Tag Archives: innovation within government

Aspire: eight lessons from the UK’s biggest IT contract

By Tony Collins

How do you quit a £10bn IT contract in which suppliers have become limbs of your organisation?

Thanks to reports by the National Audit Office, the questioning of HMRC civil servants by the Public Accounts Committee, answers to FOI requests, and job adverts for senior HMRC posts, it’s possible to gain a rare insight into some of the sensitive commercial matters that are usually hidden when the end of a huge IT contract draws closer.

Partly because of the footnotes, the latest National Audit Office memorandum on Aspire (June 2016) has insights that make it one of the most incisive reports it has produced on the department’s IT in more than 30 years.

Soaring costs?

Aspire is the government’s biggest IT-related contract. Inland Revenue, as it was then, signed a 10-year outsourcing deal with HP (then EDS) in 1994, and transferred about 2,000 civil servants to the company. The deal was expected to cost £2bn over 10 years.

After Customs and Excise, with its Fujitsu VME-based IT estate, was merged with Inland Revenue’s in 2005, the cost of the total outsourcing deal with HP rose to about £3bn.

In 2004 most of the IT staff and HMRC’s assets transferred to Capgemini under a contract known as Aspire – Acquiring Strategic Partners for Inland Revenue. Aspire’s main subcontractors were Accenture and Fujitsu.

In subsequent years the cost of the 10-year Aspire contract shot up from about £3bn to about £8bn, yielding combined profits to Capgemini and Fujitsu of £1.2bn – more than double the £500m originally modelled. The profit margin was 15.8% compared to 12.3% originally modelled.

The National Audit Office said in a report on Aspire in 2014 that HMRC had not handled costs well. The NAO now estimates the cost of the extended (13-year) Aspire contract from 2004 to 2017 to be about £10bn.

Between April 2006 and March 2014, Aspire accounted for about 84% of HMRC’s total spending on technology.

Servers that typically cost £30,000 a year to run under Aspire – and there are about 4,000 servers at HMRC today – cost between £6,000 when run internally or as low as £4,000 a year in the commodity market.

How could the Aspire spend continue – and without a modernisation of the IT estate?

A good service

HMRC has been generally pleased with the quality of service from Aspire’s suppliers.  Major systems have run with reducing amounts of downtime, and Capgemini has helped to build many new systems.

Where things have gone wrong, HMRC appears to have been as much to blame as the suppliers, partly because development work was hit routinely by a plethora of changes to the agreed specifications.

Arguably the two biggest problems with Aspire have been cost and lack of control.  In the 10 years between 2004 and 2014 HMRC paid an average of £813m a year to Aspire’s suppliers.  And it paid above market rates, according to the National Audit Office.

By the time the Cabinet Office’s Efficiency and Reform Group announced in 2014 that it was seeking to outlaw “bloated and wasteful” contracts, especially ones over £100m, HMRC had already taken steps to end Aspire.

It decided to break up its IT systems into chunks it could manage, control and, to some extent, commoditise.

HMRC’s senior managers expected an end to Aspire by 2017. But unexpected events at the Department for Work and Pensions put paid to HMRC’s plan …

Eight lessons from Aspire

1. Your IT may not be transformed by outsourcing.  That may be the intention at the outset. But it didn’t happen when Somerset County Council outsourced IT to IBM in 2007 and it hasn’t happened in the 12 years of the Aspire contract.

 “The Aspire contract has provided stable but expensive IT systems. The contract has contributed to HMRC’s technology becoming out of date,” said the National Audit Office in its June 2016 memorandum.

Mark DearnleyAnd Mark Dearnley, HMRC’s Chief Digital Information Officer and main board member, told the Public Accounts Committee last week,

“Some of the technology we use is definitely past its best-before date.”

2. You won’t realise how little you understand your outsourced IT until you look at ending a long-term deal.

Confidently and openly answering a series of trenchant questions from MP Richard Bacon at last week’s Public Accounts Committee hearing, Dearnley said,

“It’s inevitable in any large black box outsourcing deal that there are details when you get right into it that you don’t know what’s going on. So yes, that’s what we’re learning.”

3. Suppliers may seem almost philanthropic in the run-up to a large outsourcing deal because they accept losses in the early part of a contract and make up for them in later years.

Dearnley said,

“What we are finding is that it [the break-up of Aspire] is forcing us to have much cleaner commercial conversations, not getting into some of the traditional arrangements.

” If I go away from Aspire and talk about the typical outsourcing industry of the last ten years most contracts lost money in their first few years for the supplier, and the supplier relied on making money in the later years of the contract.

“What that tended to mean was that as time moved on and you wanted to change the contract the supplier was not particularly incented to want to change it because they wanted to make their money at the end.

“What we’re focusing on is making sure the deals are clean, simple, really easy to understand, and don’t mortgage the future and that we can change as the environment evolves and the world changes.”

4. If you want deeper-than-expected costs in the later years of the contract, expect suppliers to make up the money in contract extensions.

Aspire was due originally to end in 2004. Then it went to 2017 after suppliers negotiated a three-year extension in 2007. Now completion of the exit is not planned until 2020, though some services have already been insourced and more will be over the next four years.

The National Audit Office’s June 2016 memorandum reveals how the contract extension from 2017 to 2020 came about.

HMRC had a non-binding agreement with Capgemini to exit from all Aspire services by June 2017. But HMRC had little choice but to soften this approach when Capgemini’s negotiating position was unexpectedly strengthened by IT deals being struck by other departments, particularly the Department for Work and Pensions.

Cabinet Office “red lines” said that government would not extend existing contracts without a compelling case. But the DWP found that instead of being able to exit a large hosting contract with HP in February 2015 it would have to consider a variation to the contract to enable a controlled disaggregation of services from February 2015 to February 2018.

When the DWP announced it was planning to extend its IT contract with its prime supplier HP Enterprise, HMRC was already in the process of agreeing with Capgemini the contract changes necessary to formalise their agreement to exit the Aspire deal in 2017.

“Capgemini considered that this extension, combined with other public bodies planning to extend their IT contracts, meant that the government had changed its position on extensions…

“Capgemini therefore pushed for contract extensions for some Aspire services as a condition of agreeing to other services being transferred to HMRC before the end of the Aspire contract,” said the NAO’s June 2016 memo.

5. It’s naïve to expect a large IT contract to transfer risks to the supplier (s).

At last week’s Public Accounts Committee hearing, Richard Bacon wanted to know if HMRC was taking on more risk by replacing the Aspire contract with a mixture of insourced IT and smaller commoditised contracts of no more than three years. Asked by Bacon whether HMRC is taking on more risk Dearnley replied,

“Yes and no – the risk was always ours. We had some of it backed of it backed off in contract. You can debate just how valuable contract backing off is relative to £500bn (the annual amount of tax collected).  We will never back all of that off. We are much closer and much more on top of the service, the delivery, the projects and the ownership (in the gradual replacement of Aspire).”

6. Few organisations seeking to end monolithic outsourcing deals will have the transition overseen by someone as clear-sighted as Mark Dearnley.

His plain speaking appeared to impress even the chairman of the Public Accounts Committee Meg Hillier who asked him at the end of last week’s hearing,

Meg Hillier

Meg Hillier

“And what are your plans? One of the problems we often see in this Committee is people in very senior positions such as yours moving on very quickly. You have had a stellar career in the private sector…

“We hope that those negotiations move apace, because I suspect – and it is perhaps unfair to ask Mr Dearnley to comment – that to lose someone senior at this point would not be good news, given the challenges outlined in the [NAO] Report,” asked Hillier.

Dearnley then gave a slightly embarrassed look to Jon Thomson, HMRC’s chief executive and first permanent secretary. Dearnley replied,

“Jon and I are looking at each other because you are right. Technically my contract finishes at the end of September because I was here for three years. As Jon has just arrived, it is a conversation we have just begun.”

Hiller said,

“I would hope that you are going to have that conversation.”

Richard Bacon added,

“Get your skates on, Mr Thompson; we want to keep him.”

Thompson said,

“We all share the same aspiration. We are in negotiations.”

7. Be prepared to set aside millions of pounds – in addition to the normal costs of the outsourcing – on exiting.

HMRC is setting aside a gigantic sum – £700m. Around a quarter of this, said the National Audit Office, is accounted for by optimism bias. The estimates also include costs that HMRC will only incur if certain risks materialise.

In particular, HMRC has allowed around £100m for the costs of transferring data from servers currently managed by Aspire suppliers to providers that will make use of cloud computing technology. This cost will only be incurred if a second HMRC programme – which focuses on how HMRC exploits cloud technology – is unsuccessful.

Other costs of the so-called Columbus programme to replace Aspire include the cost of buying back assets, plus staff, consultancy and legal costs.

8. Projected savings from quitting a large contract could dwarf the exit costs.

HMRC has estimated the possible minimum and possible maximum savings from replacing Aspire. Even the minimum estimated savings would more than justify the organisational time involved and the challenge of building up new corporate cultures and skills in-house while keeping new and existing services running smoothly.

By replacing Aspire and improving the way IT services are organised and delivered, HMRC expects to save – each year – about £200m net, after taking into account the possible exit costs of £700m.

The National Audit Office said most of the savings are calculated on the basis of removing supplier profit margins and overheads on services being brought in-house, and reducing margins on other services from contract changes.

Even if the savings don’t materialise as expected and costs equal savings the benefits of exiting are clear. The alternative is allowing costs to continue to soar while you allow the future of your IT to be determined by what your major suppliers can or will do within reasonable cost limits.

Comment

HMRC is leading the way for other government departments, councils, the police and other public bodies.

Dearnley’s approach of breaking IT into smaller manageable chunks that can be managed, controlled, optimised and to some extent commoditised is impressive.  On the cloud alone he is setting up an internal team of 50.

In the past, IT empires were built and retained by senior officials arguing that their systems were unique – too bespoke and complex to be broken up and treated as a commodity to be put into the cloud.

Dearnley’s evidence to the Public Accounts Committee exposes pompous justifications for the status quo as Sir Humphrey-speak.

Both Richard Feynman and Einstein said something to the effect that the more you understand a subject, the simpler you can explain it.

What Dearnley doesn’t yet understand about the HMRC systems that are still run by Capgemini he will doubtless find out about – provided his contract is renewed before September this year.

No doubt HMRC will continue to have its Parliamentary and other critics who will say that the risks of breaking up HMRC’s proven IT systems are a step too far. But the risks to the public purse of keeping the IT largely as it is are, arguably, much greater.

The Department for Work and Pensions has proved that it’s possible to innovate with the so-called digital solution for Universal Credit, without risking payments to vulnerable people.

If the agile approach to Universal Credit fails, existing benefit systems will continue, or a much more expensive waterfall development by the DWP’s major suppliers will probably be used instead.

It is possible to innovate cheaply without endangering existing tax collection and benefit systems.

Imagine the billions that could be saved if every central government department had a Dearnley on the board. HMRC has had decades of largely negative National Audit Office reports on its IT.  Is that about to change?

Update:

This morning (22 June 2016) on LinkedIn, management troubleshooter and board adviser Colin Beveridge wrote,

“Good analysis of Aspire and outsourcing challenges. I have seen too many business cases in my career, be they a case for outsourcing, provider transition or insourcing.

“The common factor in all the proposals has been the absence of strategy end of life costs. In other words, the eventual transition costs that will be incurred when the sourcing strategy itself goes end of life. Such costs are never reflected in the original business case, even though their inevitability will have an important impact on the overall integrity of the sourcing strategy business case.

“My rule of thumb is to look for the end of strategy provision in the business case, prior to transition approval. If there is no provision for the eventual sourcing strategy change, then expect to pay dearly in the end.”

June 2016 memorandum on Aspire – National Audit Office

Dearney’s evidence to the Public Accounts Committee

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We spend more on IT per capita than any other government – Maude

By Tony Collins

Cabinet Office minister Francis Maude, in a speech at the FT Innovate Conference on 6 November 2012, said:

“In the last decade our IT costs have gone up – while our services remained patchy. According to some estimates, we spend more on IT per capita than any other government.” Estimated annual IT spend in the public sector is between £14bn and £20bn.

And is the spend worthwhile?

“The same people who do their shopping, banking and social networking online are still interacting with Government on the phone, in person or on paper at less convenience to them and more cost to us…

“Government provides more than 650 transactional services, used about 1 billion times every year – but presently there are only a handful where a large majority of people who could use the online option do so.

“Half don’t offer a digital option at all – and apart from a handful of services, if there is a digital option few people use it because it’s not a sufficiently fast or convenient option.

Car tax online – under-used

“In some cases users try online and then have to revert back to other channels – in 2011 around 150 million calls coming into government were self-reported as avoidable.

This leaves us with a situation where, for example, three-quarters of people use the internet for car insurance, but only half buy car tax online.

“This is simply not good enough …”

GOV.UK

He praised the agile-based GOV.UK government website as easier to use and faster than Directgov and Businesslink which it replaces.

Mosquitoes

The Cabinet Office is also reducing the “incomprehensibly large number of Government websites”  – down from 424 to 350 in the last year.

“We closed a site dedicated to British mosquitoes – no doubt mosquitoes is a serious issue. We just didn’t feel it warranted a whole website.”

£15,000 to change a line of web code

“Departments can be asked to pay £15,000 to change a single word on a website because they are locked into legacy contracts negotiated at a time when the digital capacity lay almost entirely outside government.

“This is changing. We are moving away from legacy IT and our reliance on a few large System integrators. And introducing smaller contracts; shorter terms; a more diverse supplier community that is welcoming to SMEs; open standards; open source; more use of commodity. These are the new parameters.”

Francis Maude’s speech in full.

 

Campaign for electronic patient information centre

By Tony Collins

Shane Tickell, CEO of health IT supplier IMS Maxims, is leading a campaign for a national electronic patient information centre.

It would enable NHS staff, healthcare organisations and government suppliers to share details of, or learn about, innovative practices that work.

In a guest blog, Tickell argues that there are many examples of innovation in the NHS but information on the successes is scarce or not available in one place.

He advocates a physical and a virtual centre. Information, case studies, best practice and ideas from the NHS would be shared online. There are some websites that do this, but in isolation. The virtual site he proposes would be interactive and a way of collating information that exists in silos.

The physical centre, Tickell says, could be anywhere on the UK, potentially using some of the 2,000 acres of unused NHS estate. It would be a forum for education and sharing, where suppliers could showcase their systems, and NHS staff could speak openly about what they need from suppliers.

It would also be a place for policy to be explained by government officials, where quangos define their requirements, and NHS trusts share what they are doing and the lessons they have learned.

Shane Tickell writes:

“As an acceptance grows across the NHS that there is a crucial need for integration across health and social care, the extent to which our National Health Service is disjointed is becoming increasingly clear.

In many areas, although of course not all, there are so many examples of different approaches, poor collaboration and lack of joined thinking between organisations despite their attempts to achieve the same goals. On many occasions, I’ve seen examples where an NHS organisation has shared the results of a successful pilot with another organisation hundreds of miles away and yet the trust just a few miles down the road has no idea the initiative even exists.

In recent years, healthcare IT events such as EHI Live have helped suppliers of all sizes showcase their solutions, albeit just once a year.

However, despite best efforts, most often suppliers with the biggest marketing budgets often take the centre stage, while the smaller, more innovative companies huddle around the edges trying to grab the attention of the odd delegate who is less wowed by the exciting gizmos and freebies on the bigger stands.

Equally, these events have been valuable in enabling the NHS to share their experiences by allowing them to participate in best practice showcases. But while these shows are valuable in providing those once-a-year opportunities to network and see what is available, ideas and information gathered can soon be forgotten once back in the busy NHS setting, until the next time an event comes around.

There are more than 400 pilots across the NHS and 300 ‘examples of innovation’ alone, according to the BCS. On top of all of that, my team recently mapped more than 40 NHS organisations and bodies, who work virtually disparately to attempt to provide the NHS with direction, standards and protocols.

So where does this leave the NHS – confused? Disjointed? Not a clue where to start when they are told that they need to collaborate and innovate to improve patient safety and care while saving vast sums of money?

The NHS needs a place that provides an educational and innovation forum covering everything related to electronic health and wellbeing that is available all year round – an electronic patient information centre.

At present there are pockets of innovation across the country. Initiatives set up by the National Innovation Centre and its associated ‘innovation hubs’ are providing a useful mechanism to support and adopt healthcare technology across the regions.

But an all year round centre would provide a central location for healthcare organisations, bodies, government and suppliers to meet, discuss and understand policy. Equally important, the centre would provide a valuable place to educate on future challenges and where they are being driven from and an opportunity to work together to help to address them as soon as they start to emerge.

Although it would require investment, such a centre would provide trusts, CCGs, private and independent organisations and just about anyone with an interest in health and social care regardless of their budget, size, location or IT savviness with the opportunity to attend at a time that is convenient for them.

Meanwhile, suppliers of any shape or size would have a level playing field from which to be represented and educate their current and potential customers, rather than trawling up and down the country trying to find inroads to speak to those on the frontline. In addition, it would ensure that all is not lost from the National Programme for IT and that lessons learned are shared.

For too long the NHS has had to rely on word of mouth and second-guessing how surrounding organisations are achieving success. Now is the time to really work together to ensure true innovation is shared and for everyone to have a chance to be part of it.”

LinkedIn group – Electronic Patient Information Centre 

shane.tickell@imsmaxims.com.

Fujitsu banned from Whitehall contracts?

By Tony Collins

The FT reports today that Fujitsu has been deemed for the time being too high risk to take on new public sector deals, along with another unnamed IT services contractor.

The newspaper quotes “people close to the situation”.

It’s likely the article is correct in naming Fujitsu as a supplier that is deemed by the Cabinet Office to be high risk. It is unclear, though, whether being categorised as “high risk” by the Cabinet Office amounts to a ban for the time being on future government contracts.

The FT says that Fujitsu has “in essence” been blacklisted.  “The Cabinet Office refused to confirm the identities of either of the companies that have in effect been blacklisted,” says the FT.

It is also unclear whether the Cabinet Office could exclude a supplier from shortlists even if it wanted to. The Cabinet Office awards few large IT contracts of its own; contracts are awarded by departments, and the Cabinet Office has no unambiguous power to exclude particular suppliers from shortlists drawn up by autonomous departments that take their own decisions on which companies to award contracts to.

Mega-contracts to be awarded by central departments must, however, must go to the Cabinet Office’s Major Projects Authority for approval.  The Authority could in theory require that Fujitsu be excluded from a shortlist before it gives approval.  This blacklisting would require Francis Maude, the Cabinet Office minister, and the minister signing the mega-contract to be in agreement.

If a departmental minister refused to exclude  a supplier from a bid or shortlist because of its past performance what could the Cabinet Office do, especially if the minister argued that the supplier’s continued work , in the form of a renewed contract, was not just desirable but essential?

The FT says that the latest initiative to ban companies with troubled histories in government from new contracts is being spearheaded by Bill Crothers, formerly of Accenture.

He was appointed as chief procurement officer two months ago to inject private sector rigour into Whitehall’s contracting system. He is quoted in the FT as saying that his new approach would allow past performance to be taken into account for the first time when a company is bidding for a fresh tender.

Comment

The idea of a blacklist is a good one; indeed it would be the most important innovation in government IT since the general election. For decades MPs and others have said that under-performing suppliers should not be awarded new contracts. Now at last that may be happening.

After Fujitsu sued the Department for Health for about £700m over the NPfIT a settlement has been elusive, despite the intervention of the Cabinet Office. It is likely that Fujitsu UK’s hands will have been controlled by its parent in Japan.

Fujitsu’s performance on the “Libra” contract for IT in magistrates’ courts was strongly criticised by MPs and the National Audit Office which exposed repeated threats by the supplier to withdraw from the contract unless its terms were met.

Fujitsu could circumvent any blacklisting by becoming a subcontractor on a mega-contract, as it is at HMRC on the “ASPIRE” contract and at the DWP where its hardware runs benefit systems. Or a department could ignore the Cabinet Office and award non mega-contracts to Fujitsu.

We hope the Cabinet Office finds a way to make its blacklist – if that is what it is – stick. A  private sector company would not award a new contract to a supplier that had bitten in the past. Why would the public sector?

Francis Maude talks open govt – and Whitehall does the opposite

By Tony Collins

“If people do not know what you’re doing, they don’t know what you’re doing wrong.” – Sir Arnold Robinson, Cabinet Secretary in a discussion on open government in Yes Minister.

Francis Maude, the Cabinet Office minister, said all the right things at the Intellect World Class Public Services conference 2012.

He said that:

– smaller, innovative and efficient suppliers were finding themselves locked out of the supply of services to Government because of what was described by Parliament as a powerful “oligopoly” of large suppliers

– for the first time in Government “we are using agile, iterative processes, open source technology platforms and world-class in-house development teams alongside the best digital innovation the market can offer”

– “We must eliminate failure waste. At the moment, a large proportion of our service delivery costs are incurred through incomplete or failed digital transactions. And these transactions create cross-channel duplication, which burdens the user and costs Government a huge amount in repeated costs. For HMRC alone, they estimate that 35% of calls to its contact centres are avoidable, which would save £75m.”

– “Transparency is a defining passion for this Government …”

Comment:

How much influence does Maude really have? Can he persuade permanent secretaries to effect major change? The evidence so far is that departmental officials and Maude have different ideas on what reform means.

In “Yes Minister” civil servants were proud of a new hospital that was the best run and most hygienic in the country, with no medical staff, 500 administrators and no patients.

Maude may also recall that Antony Jay and Jonathan Lynn, the acclaimed writers of Yes Minister, spoke of the Whitehall law of inverse relevance – “the less you intend to do about something, the more you have to keep talking about it”.

Open government? 

Perhaps civil servants are letting Maude get on with talking the talk while they find every way to keep things much as they are. A good example: The Guardian reported yesterday that a key part of the Government’s transparency drive has stalled amid reports of ministry opposition.

The paper’s political editor Patrick Wintour reported that plans to publish regular ‘traffic-light’ progress reports on large, costly and risky IT projects “appear to have been shelved”.

When it comes to IT this could have been the coalition’s most important single reform. It would have given MPs and the public a way of knowing when mega projects such as Universal Credit are failing. Usually we don’t know about a failed IT-related project unless there is a leak to the media, or the National Audit Office finds out and decides, with its limited budget, to do a study.

Sir Bob Kerslake, who is head of the civil service,  had indicated to MP Richard Bacon that “Gateway” review reports on large and risky IT and construction projects may be published in the civil service reform plan which is expected to be released this month.

Gateway reports to go unpublished?

Now it seems that departmental civil servants  have persuaded the Sir Bob not to publish “Gateway” reports. So the secrecy over the progress or otherwise of government mega projects is set to continue.

Yes, civil servants will allow the Cabinet Office to have its way on the publication of data about, say, some government spending. But it’s becoming clear that the civil service will not allow any publication of its reports on the progress or otherwise of major projects. It has been that way since Gateway reviews were introduced in 2001.

Some senior officials – by no means all – say they want a confidential “safe space” to discuss the progress of projects. The reality is that they do not want outsiders – MPs, the media and NAO auditors – meddling in their failing schemes – schemes such as Firecontrol and e-filing at the Ministry of Justice.

Unlike Maude, senior civil servants have what Jay and Lynn call a “flexible approach to open government”. This means in practice that Whitehall will happily release data – but not project reports on which the civil servants themselves can be judged.

Activity is not achievement

Maude’s speeches will give the impression of activity. But activity is the civil service’s substitute for achievement. I quote Jay and Lynn again, in part because their depiction of Whitehall seems to have been taken as serious wisdom by those officials who think Sir Humphrey a character worth living up to.

It’s time Maude and his team got a grip on departments. Until they do, permanent secretaries and their senior officials will regard Maude as trying to get out of situations that don’t need getting out of.

Whitehall to relent on secrecy over mega projects?

The empty hospital – Yes Minister

Government’s transparency drive stalls.

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

SaaS or Cloud SME? – get in touch says Cabinet Office official

By Tony Collins

Chris Chant, Executive Director in the Cabinet Office working as Programme Director for the G-Cloud initiative, says in a blog post that “if you are an SME and you have a SaaS or other cloud service that government might use – we want to know about it”.

Chant says the government is changing the way it buys and uses IT. “We have trained our suppliers and ourselves to think that we need big, complex solutions to complicated problems; which has meant that all too often it’s only the big, complex suppliers that get a look in.

“We are changing all this. We are giving SMEs and ourselves a chance to work together by levelling the playing field for all IT suppliers.”

Chant says it won’t happen overnight and mistakes may be made.  “This is new territory for many departments and very few are experienced at handling this new way of working.

“I think it’s fair to say that many just can’t see how this can happen yet though
many know it must.” Government users are not so different to others.

“First off government has realised that it’s not that different. From now
on, if government wants some IT,  it needs to do what everyone else does and look  at what’s already available, not just what we can pay to have built for us and not just what we are used to doing.

“It will be uncomfortable, uncharted territory for many but it must be done. It is unacceptable for things to remain the same. So if you are a SME and you have a SaaS or other cloud service that government might use – we want to know about it.”

Chant says that government will use open standards wherever it can, and buy IT on pay-as-you-go or short term contracts.

“Some contracts may be longer but there must be a break option, in my view, at no later than 12 months.

“Of course organisations will offer lower prices for longer lock-ins but, as I’ve said before, the cost of being unable to exit will almost always outweigh the savings.”

Chant says that if you are an SME, any supplier that’s never worked with government, or an existing supplier that “gets” cloud “you are the type of people we need to work with the deliver the savings all of us need”.

Talk to us, he adds.

Chris Chant’s blog post.

Vested interests will try to stop GovIT changing.

Praise for departing Deputy government CIO

By Tony Collins

Bill McCluggage, the departing Deputy government CIO, has been praised by friends and colleagues for his strength of purpose as a change advocate, and for steering through the government ICT Strategy.

He is also admired by friends for “telling it like it is” despite the Cabinet Office’s restrictive communications policy.

Said one friend: “To get the ICT strategy out and into delivery underlines Bill’s credentials as a deliverer not just a strategist; and he regularly held his ground with those who sought to maintain the status quo.”

McCluggage announced this week he is leaving government to join storage supplier EMC. He said on Twitter that it’s “sad to leave excellent team that have delivered real change but time to move on and address new challenge”.  He said he counted himself “lucky to have been part of the vanguard of new GovtIT”.

Mike Bracken, Executive Director of Digital, Efficiency and Reform Group, Cabinet Office, said that Whitehall will be poorer in McCluggage’s absence.

McCluggage joined the Cabinet Office as Deputy Government CIO in September 2009. He has been Director of ICT Strategy & Policy and Senior Information Risk Owner with overall responsibility for the formulation, development and communication of cross-Government ICT strategies and policies.

He was IT Director at Harland & Wolff Heavy Industries in Belfast and was an engineering officer in the RAF. He is a chartered engineer and member of the Institution of Engineering and Technology.

As Deputy government CIO McCluggage has been a firm advocate of agile techniques, cloud computing, open source, cutting out waste and duplication, and bringing many more SMEs into GovIT.

Deputy Government CIO to join EMC.

Deputy government quits.

Cabinet Office loses another top ICT man.

The unavoidable truths about GovIT – by Cabinet Office official

The vast majority of GovIT is “outrageously expensive” says Chris Chant. “Things have changed and we haven’t.”

By Tony Collins

Chris Chant is one of the most experienced IT officials in central government. He was CIO at Defra where he led IT service improvement programmes with strategic outsourcing partners  including IBM. His reforms helped to change the way people worked.

He was also CIO at the Government Olympic Executive, part of the Department of Culture, Media and Sport. Now he is an Executive Director in the Cabinet Office working as Programme Director for the G-Cloud initiative.

In a cloud computing event hosted by the Institute for Government in London, Chant told it like it is. The points he make indicate that major change is less of a risk to public finances than keeping the machinery of government as it is.

He began his talk by thanking those in government IT who have been“working their socks off”. He had been talking positively to his teams in the last week and now “it is time to recognise some of the less positive aspects about what we do”.

He added: “We need to face some unavoidable truths head on about government IT as it has been done.”

These were his main points:

“The vast majority of government IT in my view is outrageously expensive, is ridiculously slow, or agile-less, is poor quality in the main and, most unforgivably I think, is rarely user-centric in any meaningful way at all.”

He said it is unacceptable:

–  That “80% of Government IT is controlled by five corporations”.

–  That “some organisations outsource their IT strategy in Government”.

–  That “to change one line of code in one application can cost up to £50,000”.

–  To wait 12 weeks to get a server commissioned for use.  He said: “That’s pretty commonplace. When you think in terms of using a service like Amazon the most problematic thing on the critical path is the time it takes you to get your
credit card out of your wallet and enter the details on screen”.

–  That the civil service does not know the true cost of a service and the real exit costs from those services – the costs commercially, technically and from a business de-integration standpoint. “So  how do we untangle our way out of a particular product or service. I cannot tell you how many times I have had the discussion that says: we need to get away from that but we cannot because of the complexity of getting out from where we are: all the things hanging on to that particular service that we cannot disentangle ourself from.”

– To enter into any contracts for more than 12  months. “I cannot see how we can sit in a world of IT and acknowledge the arrival of the iPad in the last two years and yet somehow imagine we can predict what we are going to need to be doing in two or three, or five or seven or ten years time.”

–  Not to know in government “how many staff we have on the client side of IT”. He said: “I have not yet met anybody who knows what that figure is. People know about small areas but overall we don’t know what that figure is.

– Not to know what IT people do. “So we don’t have any idea of the breakdown of that number that we don’t know either, surprisingly. I think that is outrageous in this climate, and in any climate.”

–  Not to know “what systems we own how much they cost; and how much or even if they’re used”. He said: “I know there are organisations that have turned off tens of thousands of desktop services merely to discover if they are used anymore; and when they do that they discover maybe one per cent are still being used. That’s completely unacceptable.”

– Not to know when users give up on an online service; “and it’s unacceptable not to know why they give up”. He said: “Of course it is unacceptable that they have to give up because the service does not fulfil their needs.”

– to have a successful online service that sends out reminders to use that service through the post.

–  Not to be able to communicate with customers securely and electronically when technology clearly allows that to happen.

– Not to be able to “do our work from any device we choose”. He said: “That is possible and has been for some time. It’s outrageous we cannot do that.”

– To pay up to £3,500 per person per year for a desktop service.

–  That “your corporate desktop to take 10 minutes to boot and the same amount of time to close down”. He said: “But that is the truth of what goes on everyday in Government IT and I suspect the public sector too.”

–  For staff to be unable to access Twitter or YouTube, when they use those services for what they do.

– For call centre staff not to be able to access the very service they are supporting at the call centre. “It sounds funny but  when you think of the consequences of that it is truly dreadful.”

–  To ensure people are working by restricting their access to the Internet. “If we cannot measure people by outputs where on  earth are we?”

Above all, said Chant, “it is unacceptable not to engage  directly with the most agile forward-thinking suppliers that are in the SME  market today and are not among the suppliers we have been using”.

Chris Chant’s talk

This is much of what Chris Chant said:

“A bunch of people have worked their socks off [but], through no  fault of their own, on the wrong thing for some time too… And it’s quite tough being in IT because, a bit like  electricity, it’s one of the rare things people seem to use almost all of the time…but we need to face some unavoidable truths head on about government IT as it has been done.

The vast majority of government IT in my view is outrageously expensive, is ridiculously slow, or agile-less, is poor quality in  the main and, most unforgivably I think, is rarely user centric in any  meaningful way at all…

I’ll give you my personal view of the unacceptable. I have spent a lot of time with teams in the last week talking positively about things and I think it is time to recognise some of the less positive aspects of what we do.

I think it is unacceptable at this point in time to not know the true cost of a service and the real exit costs from those services; the costs commercially, technically and from a business de-integration standpoint – so how do we untangle our way out of a particular product or service? I cannot tell you how many times I have had the discussion that says: we need to get away from that but we cannot because of the complexity of getting out from where we are: all the things hanging on to that particular service that we cannot disentangle ourself from.

I think it is completely unacceptable at this point in time to enter into any contracts for more than 12 months. I cannot see how we can sit in a world of IT and acknowledge the arrival of the iPad in the last two years and yet somehow imagine we can predict what we are going to need to be doing in two to three, or five or seven or 10 years time. It is a complete nonsense.

And to those who say ‘what about a supplier upfront infrastructure: surely you have to fund that somehow?’ I would say: ‘why do we have to treat IT and particularly commodity IT any differently from any other commodity
around?’

Marks and Spencer does not come knocking on the door asking me to guarantee to buy three suits and two shirts a year for the next five years and then they will put a store at the bottom of the road… if you look at a small local garage that has to fund its hydraulic ramps and the computer equipment they now need. They do not ask people to fund that upfront. They go into the market confident of their products and confident of their pricing so they will get people back again and arrange for how that gets funding…

I think it is unacceptable not to know in government how many staff we have on the client side of IT. I have not yet met anybody who knows what that figure is. People know about small areas but overall we don’t know what that figure is. It is also unacceptable that we don’t know what those people do. So we don’t have any idea of the breakdown of that number that we don’t know either,  surprisingly. I think that is outrageous in this climate, and in any climate.

It is completely unacceptable we don’t know what systems we own and how much they cost; and how much or even if they’re used. I know there are organisations that have turned off tens of thousands of desktop services merely to discover if they are used anymore; and when they do that they discover maybe one per cent are still being used…

It is unacceptable not to know when users give up on an online service; and it’s unacceptable not to know why they give up. Of course it is unacceptable that they have to give up because the service does not fulfil their needs.

It unacceptable to have a successful online service that sends out reminders to use that service through the post…. Linked to that, it’s completely unacceptable not to be able to communicate with customers securely electronically when technology clearly allows that to happen.

It is unacceptable not to be able to do our work from any device we choose. That is possible and has been for some time.  It’s outrageous we cannot do that.

It is unacceptable to pay – and these figures are Public Accounts Committee figures – up to £3,500 per person per year for a desktop service.

It is unacceptable for your corporate desktop to take 10 minutes to boot and the same amount of time to close down. But that is the truth of what goes on everyday in Government IT and I suspect the public sector too.

It is unacceptable for staff to be unable to access Twitter or YouTube, when they use those services for what they do.

It is unacceptable for call centre staff not to be able to access the very service they are supporting at the call centre. It sounds funny but when you think of the consequences of that it is truly dreadful.

I think it is unacceptable in this day and age to ensure people are working by restricting their access to the Internet. If we cannot measure people by outputs where on earth are we?

It is unacceptable that 80% of Government IT is controlled  by five corporations.

It is unacceptable that some organisations outsource their IT strategy in Government.

It is unacceptable that to change one line of code in one application can cost up to £50,000.

It is unacceptable to wait 12 weeks to get a server commissioned for use. That’s pretty commonplace. When you think in terms of using a service like Amazon the most problematic thing on the critical path is the time it takes you to get your credit card out of your wallet and enter the details on screen.

Above all – and at the heart of a lot of this – it is unacceptable not to engage directly with the most agile forward-thinking suppliers that are in the SME market today and are not among the suppliers we have been using.

So things have changed and we haven’t is what has happened.

A lot of these things could have been explained away five or 10 years ago but I
don’t think they could have been explained away adequately in the last three years, probably at least.

So how does G-cloud help in all of this? I think G-Cloud is about a fundamental change in the way Government and I believe the public sector too does technology. It is not just about cloud computing. It requires a complete change of approach. A cultural change of approach. A change in the way we look at security; a change in the way we look at service management and above all change in the way we procure services we use. So cloud will be cheaper…

Using cloud solutions that have already been secured and accredited
will be cheaper almost always.  We will only pay for what we use. People will only use DR when they use DR.

Over time through the G-Cloud programme, products will be pre-procured and security accredited. They won’t be accredited by the programme itself but by the first users of this, so we don’t have to replicate that work time and time again because that is what a lot of our staff are doing. A lot of the tens of thousands of staff that are working on the client side of government and public sector IT are procuring the same things, accrediting the same things from a security perspective; and it is a complete and utter waste of time and huge money.

You’ll know from the outset the cost of the product and most importantly we will know the cost of exit. Nuclear power looked really cheap all the time somebody chose to ignore de-commissioning of nuclear power stations, and then it became a very different model.

Contracts will be under a year I believe… I don’t believe aggregated demand and long-term contracts bring value for money. Quite the reverse…  why anybody would offer somebody a contract  which meant we could carry on paying them money almost regardless of the service we got, with no meaningful incentive for better performance? That can all change. When we have the ability, through understanding exit and understanding the cost and performance of things, to move out of one product and into another in short order, I guarantee that the price will come down …

… Costs [of streaming] used to be outrageous and the quality was poor until the BBC put together standards on the way it’s done and the BBC can now buy services on daily basis and the cost has dropped by an order of magnitude and the quality is much improved. They know –  the service providers – that tomorrow somebody can go somewhere else. If Marks and Spencer does not provide clothes at the right price and quality people will go down the road and buy somewhere else. It is that, that drives quality and price, not a long-term contract.

[When people see that] products have clear pricing, clear details of what they do, clear details of what exiting that product is going to be like, and it says: ‘Andy Nelson at the Ministry of Justice has used this product over the last year and this is what he says about of it’, that starts to transform what happens on price and quality far and away above anything that any SLA can or ever has given us. So we won’t get ourselves locked in in any way. Not from a commercial or technical perspective. Many products nowadays are designed to get their little feelers locked into every part of your system….

Our staff over time will become skilled system integrators. That’s what will happen in the short term…

We will see people setting up services in minutes instead of years. How?

We have Foundation Delivery Partners – they are departments, local authorities, organisations that come together with others that are looking
to buy cloud products. The FDPs work with a bunch of people from the government procurement service who handle the commercial aspects; they work with staff from CESG to work out security implications and product by product they have begun to break down what it is they need to do, so subsequently that work does not need to be redone.

Over time we will have a model that describes lots of different circumstances of use of products so we will know – the senior risk information officer – will know what has been covered off already and will see the accreditation that has gone on and will know they will only have to fine tune that for the last bit of use in their department. That will dramatically reduce over time the amount of effort that goes into that security.

Large-scale IL3 email is coming soon; and large-scale IL3 collaboration
opportunities…

[The Government Digital Service is off] corporate systems to a solution that is IL0 and IL1 and 2, with IL3 on a few machines to one side. [There are] savings of 82% over adopting the corporate systems. People don’t wait 10 minutes for machines to boot up and shut down.

We don’t have all the answers… Great quality IT centres around an iterative process that gets stuff out and we learn quickly from what users do with it and is improved and improved.  I don’t recall a press release saying Google will update its apps products on 8 May next year. What happens is you notice a little banner saying we have done it differently: do you want to try it? How many times have you seen improvements on eBay and just experienced them as they arrived?

They are intuitive and what people want and they just happen… [Published in last few minutes] is a new cloud framework that is designed specifically to get SMEs across the threshold and working directly with departments, agencies, local authorities, police and health. There is a user guide. It is a key product.

We will watch very carefully how this gets used, and the impact on SMEs. I don’t anticipate any large organisations having difficulty with this. But the target is to get us engaged with SMEs.

We will watch what their problems are and we will correct that as we go. We are already working on the second version of this which will be due out, hopefully, early in the new year. With brilliant support from John Collington in the Government Procurement Service we will be adding new suppliers on a month by month basis which will dramatically change things and really gives us the flexibility we need.

The second manifestation of how serious we are in the cloud is a document to be published tomorrow which will give a very serious indication of intent around the use of cloud…”

Chris Chant’s talk – audio file Government Digital Service