Going beyond the headline savings
Institute for Government ICT report says cost focus must not come at the expense of innovation or expenditure that releases savings. David Bicknell writes
Government ICT in the last week has been like waiting for a London bus, with three developments following soon after each other: an Institute for Government critique of the government’s ICT strategy; an announcement of £70m of savings clawed back from Microsoft and SAP; and ahead of a meeting with 20 key suppliers, a reiteration that cross-Whitehall spending controls will be a permanent way of life.
The Institute for Government (IfG) report, ‘System upgrade? the first year of the government’s ICT Strategy’, set out to assess how effectively the strategy is being implemented, to identify ways to accelerate the implementation of the strategy and maximise its impact on ICT effectiveness, and to learn what works when attempting to drive change across government.
As the backdrop to the meeting with its key suppliers, which marks the next phase of its strategic supplier programme, the government re-emphasised its desire to make financial savings and to ensure that it operates in a more business-like fashion.
To help address the deficit and save the taxpayer money, the government introduced temporary controls on spending in areas including advertising and marketing spend, ICT, recruitment, property and consultancy. The result, it says, was £3.75bn of cash savings in 2010-11, and efficiency savings for 2011-12 which it expects will top £5bn.
The government points out that by creating an overall picture of where the money is going, the controls allow it to act strategically in a way it never could before.
Strict controls on ICT expenditure not only reduce costs, but also reveal the software, hardware and services that departments are buying and whether there is a competitive mix of suppliers and software standards across government.
As Cabinet Office minister Francis Maude points out, the government is “relentlessly driving efficiency savings.” Indeed Maude wants Whitehall procurement to match – or even exceed – the private sector in its financial and business ruthlessness.
“I want Whitehall procurement to become as sharp as the best businesses. I will tell companies that we won’t tolerate poor performance and that to work with us you will have to offer the best value for money,” said Maude in advance of the supplier meeting.
The IfG, though, argues that while efficiency savings are welcome, assuming they materialise, only seeing government IT as a cost to be managed can be dangerous.
Its report argues that although most progress made by the government IT community over the last year has been in those areas where savings are easily quantified – specifically in contract renegotiations – a focus on cost should not come at the expense of innovation or expenditure that actually releases savings elsewhere.
Using IT to save public servants and citizens time and money in government transactions – in taxes, benefits, health services and so on – is essential if the coalition is to have any hope of meeting its deficit reduction targets without major adverse impacts on service standards.
It also argues that solutions will not work if they are simply conceived by policymakers and then lobbed over the fence for IT professionals to deliver. As it points out both now, and in its initial report a year ago, the IfG has frequently advocated an agile approach to managing projects: one where policymakers, operational managers, IT staff and – most critically – service users work together throughout the development process.
That is because “circumstances, priorities and technologies change frequently”, so the best option to adopt is a modular approach that delivers some functionality quickly and then reassesses the next priority. This agile approach is now backed by the government, to the extent that it has adopted agile for arguably its most critical project, universal credit, and said it wants 50% of government projects to use agile principles by April 2013.
The IfG suggests that such a goal looks ambitious, despite enthusiasm in parts of the IT profession. Arguably, a tendency to develop new systems has not yet led to more agile working. Indeed, a relatively slow uptake of agile approaches might be due to the relationship between IT professionals and senior civil service leaders.
According to Sir Ian Magee, a senior fellow at the IfG and co-author of the System upgrade? report, agile requires real changes in departmental procurement, policy development and operational management processes, and it is not clear that government IT leaders feel sufficiently confident or supported to challenge departmental board leaders and ministers to do things differently.
In Magee’s experience, “many top level civil servants express discomfort about challenging IT leaders to deliver better, more responsive services, in part due to a shortage of knowledge but also due to a distinct shortage of information on chief information officer (CIO) performance. In a FTSE 100 company, it would be remarkable if the chief executive failed to have a firm grip on the organisation’s technological opportunities.
Permanent secretaries might perhaps look to their new cadre of non-executive directors with relevant experience to help them develop effective metrics for measuring performance. They might also champion an agile approach themselves, rather than leaving it to CIOs to influence intra and cross-departmental behaviour.
The IfG argues that there have been some “commendable early wins” in the ICT strategy’s first year, which ICT leaders should take forwards in their implementation plans. A key factor will be how to incentivise progress, and that comes down to choosing the right metrics. The government, the IfG says, should be cautious about using metrics without reflecting on whether they rigorously represent progress.
Similarly, savings must be open to rigorous scrutiny as to whether they represent real reductions in cost for the same value, or whether they are simply deferred expenditure. CIOs should also question whether they are genuinely improving the ways that they are working in areas such as agile, or whether they are just adding the agile label as a tick in the box.
In short, says the IfG, government needs to consider how it can develop a more enabling centre. So far, it has acted to provide an effective check on the system. Now the approvals process should be able to provide expertise and support to departments in developing cost-effective alternatives, rather than simply being a veto point. ICT leaders should consider whether there are wider things that the centre could do to be supportive, for example, providing benchmarking or offering best practice input into departments’ plans.
With these suggestions in mind, it will be intriguing to know what response the government gets from its 20 key suppliers when they meet. For once, you suspect it won’t be the equivalent of recent EU and G20 summits: lots of bonhomie and no action.
Given Maude’s comments on sharpening Whitehall procurement and warnings that the government should be viewed as one customer, not disparate buying departments – though words don’t always translate into actions – it should be a lively affair.
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