18 May 2010
After months of speculation on what a new government would mean for the IT industry, we finally have a new government in place and a statement outlining its policies on many of the most high profile Whitehall programmes.
The Conservatives and their Liberal Democrat partners pleased civil liberties campaigners with a statement released on 11 May that said: “We will implement a full programme of measures to reverse the substantial erosion of civil liberties.”
So it’s goodbye to the ID card scheme, the National Identity Register, the next generation of biometric passports and the Contact Point Database. The government will also adopt a stricter model for retention of data on the DNA database, regulate CCTV, and end storage of internet and email records without good reason.
This announcement might also help to reassure those worried about the fiscal deficit, with the Liberal Democrats estimating before the election that scrapping a number of schemes including ID cards would deliver £3.37bn in cost savings, while Tory adviser Peter Gershon argued that renegotiation of contracts could deliver between £2bn and £4bn in savings.
However, realising these cost savings may not be easy. Geoff Mendelson, partner and head of IT disputes at law firm Nabarro, said, “A straightforward renegotiation is often simply not possible within the terms of a contract and the government departments don’t want to find themselves in breach of these contracts.”
The government may have its hands tied in other respects, too. Mendelson warned that termination would breach a contract unless the government could prove that the supplier was not delivering.
“However, proving this is rarely straightforward,” he said. “If a supplier fails to deliver what it promised it is likely that the government department has also failed to support the supplier on agreed requirements,” he said.
Departments could buy their way out of contracts, but Mendelson said that this should be avoided “as it can be as expensive as paying a supplier to finish the job”.
These difficulties might spur the government to look for cost savings in other areas. Gartner research director Massimiliano Claps said the government is likely to want to shave at least £500m from its IT budget by using technologies such as shared services, increased automation and the G-Cloud.
“The new government’s ICT strategy looks very much like that of the old one in these respects,” he said.
Claps said the new government is also likely to continue Labour’s strategy of saving money through offshoring. The last government signed several big offshoring contracts in the months before the election, including a £600m deal between the Department for Work and Pensions and India’s Tata Consultancy Services for management of its pension scheme.
“In the short term, services such as application development and testing are most likely to be offshored but there is still some resistance to offshoring business services and call centres,” Claps said. “However, this is likely to change over the next 12 to 18 months as people become more used to the idea.”
So far, it seems, the change in government has produced few surprises for the IT industry. Simon Carter, marketing director of Fujitsu, one of the biggest IT suppliers to government, said, “We advised the Conservatives when they were in opposition and so we knew what was coming.
“The [then] shadow cabinet began to take on some of our suggestions, as they came to better understand government IT. For example, their proposal to cut IT contracts into smaller and shorter chunks was dropped as they realised they would have to act as system integrator to each of these smaller projects,” he added.
This article neatly illustrates the trap that large software vendors have managed to spring on the UK government and UK tax-payers at large.
On the one hand, we hear a legal expert explaining how difficult it will be for the new government to escape from huge contracts signed with software vendors by the previous administration, and on the other we hear those very same vendors are already whispering in the ears of the new administration, telling them to be afraid of any other way of working.
While these large vendors continue to gorge themselves in the trough of government big-budget contracts, the rest of the industry is discovering much more effective ways of delivering software (using techniques like lean or systems thinking) that allow customers to start getting value from the project as it happens, dramatically reducing the risk of failure.
Rather than allowing IT budgets to be spent overseas and given to these large corporations most of which are not UK-based, I would prefer to see the new government embrace a culture that encourages and nurtures enterprise among our already world-leading community of small and independent software consultancies.
For the new government to get the true picture, they need to start searching for information outside of the vicious circle.
Posted by: Matt Wynne 25 May 2010
Offshoring has shown time and again to be a highly ineffectual way to deliver software value. It's a strategy based on the gross misconception that it will save money. This is a painful lesson that is still being learned in the private sector with nearly 40 per cent of Fortune 500 companies saying they haven't found offshoring satisfying:
http://www.cio.co.uk/article/3217488/what-to-look-for-when-bringing-offshore-work-back-home/
It is a disgrace that our government intends to pursue not only a failed model but one that will take millions of taxpayers' pounds out of the country which could have been better spent investing in our own IT industry
Posted by: Rob Bowley 25 May 2010
The focus on cost cutting is disappointing. It has been repeatedly shown that this focus actually increases costs by driving waste into the system.
When the focus is on cost, the tendering process will often opt for a low-cost bid for the whole project (maybe including offshoring), which will always be too low and will be renegotiated when (not if) the project runs late, scope needs to be adjusted or for a myriad of other such reasons.
Note, that this renegotiation will have to take place because by the time the renegotiation is first mentioned, so much money would have been sunk into a death-march project that until then has delivered nothing, that cancelling it completely would be an unthinkable waste of taxpayers' money.
If instead, the government focused on value, they would see that frequent, small, incremental deliveries of working software would not only mean that we all could derive benefit from the work done so far, but would also allow steering of the project.
In addition, it would also allow programme managers to decide if a particular supplier isn't performing as required so that they may take remedial action.
I very much liked the fact that the Conservatives were talking about reducing waste in the election campaign. If they took the view that I am proposing here, it would be a strong signal that they intend to do more than just talk about it.
Posted by: Lance Walton 24 May 2010
The whole way that government goes about procuring and building IT systems needs a complete overhaul.
The continued use of large consultancies and their ridiculous methods of development that fail over and over again has to stop.
The IT industry and software developers have developed new, better, more reliable, more cost effective ways of building software. Often these methods are counter-intuitive and foreign to those whose mindset is still rooted in command and control, manufacturing techniques, but they work!
Simon Carter's statement that "their [government IT] proposal to cut IT contracts into smaller and shorter chunks was dropped as they realised they would have to act as system integrator to each of these smaller projects, shows a profound lack of understanding of how to build software.
If this government wants to actually deliver working software it must stop listening to consultancies that fail to deliver and start listening to people who do. I will be happy to put them in touch with those people.
Posted by: Channing Walton 22 May 2010
I am disappointed to read that the government thinks offshoring is a good way to reduce the costs of IT. Few in the private sector are achieving especially great cost savings that way ? those that are take great care with the contracts they sign.
If the Conservatives took the advice that Simon Carter describes to heart then they (or civil servants working under their direction) are unlikely to sign smart contracts.
As an IT practitioner who has worked on both sides of the procurement process I know that more, smaller, shorter contracts are an excellent way to control cost and increase the likelihood of successful delivery. And this absolutely does not require the purchaser to act as a systems integrator. If the new government has taken that advice on board then they will be acting on the basis of misinformation. An approach unlikely to reap savings.
What can tax payers and voters like myself do? As a practitioner who sees the government receiving such poor advice about IT cost management at such a time of economic turmoil, how do I get the right message through?
Posted by: Keith Braithwaite 21 May 2010
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