March 2012 Archives

A genuinely transformative budget measure: hands-on ministerial acceptance tests

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One paragraph in Item 1.224 in the section of the Budget papers on  "Reforms to support growth" more than makes up for my disappointment with what was not in the budget.

Section 1224 reads as follows:

"The Government is setting an ambition to make the UK the technology hub of Europe. To support technological innovation and help the digital, creative and other high technology industries the government will ...."

There follows a rag bag of initiatives, some of which may do some good, others of which are a waste of taxpayers funds. One diamond, however, sparkles amid the dross:

"... will transform the quality of digital public services by committing that from 2014 new online services will only go live if the responsible minister can demonstrate that they can themselves use the service successfully".

Will that mean a clean out of those ministers without post graduate qualifications in handling non-intuitive, man-machine interfaces?

Does it set a deadline of 2014 for the current crop of contractors to introduce on-line services, because after that they will face an acceptance test that they are almost guaranteed to fail?    
In the spring of 1971 my task was to help specify the processes to put on-line the sales ledger systems that I had just decimalised. In 1976, I was Sector Comptroller for Public Corporations when responsibility for debt chasing was devolved from the central financial services operation to the sales teams. My staff discovered that I had specified the system they now had to use. That on-line system had indeed been supposed to be capable of being used by the Finance Director - but nobody ever suggested he should be part of the acceptance testing.

Some-one clearly enjoyed slipping this recommendation in amongst the verbiage.

I could not care whether or not most of the other recommendations in the technology session of the Budget are implemented - but I very much hope that the Chancellor, Cabinet Office and relevant Commons and Lords Select Committees routinely ask to see the Minister's acceptance report - and they are available for all to see. And I look forward to Cabinet Ministers insisting that their Permanent Secretary goes first, before the junior minister who draws the short straw.
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Allow market forces to redress regulatory failure - A budget for IT enabled recovery Part 2

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There has been a chorus of complaints that the government does not have an industry strategy - as though this were to be deplored. I happen to be a Historian by original discipline and wanted to do research into the causes of growth, comparing economic theory with reality. My tutor, Maurice Cowling, set about dissuading me. He said I would find the answers in the real world and come back to Cambridge when I had found them. The attitudes of those who were happy to offer me immediate post-graduate places persuaded me he was correct.

I was then lucky enough to have three challenging years of systems engineering "apprenticeship" with STC and ICL followed by two years at the London Business School and the opportunity to lead the most successful of the industry strategy exercises that was the legacy of Tony Benn's Ministry of Technology. Later I had five years as Corporate Planner for a UK-owned multi-national, including helping organise inputs to the "industrial strategies" of nations around the world. Comparing their approaches to that of the UK did indeed lead me to some firm conclusions.

The most important is that British industry nearly always does best when Whitehall does least. "Planning" is all-too-often a euphemism for protecting the past from the future. An "industry strategy" is a euphemism for giving jobs to economics graduates not wanted by the private sector as investment analysts or corporate planners assisted by consultants touting for future business and lobbyists seeking grants to position their employers. The failure of UK government attempts to pick winners (over the past century !!!) gives no confidence that the Coalition Government can do any better. Even when ministers and officials pick the right race course they choose the wrong horses, train them the wrong way and enter them in the wrong races.

In 1978 - 9, I was part of the policy team (reporting via Ian Lloyd to Sir Keith Joseph) that looked to IT and Communications as the drivers of UK economic recovery. We called for Telecoms Liberalisation and Privatisation, a major government supported awareness campaign (it became IT 82) and a Micro in every school by 1982. I then watched as DTI turned low-cost success into expensive failure, draining enthusiasm with "challenge programmes" and initiatives while hobbling indigenous growth with:

- "investment protection" regulation that routed funding via remote pension funds and trusts while excluding the hands-on "angels" and informed local investors who are at the heart US success,

- "tax avoidance" measures which make growth companies pay tax before they have positive cash flows and reinvestment for growth, let alone to give a return to equity investors

- government procurement routines which actively discriminate against innovative new UK businesses in favour of overseas competitors which can quote their own governments as lead customers.  

Then came the Labour Government destruction of the enthusiasm inspired by the Micros in Schools programme, with mandated teaching on how to use an imported suite of proprietary office software. Finally, DTI and Ofcom set about reversing the Conservative policy of liberalisation leading to an open and competitive market. They may not have talked about reversing privatisation but, unless Ministers take action soon, current BDUK policy will re-create a BT-led cartel akin to that of AT&T and the baby Bells which the OFTEL regime was designed to avoid. 

The time has come to look back at what has worked in the past, (as well as what has never previously worked and is unlikely to do so this time round) and allow market forces to redress the failures of planning and regulation.

The four areas where I would most like to see a commitment to action in the Budget in order to help bring about a market driven, investment led economic recovery without calling for spend that HMG cannot afford are: 

Stop the bleeding - think BIG, but start small and build on success.

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Conservative Home has a thoughtful piece by Neil O'Brien of Policy Exchange on the need to think big if we want smaller government. I was pleased that his first point was on the benefits from digitising public services - but I e-mailed him my concern that his support be construed as support for achieving this via BIG projects or contracts. I said that I would blog accordingly.

I was pleased to then learn that he agreed with much of what I am about to say. It would be boring if we agreed on everything and I will leave it to you to read his piece in order to work out where we might disagree. You can then decide for yourselves which of us is right, or if we are both wrong, whether in the same or in different ways

My first point was that the losses from computer assisted and on-line fraud (benefits, VAT, procurement etc.), exploiting weaknesses in HMGs current BIG systems, already cost the taxpayer rather more than the savings he had in mind. I remind readers of my previous blog on the areas for savings that I said the chancellor should have in his budget  

I then referred to way that the computer systems to support the Universal Credit have been contracted appear to be leading inexorably to the biggest fiasco since the DSS operational strategy and the NHS patient record, courtesy of the same consultancy mindset. As readers will be aware I have blogged several times on this theme and on how and why we should be finding lower risk ways of implementing the objectives - with which I wholeheartedly agree.

I agree with Neil on the scale of savings that could and should be made. The way to achieve them is not "BIG" projects. It is programmes of incremental change that use technology to support joined-up people processes. My view is that the biggest single obstacle to such a strategy is the business model of the big consultancies - who are adept at telling politicians that this time it will be different.

It will not.

BIG is as ugly today when it comes to delivering public sector IT than it was in the 1970s. 1980s, 1990s or 2000s. It is, however, still as lucrative for salesmen, consultants and lawyers - whether or not the anything is ever delivered beyond lines of code and boxes of components that meet the contract, not the need.

Sometimes "big" may be necessary but, if so, we should look to the means used to ensure success with the biggest and most complex systems in the UK - such as those which handle payment and transaction clearance across the City of London or telecommunications charging across worlds fixed and mobile networks. I have blogged on the issues many times before, including why we never learn  and the need to separate complexity from volume.

But the drive towards smaller government raises even bigger issues. As I have said in a different context, we are witnessing the slow death of the last steam-age nation state. Its silo structures, planned in Haldane Report of 1918 were never properly professionalised: the Fulton report of 1968 was not implemented. For example, even today very few departmental accounting officers have any accountancy qualification, however junior.

Now, after a decade or so of almost mind-blowingly inefficient and inflexible outsourcing, the silos are staggering blindly into the Internet age: an age when that which matter most, to most of the population, for most of the time, is determined locally (e.g. is it a nogo area for police and public services) or globally (routed via Facebook, Google and Microsoft).

The power or national (Westminster) or Regional (Brussels) government to do more than get in the way is fading away. The constituency activists at the Conservative Policy Forum Winter School homed in on the consequences better than most of the Westminster village when they debated definitions of "The Big Society" in January. I particularly liked: "the denationalisation of compassion". The implications and inuendos reverberate.

I will stop there because I am conscious that I have not yet made time to do Part 2 of my Budget for IT-Enabled Recovery.

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Stop the Bleeding - the wetware is more important than the software or hardware

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In my previous blog on the need for the Chancellor to give serious priority to tackling on-line fraud in his budget, I should also have made the point that the software and hardware to identity probably fraudulent claims and transactions and the likely culprits are worthless without the people processes to use the intelligence created.

The scepticism of Francis Maude with regard to spending more on ICT to help cut fraud can be explained in part by the lack of return on the £387 million that HMRC has spend over the recent years trying to reduce £5 billion a year of lost taxes. The recent Guardian Article summarising the relevant NAO report shows that the prime reason for that lack of return is, yet again, a focus on ICT for its own sake as opposed to using IT to support people processes.

The OJEU notice for the framework contract for the new Government ID regime to be run from DWP indicates an intention to avoid this problem by contracting out the problem to those interested in sharing the £30 million of so of public money available for those running systems that fit the Cabinet Office electronic identity model. The big question is whether that will attract serious interest from credible commercial services - such as those used and underpinned by the credit reference agencies (Experian, Equifax and Call Credit), the payment services (from Barclaycard, MBNA and Paypal to Swift, VISA and Vocalink), the Telcos and ISPs (from BT and Vodafone to Google and Microsoft) and by their Banking and Insurance customers. One can also envisage serious responses from operations like Citizencard  and the Post Office Card Account . Then there are the many consortia and start-ups who see trusted ID systems as a crock of gold rather than a can of worms.

The process of aligning the identities used by the private sector with the NINO and other DWP files will make the data matching problems found during the recent Electoral Commission pilots look trivial. The report on that exercise politely indicates some of the many problems.

Given that the entries in the Electoral Register, the NINO, the DVLA database and the Postal  Address databases are integral to the creation and farming of most fraudulent UK identities the time has come for a serious exercise to progress actions 11 and 12 in the Fighting Fraud Together Action Plan. These were "to limit the risk" of "government issued" credentials, (they used the words "identity documents"), "being exploited for criminal puproses" and to "strengthen issurance (sic) processes for main government documents used to establish ID and facilitate online identity verification checks against government databases to support online service delivery" 

If the Chancellor is serious about bringing public sector finances under control, then effective action in this area is more likely to produce savings and place fewer votes at risk than some of the other mesures he is being urged to take. But it will require a focus on the objectives and the people processes necessary to achieve those objectives - not just the technology used to support the people processes - important though it is to get the ICT right as well.
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Stop the bleeding - a Budget for IT-enabled recovery: Part 1

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In the run-up to the budget we will hear much special pleading for special measures because "IT is so important to the economy".  Investment in the IT related infrastructure, industries and jobs of the future is indeed at the heart of any credible programme for economic and social recovery.  But the misuse of IT, focussing on the technology instead of the information and the people processes, is at the heart of our economic problems.

- The financial crisis was caused in large part by a failure of information governance (the casino bankers did not appreciate how many of their risks were closely correlated).

- The government funding crisis was in large part the rsult of another failure of information governance. Much, perhaps even most, of the information used for service delivery, let alone planning, was systemically flawed.

- The future has been mortgaged with a toxic mix of inflexible outsourcing and PFI contracts, many with already obsolete and disfunctional IT components locked in for years to come.

Meanwhile DTI/BIS, has a 50 year track record of turning IT-related potential winners into losers and two decades of outsourcing has hollowed out the skills of the rest of central government to do much more than plan challenge programmes and employ think tanks and consultancies to organise yet more PFI and outsourcing contracts.

Unless and until the in-house skills and experience of the Civil Service have been rebuilt, the less that central government does, the less harm it will do.   But first it must stop the bleeding .

Unless and until public finances are brought under control the Chancellor has to prevent a run on sterling by taking short term measures, such as quantitative easing (alias wiping out the savings and pension funds of the middle classes by forcing UK banks and insurance companies to led to government at zero interest rates while inflating the currency).

Francis Maude has written of the need to address fraud as a second target after cutting waste. I would like to be able to disagree - save that public sector anti-fraud measures have tended to morph into spend on hardware, software and regulatory programmes that increase cost and risk, rather than remove vulnerabilities and deter and punish malpractice. I therefore suggest a "modest" nine point plan as the first part of my personal suggestions for inclusion in the Budget Statement.

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