The NAO has today published
its first comprehensive and plain-speaking view of the problems with government IT and the difficulties facing the Cabinet Office and departmental CIOs as they try to effect change and cut costs.
The NAO study - Landscape Review. Information and Communications Technology in government - included interviews with Government CIOs.
Below are some key findings, and more detail below that. The sub-headings are mine, the text the NAO's.
- Government CIOs left out of some key IT investment decisions
- Praise for SMEs that cut costs and innovate
- Two ICT projects budgeted to cost nearly £2bn stopped
- 229 ICT projects discontinued by departments
- Six out of 76 ICT projects rejected under moratorium
- 80% of Government ICT work carried out by 18 suppliers
- Joining up government may prove impossible without mandating
- G-Cloud - good prospects, slow take-up
- Few public services have been transformed
- Government websites generally poor
- Failure of Senior Responsible Owner role
- Government now has a more complete picture of the whole portfolio of government ICT projects
- Is the future Agile?
- £100m limit on IT projects may be dropped
- new ICT moratorium?
- NAO unconvinced SME partnerships with big suppliers will work
Two ICT projects budgeted to cost nearly £2bn stopped
In a review of ongoing ICT projects over £50 million, over 80 major ICT Projects were identified across government for review, with a total budget in excess of £28 billion. These reviews recommended that two ICT projects budgeted to cost nearly £2 billion be stopped, and that a further 26 with a total budget of over £4 billion allowed to proceed unchanged.
The remaining projects have been rescoped or are still the subject of ongoing reviews to determine the actions or recommendations necessary on assurance and approval activities. This rescoping exercise has so far identified potential spend reduction of at least £1.7 billion, the majority of which has been used to inform the Spending Review in autumn 2010.
Maximising the potential savings will be contingent on a number of factors such as managing the exit costs for terminated projects, shifts in government policy or renegotiations with major suppliers.
229 ICT projects discontinued by departments
Departments’ own review of ongoing ICT projects identified 229 that should not continue. Cancelling these projects could realise budget reductions of up to £1 billion over the next five years.
A further 193 ongoing ICT projects were submitted for review, and further potential budget reductions of up to £240 million were identified.
Only six out of 76 ICT projects rejected under moratorium
To date 76 ICT projects totalling at least £1.7 billion have been submitted by departments for review. Only six were not approved (£36 million). The Cabinet Office estimates potential savings of around £200 million from rescoping of projects that were approved.
This is likely to underestimate the spending avoided in 2010-11 as a result of the moratorium, as departments, agencies and non-departmental public bodies decided to cancel many projects rather than submitting them.
Few public services have been transformed
In the late 1990s, the Government saw online channels as an opportunity for fragmented services spread across different departments to be presented as a single integrated service for the citizen or business.
Few public services so far have been transformed to this extent. Under the Tell Us Once
programme (launched in 2007), single notification of births and deaths has only reached pilot stage, and work on government’s long held ambition for single notification of a change of address started only within the last 12 months.
Poor ICT governance
Effective ICT governance across government and within government bodies has not always been in place, evidenced by the high numbers of ICT projects failing to deliver business benefits in the past decade.
Governance has been fragmented, and project assurance has not consistently provided the critical challenge that would directly improve quality.
A number of organisations at the centre of government have had a role in governance of ICT - either through assurance of individual projects or providing guidance or strategic advice on commercial, procurement or technical matters.
Systems of control included mechanisms to review and control spending and manage the risks in the government’s programmes and projects, such as the Office of Government Commerce’s Gateway reviews
Failure of SRO role
Recognising that a lack of ownership for the delivery of business benefits at the government body level was a factor in project failure, the centre of government created a role where an individual would be made accountable (known as a senior responsible owner
However, long-standing issues with this role have been identified: lack of operational delivery, project management and technical skills, and high turnover.
Internal IT audit useless?
The internal IT audit function has developed since 2000, but has focused mostly on the effectiveness of controls rather than the business value being derived from systems.
The governance regime in organisations has focused unduly on providing assurance and not on control of quality. There have been many examples of where government has assessed the effectiveness of controls rather than the risk to business value being delivered from systems.
Some good news
The centre of government now has a more complete picture of the whole portfolio of government ICT projects as a result of the new processes. This information can be used to help reduce duplication and identify efficiencies where a number of government organisations have purchased similar ICT functionality.
The new processes have focused government bodies on ICT spending - raising awareness at a senior level in departments beyond those who specialise in ICT.
Turning civil servants into high calibre government IT employees
In 2007-08, the Cabinet Office began using the Civil Service Fast Stream Programme to develop high calibre government IT employees.
To date it has placed 47 staff in 10 departments. The Technology in Business Fast Stream has been the most successful of all the Civil Service Programmes, with more applications per place, the highest growth in the number of applications and also a zero attrition rate.
From 2009, the Cabinet Office widened its focus. A dedicated website was set up to facilitate the building of communities of common interest and the sharing of best practice and, through e-skills UK, all government ICT staff could gain access to learning needs assessments to support their career progression.
But is government still an unintelligent customer?
The ICT profession across both private and public sectors is immature in comparison to traditional professions such as medicine, law or accountancy.
There is no core set of recognised qualifications and a very wide variety of entry points into the profession. This has made it harder for those in the senior civil service without ICT experience to understand the full value that the profession can deliver.
The Cabinet Office has faced difficulties in professionalising ICT. The introduction of the Skills Framework for the Information Age has been a helpful step forward, but there has been no clear mandate to implement it. Progress has therefore been slow. The lack of management information on the real status, capability and capacity of the government ICT workforce has not helped to develop the case for change.
It is not clear whether sufficient strategic workforce planning for the ICT profession has been undertaken across government. The right balance between wider strategic and business skills, and specialist commercial skills or purely technological knowledge, may not have been achieved.
This has affected government’s performance as an intelligent customer of complex ICT systems.
Cabinet Office fails to influence departments
The full buying power of government has not been exploited yet. Although Cabinet Office policies recognised the potential for cost reduction, the Cabinet Office has not influenced sufficient government bodies to collaborate, or made this mandatory.
Many have continued to enter into separate agreements with the same ICT suppliers and as a result they have paid different prices
Government has not taken a strategic approach in the way it has designed and integrated its online services around the user’s need. There are few examples of government bodies working together to deliver a service. Government bodies have placed different priorities on moving their services online and investment has not always been focused on the most popular services.
It is surprising that there has not been greater emphasis across government on the application of these [business intelligence] systems and the business analysis skills needed to apply them.
Business intelligence capabilities are often built into government’s business or back office systems where they are used for measuring performance of particular services by specialist business analysts.
However, it is extremely rare to find these types of systems meaningfully applied at the top level of government bodies where their potential to assist with strengthening financial management and making informed decisions about the future is greatest.
This is especially the case in departments that have complex delivery mechanisms and accountability structures across many executive and arm’s length bodies, and where large quantities of information need to be assimilated accurately and often in real time.
Long procurement cycles
Lengthy procurement cycles have increased the risk that systems do not deliver
what the business needs when they are brought into operation.
Even with heavily customised systems, there have been many common applications which government bodies have procured that could be re-used. Government has not actively sought opportunities for rationalisation of business applications across its ICT estate.
Shared services haven’t worked - but praise for the DWP
There have been limited incentives for government bodies to share back office services. Those supplying the service have needed to finance the upfront investment, while the customers have perceived a loss of flexibility and control of the cost and delivery of their core business functions.
The shared services landscape has developed with insufficient strategic direction. The ideal configuration for shared back office systems to achieve economies of scale has not been sufficiently explored.
To date, progress delivering shared services by consolidating back office systems has been patchy and expected benefits have not been realised. The Cabinet Office has had overall responsibility for more widespread use of shared services.
However, different approaches have been taken within departmental families and not all corporate functions have been shared. Early back office system consolidations within government bodies were not originally designed as shared services, but have come to be considered as such.
Only the Department for Work and Pensions provides a complete range of shared services for government bodies outside its own departmental family.
The Government’s ICT strategy in January 2010 reaffirmed the Cabinet Office’s commitment to greater use of shared services.
Duplicated activity and assets, little-used data centres, and proliferation of networks
Whilst every government body spends a significant percentage of its budget on basic ICT infrastructure, each has largely entered into procurements without taking account of what government already owned. This has led to an accumulation of duplicated assets.
For example, the Cabinet Office reported government had 220 data centres available, but on average only 7 per cent of this capacity was used.
Networks have also proliferated. Among the many used by the public sector were the Government Secure Intranet, the Criminal Justice Service Exchange, the Police National Network and the Joint Academic Network.
The Cabinet Office led the planning for a cross-government Public Sector Network, designed to create a single telecommunications infrastructure that will deliver efficiency savings. Government bodies, both locally and nationally, would be able to connect and share data.
The Past and Present
CIOs cut out of IT decisions
There is a broad spread of budget responsibility and experience across the departmental chief information officer community, but critically, only four sat on their department’s board (in 2010). Many have struggled for influence in their organisations and are not routinely involved in investment approvals even when ICT forms a key part of an investment case.
NAO praise for SMEs
Small- and medium-sized enterprises (SMEs) have brought a complementary set of innovative skills into government. They respond quickly to changing requirements and provide solutions at lower cost in less time. However, SMEs have struggled to access government contracts despite a number of initiatives to address this over the decade.
Locked into big suppliers?
Government has not managed its relationships with large suppliers effectively, to harness their skills and experience. At present 80 per cent of central government ICT work is undertaken by 18 suppliers.
Many of these contracts are for a government body’s whole ICT service, meaning that civil service staff, knowledge, skills, networks and infrastructure have been transferred to a supplier. This has effectively locked government into specific contracts for the long-term. Dependence on a small number of suppliers for ICT services has been compounded by consolidation in the sector as a result of mergers and takeovers.
Joining up government is hard to do - or impossible?
Government bodies have had to keep track of this complex and fast changing landscape of initiatives and reflect it in delivery plans for their own information and technology. Their responses to initiatives have not always been designed with cost-effective delivery as the primary objective and consequently this has led to multiple, bespoke systems that cannot easily interact...
Establishing robust management information about ICT across government - such as total spending on ICT or overall business performance - has proved difficult. This has limited the Cabinet Office’s ability to develop convincing cases for complying with cross-government initiatives and has undermined its ability to effect change...
The Cabinet Office has had difficulties with implementation of its cross-government initiatives. Adoption largely relied on persuasion and personal networks across the ICT community, and progress in delivery against this raft of initiatives has been slow.
Financial accountability in government bodies has tended to work against participation in pan-governmental initiatives. Under existing accountability arrangements government bodies favoured their own ICT agendas and individual priorities, rather than aligning with central policy...
ICT infrastructure. Historically, the centre has attempted to influence the rationalisation of ICT infrastructure and take advantage of bulk purchase of basic commodity items to reduce costs. However, the autonomy of government bodies provides for their freedom to choose and there has not been sufficient incentive to relinquish control to others. Consequently, the full potential for cost savings across government has not been realised.
G-Cloud - good prospects, slow take-up
In its 2010 ICT Strategy, the government announced the development of the G-Cloud. Cloud computing offers a different way for organisations to buy IT services.
Rather than buying its own servers and software licences and managing these, an organisation buys storage capacity and software-as-a-service over the Internet. Not only does this remove the management overhead of technology infrastructure, it helps organisations react more flexibly as it is possible to vary the number of applications or volume of data storage on demand
The government has not taken advantage of cloud computing. The 2010 ICT Strategy did recognise this as an opportunity for government to reduce basic ICT costs but progress has been slow.
NAO hasn’t yet audited savings claimed by departments
Most of the Efficiency and Reform Group’s initiatives are very recent, and it is too early to evaluate their effect. We will continue to monitor developments as they emerge.
Some immediate financial impacts of the Group’s new controls have been reported by the Cabinet Office: the Government expects to save £3 billion in 2010-11 as a direct result of the Group’s actions, and that savings totalling £1 billion had already been achieved.
Included in these figures are indicative savings from the initiatives controlling spending on ICT, which are presented in Figure 3. Potential savings are as reported to the Cabinet Office by departments and have not been audited by the National Audit Office
There is some duplication between savings reported from the three initiatives, for example, potential savings from contract renegotiations would be counted again when the re-scoped project is submitted for review by the Moratorium.
These cost savings programmes are at an early stage. Many of the cost savings have yet to be realised and neither the National Audit Office nor the Cabinet Office have audited the level of savings actually achieved by departments. Savings will be spread over a number of years.
Putting services online - websites generally poor
Progress has been made in making government services available online, although government’s own research has found that some of these services generate poor levels of customer satisfaction. Government websites have not scored well on ease of use, design and accuracy
Government websites have not offered a customer experience on a par with the private sector. The expectation gap has become wider as government has not been able to keep pace with the opportunities that new technology offers.
Is the future Agile?
Business systems. The large scale and bespoke nature of long-standing ICT systems across government has led to high costs, long development timeframes and the risk that ICT systems are out of date by the time they are delivered. Recent work by the Institute of Government has highlighted good private and emerging public sector practice with the agile development methodology.
£100m limit on IT projects may be dropped
In December 2010, the Government announced “the days of the mega IT contracts were over” and a limit of £100 million on contract sizes for ICT projects would be enforced. At a summit attended by representatives from the major suppliers, the Government explained the rationale for smaller projects implemented, where possible, using off-the-shelf solutions and agile methodologies.
The Efficiency and Reform Group has not yet published guidelines on this commitment and the £100 million limit may not be implemented.
ICT spending almost certain to be lower
The new initiatives mean that spending on ICT will almost certainly be lower in 2010-11 than earlier years. Accurate figures of government spending on ICT will be available later in 2011. Many of the projects that were cancelled had limited business value or were found to be likely to fail.
However, it is also difficult to evaluate the long-term and wider impact on government operations of the cost reductions made by restricting spending on ICT in 2010-11, for example, where projects delivering business transformation have been delayed or cancelled.
Crown representatives to be appointed - one for SMEs
A number of Crown Commercial Representatives will be appointed as the central point of contact for a group of 20 to 25 suppliers. They will take a strategic, cross-government approach to their suppliers and will have the power to agree or prevent a contract extension. One will have particular responsibilities for SMEs.
More people need to access Internet - nine million digitally excluded
To secure the full benefits of cost reductions by switching to online services, government needs to increase the number of adults using the Internet. Access to the Internet in the United Kingdom over the last decade has become widespread - over 30 million adults go online every day. However, nine million, referred to as the digitally excluded, have never used the Internet.
New ICT moratorium?
Central government departments, agencies and non-departmental public bodies were told not to sign any new ICT contracts, contract extensions or modifications above a value of £1 million, without specific agreement by the Minister for the Cabinet Office.
The ICT Moratorium will be replaced by new spending control mechanisms in 2011-12, which may include a moratorium on ICT projects with a higher limit of £5 million proposed.
No new spending on IT infrastructure - February 2011
The primary aim of these measures is to reduce wasteful spending on operational
uses of ICT. Further centralisation of spending controls was announced in February 2011
when the Treasury wrote to all departments requesting no new purchases of ICT
infrastructure should take place, effectively centralising its specification and purchase
This further centralises government purchasing, adding to existing collaborative procurement policy relating to purchases of ICT hardware (such as laptop and desktop computers).
Skunkworks and open source
Some policy initiatives to improve how government software is developed have been announced. The Government reaffirmed its commitment to open source software and has created a ‘skunkworks’ team within the Cabinet Office.
The ‘skunkworks’ team will test proposals to ensure they are the most optimal in terms of feasibility and likely success, encourage responses to government procurements from a wider group of suppliers and keep government up to date with innovations in the private sector. It will be important to integrate this team’s role with the Efficiency and Reform Group’s other
spending controls as they develop.
NAO unconvinced that SME partnerships with larger suppliers will work
Progress on improving SME’s access to government contracts will be reported on annually from December 2011. Early developments in this area have been to encourage existing large suppliers to expand partnership working with SMEs, rather than government contracting with SMEs directly.
It remains to be seen whether this approach will deliver the expected benefits of reduced costs and greater diversity and innovation in the supply chain.
NAO will check whether Government is opening up work for SMEs
[NAO will investigate] what practical measures are being introduced to open up government ICT to small- and medium-sized enterprises
New Major Projects Authority
A new Major Projects Authority will take responsibility for the governance and management of government’s Major Projects Portfolio from April 2011 including ICT projects costing £50 million or more.
The Authority will be part of the Cabinet Office and will implement a new mandated integrated assurance and reporting regime for all major projects. It will be responsible for any decisions taken during the Major Projects Review in autumn 2010.
New CIO role
A new role is planned for the Government Chief Information Officer and the Chief Information Officer Council. In the past, the Government Chief Information Officer post had been filled by a full-time Cabinet Office civil servant.
The newly appointed Government Chief Information Officer also holds that post for the Department for Work and Pensions, one of the most heavily ICT-dependent government departments.
The role of the Council is also evolving to meet the new demands of the fiscal environment.
Correcting weaknesses in individual ICT strategies?
ICT strategies published both by individual government bodies and for the whole of government have largely been technical. Whilst of value, as a clear signal of technical direction, these strategies have neither fully engaged the non-ICT community nor secured a central position for ICT professionals in the early definition and planning for new policies, new services and wide scale cost reduction.
For any aspect of government ICT we will therefore evaluate how the policy and strategy landscape affects the cost and eventual performance of the investment.
Consequently our questions will focus on:
- Are ICT policies being streamlined and becoming more coherent from a cost€‘effective delivery perspective?
- Is there evidence that new policy will drive more business-led decisions in the effective application of ICT?
- Is there evidence that ICT strategies are becoming more business-led and setting out more clearly how ICT will improve government’s performance against its business plans?
Risk of higher costs and more complexity?
An extensive set of information, commercial and technical policies for ICT have emerged since 2000. They are not under unified control and risk adding complexity and therefore cost into the development and evolution of systems.
NAO will also check:
Whether more effective use is being made of those seniors across government with ICT experience. Whether greater critical challenge is being introduced - to assess the feasibility of proposed solutions, better inform risk assessments and recognise and manage excessive levels of ambition.
We’re watching you, says NAO
The National Audit Office plans to undertake three cross-government investigations
in 2011-12. These will assess the value for money of government’s overall strategy for
ICT, online services and its shared services.
Margaret Hodge MP, Chair of the Committee of Public Accounts, said of the NAO report:
"...Over many years, the Public Accounts Committee has indicated the potential of computing to save the taxpayer money and connect citizens more directly with services. But, on far too many occasions, IT projects have gone badly wrong, and often for reasons that could have been avoided.
"Almost always the consequences are delay and additional cost to the public purse. I welcome today’s report, which sets out clearly the challenge facing all departments in future.
"As I see it, this can be summed up in one question: how can the public sector harness the benefits of Information Technology, without being overwhelmed by the complexity of IT projects and allowing them to spiral out of control?"
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