by Martin Rice

Government IT: why getting it right matters

Jan 26, 2010
GovernmentIT LeadershipIT Strategy

As Britain looks forward to the advent of super-fast broadband internet, low-carbon technology and radical new opportunities for commercial growth, government IT is of absolute importance to anyone who hopes to share in the success of UK plc. Despite the UK spending more per capita on IT than the US, Germany, France and several other comparable nations, e-government continues to be blighted by the costly failure of new projects and low take-up of existing services – despite a high level of availability. Even the much hailed DVLA system only managed 30 per cent take-up. While there is no definite figure for how much government spends on IT, current estimates put the figure somewhere between £16bn and £20bn, with accountancy firm Deloitte categorising this spending as “heavy investment, not delivering results”. This is absolutely an issue of national importance which affects CIOs and their businesses in every sector. It is not just the delivery of public services that is at risk if the status quo continues. When we survey the UK technology landscape for those innovative ideas which could grow into the next Google or SAP, one of the dominating features is the obstacles facing smaller enterprises offering alternatives and insightful thinking.

The digital landfill The current approach to IT is to custom-build systems and incrementally change them as required. As the degree of change increases over time, so does the complexity of the system – driving up the cost of change exponentially. Eventually a point is reached where starting afresh is cheaper than changing the existing system – and the cycle begins again. Much of the government’s spending is simply keeping the lights on and keeping the basic infrastructure working. In the same way as many large corporations, government has become beholden to a few large suppliers, with little alternative to paying escalating support costs to keep business-critical systems working. More worryingly, the current approach of government and many in the private sector to legacy systems means there is a major risk that if a system fails they have no means of quickly replacing it.

The government straitjacket Because government has become reliant on a small, dominant group of suppliers – to an extent that a group of academics from UCL and LSE, led by Professor Patrick Dunleavy, have warned government-IT industry relations have become “dangerously unbalanced” – there is a significant vested interest in protecting the status quo. This vested interest, often masquerading as best practice, is a straitjacket on government. However, the wider implication is a chilling effect on the UK’s entire IT industry.

In the current climate, innovation is not brought to the table by suppliers who are afraid that such a thing would significantly threaten their revenue streams, particularly in an environment where the mantra is to get ‘on contract’ and profit from change requests. Equally, civil servants who are fighting for change are all too often strangled by red tape. There is an alternative: smaller projects, embracing innovation and lowering the barriers to procurement for small business. Address these issues and a step-change is possible, but the current approach to innovation is failing badly.

Private-sector lessons It is often claimed that government IT is uniquely complex with a vast customer base facing insurmountable obstacles to service delivery that the private sector cannot comprehend. Yet in a climate where data accuracy and security is of paramount importance, and when the barriers faced by commercial competitors are ever lowering, it is arguable that the private sector has a far tougher time than the government. This attitude that the private sector is somehow less sophisticated or has an easier task is one that is clearly quite perverse. One only needs to look at the fact that the private sector rarely announces a new service without already knowing it works, whereas government rarely prototypes before legislating. The Dutch government has already recognised this issue and now new legislation must be accompanied by a statement of technological feasibility. Industry CIOs are also taking a more proactive approach to the long-term questions facing IT systems. From building open standards into contracts, preventing lock-in, to vigorously enforcing service level agreements (SLAs), the private sector has demonstrated that it is possible to have a forward-thinking IT strategy that delivers new services while maintaining continued performance. In government, large IT-enabled programmes have too often gone wrong because experienced people who understand both the applications and the technology have been lost, with the domain knowledge of entire systems handed over to outsourcers or lost through retirement. This has weakened the government’s ability to manage its suppliers and scope projects significantly. Many CIOs have recognised the risk that lost domain expertise and intellectual property outsourcing poses and there has been a clear shift to ‘in-source’ critical systems, particularly where the initial cost savings have evaporated into much higher maintenance and support costs, or fallen into a mire of change requests. Unfortunately, government is lagging behind in recognising this as a major issue and still lacks a coherent strategy on where outsourcing can be used to deliver cost savings and where it actually makes the problem worse. While CIOs in all organisations, whether commercial or public, have been challenged to deliver year-on-year cost savings and to do more for less, they have not seen the high-cost, low-uptake and frequent failure that has beset the public sector.

The role of industry bodies in this respect must be questioned. All too often, the successes of innovation and change found in the private sector are confined to the edges of discussion, restricted to low-level work streams and passed over in high-level- communications. Equally, the government is far too closed in looking for alternatives, both in terms of the pool of vendors it is engaged with but also with reference to CIO expertise. A vibrant engagement between government and CIOs from industry would not only share expertise but offer a platform for the UK technology sector to flourish by providing a mechanism to access the innovation adopted across the economy.

Step-change thinking The underlying premise of IT should be to make change a fluid, low-risk and low-cost process. A system which can be evolved at low risk and low cost will not end up in the digital landfill – while those which are brittle and difficult to change will. The world is a constantly changing environment and only those organisations which can accommodate the pace of change will succeed. The same is true of IT systems. For government to deliver world-class services in an emerging world driven by cloud computing, open source software and agile development, there must be a step-change from the current approach. Squeezed budgets will drive incremental change, leading to existing assets being sweated to the maximum and the supply chain being squeezed. Rarely does such an approach deliver radical thinking or significant innovations, while supply chain squeeze can force smaller businesses out of the market altogether. Despite the recessionary pressure on IT departments across the world we have seen little by way of innovation. In search of relatively modest savings, inevitably supply chains have been squeezed, on-going projects have been reduced in scope and some have been cancelled altogether. Targets need to be set much higher than they currently are – and I would argue in favour of aiming to reduce the cost of government IT by in excess of 50 per cent. The government does not have the luxury of starting afresh and must tackle a hardware and software infrastructure that has grown in size and complexity for decades. However, once the boundaries of discussion are set, step-change innovations can be sought out – and once they are found, the processes must be in place to adopt them and overcome the inevitable vested interests and risk-adverse mindsets that are commonplace in both business and government. Where can these ideas be found? By asking those with the most to gain, innovation can be brought forward at a much faster pace – necessity does breed invention. The UK has bright, lateral and resourceful innovators who are currently frozen out by incumbent prime contractor suppliers. There is a need to seek out this insight, the lateral thinking around alternative approaches, as these are the types of innovation that can transform services and significantly cut costs – the step-change visions.

The innovation game Government, as the largest procurer of IT in the UK and with responsibility for some of the biggest civilian IT projects in the world, is uniquely able to drive the market and support the development of innovative businesses and technology. Many point to state-sponsored programmes like Concorde or the Human Genome Project as examples of the impact government can have on the wider economy by pursuing innovation. Indeed, arguably the greatest state-led venture, space travel, would have been significantly delayed if left to the market. Yet consider the transformation of communications and business enabled by satellites, and there is no doubt the investment was worthwhile. Ultimately, the profitability of the status quo – a problem worsened by the emergence of a few dominant suppliers, particularly in the UK – has all but shut down supplier side innovation. The drivers from purchasers, particularly government, have focussed on keeping the lights on and incremental savings. Few have been bold enough to lay their careers on the line to champion innovation against the vested interests and risk aversion they face at every turn. Those who are willing to do so may well emerge as the CIOs who change the very nature of government, business and the United Kingdom.

About the author Martin Rice is CEO of software company Erudine –