Coalition government must handle IT with care to prevent failures

Nick Cleggis unlikely to put IT at the top of his list of policy issues to argue about with David Cameron. Indeed on questions like so-called ‘big brother’ databases, Cameron’s deputy is more likely to warmly endorse his new boss’s oft-stated position.  Of course we don’t yet know the new government’s precise policies on every aspect of public sector IT. But we can surely take recent Conservative Party pronouncements as a useful guide for the shape of things to come – and come soon.

Many of the pre-election proposals are not just sound and sensible but unarguable, at least to those in the know about public sector IT. They include things like: ‘We will set common standards for data security’ and ‘We will carry out a transformational redesign of NPfIT’. But others will need considerable care and caution if their intended consequences aren’t to be swamped by unintended ones. To see what I mean, let’s look at three of those proposals:

(1)    ‘We will drive better procurement and management of ICT throughout Whitehall.’

There is emphatically scope for improvementhere, but how to achieve it? Government procurement must of course be seen to deliver best value for money, and stand external scrutiny – by the Audit Commission, Office of Budget Responsibility etc – and quite right too. But IT procurement needs to be quicker, and more focused on value. Yes, IT is complex, but there is no reason it should take over a year to buy a £5m IT system; it wastes time and money and adds little other than cost to everyone concerned. The government has a plethora of ‘frameworks’; it should start using them – this would halve time and increase quality. Finally – the cheapest bid isn’t necessarily the best value. We need to start looking at outputs and benefits. And suppliers need to be prepared to link their payments to them.

Every big IT procurement involves a balance of confrontation and collaboration, but to win true value from public sector IT bids I’d recommend a big shift from the former to the latter, with bidders given much freer access to the departmental ‘business people’ (as opposed to IT specialists) whose needs the new procurement aims to satisfy. There is also a need to increase and spread professionalism in IT procurement across Whitehall, to bring all departments up to the standards of the best-in-class.

Even more important in my view is the need to shift from input-based pricing (number of person-hours etc) to outcome-based pricing. This means paying the successful bidder for delivery against the benefits promised – staffing costs saved or productivity gained or (for instance) time to resolve pension tax or benefits enquiries from the public cut. This is emphatically not the same thing as output-based pricing, based on number of users, applications, lines of code etc. It is payment by results, and by the results that really matter. It is excellent that the Conservatives are keen on this approach, of paying for results or paying for business benefits achieved.

(2)    ‘We will immediately establish a presumption that ICT projects should not exceed £100 million in total value.’

This sounds like common sense, especially in view of much-publicised public sector IT disasters. Unfortunately, however, it is going to be a difficult idea to put into practice. To take an example: if you are going to upgrade and run 125,000 desktops that are nearing the end of their useful life in a big department, that programme simply won’t be achieved within the £100 million limit. True, you could split the programme into bite-sized chunks – hardware replacement, software licences, systems integration, staff retraining etc – but let’s face it, that is precisely the kind of Sir Humphrey fiddle that our new government will be watching out for, and will not tolerate. And fitting the separate chunks together will probably involve additional integration activity – and costs. IT systems in government handle millions of complex transactions for millions of people daily. Sometimes they will cost a lot of money.

Clearly all big ICT projects will need scrutiny, and the bigger the project the closer the scrutiny. That is surely a principle we can all applaud. But I seriously doubt whether an artificial cut-off point can work in the world of real-life government departments facing big challenges that can only be addressed using big IT.

(3)    ‘We will impose a moratorium on existing and upcoming procurements, and review big databases.’

A moratorium is understandable in an era of drastically tightening purse-strings. But there is another side to the picture. All government departments are striving to ‘do more for less’ – less budget, less headcount, less office space. But the almost universal experience from the public sector and from our best companies, large and small, across all parts of the private sector is that the solution to such a challenge is critically dependent on IT – new investment in IT and in the right IT. So if a moratorium means a pause for thought – hard thought and careful scrutiny – then it will prove eminently sensible. But an overly-dogmatic total ban would, I believe, be more akin to cutting off the water supply to a parched land. Sure, it will save money in the short term, but could end up costing a ton of money in the medium and longer term as systems, processes and productivity levels become fossilised in their present-day state. And let’s be realistic; if we are going to make really significant cuts to public spending and retain an acceptable level of service; we will need more and better IT not less.

In reviewing big databases, let’s not forget that without them there would be no tax revenue to HMG and no benefit payouts to citizens. The promised review is nonetheless an excellent idea. Indeed, in present national circumstances it is inevitable. But  there is a balance: we need databases to deliver the basic functions of the state – tax, welfare, public security and protecting the vulnerable. And I seriously doubt government knows as much about you as your local supermarket –  where you live, your spending habits, lifestyle choices – even your favourite wine. Let’s keep some perspective.

To sum up, I believe that post-election we have a new spirit of realism in public sector IT, and a new opportunity to evaluate the money spent on it against the benefits delivered. And closer scrutiny of costs versus benefits is an idea that all sensible people must surely support. But let’s also remember just how central a role IT plays in every aspect of our lives today, and let’s implement our new realism and cost-consciousness with care and caution.

The focus must be more radical than simply cutting the cost of IT; this will not save anything like enough. Rather we must use technology radically to reduce the costs of operations by system re-design. Government must incentivise this by paying for results, business benefits achieved and not otherwise.