The CBI have unveiled a report into Government procurement (www.cbi.org.uk/media-centre/press-releases/2012/11/government-procurement-still-a-painful-process-for-business/) concluding that it is still a painful process for business but the necessary reforms are heading in the right direction yet the pace is slow.  This report comes on the back of news that Cabinet Office have paused the procurement of new ICT frameworks following the cancellation of the ADDSS framework and have commissioned David Shields (Government Procurement Services) to conduct a review into ICT frameworks.  This report in conjunction with the eagerly awaited Department for Transport/Sam Laidlaw report into the West Coast Mainline procurement demonstrates that Government recognise that the reforms to public sector procurement must be followed through so as to ensure a smooth and efficient market system that generates mutual value for the taxpayer and private sector suppliers.

Government have accepted the need to build and develop commercial skillsets in line with the traditional focus on policy development, however, developing such skills will take time/investment and requires focus/long term planning.  Whitehall faces a ‘perfect storm’ in that the reduction in the number of external consultants used to support major procurements/commercial programmes has left a gap in the availability of specialist skills yet it will take time to recruit, train and retain civil servants with the required internal skillsets. This ‘storm’ runs the risk of further impacting major programmes and causing reputational damage.

Government should consider how it can inject expertise to support and develop civil servants to develop specialist knowledge.  Such expertise should support civil servants to procure and run major programmes but it should not do the job of civil servants.  There is a key difference between the provision of subject matter expertise and generic programme delivery capability.  Government has been burnt by over reliance on generic programme delivery skills and urgently needs to develop specialist knowledge.

On 14th November 2011 various financial organisations in the UK were required by the FSA to implement solutions for recording mobile communications. The remit for recording was all communications involving the ‘taking of client orders and/or dealing in financial instruments’. One year on, how is this affecting strategic technology decisions?

Read our Insight to find out more: Mobile call recording – one year on

Hudson & Yorke were invited to attend a BT showcase event on the subject of Shared Services on the 5th November 2012. The event discussed a BT commissioned Kable whitepaper on Shared Services in the PSN era. The discussions shed the light on the findings of the whitepaper and the latest experiences in relation to PSN implementation. Amongst attendees were Central Government and Local Government representatives who also helped us understand the internal debates currently taking place.

The findings provided confidence that PSN continues to be high on the agenda with 70 % of departments/organisations within government perceiving it as a positive change despite the slow momentum, which was attributed to:

• Organisations not establishing the right level of trust with each other
• Push back on solutions that are not bespoke to the organisation
• The immature nature of the market, which doesn’t offer many successful models to follow

Partnerships between like for like organisations which have common processes and governance provide the most successful shared service implementation model stressing the importance of governance and process.

Other key success factors highlighted were:
• Establishing a high level of trust with potential partners
• Early engagement with stakeholders/IT managers and securing their buy-in

This is in line with Hudson & Yorke previous commentary published by PublicTechnology.net and Computerworld UK on the subject of shared services in public sector specifically in response to the Public Accounts Committee’s (PAC) criticism of the government’s delivery of the shared services scheme.

In response to PAC’s criticism of the scheme, Hudson & Yorke acknowledged the difficulties however emphasized the importance of the shared services initiative saying:

“This report is critical but it isn’t a disaster. The bottom line is that shared services can offer very real benefits, and there is still ample opportunity for the government to deliver the required savings in future. But in order to do this it will need to deliver stronger commitment from more departments, plus proper governance of all shared service arrangements.”

Hudson & Yorke also provided insight to key steps and reasons for successfully implementing a shared services model saying:

“Clearly a half-hearted approach is not going to deliver the required savings. The government must convince key stakeholders that this approach will provide real benefits for them to secure their buy-in. Mistrust is a potential challenge the government will face, so clear communication is the key, particularly with departments that have handled a number of functions for many years without any changes.”

Hudson & Yorke’s top five tips for companies or government departments thinking about implementing a shared services model are as follows:

1. Consider whether a shared services model is right for your business or department. Shared services generally only work for large organisations, or those with fragmented business units. Local authorities are a particularly good example of this.

2. Ensure proper governance. The work doesn’t end when a shared services approach is implemented.

3. Ensure that planning doesn’t result in mistrust. Remember that some departments within an organisation may have been responsible for certain functions for years – changing this could result in hostility. Communication with key stakeholders throughout the process will ensure sufficient buy-in across all business functions.

4. Know that centralisation isn’t appropriate for every single function within an organisation. In general, companies shouldn’t centralise core competencies that involve customer contact.

5. Ensure that you look through a long-term lens. Don’t expect benefits to be apparent straight away because of the length of time it takes to change adapt and implement, but in the long run shared services can really deliver.

For further insight into Hudson & Yorke’s views on the subject of shared services and the PSN, please follow our links below:

Insight: Public Services Network: act now to deliver your vision

Publication on PublicTechnology.net: Best Practice – how to get the most out of sharing

Publication on Computerworld UK: Government shared services have ‘failed’, MPs say

Failures in ICT programmes have highlighted the need for specialist resources, whether this be in early value assessments and strategy development or in sourcing/transformational engagements. This is underlined in Audit Scotland’s recent review of three failing Scottish public sector ICT programmes and the ‘Government ICT Capability Strategy’ published in October 2011. From these documents it is clear that there is a lack of specialist ICT knowledge within the public sector and as a consequence an inability to effectively run complex ICT programmes. Audit Scotland’s report is testament to the dangers of a lack of experience in this area and attributes key project failings to “a lack of understanding about the complexity of the programmes and an over-reliance on the supplier for key decisions”.

This problem has been exacerbated by an over dependency on private sector/third party expertise, sapping the government of the necessary skills required to effectively manage external suppliers and leaving them with an ICT skills deficit. Set off by this, both documents outline the need to build up the level of in-house knowledge through strategic knowledge reviews and subsequent staff development. This, however, does nothing to address the immediate need for a boost in specialist skills that will allow government to act as a smart consumer of ICT services.

As an example, driving value through effective sourcing is of increasing important in this time of austerity but all the while becoming a more and more complex task. In this field it is unlikely to be economic or effective to have highly specialist technology skills in-house. The fast pace at which the market is evolving and technology trends are emerging can often leave in-house specialist teams behind unless there is a significant constant investment in training.

So, we see that in order to fully comprehend the complexities of ICT programmes, there is a need for a perfect blend of specialist external resources, who can provide an impartial injection of expertise, and civil servants, who understand the minutiae of the political environment.

ICT is critical for the effective operation of any business but achieving effective ICT without the specialist knowledge of how to source it is nye on impossible. We have seen government acknowledge this but only time will tell if their long term focus will pay off.

Public Service Europe published an article, written by Harry McDermott on the UK’s broadband strategy, which is dogged by the same problems that existed two decades ago and compares unfavourably with other European countries.

To say the recent British House of Lords select committee broadband report met with a lukewarm reception would be something of an understatement. The industry and external commentators were quick to react, with responses ranging from consternation to confusion.

The report was released a few days before figures showed that the United Kingdom sits in 15th place in the European broadband speed table, a long way from the government’s target to achieve pole position by 2015. The inconvenient truth is that there is nothing in this report that makes that target seem any more achievable.

Broadband strategy in the UK is still dogged by many of the same problems that existed 10 or 15 years ago. Issues such as the provision of broadband services in rural and remote areas and fair wholesale access to third party infrastructure have been around since the 1990s. Grandiose statements describing telecoms infrastructure as a strategic asset like road or rail networks are all very well, but this particular asset was transferred to the private sector more than 20 years ago.

Despite what government may wish for from private commercial companies, the economics of providing this service simply do not stack up. With lower population density in rural areas, the high cost of rolling out broadband infrastructure is not met by the volume of demand present in more densely-populated urban areas.

For example, Fujitsu recently withdrew from a tender process for a project aiming to provide 90 per cent of homes and businesses in Cumbria with 25Mbit/s broadband speeds. It was reported that the company wanted access to at least one million premises, and that Fujitsu considered this reach a crucial factor in being able to attract interest from consumer broadband providers such as Sky and Virgin Media. Clearly the company felt that it was unable to guarantee the required economies of scale and therefore terminated its involvement, leaving BT as the only provider left in the process.

Capital cost is a barrier to such projects, and yet broadband providers are investing significant sums in parallel broadband infrastructures which perform essentially the same function in the same geographic areas. This duplication of effort and spend is inefficient, only serving to ramp up costs to those consumers already located in an area with broadband coverage, while ignoring those consumers who are beyond the reach of the broadband network.

It is increasingly difficult for commercial broadband providers to differentiate their offerings based on infrastructure, a realisation made a while ago by the mobile industry. Mobile operators’ acceptance that competing on the basis of investment in parallel and overlapping infrastructure is unsustainable has led to collaboration between competitors who now share networks under commercial arrangements. It is worth pointing out that these developments happened independently of the regulator and without obvious government intervention.

By contrast in the broadband industry we are faced with infighting and claims of anti-competitiveness, and watchdog Ofcom is tasked with regulating a market which may well be systemically unbalanced. If the mobile operators’ model of infrastructure collaboration could be replicated by broadband providers with an industry-wide scheme, that would be a sign of real, practical progress.

The systemic failure of the free market approach to align with government policy requires some radical new thinking. For example, is it time to consider the merits of a state-run national infrastructure company as the answer to the commercial challenges of providing fast, nationwide broadband? The infrastructure company would be a nationally owned asset, with the regulator ensuring fair and impartial wholesale access to all commercial broadband operators; its objective would be to ensure that the UK has the best, most up-to-date broadband infrastructure.

The latest figures show that the UK’s current progress on the rollout of broadband still compares unfavourably with many other European countries. If the government is to meet its own targets, it will need to close the policy black hole between aspiration and execution. Overall, the Lords report feels like a missed opportunity to stimulate productive action in the UK on broadband issues; the sort of big thinking which might pose questions to advance the whole discussion is largely absent. The unavoidable conclusion is that we are still looking at the same problems that were doing the rounds 10 or 15 years ago without presenting any tangible solutions.

Indeed, 2015 is not far away and unless things improve very quickly the government looks set to miss its target of having the best broadband network in Europe by that date. Less talk and more action should be the order of the day. And some of that action needs to be radical.