“I always get people saying ‘he’s an open source nut’, or ‘he’s an SME nut’. I’m not actually, I’m a competition nut. This is about enabling competition.”
This is what government chief technology officer Liam Maxwell lives by at the moment – creating a competitive public sector. He believes that if there is competition in the UK public sector’s supplier base, barriers to entry will drop, costs will fall, innovation will be introduced and ultimately the tax payer will be getting a much better deal.
Basic economic theory though right? Well, you’d think so, but it’s a mantra central government has failed to live by in years gone by and Maxwell knows it. Departments have previously relied upon a handful of suppliers – which have since become known as the infamous oligopoly – and the result is multi-billion pound projects that have either failed miserably or taken so long to spec out and deliver that once they were live, the technology was out of date.
One of the more recent controls that the Cabinet Office has put in place – which is Maxwell’s Whitehall home, working within the Government Digital Service (GDS) – is a number of ‘red lines’. Specifically for central government IT contracts, the most important red line states that no IT contract will be allowed to be worth more than £100 million in value. Given that departments are still carrying out multi-billion IT projects (e.g. Universal Credit – which is going very well, as we all know), how easy an adjustment is this going to be for Whitehall? In fact when I suggested to Maxwell that perhaps £100 million was possibly a bit on the low side, he wasn’t worried…
“Nope. How much does it cost to build something when you really get down to it? If your hosting costs are 98 percent less, if you are building things in an agile way. If you are building things where you don’t suddenly have a big launch and then change control, how can these things possibly cost that much money? And how did they cost that money in the first place?
“Well, you know why that’s happened: we procured before we designed. We have got a really, really top notch procurement team. They are really good at getting a really good deal, but if you are buying the design service as well you are into a whole different world. You tell a supplier that these are the requirements and that’s all they’re going to do – then day one you need to change it – and that’s when costs just start going up.”
This is core to the government’s reforms – instead of specifying from the start what you need as a department for the next ten years, spending three years building it and then effectively writing suppliers a blank cheque for all future changes (because, surprise surprise, technology advances pretty quickly), you design for the user, use a variety of suppliers alongside internal digital development teams, build in an agile way and carry out staged launches with public testing.
Maxwell used the 25 exemplar services that the government has chosen to redesign for the digital era - which will be “so good people prefer to use them” - as an example of how things are changing. It is hoped that by digitising the most popular citizen-facing transactions, as set out by the 2012 Digital Strategy, Whitehall will save a pretty impressive £1.7 billion a year after 2015. The first 25 exemplar services include the electoral registration system, student finance, PAYE and criminal record checks.
Maxwell said: “The exemplars are 25 citizen facing public services. They are not costing £100 million each, they are costing way, way less than that. Judge us on the cost of doing those 25 compared to how much they cost previously.”
In fact, Maxwell thinks the ‘red lines’ are a quite generous…
“So £100 million is a ceiling, it’s a bit high. But let’s just get this in place.”
Introducing digital skills is a three pronged approach
Maxwell’s drive for competition and introducing digital to the complex environment of Whitehall doesn’t seem like an awful idea, in fact if all goes to plan we might begin to see government departments create services that the public actually want to use – mobile first, online, with beautifully designed user interfaces. However, one of the main problems, as always, is the capability. Skills.
With departments having outsourced their IT capability for years and Whitehall not having really bothered to introduce digital in-house (before GDS was created) there is a serious lack of digital skills within government. This was highlighted when I recently revealed that although the Department for Work and Pensions has thankfully decided to roll out a digital version of Universal Credit nationally, they only have three (yes, THREE) in-house staff working on the project. They have since launched a massive recruitment drive to plug this gap – albeit a few years in and hundreds of millions of pounds already spent, but better late than never I guess.
Maxwell explained that departments need to correct this deficiency in digital using a three pronged approach – through the use of GDS, the Digital Services Framework (essentially a supplier list of agile, digital companies that is largely made up of innovative SMEs) and building an in-house capability.
1) GDS will get departments set up and advise on an approach, the consulting. 2) The Digital Services Framework will be used to bring in any external technology or skills that are not available in house, but these contracts are likely to be short in length and through the use of SMEs. 3) The department will do the rest, via an experienced, creative and in-house capability.
“Me, my crowd, we are all part of GDS. There’s not a technology function in GDS, the technology is part of GDS. The old way of looking at stuff, that you had an IT department, is different now. You do need digital skills,” said Maxwell.
“We do need to get digital skills into government and there is a lot of work being done to do that. We are hiring fantastic people – Kevin Cunnington (DWP), Mark Dearnley (HMRC) – really high quality people from outside government, coming in to government from outside coming to work in departments.
“It’s not like we are saying we are going to outsource the entire digital development for this project to a large company who are going to take it away. That’s the bit we are running away from. Gradually and as we grow, because this takes time, the GDS role will become more about helping people and specifying what they need to do and ensuring they do the right thing. The department gets people in to ‘do the do’, with the third set of resource coming from the Digital Services Framework in the end.
“We were always going to need all three, because you need to have effective standards, and the link up with the user, and at times pull in specialist resource from industry, which bridges the gap.”
Popping the London digital bubble
Part of the government’s plan to diversify its supplier base and bolster its digital capabilities is to branch outside the confines of London and create government digital hubs across the UK. For example, HM Revenue & Customs recently announced that it would be creating a digital centre in Newcastle- where it is hiring for a number of digital roles.
Maxwell explains that we will continue to see more of this, where GDS and other departments are keen to push the digital boundaries outside the confines of Whitehall and the much publicised (and government backed) Tech City, which is based around a cluster of start-ups in the east-end of the capital.
“This is a new digital environment in the north east, which is also a long way from the hot house of Tech City. There’s going to be many more of these, we are going to do some in Manchester, do some in Leeds, do some stuff in the north west with other departments,” he said.
“I know one department is looking around the south coast for sites to do stuff. It means we are tapping into expertise which is there across the British economy. One of the interesting things is if you look at a map of our suppliers in 2010 and then look at our suppliers now – it was this little cluster, the oligopoly, but is now all around the UK.
“We are creating new, highly skilled jobs doing this. You can’t do it all around London and Birmingham, there’s loads of digital hubs across the UK.”
Taking off the boxing gloves
As you can imagine, after years of lucrative deals, some of the suppliers are beginning to getting a bit anxious about the government’s reforms – for example, CGI recently told me that if the Cabinet Office doesn’t tone it down a bit the government risks scaring off investment from the big companies elsewhere.
However, Maxwell isn’t worried. He believes that as long as the market is competitive then the government will be getting the best deal and he isn’t willing to engage in parting cheap shots with the oligopoly.
“Let’s lower the barrier of entry, let’s never get to that situation where we have to go and buy from a privileged few large companies. Otherwise, as ministers you are just locking out innovation,” he said.
“Are the bigger suppliers starting to get it now? Yeah I think they might be. Look we have got more than 1,000 fantastic suppliers on the G-Cloud. The 12 that were there before, are 12 amongst the thousands. It’s a competition. I think they’re waking up to it, but we are not going to fight with these people. We just created a much more competitive market place. The taxpayer wants competition.”
Maxwell isn’t just regurgitating rhetoric for the media here, he is serious about these reforms and has been one of the main forces in driving them through central government departments, which have seriously lacked innovation and struggled to modernise in pretty much every respect. He and his other GDS cohorts are creating real controls and mechanisms – namely through new agile frameworks (G-Cloud, Digital Services Framework) and the red lines – to create a diverse supplier base to Whitehall departments and introduce innovation.
However, this isn’t a done deal. Apart from the problem of legacy systems, many of which are tied up in multi-year outsourcing deals that departments will struggle to escape from easily, many jobs in Whitehall depend on the old way of doing things. Procurement bods, consultants, technology divisions (and even CIOs) are relying upon these complex and costly environments staying. This cultural change will not be easy to overcome.
Nonetheless, Maxwell and his team are on the right path and if GDS can keep up its current momentum, when some of the larger outsourcing deals do come to an end over the next few years we might just begin to notice some change. And perhaps even save the taxpayer some money.