Everybody lost in NHS IT disaster

A degree of ironic congratulation is due to the Department of Health (DoH) and Cabinet Office minister Francis Maude for finally extricating the NHS from its disastrous contract with CSC.

The supplier, which was meant to deliver patient record systems to 160 NHS trusts, has ended up with just 10 trusts to complete.

The DoH says it has saved £1bn by renegotiating the original £3bn deal with CSC, but is reluctant to disclose how much it will ultimately spend with CSC. Let’s hope it’s not the apparent balance of £2bn – that would give 10 trusts a £200m patient record system each, which would probably be the least value for money IT projects in global healthcare history.

The irony of the congratulation comes in light of the billions that the DoH has spent over 10 years on the National Programme for IT (NPfIT) with such a poor return. There have been success stories – the Choose & Book appointment booking system (eventually), the PACS imaging system, NHS-wide email and the N3 broadband network – but based on the major objective of a national electronic patient record system, NPfIT was an abject failure.

According to a National Audit Office report last year, £6.4bn had been spent on the programme, with a further £4.3bn earmarked. Presumably, the £1bn saving with CSC is simply a reduction in that figure.

But it’s not only the NHS and the taxpayer that has lost from NPfIT.

Two of the originally contracted suppliers, Accenture and Fujitsu, quit or were thrown off the programme at significant cost to each after they found they couldn’t deliver their commitments and were losing money.

BT was forced to write off £1.6bn in 2009, due mainly to its NHS contract. BT at least had an early opportunity to renegotiate its deal before Maude’s austerity-led supplier renegotiations, and is probably feeling pretty smug now as it watches CSC’s woes.

CSC itself wrote off $1.5bn – effectively its entire investment in NPfIT – making a substantial loss on the contract, not to mention the reputational disaster it has been for one of the world’s largest IT services providers.

When the NPfIT contracts were first awarded, I was told privately by IBM and EDS – then the two biggest outsourcers in the world – that they wouldn’t touch the deals with a bargepole because the risks were weighted too heavily against the suppliers.

The architect of those deals, former NHS IT director-general Richard Granger, famously said he would “hold suppliers’ feet to the fire until the smell of burning flesh is overpowering.” Accenture, Fujitsu, BT and CSC certainly got their feet burned, even years after Granger quit.

Granger set out to reverse the historic perception that IT suppliers had Whitehall over a barrel when negotiating contracts, but hindsight shows that his combative style pushed the balance of risk too far the other way.

Therein lies the only real lesson that can be taken from the whole humiliating history of NPfIT.

It’s become a cliché, but major projects have to be a genuine partnership. That requires an intelligent buyer, with sufficient in-house skills to assess suppliers and hold them to account. It also requires suppliers who stop selling products and boxes and packaged services, and understand what it really means to deliver business outcomes. Sadly you would struggle to name a single major IT supplier who would fit that description, even today.

The government’s reaction to NPfIT – and other major IT disasters – is to loosen its reliance on big system integrators entirely, trying to find ways to make it easier for small IT firms to do business with Whitehall. There’s a long way to go with that one too, and we will be reading about mega-contracts going to global system integrators for a while yet.

CSC, meanwhile, gave the most entertainingly positive spin on the culmination of its negotiation with the NHS, calling it a “a significant milestone in our relationship with the NHS” and “a renewed commitment by the NHS and CSC to a long-term partnership.” Certainly it’s a significant milestone, and those 10 trusts are stuck with CSC’s Lorenzo patient record system for the long term.

CSC will compete on an equal footing with rivals for every other NHS trust as the NPfIT is dismantled and devolved to local IT purchasing decisions. On that basis alone, the only way is up for CSC.

Everybody lost in the NHS IT debacle. We can only hope everybody learned from the experience.

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