The NHS has awarded its biggest-ever IT contract to a consortium
led by McKesson, the world's largest IT healthcare company.
The £325m contract for a unified human resources and payroll system
was finally signed after months of delay.
The winning consortium, which includes companies such as Oracle,
PWC Consulting and IBM, beat off a rival bid from Sema Group, SAP
and KPMG.
The choice of a preferred supplier was to be announced in December
2000, but was postponed to February, then May after the Office of
Government Commerce introduced the Gateway project review method
for high-risk public sector IT contracts.
The Department of Health (DoH) is exempt from the review process,
but made a voluntary decision to adhere to the guidelines, although
it meant the contract was delayed.
A signing date was pencilled in for September, but uncertainty over
the sharing of risk in the Public Private Partnership meant
negotiations dragged on for more than two months. The final deal
will see the consortium fund upfront investment with the NHS only
paying when the system is up and running.
By 2005, every NHS organisation is expected to have Oracle's Human
Resource Management system running on IBM's latest servers. The
system will replace 29 different payroll and 38 different HR
systems with a fully integrated payroll and HR system for one
million NHS staff.
The 10-year deal will provide a modern IT system that enables the
NHS to analyse skills gaps, recruit staff proactively and consider
flexible working to attract the best staff, said the DoH.
The department hopes the system will save the NHS £400m over 10
years through better staff management and effective pay and HR
policies, which will help to retain staff and cut recruitment
costs.
Christine Daws, the DoH's deputy director of finance, said: "The
McKesson consortium offered high-quality, commercial off-the-shelf
products. This is an important part of the Government's
modernisation programme in the NHS. The majority of existing
systems used by the NHS are old and in desperate need of
updating."
Mike Kingswood, McKesson's UK managing director, said the deal was
won on best value, solution and record. "Introducing common
standards and changing current working practices are the biggest
challenges," he added.