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Exiting large government IT contracts could take four years, document warns

Government Commercial Function's guidance on exiting large, monolithic outsourcing contracts says disaggregation takes longer than thought, and must be run as a business transformation programme

The Government Commercial Function has issued guidance to departments looking to exit large, monolithic IT contracts, warning it is a complex process.

The guidance document said exiting large IT contracts is a difficult task, often taking up to four years and requiring a significant amount of resources and planning.  

“Proper consideration should be given to the amount of time and resources required to provide sufficient time for the management of the complete exit and transition to a new service model; this typically, in reality, takes four years,” the document said.

The guidance comes after the Cabinet Office last year launched a review, dubbed “Ocean liner”, which aimed to establish new principles to help manage the move away from the many long-term outsourcing contracts that are due to expire in the coming years.

Current government policy is moving away from these large contracts to smaller, multi-supplier contracts, taking a cloud-first approach.

However, most government departments have outsourced most of their IT functions for many years, meaning they can lack the skills and capabilities needed to exit large outsourcing deals.

The document said departments have to set up the contract exit plan as “a business transformation programme”, as well as having the right governance in place.

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It said it’s important to identify “the skills and capabilities that will be needed in the future to manage a disaggregated model, which are very likely to be different from the ones organisations have needed previously and may be absent from the current organisation, e.g. service management and integration roles having a programme plan through the transition”.

“Exiting large outsourcing contracts and moving to a multi-supplier operating model is a strategic change programme and should be run as such,” it said. “The skills and resources required to manage such a complex project should be in place, and the programme should be run to a realistic timeframe.”

The document also highlighted the need for departments to undertake a review of its technology to understand its needs and develop a technical strategy, showing what changes are needed to ensure systems integration.

Several government departments are already in the midst, or have completed exits from large IT contracts. HM Revenue and Customs (HMRC), completed its exit from the £800m-a-year Aspire outsourcing contract earlier in 2017, but will keep some services running until 2020.  

During the department’s work on the contract exit, it was criticised for having unrealistic timelines for the project. ........ ....... . .. . . .. . .......

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