Monday, July 09, 2012
Another Government IT disaster
Today's Telegraph highlights a disastrous attempt by Government civil servants to save money which actually cost them more. The incident highlights once more the inability of the public sector to handle ICT contracts, but also the perils and pitfalls behind a philosophy that suggests that joint working and shared services always saves money. It is not necessarily so.
The paper says that five departments including the Departments for Work and Pensions, Environment, Food and Rural Affairs and Transport, as well as the Ministry of Justice signed up to share ‘back office’ functions like human resources and finance.
The new way of working was meant to cost £900million but ran £500million over budget, and eventually cost £1.4billion. They were meant to have saved £159million by the end of 2010/11 from the new arrangement, but only one department “broke even”, and two departments reported net costs of £255million.
The Commons Public Accounts Committee found that departments focused too much on bringing in new computers, rather than making savings from their existing operations. The paper adds that the expensive software systems used by the departments were ill-suited to the task and added to the complexity and cost. They says that the Cabinet Office also failed to tear down barriers between individual departments to encourage better cooperation.
Yet another object lesson from Central Government of how not to do it.
The paper says that five departments including the Departments for Work and Pensions, Environment, Food and Rural Affairs and Transport, as well as the Ministry of Justice signed up to share ‘back office’ functions like human resources and finance.
The new way of working was meant to cost £900million but ran £500million over budget, and eventually cost £1.4billion. They were meant to have saved £159million by the end of 2010/11 from the new arrangement, but only one department “broke even”, and two departments reported net costs of £255million.
The Commons Public Accounts Committee found that departments focused too much on bringing in new computers, rather than making savings from their existing operations. The paper adds that the expensive software systems used by the departments were ill-suited to the task and added to the complexity and cost. They says that the Cabinet Office also failed to tear down barriers between individual departments to encourage better cooperation.
Yet another object lesson from Central Government of how not to do it.
Comments:
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imho, government departments ought to be issued 'licences' to have computers. The DVLA would not get one, nor Student Finance England etc.
Local government is no better. I seem to recall Swansea Council having very similar problems.
# posted by 
: 9:20 AM
: 9:20 AM
A lot of this goes back to Heseltine abolishing central professional training in the civil service, one of the good things brought in by the Callaghan government. New Blue Labour continued the unthinking privatisation of government IT.
It projects usually go over budget due to it starting with a deficient functional specification. Costs escalate adapting applications to do requirements not known. It's really a measure of not knowing what the organisation does.
Note..Shambo is correct. There were two councils of similar size who did a massive IT project in the period 1999-2004. RCT and Swansea. It related to establishment of One4All centre upgrades, and integrating core legacy systems. RCT (Plaid) did it internally and was under budget. Swansea (LibDem) privatised their IT department to save money and out-sourced to CapGemini. The Swansea project cost millions, went way over budget and the system was eventually binned.
Note..Shambo is correct. There were two councils of similar size who did a massive IT project in the period 1999-2004. RCT and Swansea. It related to establishment of One4All centre upgrades, and integrating core legacy systems. RCT (Plaid) did it internally and was under budget. Swansea (LibDem) privatised their IT department to save money and out-sourced to CapGemini. The Swansea project cost millions, went way over budget and the system was eventually binned.
# posted by : 6:51 PM
: 6:51 PM
Actually that is not correct. The Swansea IT project was neither abandoned nor did it go over budget. Apart from the payroll, which proved technically difficult, it was delivered within the budget set for it by the previous Labour Administration. Where it did not deliver was the benefits projected for it. These proved unrealistic but as they had never been budgetted for then there was not adverse impact on the Council's finances.
Actually, Swansea signed an £83million deal with CapGemini in December 2005. Something which was already implemented in RCT, internally, by this date, at one tenth of the cost. One year later, Swansea cancelled the outsourcing project as the first phase of work (£64million) of work suggested it would not make anywhere near the original forecast savings. Although the outsourcing project was cancelled, Swansea council still has to pay a total of £9.1million as a cancellation fee during 2013-2016. This is to buy out of the failed contract, for nothing in return. Your comment 'done apart from payroll' proves the point. The whole concept of an e-integration scheme is to embed manpower planning into the system. That's the whole concept. It failed due to lack of correct and encompassing functional specification. A road to ruin when outsourcing IT projects.
# posted by : 12:33 PM
: 12:33 PM
Completely untrue. the contract was not cancelled but remains in situ today as part of a ten year deal. Manpower was embedded into it which is why the cost is put at £83m - it includes the cost of manpower transferred from elsewhere in the authority to the project. Phase two however was not proceeded with as the figures did not add up and the benefits could not be quantified. That was a prudent decision which reinforces the point you and I are both making, except in this case the council learnt from its experience with phase one. The systems installed as part of the contract are fully functioning by the way have improved council efficiency and are clear benefits of the extra expenditure of around £4m a year over 10 years.
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