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Last week the Driver Vehicle and Licensing Agency announced (with some fanfare) it had ended three decades of IT outsourcing and started to take back control over its technology estate.

The agency’s 13-year, £1.5 billion contract with IBM, Fujitsu and other partners has finished and the DVLA has now transferred 302 people in-house from Fujitsu, doubling the size of its IT department.

It expects to save at least £225 million over the next 10 years, chief executive Oliver Morley told ComputerworldUK.

It is now directly responsible for managing the 300-odd companies that provide various different components of its IT estate.

First priorities

The first priority is to stabilise its legacy VME systems and separate out the various layers of its technology stack to improve visibility, the DVLA’s chief technology officer Iain Patterson explained.

The agency will gradually move to an “open standards landscape” and become “as infrastructure free as possible” by moving much of it to the cloud, Patterson told ComputerworldUK.

“This is not just because cloud is cool. Our infrastructure needs to handle billions of transactions. A lot of what we do is very ‘peaky’ – we don’t need all of the capacity all the time – and cloud will give us more transparency over costs,” he explained.

Patterson will now return to the Government Digital Service after a two-year stint on secondment to help bring the agency’s IT back in-house, with the DVLA due to recruit a replacement imminently.

Meantime, the DVLA is pursuing an ambitious digital transformation project. It has increased digital uptake of its services from 66 percent to 90 percent over the last two years, according to Morley.

It has launched new online services that let you view and update your driving record, personalise your registration number and pay your car tax, replacing paper discs and driving licences.

Despite mixed initial success with some of these launches (the website has crashed repeatedly on major deadline days), the DVLA plans to expand the range of services online in the coming years.

Now it has control over its IT, of course, the DVLA will no longer be able to blame its opaque supply chain for technical glitches (as it did over the website crashes).

IT outsourcing model broken

DVLA is now a testbed for the rest of government, as departments and agencies move on from 10-year, single-supplier deals and wrest back control over their technology and digital services. It’s a policy they have talked about since 2010 that finally seems to be coming to fruition.

The agency’s case shows how badly broken this old IT outsourcing model seems to be, especially within the public sector – but also how it can ultimately be fixed.

Although Morley said “it may have been cost effective to outsource IT in the old world”, he conceded it is decreasingly defunct in a fast-changing world where the price of technology is plummeting.

The agency was paying for far more than it needed, he admitted. Many departments, especially those that handle the big traffic peaks and troughs due to deadlines, have suffered this issue.

HM Revenue & Customs pays full whack yet its average compute power utilisation is a tiny 6.7 percent, just to ensure it can handle busier times of year, its CIO Mark Dearnley has admitted – a problem it hopes it can solve by moving more of its infrastructure to cloud.

The DVLA IBM contract’s costs soared from an original estimate of £287 million to £1.5 billion – a common characteristic of these sorts of deals across Whitehall, it seems.

Even worse – the DVLA sometimes did not know what it was paying (very expensively) for, due to the lack of transparency over spending, Patterson hinted.

“We’re undergoing a stabilisation period where we review what we’ve been sold versus what we were charged,” he said.

Another problem with these sorts of IT deals is the lack of investment in keeping technology up-to-date: something suppliers are not incentivised to do.

Some very basic things have not been invested in. In these situations [outsourcing deals] people won’t make those sorts of big changes,” Morley admitted.

Where the client decides they want to order changes to the contract they have to endure “a long change management process and inevitable uplifts on quotes,” he added, euphemistically.

The Home Office, HMRC and the Department for Work and Pensions are just three of the departments supposed to be working to move away from monolithic big supplier contracts right now – but it is a common story across all of Whitehall and the wider public sector.

Thankfully, it seems the government has woken up in recently years and is starting to take action to end this damaging, expensive over-reliance on a handful of outsourcers. So what tips do Morley and Patterson have for others due to cut themselves loose?

What lessons we learn from the DVLA’s experience?

If you are trying to wrest back control over your IT estate, make sure you and you alone are in charge, Morley said.

“If you are bringing parts of your tech estate back in-house, you have to do that project yourself. It has been DVLA led and run throughout. We had to deliver it on our own to our own standards.”

You should try to “build in governance from the start” – make sure you engage with staff, suppliers and have strong oversight over the project, he added. It’s also important to do the job one bit at a time, not try to rush at it or do too many things at once.

“Keep it simple. Transform, stop, transition, then carry on transforming,” Morley said.

You need to make sure you fully understand what technology you own or use, and the skills of the people working for you, according to Patterson.

“Work to understand your tech estate, the capability within your teams and your commercial positions and arrangements,” he said.

He suggested to use SMEs “wherever possible” as they are generally far more flexible than large multinationals, and constantly check back on costs to ensure they stay under control.

“Look at your supply chain and crucially look at their future strategy, products and their direction of travel,” he added.