news The UK Government has taken a startling new stance on major IT contracts, outlawing new deals larger than £100 million (AU$190m) and declaring that it’s time the country moved past traditional arrangements with “legacy technology giants”, in a move which appears to mirror similar State Government initiatives in Australia.
In a speech given this week to the Sprint 14 conference in London, UK Minister for the Cabinet Office Francis Maude said previously, the UK government spent more on IT than any other country in Europe except Switzerland. “Although I think that included the cost of CERN,” the Minister added. “They were looking for the God Particle – but over here, we were left with an ungodly mess.”
In the old world, Maude said, the country was procuring applications before they had been designed – or over such a long period of time that the technology was out of date before it was delivered.
“To re-visit the film metaphor: we were promised ‘It’s a Wonderful Life’, charged a ‘Fist Full of Dollars’ – and then a ‘Few Dollars More’ – but we were left with ‘Titanic’,” he told the conference, according to a transcript posted online. “For too long, big IT and big failures have stalked government. Now we want to see a new world, a start-up world, where what you can do matters most and where value includes both cost and quality.”
To address this issue, Maude said, the UK Government has mandated a list of what he described as “IT red lines”, which he said he would be “unashamedly militant about enforcing”.
The news rules state that no IT contracts will be allowed to exceed £100 million without a powerful reason; hosting contracts will not last for more than 2 years (“the cost of hosting halves every 18 months, why commit to a longer contract?”); there will be no automatic contract extensions without a compelling case; and companies with a contract for service provision will not be allowed to provide system integration in the same part of government (“there is a conflict of interest here, and contracts are too opaque”).
Maude said: “The whole point is for Whitehall to look beyond the oligopoly IT suppliers – the legacy technology giants. We want the right technology at the right price for taxpayers – whether that’s from an innovative big supplier which gets the new ways of working with us, or a start-up.”
This kind of approach has recently had wins within the UK Government, as the country has forced its IT buyers to look beyond large traditional suppliers.
“We know the best technology and digital ideas often come from small businesses, but too often in the past they were excluded from government work,” said Maude. “There was a sense that if you hired a big multi-national, which everyone knew the name of, you’d never be fired. We weren’t just missing out on innovation, we were paying top dollar for yesterday’s technology.”
“One great example of the potential from small businesses was when we retendered a hosting contract. The incumbent big supplier bid £4 million; a UK-based small business offered to do it for £60,000. We saved taxpayers 98.5 percent.”
In addition, the UK has saved substantial money by actually exiting projects. “Last year we saved the taxpayer over £500 million by stopping projects not aligned to our IT spending controls,” the Minister said. “Digitalising public services could save citizens, the Exchequer and businesses £1.2 billion over the course of this parliament, rising to an estimated £1.7 billion each year after 2015.”
The approach appears to mirror some similar initiatives being undertaken in Australia. In March last year, for example, the South Australian State Government issued a new whitepaper designed to provoke discussion of its future ICT strategy, promising as part of the document that from then on, it wouldn’t pursue “big ICT projects” any more, with all technology-related initiatives to last 90 days at most.
Similarly, State Governments such as Queensland, New South Wales and Victoria, which have both been pummelled by the failures of massive IT projects, losing hundreds of millions of dollars on individual projects, have mandated “cloud-first” approaches to IT procurement which should result in massively smaller IT contract costs, as IT is procured on a service basis, avoiding large monolithic software customisation projects and instead customising their business processes to meet the demands of cloud computing platforms.
However, the holdout for such approaches is the Federal Government. Over the past decade, major departments such as Defence, Tax, Customs, Immigration and Human Services (Centrelink) have undergone major IT projects worth amounts in the hundreds of millions of dollars, typically involving large traditional IT systems integrators such as IBM or Accenture.
As a rule, the projects have largely run over budget and suffered implementation problems — in some cases major implementation problems — but have eventually been delivered successfully.
I think I may do a deeper piece on this issue for Delimiter 2.0 next week; so I’ll leave discussion of this issue up to you guys for now ;) However, I will note that this is a fascinating (and frightening, if you’re IBM) approach from the UK Government. I recommend you read Maude’s full speech; it’s available online here.
Image credit (photo of Maude): UK Government