With taxpayers and patients now regarded as customers, clients or even stakeholders, it is easy to see how the government has looked to the private sector to revolutionise the way in which it operates, both locally and centrally. There have been many factors for this, from the pushing of local government to become e-enabled, to meeting the efficiency savings called for in the Gershon Review.
Government departments have worked closely with the private sector on public private partnerships and privately financed schemes. ‘PFI strategy had two things going for it as far as the government was concerned – private-sector finance and transferring risk,’ according to Andy Dunn, a managing partner at Atos Consulting.
‘The government thought it could derisk things. Although the supplier takes on some risk, accountability for delivery remains with the government, so it doesn’t transfer – PFI caused bad thinking.’
And the financial model within which the public sector operates – through annual budgets that departments feel they have to spend, often from badly formed figures – creates a great deal of pressure when combined with private sector-style performance target setting.
So what does the public sector do? It copies the private sector and makes great investment in IT to drive greater performance, while meeting its stringent budgetary requirements. Unfortunately, where executives – most notably finance directors – have gone through a round of poor IT choices, they seem to have come through the other side a lot more choosy and frugal about technology. The public sector, however, has yet to reach that point.
The number of problematic, costly or downright failed IT projects in the public sector is long: from national insurance (NIRS2) to tax credits, to the Passport Agency and even air traffic control systems. Those and more (see below) have not delivered on what was promised originally.
While it is easier for private-sector businesses to gloss over IT problems, especially in companies that are not listed, their lack of scale and complexity in comparison with overarching public-sector contracts has seen fewer major problems in recent times, and since they are not costly political hot potatoes, they are also less likely to grab unwanted headlines. ‘The UK government is very ambitious,’ says KPMG government advisory partner Keith Bannister. ‘It relies heavily on IT to drive change. The only way to carry out a lot of the things they’re talking about brings complexity to connect central and local government.’
Yet, for the IT firms, the lure is so appealing that even when faced with handling massive projects, the kind that are most at risk of failure, the biggest companies still tender. ‘The place to be is the UK: it’s exciting as many of these kind of projects are happening here for the first time, but requirements change for public-sector contracts,’ says Bannister. ‘If you’re midway through a project, you won’t have the requirements for a time, and sometimes you have to revisit to see if it’s deliverable.’
The biggest concern for IT implementation companies is taking over the reins of a struggling IT system. Capgemini, with its successful bid to operate the Inland Revenue’s IT in place of EDS, was a prime example of this. After problems with online tax filing and tax credits, the Revenue’s IT contract, worth £5bn, was handed to Capgemini. Complicating matters was the plan to merge the Inland Revenue and Customs & Excise to create HM Revenue & Customs (HMRC). On top of this, Capgemini would also be dealing with HMRC’s new chief information officer, Steve Lamey. However, his appointment proved that private-sector experience of big projects and risk could work in the public sector.
Lamey worked to set Capgemini a clear set of service-level agreements and switched to ‘firefighting’ mode to clear up the databases of the merged department. The strategy meets the basics of what Bannister classes as ‘good risk management’.
‘These programmes require governance procedures in place - linking objectives to outcomes and ensuring transparency about what’s happening with a project. And the key is knowing how a department’s portfolio of programmes is working together.’
Bannister says public-sector clients following the focus from the private sector can understand more clearly what business process changes come about from implementing new IT, especially after so many failures. ‘Our clients want to deliver services more efficiently. It’s not just about IT any more: it’s about what the business change is, and the cultural outcome. We have to keep sight of that,’ says Bannister. ‘A lot of lessons have been learned from failing projects – so we now have the transformational government white paper [published in November 2005], which is about professionalising IT, and the gateway programme. I’m sure the number of failed programmes is decreasing.’
Dunn agrees that outsourcing the whole process rather than just the IT implementation has improved the interface between government and supplier because, although the government transfers the risk, the vendor is more in control. ‘If you outsource it all it’s much more simple to measure and monitor,’ says Dunn.
Despite concerns, there have been some signs that the government is looking to change its approach to IT as it attempts to avoid the problems of the recent past. Transformational government points to a more professional approach to IT. According to the white paper, ‘This requires coherent, joined-up leadership and governance, portfolio management of the technology programmes, development of IT professionalism and skills, strengthening of the controls and support to ensure reliable project delivery, improvements in supplier management, and a systematic focus on innovation.’
Other influential sources have put forward plans to turn around failing gover nment IT systems. The National Audit Office (NAO) has urged government to avoid IT project delays by not having many ongoing key projects under way at any one time, as that could put too much pressure on a potential new IT supplier – another example of putting risk management to the fore of government IT.
Conservative MP for Putney Justine Greening has her own take on risk and IT as a qualified chartered accountant. ‘Rather than leave the risk with departments to implement IT, the risk should start with those formalising legislation. You’d end up with a more rigorous view of not only what the policy should deliver, but the pragmatic question of whether it can actually happen with the plan you have.’
But with the NAO set to report on successful public-sector technology programmes to outline lessons for the future, there will, hopefully, be less use for firefighting IT consultants.
POLITICS AND IT DON'T MIX – NOT JUST YET
While business leaders bemoan the changes that government makes to legislation,
which often appear arbitrary and without thought for their effect on industry,
the public sector feels the effect of this on an even greater scale. With
politicians looking to move up the ladder, and governments desperate to hang on
to power, civil servants often face the biggest operational change.
The list of failed public-sector projects is a long and inglorious one. For example, the £200mnational insurance system, NIRS 2, struggled to pay pensioners after failing to cope with legislative changes. But it did highlight that the blame for such a project is never that clear cut.
While IT supplier Accenture took the headlines, the National Audit Office (NAO) warned that politics and IT projects really don’t mix well. ‘Legislative timetables should be set so that departments can implement changes while complying with other legal requirements,’ the NAO said in 2001.This problem has not gone away.
Conservative MP Justine Greening, while not coming out in defence of IT consultants and software companies that have taken stick for failed large-scale projects, says that IT has been ‘badly served’ by parliament. ‘Most government policies – including those in the Department for Work and Pensions where I’m on the select committee – are critically delivered by an IT system of some sort, but the legislation we’re presented with in parliament will not include the IT proposals in any detail whatsoever.
‘Fifty years ago, filing paperwork was enough. Now, understanding whether the IT will deliver is very important.’ Unfortunately, Greening does not foresee a change in this attitude until more business-focused individuals sit on parliament’s green benches. ‘We don’t see the nuts and bolts presented. As you get more accountants in parliament we will ask: “How can we sign off on a policy proposal when you haven’t shown us the IT details? How do we know it’s value for money?”’
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