The problem with business cases for digital transformation programmes in government

The government’s approach to funding, managing and measuring the success of digital transformation projects isn’t working. That’s the view of the latest report from think tank Institute for Government, which argues that departments need to take on higher risk and not assume that everything can be known up-front.

Business cases have long been the mechanism through which government departments have secured funding to support a project, often with approval needed from the Treasury. The success of these projects are then measured against the proposals put forward in the original business cases, forcing those involved to try and minimise any uncertainty at the start. This is, unsurprisingly, incredibly difficult and often unrealistic.

It’s an area that is often not spoken about, as ‘business cases’, as a topic, are hardly the most thrilling. That being said, they underpin almost all transformation projects in government and, as an approach, are in dire need of reform.

The Institute for Government notes that as of July 2018, government had approved over £80 billion to spend on 41 major transformation programmes across 10 departments and one public body. At least 19 of these, costing almost £38 billion, are digital transformation programmes.

These range from the Home Office’s £145 million Smarter Working Programme, designed to improve workspaces, technology and operations, to HM Courts & Tribunals Service’s £1.65 billion Reform Programme, intended to transform the courts’ service including making more cases digital.

The problems

However, the Institute for Government’s (IfG) latest report does a good job of analysing why Whitehall needs to adapt its approach to funding and managing transformation projects. It states (these points are taken directly from the IfG report):

• Business cases are ineffective when the vision for a future digital organisation is unclear - The report argues that “this is especially the case where digital transformation is not well understood and viewed too narrowly”. IfG rightly argues that too many civil servants focus on new technology rather than the wholesale transformation of what an organisation does, how it operates and its culture.
  
  
• Business cases fail to represent large-scale and complex transformations - “the scale of the change required means that producing high-quality business cases for digital transformation is challenging”. As we have seen time and time again, legacy operating models, contracts and systems, which have often not received much investment for many years, make the transition to new systems complex. And as noted above, business cases try to deal with this complexity by writing long, detailed documents. IfG states that, as a result, if leadership is not clear on the outcome of transformation, attempting to please multiple stakeholders can add significantly to the complexity of business cases. Those responsible for reviewing business cases in departments and the Treasury find these documents often do not make the case for change clearly enough.
• Business cases often struggle to make a convincing economic case that can be approved when finances are tight - “because most government organisations do not have a history of continuous investment in keeping up-to-date and many have outdated management approaches, the level of investment typically needed to transform them is high, compared with starting a new operation from scratch”.
• Business cases may be produced by staff who lack experience - “it takes time, considerable skill and confidence to produce an effective business case for digital transformation”. IfG notes that with many transformations underway in Whitehall, not all programmes have access to people with sufficient experience and insight. Consequently, quality suffers.
• Business cases fail to effectively represent uncertainty - Infrastructure programmes have defined outputs and it is possible to have a reasonable degree of confidence in their timelines and what they will deliver. This is not the case for transformation programmes. New guidance from the Heads of the GDS and the IPA on the ‘7 Lenses of Transformation’ notes that transformation plans should “accommodate the fact that not everything can be known upfront”. The IfG notes that “given this reality, we found that those approving business cases for digital transformation often require unreasonable levels of certainty…this forces transformation teams to focus too early on one preferred option, before they have the evidence to be sure it is the right one”.
• Business cases can lock programmes into fixed and unrealistic timelines and milestones - one senior finance official told the IfG that when costs and benefits are rigidly specified at the start of a programme, teams end up working towards those but “still go over budget and deliver different benefits”.
• Business cases are not used as dynamic ‘live’ documents - Treasury guidelines state that business cases should be dynamic management tools, and that there is no need for teams to be held to account for analysis and estimates that were made at the initial approval stage if updates to the cases are made throughout the programme and the learning and intent are clear. However, the IfG has found that practice rarely follows this guidance. Few programme teams maintain a live business case. “Boards inexperienced in transformation do not always provide an environment conducive to considering terminating or re-directing activities based on learning and changing conditions”.

The solutions

The IfG explains that what is required is a new approach to leadership, which is about more than traditional programme management. It states that transformation requires a “wider set of skills, primarily leadership of organisations and cultural change, organisational design, communications and business insight”.

It adds that successful digital transformation requires experience, a high-risk appetite and an understanding of the long-term, incremental nature of transformation.

The report points to departments and organisations, such as HMRC and DVLA, which have adapted their style and tone of leadership to “create the right enabling environment for transformation”.

As the government’s own guidance states, “leadership of traditional projects tends to be about minimising uncertainty, transformation leadership is about creating the right amount of uncertainty to generate productive organisational distress”.

In other words, less detailed initial planning, taking her risks, and then actively managing those risks through cycles of testing and learning.