Tag Archives: Cloud Computing

Universal Credit full business case “a long way from Treasury approval”

By Tony Collins

Yesterday in Parliament Iain Duncan Smith gave a statement on Universal Credit – then MPs asked him questions.  Conservative MP Nigel Mills asked IDS a straightforward question:

“Can the secretary of state confirm that the Treasury has now signed off the whole business case and laid to rest that fear that they were not going to do that?”

IDS gave a clear reply: “That is exactly what was being asked before the summer break and the answer is they have …”

But the UC programme has not received Treasury approval for the full business case, nor even the outline business case. Today’s National Audit Office report “Universal Credit: progress update” says that the UC programme received approval in September 2014 for the “strategic outline business case” only.

An NAO official says this is a “long way from Treasury approval” of the full business case.

Until the full business case is approved, UC has no formal funding beyond the current spending review. Meanwhile the Treasury has been funding UC in “small increments” according to the NAO.

The Department of Work and Pensions is due to produce the outline business case next summer, before the next government’s spending review.

The “outline” business case is supposed to set out how the programme is affordable and will be successfully delivered. It summarises the results so far and sets out the case for proceeding to a formal procurement phase.

The “full” business case documents the contractual arrangements,
confirms funding and affordability and sets out the detailed management
arrangements and plans for successful delivery and post evaluation.

The absence of approval for the outline or full business case underlines the uncertainties still in the UC programme. Indeed the latest NAO report says it’s too early to tell whether UC will prove value for money.

But the DWP has reduced risks by extending the roll-out. The programme is now not expected to be completed before 2020. The original completion date was 2017.

The DWP has a twin-track approach to the UC IT programme. It is paying its existing main IT suppliers to support the introduction of UC – the so-called “live” service – while an agile team develops a fully-automated “digital” service that is designed to do all that the “live” service cannot do without manual intervention.

The agile system has yet to be tested – but it has cost only about £8m compared with more than £90m spent on the “live service”.

Porkies?

Labour MP Glenda Jackson, who is a member of the Work and Pensions committee, suggested to IDS yesterday that his promises to MPs on Universal Credit’s roll-out have all been broken and that he has told the House of Commons “porky pies”.

IDS replied that his intention is to ensure that UC is rolled out in a safe and secure way.

Comment:

You’d never know from IDS’s replies to MPs yesterday that the Universal Credit programme doesn’t yet have either outline business case approval or full business case approval.

In other words, the Treasury has yet to be convinced the UC programme is feasible or affordable. It is paying for the programme in increments.

IDS told MPs the programme has business case approval. He did not make it  clear that the programme has the early-stage strategic outline business case approval.

His comments reinforce the need for the National Audit Office to scrutinise the Universal Credit programme. Left to the Department for Work and Pensions, the facts about the programme’s progress, problems and challenges would probably not emerge, not in the House of Commons at least.

Some MPs have said for years that Parliament is the last place to look for the truth.

IDS also said yesterday that the original deadline for completion of UC by 2017 was “artificial” – though he has quoted the 2017 date to MPs on several occasions.

Will UC succeed?

UC as an IT-based programme is not doing too badly, to judge from today’s NAO report.

Indeed it seems that the Department for Work and Pensions, when under intense scrutiny, can start to get things right.

Though existing systems from major suppliers look increasingly unlikely to be able to handle the predicted volumes without a large and expensive amount of manual intervention, the agile digital system, though delayed by 6 months, looks promising, at a fraction of the cost of the conventional “live” system.

Scrutiny

The NAO is scrutinising the programme. The DWP’s own auditors seem to be doing a good job. The Cabinet Office’s Major Projects Authority is making useful recommendations. And the programme has an independently-chaired board. [The NAO says the programme board has been hampered by limited information and suggests this is because the DWP gives the board “good news” statements rather than facts.]

All this scrutiny is powering the programme in the right direction, though the uncertainties remain massive. As Campaign4Change predicted, the programme will not be complete before 2020. But who cares, if it works well in the end and losses are minimised?

DWP officials are learning lessons – and UC could end up as a template for big government IT-enabled programmes  The twin-track approach of using existing suppliers to deliver support for major business changes that yield problems and lessons  that then feed into an entirely new agile-based system is not a cheap way to develop government IT –  but it may work.

What DWP officials have yet to learn is how to be open and truthful to Parliament, the media – and even its own programme board.

Universal Credit: progress update

Some highlights of today’s NAO report

NAO warns over costs of further Universal Credit digital delay

Universal Credit: watchdog warns of costs of further delays

Government may have to write off more than £200m invested in IT on Universal Credit

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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.

Lessons from Birmingham Council’s joint venture with Capita

By Tony Collins

A report on Service Birmingham – Capita’s joint venture with Birmingham City Council – shows that the deal has been largely successful so far but that trust and relationships may be breaking down in some areas.

The “High-Level” review of Service Birmingham by the Best Practice Group could be read in two ways: as a qualified endorsement of the deal so far, or as a warning that a deteriorating relationship in some areas could end up, in years to come, as a legal dispute.

The report’s authors suggest that the council and Capita have little choice but to make improvements given that the contract lasts another nine years. They say:

“Given the fact that the commercial partnership has a further nine years to operate, there is an inherent risk that unless a core focus for both parties is re-established, the commercial trust between BCC [Birmingham City Council and SB [Service Birmingham] will continue to deteriorate.

“Neither party will benefit from the relationship if this situation is permitted to manifest itself.”

In another part of its report the Best Practice Group says:

“BCC and SB seemed to overcome early challenges in their relationship by having a ‘great common cause’. The Council entered into this relationship in 2006 because it had the foresight to realise it had to fundamentally transform how it operated in order to improve social outcomes for its population…

“Now the transformation has largely been successful and the initiatives are almost complete, the level of innovation seems to have stalled and the relationship has deteriorated. Somewhere in the fire-fighting, both BCC and SB have lost sight of the next ‘great common cause’ – the fact that the Council needs to further reduce the cost of ICT service delivery by £20m per annum. This will require some significant ‘outside the box’ thinking about how to achieve from both BCC and SB.”

Below are verbatim extracts from the Best Practice Group’s report which highlight some of the lessons arising from of the joint venture so far. The sub-headings (in italics) are mine.

Extracts from Best Practice Group’s report:

Service Birmingham charges a fee even when the council implements services outside the joint venture – poor value and reputedly poor practice?

“SB has an on-going contractual duty to ensure it provides independently benchmarked best value in the services it delivers to BCC [Birmingham City Council]. As part of these arrangements, BCC can request specific third party services (outside SB’s own delivery capability) with SB applying a fee for ‘contract management’.

“However, these situations vary considerably, raising the question of how to maximise value. The contract management fee would be considered high value when BCC gives SB a service outcome it wants to achieve, and SB researches the market, provides options and recommendations to BCC, sources the best value vendor, and ensures the solution is implemented and the business outcomes achieved.

“In other situations, BCC already knows the outcome to be achieved, how to achieve it and who the best value vendor is, and can implement the solution itself. However, the same contract management percentage still applies to these cases. This causes resentment for the service area involved because they cannot see how SB has added to the process, and in real terms, is perceived by BCC as very poor value. Although the sums involved are minimal compared with the relationship’s overall cost, it is highly visible as an area of poor value and reputedly bad practice, and needs to be realigned.”

Service Birmingham needs to make a significant return for its shareholders

“Given the relationship challenges between BCC and SB, there are a couple of fundamental points to address, namely that: (a) certain individuals within the Council need to understand that SB is not a social enterprise, a public sector mutual, or a charity, and needs to make a significant return on its capital for its shareholders, and (b) SB needs to understand that the Council is in a significantly deteriorating financial position due to Government cutbacks.”

SB drops its prices when challenged

“There have been statements made by a number of the officers in the Council that SB drops its prices when challenged, especially when the Council has investigated alternative industry offerings. SB have suggested that it is only when the challenge arises that initial data is clarified and therefore, more focused pricing can be provided.”

A hardened commercial stance in some circumstances?

“… these obvious and immediate savings are now being met with a hardened commercial stance for anything that falls outside of the core deliverables by SB.”

The cloud imposes hidden costs for SB

“Regardless of whether a scale of mark-up can be achieved, one issue that is clear from the interviews undertaken is that SB/BCC needs to educate the BCC service areas at all levels around what the contract management mark-up actually buys for the Council from SB. At present, for example, there is a lack of understanding within BCC service areas that having ‘cloud’ delivered solutions within the overall portfolio does still incur hidden costs for SB in supporting the overall infrastructure and managing the intermediate fault–reporting service.”

Staff survey on SB – mixed results

“With regards to the survey, 63% stated that they talk ‘positively’ about SB to their colleagues. Slightly less, 59%, believe SB understands the requirements and support needed to deliver the Council’s services. However, when asked if they would naturally think to contact SB for help and advice in situations where they were thinking about undertaking new ICT related work, only 33% of the Council respondents said that they would…

“When asked the direct question of how satisfied they were overall with the service delivered by SB, only 15% of the respondents felt that the service was less than satisfactory. However, only 10% believed that it was excellent with 39% rating it as satisfactory and 36% rating the service received as good.”

Project concerns

“There is a feeling which was voiced by several interviewees from the Council that project implementation often runs behind schedule and ultimately it is the ‘loudest project to shout’ which will then have the scarce resources allocated to it at the cost of other projects.”

Lack of commercial trust

“…there are elements of the KPI [key performance indicator] reporting received from SB that BCC need clarity on . This, coupled with the general lack of commercial trust between the parties and the fact that BCC have shown that SB have reported some data incorrectly (after discussion around interpretation), means that the KPIs are not fully aligned to the business outcomes BCC now needs to achieve in the current financial climate.”

Seeds of a possible legal dispute in future years between the two sides?

“One point that should be highlighted is that we believe there is a misalignment between both parties view of what partnership working actually entails. From the perspective of some service areas within BCC, they view certain individuals within SB as uncooperative. In a similar vein, there are certain individuals within SB who view specific BCC staff also as uncooperative. It should be noted that these individuals within both BCC and SB are in the minority.

“However, such un-cooperation is manifesting itself into a perception of a lack of commercial trust in both camps. Some BCC individuals are not really taking into account, or understanding, that SB is a commercial organisation that has a majority shareholding by a publically listed company. Its commercial shareholders need to see financial returns from SB that increase annually…

“In the early stages, the working relationship was put firmly on the rails by having a ‘great common cause’. The transformation requirements of BCC were so fundamental, it seems many differences of opinion were set aside and both parties worked very hard to overcome the obstacles in ensuring the transformation was successful. Largely, that was achieved. Now that the original transformation process has almost all been completed, the parties working relationship seems to have deteriorated in certain instances. This pattern of behaviour is normal in most strategic vendor relationships.”

SB more expensive than the average in certain areas?

“SB appear to be significantly more expensive than average in the areas of voice, data and converged service provision (KPI-17). The most significant of the three costs provided is the provision of Data services where SB are the worst value of all of the respondents in the SOCITM survey with a cost of £227 per data outlet (capital + support) compared to a median of £118. At the time of writing this report, no clarification had been provided as to the reasons for the significant difference between the SB provided cost and the survey median. When KPI-17 is reviewed as a cost per user, SB fairs much better across the service types. It has a cost of £321 per user compared to a median of £290 per user. However if you consider that this £31 per user per year, it actually represents over £600k per annum above average.”

Council concerns over SAP work going abroad

“Different parties within BCC perceived that in the interest of cost savings, SB was passing some work on SAP projects to an off-shore organisation, rather than using the UK workforce. It should be noted that the contract allows for the off-shoring of SAP work, but only where such work does not adversely impact jobs in the UK.

“A high level review of the SAP project work has identified that SAP work has only been off-shored when the UK workforce does not have the required expertise. In addition, we requested specific evidence from individuals to support their view that work was being off-shored that could have been undertaken by the UK workforce, but this could not be provided.”

The Council was paying for unused phone lines

“… Ultimately, the Council kept receiving invoices from the line provider for what were essentially unused telephone lines. The process ceased promptly after BCC and SB addressed the escalation of the issue.”

Stagnating innovation could widen the divide between the two sides

“It is clear that both parties will continue to feel significant frustration until they can resolve how to share the innovation process, provide resources to help the generation of sound business cases and provide formalised and comprehensive feedback to allow for the implementation of suggestions. These suggestions need to become acceptable to the Council as realistic deliverable solutions. If this does not happen, then innovation between the partners will continue to stagnate, driving a widening divide between the organisations.”

KPIs not always useful?

In the case of the BCC and SB agreement, despite an abundance of KPIs being in place, the Council perceives the contract could be better aligned in order to maximise the behaviours from SB that it needs.

Comment:

The report gives the impression that those running the joint venture must overcome the many problems because the contract still has nine years left to run. Both sides, it seems, are locked into the relationship. In some areas it works. In others it doesn’t.

Capita, clearly, has been trying hard to make the relationship work. Some within the council have too. Some are not so enthusiastic and have been “making noise” according to the report’s authors. Do those making a noise have a point, or are they simply making trouble against the joint venture? The report suggests removing those making a noise. But will that remove some of those who are providing an independent challenge?

So far the relationship has been largely successful; and the survey of staff is generally positive. But there are signs of serious trouble. Innovation is stagnating, the council’s finances are deteriorating and Capita needs to make a profit from the venture. Are these fundamental incompatibilities? Will the relationship really last another nine years, especially if there is more political change within the council?

High-Level Review of Service Birmingham

Government Digital Service sets an example on cloud

By Tony Collins

The Government Digital Service is putting its money where its mouth is. A leading public sector advocate of the cloud, GDS says that the first cloud hosting provider it is working with is Skyscape.

Mark O’Neill, Head of Service Delivery and Innovation at GDS, which is a team of innovators based at the Cabinet Office, writes that GDS is building GOV.UK, currently in beta at http://www.gov.uk.

“In the past, we might have looked at dedicated servers or possibly even our own rack in a datacentre somewhere. We would then have had to decide if we wanted to own the servers or if we should rent them some time to break out amortisation tables and spreadsheets.

“We would have to make sure that we were not locked in if we needed to move servers, so it would be necessary to negotiate break clauses in contracts; we would need to arrange access to server rooms for security accreditation; we would need to… well, the list goes on and on.

“The cloud has transformed all of this. Through the G-Cloud framework we are able to simply and rapidly buy highly reliable, highly cost-effective hosting services.

“Colleagues in GDS put together a statement of our requirements based on the experience we had gained during the alpha and the ongoing beta releases of GOV.UK and experience from the delivery of other major online services, both public and private sector.

“We then tested that statement of requirements against the list of suppliers on the G-Cloud framework. This allowed us to sift the number of potential providers down to four who met the statement of requirements.

“We then invited each of the suppliers in and used a consistent set of questions to explore their ability to meet our needs, their approach to operational service delivery and how they could provide flexible, scalable services through the cloud.

“To meet the needs of GOV.UK, we are planning to work with a number of different Infrastructure as a Service providers. We are happy to announce that the first cloud hosting provider we are working with is Skyscape.

“We have used G-Cloud previously for a number of small projects covering services like hosting and operations. We were very happy to discover that letting a major service contract for our flagship platform, GOV.UK, was equally straightforward and quick.

“Whilst the GOV.UK contract is the largest we have let so far, it is one of an increasing number we are letting through G-Cloud, which is now our standard way of procuring infrastructure services… If you have not used G-Cloud before then take a look, you will be pleasantly surprised. In the words of a song of my youth, ‘It was easy. It was cheap. Go and do it!'”

Introducing a new supplier – Skyscape

Shining a light into the darkest corners of wasteful IT projects

By David Bicknell

US federal chief information officer (CIO) Steven VanRoekel is adopting a novel approach to Government IT: innovate with less.

In a piece written for the The White House’s Office of Management and Budget, VanRoekel says he has learned lessons from the private sector on helping government learn private sector best practices, and in particular, how to buy IT.

“These agency successes are a good start, but we need to do more. We still face an unacceptable amount of duplicative and low-value IT.  That is why (we are)…. launching a new tool for agencies to use to assess the current maturity of their IT portfolio management process and make decisions on eliminating duplication across their organisations.

“This tool – which we’re calling “PortfolioStat” – gives agencies tools to look into the darkest corners of the organisation to find wasteful and duplicative IT investments.”

VanRoekel says the efforts are paying off.

“Over the past three years, the Federal Government has done much in adopting private sector practices to triage broken IT investments, reduce the IT infrastructure footprint, and innovate with less.

“For example, at today’s President’s Management Advisory Board meeting, the Department of the Interior showed that by modernising IT infrastructure and aligning resources to improve customer service, they will realise $100 million in savings from 2016 to 2020, for a cumulative total of $500 million. To date, there have been $11 million in cost avoidance by updating the scope of projects and $2.2 million in redirection of funds due to IT Spending Reviews.”

Over the next year, says VanRoekel, agency Deputy Secretaries or Chief Operating Officers (COO), must lead agency-wide IT portfolio reviews within their respective organisations, working in coordination with Chief Information Officers, Chief Financial Officers, and Chief Acquisition Officers.

The level of executive sponsorship, VanRoekel says, “is a direct reflection of our belief that IT is a strategic asset that can dramatically improve productivity and the way agencies execute their mission. By June 15, agencies will complete a high-level survey of agency IT portfolio status and a bureau level information request for specific types of commodity IT investments that will used to baseline the maturity of agency portfolios.

“Then, using the portfolio data gathered combined with other data available at the bureau and agency level, COOs will establish targets for commodity IT spending reductions and deadlines for meeting those targets; illustrate how investments within the IT portfolio align with the agency’s mission and business functions; establish criteria for identifying wasteful, “low-value,” or duplicative investments; and improve governance and program management utilising best practices and, where possible, benchmarks.

“Though this process is new for Federal IT, leading private sector companies have been leveraging improved IT portfolio management tools for some time. Private sector organisations that waste millions on duplicative and low value IT are destined to disappear. Competitive pressure has forced change and efficiency.

“Though there are differences between public and private sector work, my time in both makes me extremely confident that the best practices from a well-run company can be applied effectively to the Federal Government.”

According to Nextgov.com, which reported VanRoekel’s attendance at the  FOSE  2012 conference on government technology,  US federal IT spending grew about 7 percent every year during the decade prior to 2009.

Since President Obama took office amid the 2008 financial crisis, federal IT spending has leveled off at about $80 billion annually.

“I’m proud to say that in the last three years on that flat or declining budget we’ve actually innovated a lot,” VanRoekel said.

Homeland Security Department CIO Richard Spires imposed a 10 percent cut in operations and maintenance spending across the department in the administration’s fiscal 2013 budget request to free up money for new initiatives.

VanRoekel said initiatives to consolidate federal data centres, shift more of the IT budget to cloud computing and a “maniacal focus on rooting out duplication” were allowing agencies to invest in new technologies.

The US Defence Department’s 2013 IT budget request, for instance, is down more than $1 billion, largely because the department cut costs associated with maintaining data centres.

PortfolioStat is an opportunity for CIOs and chief operating officers to look horizontally across an agency and identify places where services can more easily be shared,VanRoekel said.

According to Nextgov’s report, the U.S. Agriculture Department has moved from more than 20 separate email systems to only one cloud-based system during the past year and recently consolidated more than 700 mobile phone contracts into three blanket purchase agreements.

US Chief Information Officers Council

Nextgov.com

The challenges of shifting US Government IT into the Cloud

By David Bicknell

Good piece from Federal Computer Week (FCW) in the US about the challenges of shifting Government IT systems towards Cloud delivery.

Alan Joch’s piece, ‘Is government procurement ready for the Cloud?‘ points out that although cloud computing will offer speed and agility with agencies anble to take IT services up or down as necessary to quickly support new mission plans or workload changes, the reality – for now –  has yet to hit procurement practices.

As Joch says, “Many IT procurement practices and contracting vehicles were designed to help managers provision hardware and software, not on-demand services. Can the current acquisition practices translate easily to the dynamic world of cloud computing?”

Not really, says Barry Brown, executive director of the Enterprise Data Management and Engineering Division at Customs and Border Protection. He echoed a view shared by others in the federal government, and told FCW that for cloud computing, “The technology delivery model has changed. What has not changed is the procurement model.”

The US government has a Cloud-first policy which seeks to reduce costs and increase IT acquisition flexibility by pushing federal IT systems towards cloud environments. Each agency has until May to identify three IT resources that it will move to the Cloud.

But, reports FCW,  the move is straining traditional procurement departments. Rather than promoting speed and agility, in some cases Cloud initiatives are spawning extended contract negotiations and legal challenges that are making it take even longer for agencies to get the resources they need.

US Government Cloud First Policy

DWP defends £316m HP contract

By Tony Collins

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

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

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

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

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

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

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

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

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

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

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

DWP responds to questions on £316m HP deal 

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

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

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

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

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

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

My questions and the DWP’s answers:

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

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

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

What is the role, if any for SMEs ?

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

Why is there no mention of G-Cloud?

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

Comment:

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

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

DWP reappoints HP on £316m desktop deal

DWP signs fifth large deal with HP

“DWP awards Accenture seven year application services deal”

“DWP awards IT deals to IBM and Capgemini”

G-Cloud – it’s starting to happen

By Tony Collins

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

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

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

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

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

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

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

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

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

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

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

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

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

Chris Chant’s blog post

Dedicated Cloud servers make a difference says Puma

By Tony Collins

Jay Basnight, the head of digital strategy at sports shoe and sportswear manufacturer Puma, has told CIO how his company moved from four cloud suppliers – Amazon, Computer Sciences Corporation, Rackspace and Slicehost (now part of Rackspace) –  to cloud supplier Eucalyptus.

Eucalyptus provides Puma with dedicated servers rather than spreading the company’s data and applications across servers used by other businesses, as is the case at Amazon, says Basnight. That helps make privacy audits easier because he can point to a specific server where data resides.

“This allows you peace of mind that you’re not sharing infrastructure with anyone else.”

Consolidating clouds saves “significant” money says Basnight – as much as 50 percent per hour due to better contract terms and economies of scale.

CIO article.

 

G-Cloud and agile briefings

By Tony Collins

On 22 November the Government Digital Service is giving a briefing for potential G-Cloud suppliers. It’ll be streamed live.

Officials say the briefing will be particularly useful to suppliers whose employees have never participated in a government tender.

At the ApplyCamp, officials will explain G-Cloud, steps in the OJEU procurement process, what information potential G-Cloud suppliers need to give, and what happens next.

The event is particularly aimed at Infrastructure as a Service, Platform as a Service, Software as a Service and other specialist cloud service suppliers. It will be held at Google, 76 Buckingham Palace Road, London SW1W 9TQ – 3pm – 5pm.

Agile TeaCamp – 24 November

Between 4pm and 6pm at the Cafe Zest, House of Fraser, Victoria St, London, there will be talks on agile. Derrick Cameron, MD of software consultancy Eximium and COO of agile software house Procession will speak on “Becoming the Intelligent Buyer”.  Chris Parsons, a “freelance thinker, coder and trainer” will talk about the e-petitions project and the aims of the Agile Delivery Network.

Teacamps in November and December – Government Digital Service