Here’s Why Government Systems Are So Ineffective
From benefits to IT, government systems are what keep society together, but they’re not always as effective as they are intended to be. Here Stephen Norman, author of Trading Down, to be released on November 9th, delves into some prime examples of government systems and the development, management and gears behind them.
2nd Oct 2017: Universal Credit is ‘a disaster waiting to happen’ but Teresa May says Universal Credit roll-out WILL go ahead.
Sound familiar? You are not mistaken. 20 years ago, Gordon Brown set his heart on a major overhaul of the benefits system. The project aimed to replace two allowances with tax credits i.e. negative taxes in which the taxman pays you. The project was a disaster: late, over budget and over generous to claimants on an eye-watering scale. By 2008, HMRC was chasing £4.3billion in overpayments.
However, the tax credit system worked, eventually. Unlike the “National Program for IT for the NHS”, which cost £10 billion and absolutely failed to live up to its bold vision. Likewise, UK farmers have bitter memories of the Single Farm Payments project. Perhaps magistrates mourn the failed Libra system which aimed to transform their lives for £146m and failed to do so for £389m. Then there is the e-borders project and the (5 years late) Ministry of Justice GPS based tagging system. Just to list the public fiascos of the last twenty years would take up the rest of this article.
Why public sector IT so accident prone? The Public Accounts Committee publishes frequent critical reports and there is a substantial independent literature on the subject[1]. The same themes come round again and again:
- Ambitious politicians set unrealistic scope and dates, not understanding the risks i.e. likelihood of failure;
- Civil servants, desperate to please, acquiesce;
- In the rush to delivery, the real requirements are not bottomed out and agreed;
- “Automating a mess creates an automated mess.” The project tries to digitise existing complex and manual practices (eg doctors’ access to medical records) or legislation;
- It is assumed that users (taxpayers, benefit claimants, patients) will behave “rationally”. But they don’t;
- Few IT vendors are large enough to bid on major work, limiting competition and innovation.
- The work is split between vendors in strange ways that create complexity and blur accountability;
- There is an election or a reshuffle. Leadership is lost, scope changes;
- No-one wants to hear bad news, especially politicians. Early warning signs are ignored until it is too late.
Panic finally sets in, leading to cuts in scope, and crisis hiring of call centre and back office staff. All of which increase the ultimate cost.
It’s all pretty obvious, isn’t it? I haven’t told you anything that you (and Sir Humphrey) didn’t already know. Assuming that civil servants don’t want to be pilloried in the Daily Mail or roasted by the Public Accounts Committee, why these endless failures?
Let’s get realistic. In a democracy, politicians will always come and go. They will always want quick results. They have electorates to please. Few ministers (or civil servants) understand IT or have a gut feeling about the risks of a big project, and this is not likely to change (David Gauke, the Work and Pensions minister responsible for Universal Credit, is a solicitor and Ian Duncan Smith started life in the Scots Guards). So the political pressure to want everything, by unrealistic dates and then to move the goalposts during the match will always be with us.
But wherever you look, there are huge opportunities to save money while providing the public with more personal, immediate and helpful services. In my local hospital, patient records are still handwritten and wheeled around between wards (automation has arrived – the trolley is electric!).
The need for big national IT is growing and politicians will always be politicians. So what can we change?
Some enterprises are born digital. Born digital enterprises don’t have an IT department; they are an IT department. Everyone from the CEO downwards lives and breathes technology. The born digital worship good design and simplicity. They know that a few smart people can build systems that thousands of ordinary people cannot. They understand agile development and incremental change. They accept that innovation brings failure.
Born digital enterprises are all software companies, right? No. Take Tesla. Tesla is an automobile company but its management from Elon Musk down are all geeks. The best of the challenger banks, the world’s largest advertising company, the world’s largest retailer… these are all born digital.
Let’s contrast this with the acquired digital. Management in acquired digital enterprises are not geeks, but they care about IT and they feel accountable for its delivery. They pay attention. They hire the best techies they can and fire them when they don’t deliver. They understand the constraints of the iron triangle: money, time and resource. The majority of today’s successful corporations are acquired digital.
The third category have “digital thrust upon them.” These enterprises have been burned by past failures, are running on a shoestring, or are just poorly managed. For them, IT is SEP, “Somebody Else’s Problem”. Often they achieve this by outsourcing. They put their faith in competitive tenders, complex contracts and penalties. In 2007, a consortium of banks bought ABN AMRO. ABN AMRO saw IT as “Somebody’s Else’s Problem.” They had outsourced it once to EDS, and then – disappointed with the results – tried again with IBM. Managing their own IT was just too hard for them, but they weren’t competent to manage their suppliers either. When RBS Markets re-insourced their piece, costs dropped by over 40%.
HM Government has for the past twenty tried to make IT “Somebody Else’s Problem”, “Somebody Else” being a small club of suppliers familiar from the records of the Public Accounts Committee: Cap Gemini, Capita, Accenture, IBM, HP/EDS and so on.
HMRC, for example, outsourced its IT to EDS under a 10 year contract signed in 1995. This contract was not a ticket to a gravy train. EDS were blamed for the failure of the Tax Credits project and ultimately lost the contract to Cap Gemini.
Reliable public sector IT will not be achieved by hand wringing over the proximate causes of failure listed earlier. Simply put, the departments of UK Gov need to “acquire digital.” This does not mean to re-insource all IT. John Yard, who spent 5 years as the head of IT of HMRC, puts it, “what you need is a small cadre of high calibre IT people who understand the business and the complexity of the existing environment.” Such people would not throw IT over the wall to an EDS, but would outsource selectively to a broader range of suppliers, including smaller and more specialised suppliers with new ideas.
Progress is being made. HMRC are bringing IT management back in-house. The GDS (Government Digital Service), a Cabinet Office agency set up in 2011 is a catalyst for change, preaching the benefits of agile, of listening to users and short projects. One of its successes has been to migrate government services onto www.gov.uk. Perhaps even the incremental roll-out (of Universal Credit) is a smart move. After all, Tesla does it. Well, go to www.gov.uk/universal-credit/eligibility and imagine that you speak little English, have 3 children and an elderly mother. You may wonder if the incremental delivery of Universal Credit is merely a car crash being brought to us in slow motion. Time will tell.
Stephen Norman spent 20 years at the forefront of investment banking IT in a range of high powered roles including Chief Technology Officer at Merrill Lynch and an unusually long 7-year stint as CIO of RBS Global Markets. In 2012, he left the world of finance to focus on his writing. Trading Down, Stephen’s first novel, is published by Endeavour Press on 9th November.
[1] See for example Conundrum, R Bacon and C Hope, and The Blunders of our Governments, A King and I Crewe
