotes Tesco Bank as saying the problems have been fixed and that “all customers can access their accounts online as normal”.

Says the BBC, quoting a Tesco Bank spokesman:

“For a brief period some customers were unfortunately unable to access their accounts. We apologise for this, but can reassure them that the process is now complete and all customers can access their accounts online as normal.”

Jon is among those who have spent more an hour getting through to Tesco Bank’s helpline.

“I can’t understand comments that Tesco appear to have made to the media suggesting that the problem has been ‘fixed’.  It’s pretty clear that Tesco is having a huge IT collapse and, as soon as I’m able, I’ll be moving my funds to another bank. If they can mess up this so badly, then people need to question whether their funds are even safe with Tesco.”

Another customer comments: “I still cannot access my savings account…Not happy as needed to transfer some money to a relative for deposit on a flat . May now lose it. Hope they are proud of this monumental cock-up. They really need to compensate people for this.”

People are angry that Tesco Bank’s website says that people can now access their accounts and that extra staff have been brought in to answer phones.

“The front page of the Tesco bank website is now saying that access has now been restored and that extra staff are in place to answer phone enquiries. I still can’t access my account and they are still not answering their phones. Tescos are treating their customers disgracefully.”

Wednesday 22 June

BBC R4’s Money Box Live says it has been “inundated” with calls from Tesco Bank customers who cannot get through to their accounts. It takes a call from a customer who accuses Tesco Bank of “lying”, which the Bank denies. The caller speaks to George Gordon, head of communications at Tesco Bank, who has agreed to take part in the programme.

The caller, Alistair, says: “I have been trying to access my Tesco account since Monday to do a small transfer. We are not talking millions. You have six and half million bank customers. Why are you lying to them through your website and through other media by telling them that your system is now working. I can assure you that as of 30 seconds ago it is not working.”

Gordon says: “I just want to say how sorry I am that you have had these difficulties getting onto our website. For the vast majority of our customers, the site and our phone lines are working but we are aware there area few technical issues there. We have an IT helpdesk and some online information on our website which we are actually improving this afternoon to try and help people in your position. I am very happy after the call to take your details and make sure we pick up on that.”

Vincent Duggleby (presenter) “I have to say I looked at your website and I don’t think it was at all helpful. It simply said everything was alright and you were sorry.”

In his reply Gordon says the technical issues have been sorted out. “Obviously we are sorry for our savings customers who have had technical issues over the last couple of days. As our website says we have suffered some intermittent technical problems and these problems follow a significant piece of work that we did over the weekend – a planned piece of work that we told customers about –moving from Royal Bank of Scotland  platforms to our own Tesco Bank Platforms.

“Now we put messages out there today to let the vast majority of our customers who want to access their accounts know that we have sorted out technical issues and that we have actually increased the number of people in our call centre so that if people have issues they can get in contact with us and we can help them –

Alistair: “It says on your website all customers can access their accounts online as normal but that obviously is not the case. I spent 46 minutes today in a queue to get through only to be told by the person at the other end: ‘I am sorry we cannot access your account.’”

Another caller “Mike” says that Tesco Bank’s 0845 number costs a premium rate to ring, for some people. “Is Tesco Bank making money out of our discomfort?” asks Mike.

In his reply Gordon says – again – that technical problems have been sorted out. His reply: “Absolutely not. We are trying to sort things out. We have had some technical issues over the last couple of days which have been sorted out. We are looking at the calls we are getting at the moment. In terms of the time Mike has spent on the phone, that’s clearly not acceptable and we are sorry about that. In our call centre today we have significantly increased the number of people who are answering the phones so we can deal with the very high call volumes.”

James Hillon, head of Retail Banking at Co-operative Bank, emphasises the importance of trust.

“One of the things we have learned over the last two to three years is that trust is of paramount importance in financial services and it is things like this that can knock peoples’ trust. I am not going to pretend that the co-operative bank has never had systems issues but what customers want at this time is to be dealt with honestly and to be kept informed about what’s going on. That’s the sort of thing we try to do.”

Tesco Bank customers have particular problems logging in with IE9. Commenting on ComputerworldUK’s website they say they have had more success when using Google Chrome or Firefox, though these browsers don’t work for everyone .  Tesco Bank issues guidance to customers with IE9 saying they need to enable “compatibility mode”. Says one customer:

“I did download Firefox and managed to get in to my account (I also had to download Flash V9 – God help anybody who doesn’t know what they are doing). It sort of worked ok but the new level of security wouldn’t let me move any money to my high street bank account without sending them a bank statement first.”

Thursday 23 June. The website of Moneysavingexpert [Martin Lewis] reports that the “Tesco Bank online log-in pain” is “now over”. The site quotes Tesco Bank as saying:

“All of our savings customers can access their accounts online. However some customers need to make a small change to their browser settings to do so.

“We’ve improved the step by step guidance on our website and this should help those having problems. We have also contacted a limited number of customers who had a specific issue on Monday.

“Waiting times on the phone are falling, but customers are still waiting longer than any of us would like and we’re doing absolutely everything we can to sort this out as quickly as possible.”

Saturday 25 June

It’s clear some customers are still locked out.

Paul Lewis on BBC Money Box says some people with online savings accounts at Tesco Bank have been unable to access their money “all week”.

One customer says on Money Box: “The problem is essentially step six in the brochure about changing to the new security system where it says they need a password of at least seven characters long. I entered nine and it said it was not acceptable. It then took me over an hour to be able to ring back and get some help and it’s still not satisfactory. Quite frankly my attitude is I want to withdraw all my money from Tesco’s and bank somewhere else.”

Another Tesco Bank customer says: “I’ve been trying to log into my Tesco savings account since Monday. I think that Tesco should have come clean about this in the beginning and admitted they’d made rather a pig’s ear of it and given customers a regular update, and then I think everybody would have been a lot happier.”

One customer says that a store manager allowed his wife to take the blame for a Tesco Bank problem.

“My wife tried to buy some goods from Tesco’s on Wednesday using Clubcard Plus. Payment was refused. A manager was called and after another attempt he said that the problem was with my wife’s account and that she should call the Clubcard Plus helpline. He did not admit that the fault could be Tesco’s. She was stressed out by this. They could have admitted at the shop that it was Tesco’s fault and not my wife’s.”

Paul Lewis makes the point that the main source of customer frustration is the “lack of clarity from Tesco Bank about what the problems are, how they could be fixed, and indeed when”.

Says Lewis: “On Monday a Tesco Bank spokesperson told the BBC that for a brief period some customers were unable to access their accounts, but all customers could go back online as normal. Similar claims were made on Tuesday and on Wednesday, made indeed on Money Box Live in the afternoon, then on Thursday; and again on Friday we were told most of the problems were resolved.

“But throughout the week listeners kept emailing to say they were still having problems logging on and particularly contacting the helpdesk.”

To his credit, Benny Higgins, Chief Executive of Tesco Bank, goes on Money Box to answer Lewis’s questions, only he doesn’t quite answer questions about whether the Bank has been open about the seriousness of the problems.

Lewis asks Higgins: “Will you now admit that these problems are far more serious than your spokespeople have been telling us all week?”

Higgins: At Tesco we strive to deliver service of the very highest standard. And this week …

Lewis: Well you’ve not been doing that, have you?

Higgins: … and this week Tesco Bank has for a significant minority of customers failed to do so, and it’s not good enough and we apologise unreservedly for that. What I would like to make clear is what has happened and what we’re doing about it.

Lewis: Tell us what’s happened because I’ve heard a number of things have gone wrong. People have said it’s the passwords; it’s the wrong Internet browser. Some people, I was told, had their identities effectively trashed because they were online when the glitches occurred on Monday and Tuesday.

Higgins: I’d be delighted to tell you what happened …we transferred 605,000 customer accounts in respect of savings and another 320,000 in respect of personal loans. The system, the web availability, went down on Monday for 12 hours and on Tuesday for six hours, so regrettably during those periods customers clearly had no access to online. Thereafter we have had continuous availability of our online service…

Lewis: … it’s all very well saying you’ve resolved that [problems with IE9]. You haven’t resolved it for a huge number of customers.

Higgins: … As I say, there has been the issue with Internet 9 and that has affected a number of customers. Of the 100,000 active customers, 25,000 have already re-registered successfully. We’ve had 9,000 customers over each of the last few days active online. One of the two things I think you need to be aware of too is that there were a number of customers online when the system failed. Those customers were locked out. There was also …

Lewis: And they’re still locked out, aren’t they, until they write to you and you write back to them?

Higgins: No, that’s not the case if I can make it clear.

Lewis: Well that’s what some of them have told us.

Higgins: Well let me make it clear. There’s also a number of customers who routinely – and this happens every week … Prior to this week, in a typical week we would have between 750 and 1,000 customers who can’t sign on because they have got inaccurate security credentials in their possession, so they themselves don’t have the right details.

Lewis: Well so you’re blaming the customers now?

Higgins: No, I’m absolutely not. I’m just saying typically there will be 1,000 customers who have that difficulty every week. We had 2,500 customers, including any that had the details wrong themselves, plus those that were online. So we had 2,500 customers who were locked out as a result of Monday and Tuesday and we have been contacting those customers by telephone and by email to ensure that they have every chance to be back online.

**

Lewis makes the point that customers cannot get through on the phone, or they wait on the line seemingly indefinitely.

Higgins says that calls were being answered within 15 minutes on average the previous day; he doesn’t explain why Lewis was hanging on for 54 minutes that morning.

Lewis:  I hung on to your helpline with that lovely music for 54 minutes this morning before we got an answer. That’s just not good enough when you know there are thousands of people needing to contact you.

Higgins:  It’s absolutely the case that we have failed in that regard, but …

Lewis:  What are you doing about it? That’s what people want to know.

Higgins: …It is our highest priority to focus on doing the right thing to put customers in the right place. At the start of the week when we had the failure online, we had a waiting time, an average waiting time, of over 40 minutes. We have between doubled and trebled the number of people on the telephone since Wednesday. Our average waiting time yesterday was 15 minutes. Still not good enough, but we are …

Lewis: It was 54 when I rang, unless you’re saying I was kept on hold exceptionally. It was 54 minutes.

Higgins: Yesterday …

Lewis:  And also we were told today faster payments aren’t working, are they, so it’s still not back to normal even for the customers who can log on?

Higgins:  The average yesterday was 15 minutes. I don’t know what the average this morning has been, but I would expect it to be around the same time.

Lewis:  Well I can only tell you I rang at half-past ten and it was 54 minutes. Let me ask you this. You’ve got this transfer of, as you say, nearly 900,000 people. Didn’t you test the new system to destruction before you actually went live with it? This is a banking system with people’s money at stake.

Higgins:  Of course we did, and I have …

Lewis: Well not very well then, did you?

Higgins: …  I have been involved in a number of large migrations in my career in financial services. We tested very, very thoroughly. It is no consolation to customers and no consolation to us that a relatively small number of issues have gone wrong and created disproportionate damage to the customers. We do apologise unreservedly. It is absolutely our focus to put this right. We’re doing absolutely everything we can and we’ve made huge progress since earlier in the week. A number of …

Lewis: Well I have to say we’re getting more emails than we were earlier in the week. It doesn’t seem to us that things are getting better… A lot of people have said to us we’re going to take our money out of Tesco. What do you say to them?

Higgins:  Customers are entitled to make their own choice. We will not be deflected by the incidents this week from seeking to provide customers with the very highest level of service. The test of an individual and the test of an organisation is what they do when things go wrong as much as any other time. That’s what we’re focused on. Customers will make their own choice. We will not be deflected in our pursuit of serving customers well.

Lewis:  And you think you’ve passed that test because, of course, you want to become a force in banking, don’t you?

Higgins: We have not passed that test yet.

Lewis:  You haven’t passed it. But you want to become a force in banking to compete with other banks when one of the big problems is service?

Higgins: Absolutely, that is indeed what we are setting out to do. This is one of a series of migrations. Many are behind us very successfully. It is no consolation that things have gone wrong this week. We are very focused on doing the right thing and focusing on what customers need sorted. That’s what we’re doing.”

 **

Paul Lewis interviews Mike O’Connor, Chief Executive of Consumer Focus, which describes itself as the “statutory consumer champion” for the UK. O’Connor says:

“We’ll never have accident free. But when things go wrong banks should admit it; they should communicate clearly; they should fix it; they should apologise, and compensate not just for loss of money but also if you’ve spent an hour on the phone…”

Monday 27 June (week 2 of the crisis) 

Tesco Bank gives an address on its website for customers to make claims for compensation.

Thursday 30 June

 Tesco Bank’s website announces:  “Our online service is now fully operational.” The Bank apologises to “any of our savings customers who continue to have difficulties registering online”. It adds:

“We continue to receive a high volume of calls, but are beginning to see waiting times return to more acceptable levels. Your call will be answered as quickly as possible. In some instances to ensure that your request can be dealt with fully we will arrange a call back…”

Saturday 2 July

Some customers remain locked out, despite the assurances that customers could access their accounts. BBC Money Box says emails are “still arriving from listeners desperate to access their own money”.

One is from David of West Sussex who is unable to close his Tesco Bank account. Initially he’d wanted to pay a bill from his Tesco account. After a 40 minute wait on the phone David was told he couldn’t because the system was down.

Tesco promised to phone him back but didn’t. So David phoned twice on Wednesday 22 June and still didn’t get through. By Thursday 23 June, more than a week ago, he decided to close the account and transfer the money to another bank.

Says David on Money Box:

“On 23 June I waited for 45 minutes and eventually the phone was answered by a guy called Scott. He said that he would make the arrangement to close my account and transfer the funds to my nominated bank. He told me this would take three to five working days to complete.

“The next Wednesday, 29 June, that gave them 6 days, I went to my nominated account and there was no money in there. I am talking £7,000. I phoned Tesco again and then found my £7,000 was reinvested due to their – Tesco’s – human error into the Tesco account that was already closed. I couldn’t believe it. I spent a long time on the phone. I was frustrated and very angry. It is just not a way to do business for a company that size.”

A former member of Tesco Bank’s IT team emails to say he is not in the slightest bit surprised at the current fiasco at Tesco Bank. It would take three weeks just to get a computer on your desk, says the man. Another IT project that Tesco forecast would take six months to complete took in the end three years, he claims. He describes a scene to Money Box of total management chaos. “A great organisation bogged down by a management who can’t get things done as he put it.”

Tesco Bank denies it is a slow-moving bureaucratic organisation and says it has a reputation for getting things done, and done well.

Alex Fiatcosky, who was at Tesco Bank for a meeting at the height of the problems, implies that Tesco might have gone live too soon after migrating RBS accounts to Tesco Bank’s systems. “I think that would be something for Tesco to look at themselves to make they have the timings right on this and haven’t inadvertently inconvenienced their customer as part of timings to evacuate from the RBS systems.”

He adds: “Where they were perhaps undone on some of the system challenges is the rising volumes on the first day of full operation on the Monday. One could say: ‘should you not have anticipated the likely rise in volume and tested the system accordingly based on an uplift in attempted online log-ins’. There we have perhaps some areas of learning.”

Paul Lewis concludes by saying that most customers can now access their accounts, some have emailed to praise the Bank’s helpfulness and he got through to the helpline almost immediately.

3 and 4 July

I ask Tesco Bank:

– what lessons it has learned

– whether it had been open and accurate in its communications with customers and the media.

Its spokesman is helpful but doesn’t answer those questions directly . He says Tesco Bank has engaged with the media, made information available on its website and put more people on the phones.

This is Tesco Bank’s statement which, while helpful, still doesn’t answer questions on whether the Bank had learnt anything from telling customers they could access their accounts when some couldn’t.

“Our online service is fully operational and the overwhelming majority of our customers are able to access their accounts online. We are working to tackle remaining registration questions and continue to update the step-by-step guidance on our website to help customers quickly resolve any issues.

“We continue to receive a high volume of calls, but customer waiting times have returned to more acceptable levels. We’ve introduced a dedicated team to call back customers to ensure their requests are dealt with fully.

“We apologise to any of our Savings customers inconvenienced by the issues over the past two weeks.”

Comment:

Most people will welcome Tesco Bank’s entrance into financial services. The more competition the better.

But in saying problems are fixed when customers still cannot access their money, the Bank has inadvertently behaved like government departments that have played down the effect of IT-related problems on taxpayers, NHS patients, junior doctors, farmers, child support claimants, pupils and teachers involved in SAT tests, magistrates’ courts officials, prison officers and MoD workers.

Nothing would surprise people more in an IT-related crisis than plain speaking, truthfulness and openness. It’s time for people to be surprised.

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Posted in improving communications, private sector lessons for the public sector, Uncategorized

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