One of the pledges made by the current UK government is to put an end to the cycle of mega-IT projects in the public sector that cost the taxpayer hundreds of millions of pounds but are then found not fit for purpose - if they even get finished at all.
The basic thrust of the plan - at a mile high level - is to break up those mega-deals being awarded to mega-suppliers - the so-called oligopoly of major systems houses - and bring in smaller, more agile contracts delivered by an ecosystem of providers populated by SMEs which have felt locked out of public sector business to date.
It's a noble ambition and one that we'll hear a lot about over the next couple of years as the majority of the UK government's existing multi-year contracts with outsourcing and systems integration firms come to their end and are - in theory - not renewed, but replaced by the new way of working.
Today comes a salutary reminder of why this is necessary as a flagship policy of the current government, one billed as essential to the future economic well-being of the UK, is found to be floundering thanks to issue with £300 million worth IT systems that are not delivering value for money.
Universal Credit is a significant reform to the welfare systems in the UK which will see six existing means-tested social security benefits rolled into one payment.The Department for Work and Pensions (DWP) plans to spend £2.4 billion to implement Universal Credit up to April 2023.
Up to April this year, it had spent £408 million against a planned £420 million, with 76% of that (£312 million) going on outsourced IT design and development.
According to the UK parliamentary watchdog The National Audit Office the program is behind schedule and has suffered from various major problems, including:
- The DWP being overly ambitious in both the timetable and scope of the program.
- Taking risks to try to meet the short timescale.
- Using a new project management approach which it had never before used on a program of this size and complexity.
- Being unable to explain how it originally decided on its ambitious plans or evaluated their feasibility.
- A lack of critical in-house IT expertise and senior leadership, with frequent changes in senior management.
- The write-off of £34 million of its new IT systems
- Having a lack of certainly about whether existing systems will be able to support national roll-out.
- The existing systems offer limited functionality.
As a result of all this, the DWP has had to delay rolling out Universal Credit nationally which was intended to kick off next month. Instead it will add a six pathfinder sites from October 2013. while it reconsiders the timing of full roll-out.
The IT delivery shortcomings are at the heart of all this, notes the NAO:
Universal Credit pathfinder systems have limited function and do not allow claimants to change details of their circumstances online as originally intended.
The Department does not yet have an agreed plan for national roll-out and has been unclear about how far it will build on pathfinder systems or replace them.
In May 2013, the Department identified the need to write off £34 million (17 per cent) of its new IT assets. The Department will undertake a further impairment review when it has confirmed its plans for the future of the programme.
Most of the IT spend has gone on core software applications (£188 million) including a payment management component (£11 million), an interface with real time information (£10 million), and a case management module (£6 million).
The Department also spent £31 million on licences, £26 million on support from suppliers and £50 million on hardware, telephony equipment and changes to old systems.
Source: National Audit Office
There are four main IT providers commissioned to deliver IT to underpin Universal Credit - and by happy chance, they're all oligopoly members:
- Accenture which is developing the new online claims system and evidence management systems.
- IBM which is developing the new payment and real time earnings system, as well as interfaces with existing systems.
- HP which is developing the work services platform and provide hardware and server capacity.
- BT which is providing telephone services.
How those suppliers have been managed comes in for criticism with the NAO noting:
The Department commissioned IBM to act as an Applications Development Integrator from January 2012, providing some oversight and overall management of IT development, but creating risks of supplier self-management.
Various reviews have criticised how the Department has managed suppliers.
In June 2012, CESG (the UK government's technical information assurance body) reported the lack of an agreed, clearly defined and documented scope with each supplier setting out what they should provide.
This hampered the Department’s ability to hold suppliers to account and caused confusion about the interactions between systems developed by different ones.
In February 2013, the Major Projects Authority reported there was no evidence of the Department actively managing its supplier contracts and recommended that the Department needed to urgently get a grip of its supplier management.
For all that, DWP officials believe that the majority of the IT systems that have been been are of high quality, but they admit that they have not been fully developed and cannot support scaling up the program as it stands. Others suggest that certain systems are inflexible or over-elaborate.
Source: National Audit Office
Some of the problems highlighted in fact do fall into the 'mission critical' category. For example, the new systems lack the ability to identify potentially fraudulent claims. The NAO notes:
Within the controlled pathfinder environment, the Department relies on multiple manual checks on claims and payments. Such checks will not be feasible or adequate once the system is running nationally.
Without a system in place, the Department will be unable to make the savings it had planned, by reducing overpayments from fraud and error. In December 2012, it estimated these savings to be worth £1.2 billion per year in steady state.
Cutting to the chase, what this all means is that the money spent to date is not delivering a good return - and fixing it is inevitably going to mean spending more money. The NAO reports:
The Department currently estimates its IT assets are worth 53 per cent (£162 million) of the amount it has invested in IT (£303 million). This is lower than the 80 per cent (£253 million) which the Department had planned in December 2012.
Remedial work to make good or replace the IT assets could further increase the Department’s IT budget, which had already increased by 61 per cent (£241 million) between its May 2011 and December 2012 plans.
Lack of agility
Universal Credit is also a major test case for the public sector's use of the AGILE methodology of iterative and collaborative project management. In this respect, NAO concedes ambition exceeded practicality as this was the first time it had been used on a major program of this scale.
The DWP ran straight into problems incorporating the AGILE approach into existing contracts, governance and assurance structures - and after decades of outsourcing to the oligopoly, there just aren't the skills in-house.
So it found itself managing a programme which grew to over 1,000 people using an approach that is intended to be used in small collaborative teams and did so without defining how it would monitor progress or document decisions.
Changes in responsible officers have not helped either. The DWP CIO role was filled on an interim basis for five months from March 2012 while the director of Universal Credit IT was removed from the programme in late 2012.
The Department has replaced the role with several roles with IT responsibilities while latterly the Government Digital Service has stepped up to the mark.
So now the post-mortem begins - while the patient is still alive and on the operating table.
Amyas Morse, head of the National Audit Office, said:
“The Department’s plans for Universal Credit were driven by an ambitious timescale, and this led to the adoption of a systems development approach new to the Department.
"The relatively high risk trajectory was not, however, matched by an appropriate management approach. Instead, the programme suffered from weak management, ineffective control and poor governance.
“Universal Credit could well go on to achieve considerable benefits if the Department learns from these early setbacks and puts realistic plans and strong discipline in place for its future roll-out.”
Meanwhile Margaret Hodge, the fearsome chair of the powerful Public Accounts Committee (PAC) of the House of Commons, raged:
"The DWP seems to have embarked on this crucial project, expected to cost the taxpayer some £2.4 billion, with little idea as to how it was actually going to work.
"Confusion and poor management at the highest levels have already resulted in delays and at least £34 million wasted on developing IT.
"If the Department doesn’t get its act together, we could be on course for yet another catastrophic government IT failure."
The political response will be interesting given the flagship nature of Universal Credit as a plank of the current government's policy.
The DWP got its defence in first on Wednesday when Howard Shiplee, the current head of the program, put his hands up to failures under previous management regimes.
With the authority of someone upon whose watch the reported problems did not occur, he told the Daily Telegraph newspaper:
“It's clear to me there were examples of poor project management in the past, a lack of transparency where the focus was too much on what was going well and not enough on what wasn’t and with suppliers not managed as they should have been."
But he added:
"We’ve put that right… I am confident we are now back on course and the challenges are being handled.”
The cynics will of course immediately state the obvious: plus ca change etc etc.
That's not entirely fair. In fact the NAO report validates the need for the type of reform that the Cabinet Office has been calling for and the lessening of the dependence on current practices and oligopoly of suppliers.
It also rams home the desperate, desperate need to get more skills back in-house across government after decades of becoming dependent on third party contractors. This has to be made even more of a priority by the government.
The silver lining on all this is there is still time to put it right.
This needn't be like that totem to public sector IT waste, the National Programme for IT for the National Health Service, where billions of pounds of public money kept being pumped into a program that was savaged by the likes of the NAO and the PAC. On that occasion, the response was just 'keep carrying on' and more and more good money thrown after bad.
(Labour's Shadow work and pensions secretary Liam Byrne has been describing Universal Credit as a "Titanic-sized IT disaster" to the media this morning. From the party that brought us NPfIT and just kept on throwing public money at it as its problems became more and more obvious, that takes a degree of nerve I would lack!)
This time it seems that while there are flaws, there is the making of decent IT underpinnings. The whole thing needs better control, better direction, better supplier management and so on, but there is something there that we might work with.
Let's hope this is taken as a much needed shot across the bows and that attention is focused on the shortcomings identified. If this is taken as an opportunity to admit 'mea culpa' and change direction, then the situation is hardly beyond redemption.
And if I were Cabinet Office Minister Francis Maude or government COO Stephen Kelly or CTO Liam Maxwell, I'd be banging a copy of this NAO report on the desk of every senior official in Whitehall and declaring: "THIS is why we need to change the way things are done!"