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Changing channels at the UK’s DWP

Kenny MacIver Profile picture for user kmaciver December 2, 2013
How the UK’s Department of Work & Pensions is pushing to switch its “customers” to digital engagement — in pursuit of dramatic cost-efficiencies

What does ‘digital’ look like to a £5.5 billion ($9bn) IT organization — one that is having to support “once in a generation” transformation across every one of its major lines of operation? That’s a question Andy Nelson is putting to himself nine months into his tenure as CIO of the UK’s Department of Work and Pensions (DWP).

Certainly, when he thinks of ‘digital at the DWP’ he does not have in mind the data centers full of its 30-year-old “heritage” mainframes and the green screens terminals and Windows PCs that support many of its 100,000 employees in call centers and branch offices as they handle claims for unemployment benefit, disability allowance, children support payments, pensions and so on. Rather, faced with a political agenda that mandates technology-led change at the citizen level, the digital focus is on what IT can do to create a radical change in service-user behaviour — among the “customers” to whom the DWP pays a total of £3 billion ($5bn) weekly.

“What you see happening at the DWP is fundamental change right across all of its core welfare agencies,” says Nelson. Over the next 18 months in the build up to a General Election, the UK’s Conservative-Liberal Democrat coalition expects to see dramatic results from their policy changes at the DWP. But for that to happen, things have to move rapidly in a digital direction, one that successfully applies the consumerization of IT to processes and channels that have historically been largely manual.

Act like a bank

If that makes the DWP sound like a business embracing digital disruption, then that is not too far removed from Nelson’s thinking. With annual payouts of £163 billion ($267bn) the DWP is the biggest user of the UK bank clearing system. “I think of the DWP as one half of a bank,” says Nelson. “[The UK tax authority] HMRC takes in the money and we pay out. In terms of pure transactions online that may not put us up there with an Amazon or Google but it is a big scale business” — and one which today still runs to a large extent on a mix of call centers, face-to-face interaction and paper-based processes.

Its profile as a transaction-based business would suggest “it lends itself to that digital world, to being a different sort of business, a digital business.” But it’s a bit more complicated than that, Nelson emphasizes: It’s also about helping people get back to work, helping children as their families go through change, encouraging savings in the form of pensions, helping those with disabilities, and so on. The question is: “How does that play through digital.”

“What we don’t have are the advantages of say an insurance company, where the compelling attraction in moving people to online might be different incentives such as lower prices,” says Nelson, who spend the majority of his career in leadership roles in the private sector, including at RSA Insurance, GE Capital and Wal-Mart’s Asda. “We don’t have that, so how do we actually drive people to use the [digital] channel” — and, ultimately, ensure the DWP spends much less money on running the service.

Channel push

And cost, of course, is the main driver. “Digital will genuinely transform how we operate,” he argues. “It should lead to lower costs because if we are dealing with people more and more online then we’ll employ less people to process them and need fewer sites.” And he adds: A key part of the government’s digital strategy is that “the services are so well designed that people want to go there rather than [engage via] paper, a call center or face-to-face.”

The DWP has already been driving some of those numbers down through tactical approaches to call handling that involve channelling more people to self-service. Nelson reports that overall call volumes in the last year have fallen from around 100 million to 60-70 million.

He points to one example — Jobseeker’s Allowance (JSA) — that has contributed to that astonishing drop. A year ago, disappointed that over 60% of those applying for JSA still chose to apply/re-apply face-to-face or over the phone, the DWP set out to find mechanisms that would channel many more online. “We decided we wanted to really push that,” says Nelson, so staff started to encourage people who applied via telephoned to apply on line, with the lure of a faster, smoother process (10 minutes for returning claimants) or pointed those who applied at Job Centres to use terminals installed at sites to apply online.

“It was a real push to shift the channel,” says Nelson. “So 12 months later the score is 84% of all claims made online. In this case, the change has not just been about ease of use but an organization saying, ‘what do we need to do to encourage/push a shift of channels to online applications.”

Universal trial

But the highest profile test of that digital strategy is looming large in the shape of the government’s ambitious Universal Credit program — the move to bundle the six main state benefits into one claim, assessment and payment process cycle (a system referred to internally, according to Nelson, as “the Lobster Pot” — ‘once you’re in, you’re probably not getting out’). That transition is as complex as it is large, given the 31 million payments the DWP currently makes each week.

After a year of controversy, delays and false starts, Universal Credit’s roll out is still at a “modest stage,” says Nelson, “as it pilots through a number of sites, with four started during the summer and another three since, two of which have just gone live [on 25 November].”

The numbers involved in these trials are small: to date, only around 4,000 Universal Credit claims have been made, he outlines, with an announcement expected before the end of the year about how the DWP plans to take the project forward.

Mobile first

In any case, Nelson takes some encouragement from the patterns of digital adoption shown during those trials. “We had some rough predictions that 50% of people would apply online [as] we’ve been a paper- and call-based system for years. The reality is well over 90% of all claims have been made online.” The sample size is way too small to indicate if that would scale into tens of millions, but Nelson is having to come to terms with another unexpected number: over a quarter of the claims made to date have come through mobile devices.

Perhaps that proportion is not so surprising. Many of the individuals claiming benefits may not have ready access to a PC, but the vast majority will have access to a mobile phone. Does it mean DWP needs to be adopting a ‘mobile first’ policy for some of its customer-facing applications? Nelson is undecided on that, but reveals that DWP’s IT teams have recently worked with the Government Digital Service to consider the degree to which they need to orientate their thinking around mobile first and how that impacts design.

Meanwhile, he has enlisted some digital consumer expertise in recent months. Vodafone’s former global head of online, Kevin Cunnington, joined in October to be the DWP’s first director general of digital transformation. He’ll not just focused on the move to digital services, but has been asked to look at defining the DWP’s future business and digital models, take on the leadership of the DWP’s three ‘exemplars’ of digital services (Universal Credit, Personal Independence Payment and Carer’s Allowance) and manage its change portfolio.

All this activity is of course against a background of — and largely inspired by — intense pressure to reduce public spending costs. In 2009/10, the DWP’s IT department spent £7.4 billion ($12.1bn) on its core operations; as it exits this financial year in April it will have spent £5.5 billion ($9bn).

“That’s a 25% reduction in a department going through the biggest level of change in a generation. And if you overlay that with digital transformation,” says Nelson, “that’s hugely challenging.”

Andy Nelson was speaking at the 2013 Public Sector ICT conference in London.

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