Steve Lamey is one of government IT's most recent recruits from the private sector, joining the likes of Richard Granger at the NHS and head of egovernment Ian Watmore.

Formerly chief information officer (CIO) at gas giant BG Group, Lamey took up the post of CIO at the Inland Revenue in October, replacing the outgoing director of business services John Yard.

He joins the Revenue at an interesting time. The department has recently broken new ground, replacing its incumbent supplier EDS with a consortium led by Capgemini, winner of the £3bn Aspire deal in December 2003.

The handover between the two was completed on schedule in June, and is being hailed as a model for other government bodies coming to the end of long-term contracts and examining the feasibility of replacing their established supplier.

At the same time as bedding in the new arrangements created under Aspire, Lamey will preside over the proposed merger of the old department with HM Customs & Excise (HMCE) to create HM Revenue & Customs (HMRC).

The bill creating the new department is currently in committee in the House of Commons, and is likely to be law by April. All the priority services needed by the new HMRC from the start will be ready to go when required, says Lamey.

'We've started with the day one activities - integrating mail systems, providing common data stores, trying to integrate into a single place of reference for citizens, and so on,' he says. 'There's been no finance available so we've taken a very pragmatic view about what the essentials will be on day one and what added value can we bring to those components.'

The merger will be used as an opportunity to rethink the role of the IT department for the new organisation, and the bulk of Lamey's time since October has been spent establishing what the combination of the two IT departments means, and what that new structure will be able to do for HMRC.

There are three major challenges, Lamey says:

* to establish the overall strategic direction of the organisation;

* to improve the success of mission-critical programmes;

* to integrate the contractual basis of the two departments' existing suppliers.

'This is about creating an organisation that has a set of objective values and strategies that support what the new HMRC is going to be about,' says Lamey. 'That is the biggest challenge on day one and that is what we are working towards.

'Both organisations have been traditional technology-focused IT departments, and changing that to a customer-focused approach, driving business change, was not necessarily a priority in the past.

'The idea was to run the boxes and that's it, not give an insight into where the future might be or where we could go in support of business opportunities.'

Under Lamey, the focus will shift from running systems to assessing business opportunities and how to support them. 'That is what drives us, both in terms of our organisational model and also the roles we will play in the new HMRC,' he says.

To improve the performance of key programmes, Lamey plans to augment the Gateway review system, sponsored by the Office of Government Commerce (OGC), with an internal monitoring structure.

The OGC component will be integrated into the internal process so both form part of the same procedure rather than duplicate each other, says Lamey.

'Gateways provide high-level views that are very useful from an audit perspective,' he says.'But internally, running programmes of the size and complexity that we do, we need a more granular level of programme governance.

'We believe the rigour that will give us in making sure projects all go through the right stages of development will give us great confidence of delivery.'

As well as the practicalities of merging the two departments' IT services, the contractual overlap between the two main suppliers needs to be ironed out. Fujitsu is prime contractor for HMCE, and a sub-contractor on the Aspire deal at the Revenue. However, this offers little benefit beyond the cordial relationship with Aspire key player Capgemini.

In contract terms, the deals couldn't be more different. Fujitsu's HMCE contract is private finance initiative-based, whereas Aspire is based on service level agreements and consumption.

Ideally the two contracts would be standardised, creating a common contractual backdrop for the common technical environment the merged department is to establish. How far that will be possible is not yet clear.

'The contracts were done from two entirely different approaches so we might not even manage to get there, it might be too difficult,' says Lamey. 'Though they are both long-term contracts, we might have to live with both and just ensure that the services provided are much more common.'

Lamey acknowledges his move to the government sector has been quite a culture shock. 'It's quite a challenge - but I knew it would be,' he says.

He describes the chain of command as a 'matrix' and has been working on re-organising his team to clarify who is responsible for what.

'I have simplified the whole organisation into five building blocks, and I have five people who will be accountable for them. That is an immediate improvement,' he says. 'The main difference with the private sector is that there is much less clarity about what a government organisation is trying to achieve.

'There are all sorts of conflicting stakeholders - citizens, ministers, departments, outsourcers - and a key part of my role is to get all of them facing in the same direction.'

With salaries a fraction of those in the private sector, the lure of government IT is the size of the challenge, he says.

'There aren't many of the big jobs to re-engineer a major business left in the private sector,' he says. 'The size of the challenge and the opportunity to work in a different environment balances out the fact that the pay isn't the same.

'My biggest fear was that I was coming into a world full of people just waiting to be told what to do, but the energy I'm getting back from people here is really encouraging.'