The Labour government’s top-down, statist command and control approach, and its liking for spending public money, has led inevitably to a predilection for big expensive ICT projects. There are many malign effects of this.
- Scale creates complexity which multiplies risk which leads to failure and waste.
- Scale leads to very long timeframes for the design, procurement and build of ICT solutions, which then frequently become technologically obsolete even before they are delivered.
- Scale multiplies the development cost, which then leads to long contract periods over which the development cost can be amortised, which in turn locks the government into rigid arrangements unsuitable for changing circumstances.
- The huge size of projects and the extended timeframes has inevitably led to overdependence on the few very large vendors who have the experience and scale themselves to manage such large projects. According to Kable research, in 2007 nine suppliers accounted for 60% of public sector spending on ICT. These large vendors have a commercial sophistication and strong financial incentives that creates an asymmetric relationship with the often quite junior civil servants who manage them.
Scale and the consequences of cost, complexity and risk arise from the scale of the ‘business/process’ change and the vendor’s business model, even more than from the centrist controlling mindset of Labour Ministers. This is a crucially important point and if you misunderstand it then you will do no better than Labour.
First, the complexity and risk are driven by the business change goals. Breaking large scale system development projects into smaller ones (which I wholeheartedly support) will not necessarily reduce cost, complexity and risk. In fact, manage them poorly and all three will jump exponentially (even more than the Tax Credit and NHS database projects). To get better results than Labour, you must deliver a substantial improvement in the quality of both PROJECT MANAGEMENT and RISK MANAGEMENT. Part of delivering that improvement means getting a better way of controlling the political temptation to interfere with a project once it has been commissioned and is underway.
Second, the vendors sell large projects because it suits their business model very well, thank you very much. They employ smart, persuasive individuals to make the sale and they employ ex-Ministers and bureaucrats to enhance their knowledge and contacts in the procurement process. Once they have established a multi million pound contract, the accountable officers on the procurement side become beholden to the project; they are unable to cancel it or to order wholesale change because unless it is a complete disaster the vendor will be able to destroy their career. To get around this inevitable ‘capture’ you must do something quite counter-intuitive: you must make sure that the most senior accountable officer(s) have no involvement whatsoever in the procurement process and that their goals are purely based on business outcomes and not on project delivery!
Limiting contract size will improve the ability of small businesses to tender, but will it actually deliver innovation?
In particular, the role of consultants in scoping projects pre-procurement should be of equal concern – they will scope a project within the technological boundaries they are familiar with, rather than seeking out innovation.
The approach needs to change to letting the market respond to Government challenges rather than Government assuming it knows best. The Rewired State project has offered several examples of how this can be done.
The success rate of previous projects should be front and centre of procurement, and there should be an absolute rule that no supplier will be promised future work in any disupute settlement.
Accordingly to Patrick Dunleavey the problem is worse than that, and he has identified the model for the solution exists in both Canada and Holland. Of course if you do less you need less (see “don’t try to own the customer experience”)