Profile: custom made

Broken chiller rooms and unexploded bombs might seem like quite unlikely explanations for the website crashes that thwarted many attempts to file self-assessment forms on 31 January.

But Steve Lamey, chief information officer at the combined Inland Revenue and Customs & Excise department, is sticking to the excuses. ‘We don’t expect [computer server] chillers to break and bring down networks,’ he says. ‘But we’re looking to get those things right and I already know that we’ll be better next time. People want our systems to be more available and robust – they don’t want a repeat of 31 January.’

As for ‘unexploded bombs’, they’re Lamey’s euphemism for computer bugs, hidden deep within the systems, that unless uncovered could cause them to fail.

Lamey has good reason to be bullish about the future robustness of the combined department’s IT set-up, given that he’s the man with the onerous task of bringing its systems into the 21st century.

The former IT head of BG Group stepped into the hot seat last October, taking up the reins of what is arguably the most ambitious IT project ever faced by central government. His task is to ensure that Revenue and Customs (between them employing 98,500 staff) have a fully integrated IT system within the next three years, which provides value to its ‘customers’ – essentially every man, woman, child and business in the UK.

‘It’s one of my more interesting challenges,’ Lamey says in his typically understated manner. His first, and easiest, job was to change the IT department’s name to ‘information management solutions’, a moniker he believes is symbolic of its new strategy and culture.

But rather than simply upgrading the back office functions, any changes he makes will have a direct impact on the way Revenue and Customs deals with its customers or ‘clients’.

Gordon Brown estimates that 12,500 jobs will be lost as a result of the merger by March 2008 – around 14% of the combined headcount of Customs (around 23,000) and Inland Revenue (around 68,000). In addition, 2,500 staff will be redeployed to front-line activities. This will save around £300m in staff costs, out of a total annual budget of £4bn.

The physical merger of the two systems is still some way off. For the time being, Lamey is going through a process of due diligence as the IT currently in place across the departments undergoes a series of health checks, ‘to give us an objective view of where we are’ ? a process that still has months to run.

These health checks focus on what Lamey describes as ‘non-sexy, IT stuff’ – and the results have already thrown up some interesting problems including ‘environment inheritance’ issues like crumbling bricks and mortar and the housing around vital servers.

‘Most of the outages we’ve suffered have been things like chillers breaking down in our data centres or power supplies being cut off, and not necessarily because the systems have been falling apart – although we’ve had enough challenges with those anyway.’

Lamey’s team are working closely with consultants Capgemini and Fujitsu, incumbent IT suppliers for the Revenue and Customs, to integrate the systems (see box, top right). But as the recipients of billions of pounds of taxpayers’ money, Lamey is under no illusions as to the level of service demanded of his suppliers – and his own team – if they’re to avoid the glare of the National Audit Office or Public Accounts Committee in the future.

And, given the public sector’s abysmal track record on IT projects, the pressure is on to turn rhetoric into action. The number of catastrophic, costly or just plain embarrassing public sector IT projects has already reached double figures, the most recent of which was the non-performing, £456m, Child Support Agency computer system.

The Revenue alone has suffered online filing crashes, a tax credit system that resulted in big backlogs of applications, and the infamous National Insurance Recording System that single-handedly overpaid tens of millions of pounds in tax rebates.

He remains tight-lipped on the subject of EDS, the previous IT supplier for the Revenue in charge of systems during the tax credits fiasco. But he does admit to being pleased with the progress of the handover to Capgemini since it took place last June.

Lamey is more than aware of the challenges ahead and fully expects to be judged before the department’s three-year plan to transform and integrate IT is completed. ‘I’m expected to have stabilised systems within 12 months, so perhaps I can be blamed for problems from six months’ time,’ he says.

Project governance and integration of the contracts are key. But he also believes that fundamental changes to the way accountants, finance directors and the general public use IT systems to deal with the combined department are just as important.

Lamey is confident that in addition to cost savings for business, his IT plans will result in more accessible processes ? from online filing to submitting VAT returns.

‘Customer interface will be at the heart of the organisation. It’s there at the moment, but isn’t really viewed as the heart. That will be a huge step forward – there will be discrete people within Customs and Revenue working very closely with different customer groups. It’s important how we start that process.’

To start with, the department aims to cut the dodging of direct tax and national insurance contributions by at least £3bn a year from the 2007/08 financial year. It estimated that the amount of VAT lost in 2002/03 due to fraud and error was over £11bn.

With an organisation of such size, one fear is that the combined department will overstep its powers. Lamey says that Revenue and Customs is ‘sensitive’ to the enormous powers of the combined organisation, ‘but that’s the whole point of bringing the two together ? to make it a much more efficient and effective government department’.

So is Lamey the right person to take on a job of such scale, breadth and complexity?

He, for one, believes his private sector experience of huge change management projects will stand him in good stead for his latest challenge.

Lamey spent 22 years at gas giant BOC, including the last two as director of global information and management user services, before joining British Gas in 2000 as CIO and vice-president of information management. It was during his time at BG that Lamey led a global roll-out of SAP, integrating the company’s global IT function and slashing the group’s IT suppliers from 190 to 80. IT research group IDC described the project’s ROI as showing a ‘healthy payback’.

CIO Connect, a forum for CIOs, described him as an ‘excellent appointment’ for Revenue and Customs. ‘He’s done a tremendous job at BG and he has the strength of character to deal with the role,’ said CIO Connect chief executive John Handby.

Lamey’s contract with Revenue and Customs is scheduled to run for four years. Another aspect to his job involves preparing a succession plan if he were to depart, a situation to be clarified further down the line. ‘I have to create a positive environment within the organisation, then hopefully we’ll be able to build from within.’

If Lamey can instil a private sector, customer-facing culture into the Revenue and Customs, then his efforts must surely be viewed as a success.

When three became one
When Steve Lamey stepped into the Revenue and Customs CIO hot seat in October, he assumed far more than a new job title – he also took on one on the biggest IT challenges around.

Inheriting two massive, legacy IT systems, it is Lamey’s job to consolidate the technologies into one combined, efficient system.

The Revenue’s IT is handled by Capgemini, who replaced EDS last July under the £3bn Aspire deal, following a tax credits fiasco that led to disruption in the processing of more than 1.1 million tax credit claims and as much as £500m in overpayments. Customs’ computers, meanwhile, are being managed by Fujitsu in a 10-year outsourcing deal due to expire in 2010.

But these two contracts could be brought together this autumn into a combined deal. ‘By September we’re hoping to sign a memorandum of understanding, based on integrating all those commercial contracts,’ Lamey explained. ‘In essence, our “commercial alignment” is in good order, but there is still some way to go,’ he added.

The Revenue had already begun to review its information security procedures as part of the 10-year Aspire outsourcing contract. Business processes, such as the appointment of subcontractors and staff accreditation programmes, have been tightened at the department during the handover.

Although Lamey is ‘very confident’ about the efforts to make the Revenue’s systems more resilient, he says he’ll be in a better position to comment in six months’ time. But all the signs are good. Capgemini’s work has been of a high quality. ‘January and February were the two highest service-level agreement scores we’ve ever had on our Revenue contract,’ he says.

Fujitsu may be viewed as the smaller player in the Revenue and Customs merger, but it also has a vital part to play. Its £327m IT supplier deal with Customs has run for four years. Capgemini also relies on Fujitsu’s help as a subcontractor on the Aspire contract. ‘There’s a good working relationship,’ says Lamey. ‘It’s a win-win for everybody – in fact it’s a triple win.’

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