Why inter-operability standards are essential for an open and competitive market

Bryan Glick’s summary of the “Big IT v. SME’s” debate and the need to change supplier behaviour raises many questions, not least “how we bring about genuine competition?”.

A little while ago, when blogging on the need for robust policies to preserve competition in the on-line world as a whole  I promised to reprise my script to a recent BASDA (the Business Software Developers Association) conference. I was asked to address the importance of inter-operability standards. These are boring but essential to genunine competition. Without  effective action on standards, the lobbyists of the oligopolists can still make a credible case to “Sir Humphrey” that the Minister will be happier with hiring consultants to plan a high cost/risk “delayed big bang” project (i.e. promises today, problems tomorrow: for his successor) than a low cost/risk incremental change programme. The former is safer for the minister – he will have moved on before the chickens come home to roast. The latter opens up the potential for criticism while the minister is still in office, whether the trials work (post code lottery because only a few have benefited) or not (waste of time/money, however small).

Chi Onwurah is correct in saying that we still need the big suppliers. If government is seeking to contract 25% of its business to SMEs that mean the big suppliers will still account for up to 75%, But securing value for money, with systems and contracts that can evolve over time, as needs and technologies changes, require fundamental changes in behaviour on the part of both government and its suppliers, small as well as large. The era of painfully negotiated, comprehensive and inflexible outsourcing contracts and PFI deals is coming to an end. Its demise will, however, be neither easy nor painless, unless and until major suppliers can find democratically accountable, (for public money and quality of service), ways of working flexibly and profitably with “families” of nimble, low overhead, innovators. Some suppliers are well down this route. But even they face problems because they risk cannibalising bread and butter revenue streams in favour of a reduced share of lower margin new business. The true winners are those (as yet only a handful) who have worked out how to use the opportunity to jobs back to the UK while dramatically cutting their off-shore, outsourced costs: the “win, win, win” strategy. 

I was, however, accused of “scaremongering” when I blogged on the possible implications of a recent criticism of a ministerial refusal to plough good money after bad until the end-user trials of the people processes the technology was to support had demonstrated success. I should therefore make a couple of disclaimers before I reprise the script I used when speaking to BASDA last month.

First as an occasional journalist and regular blogger:

I first wrote for Computer Weekly in 1973, when part of my London Business School Master’s project appeared as a ten part series on “Why Computer Systems Fail” (£15 per thousand words was good drinking money in those days). I have been an occasional contributor ever since. I have also written for others. I even had a column in Computing for some years. I started this blog in September 2007 when I was “convenor” (alias programme advisor) for the CW500. The aim was (and still is) to put political matters into IT context and IT matters into political context, mainly for the benefit of Heads of IT (whatever the current titIe of the poor sod who carries the can for delivering systems that work), for users (alias victims) and for investors (from finance directors to fund-managers).

Apart from occasional speaking engagements and advice on thought leadership opportunities I have not worked for a supplier since I left ICL in 1977. I then had five years outside IT as a corporaate planner for a UK-based multi-national before joining the NCC, originally to set up a technology assessment operation. When I left the NCC in 1986, I took with me the operation that I had joined the NCC to create: helping banks, fund managers and major users to appraise new technologies and the associated investment opportunities. That has entailed both avoiding vested interests and taking a cool look at innovations and market enthusiasms. 

Second as a volunteer, unpaid, politician:

In 1978 I was co-founder of the Conservative Computer Forum. About the same time, I volunteered as an ASTMS representative (I paid the political levy and remain a member of Unite) on the TUC studies for the Labour Party on the impact of new technology. Some of the studies on which I worked appeared in the policy papers of both sides in 1979: e.g. telecoms liberalisation and the micros in schools programme. Others did not: e.g. telecoms privatisation and IT Year. 

 In 1981 I was one of the co-founders of the all-party Parliamentary IT Committee (PITCOM). Shortly afterwards I stood down as chairman of the Conservative Computer Forum (after joining the National Computing Centre I was barred from appearing on party political platforms). In 1993 I agreed to organise the re-launch of EURIM. Until 2010 (when I stood down as Secretary General of EURIM) I devoted my energies to working on an all-party basis.

In 2010 I agreed to do a three year term as chairman of the Conservative Technology Forum with a remit to try get the younger generation to do as we had done in 1978-9: collating industry inputs into peer-reviewed recommendations for submission to those responsible for drafting party policy. I made clear that I still regarded most matters IT and tele-communications as cross-party rather than partisan and would continue to seek support for all-party, pan industry studies where practical.

I stood down as chairman of the CTF on March 31st but remain Vice-chairman (Policy Studies). The list of topics for which CTF is currently seeking volunteers and submission is on their website . The nearest Labour equivalents are probably Labour Digital   and the Digital Government programme although Labour has also announced studies into Digital Skills and on the Digital Creative Industries. When speaking to industry audiences, including via this blog, I strongly encourage listeners and readers to be active via the party of their choice – because the silent majority gets what is deserves – ignored.
Now to the meat of this blog: the script I used when speaking to BASDA on why action on inter-operability standards is as important as action on public sector skills if we really do wish to change the behaviour of government and its suppliers towards using IT to serve the community. This is relevant to the issues raised by Bryan because without such action, we risk perpetuating practices condemned as unfit for purpose by the National Audit Office, the Public Accounts Committee and the Public Administration Select Committee     

Why inter-operability standards are essential for an open and competitive markets
•    The on-line world is dominated by  an interlocking hierarchy of cartels
•    The Western economies are in recession 
•    Therefore monopolists can only  grow by vertical integration
•    Politicians and regulators are in ignorance, captivity or both
•    Competition cannot survive without enforced open standards
•    The layers of standards: technical, operational, service and business 
•    Who is the opposition: customers and competitors?
•     Who are your potential allies: customers and competitors?
•    You have to work to make standards less boring for politicians

Goodafternoon.  Standards are boring. I have been involved in the politicsof IT for over forty years and have met only three politicians who canstay awake, let alone understand what is at stake. The first was the 3rdViscount Chelmsford, who helped expedite the chip and pin card standardswhich now save us £billions by causing criminals to focus on Americanissued cards instead. The second was Malcolm Harbour MEP who sawe-Procurement and e-Invoicing thorough the European parliament. Thethird is Stephen McPartlandwho is trying to get the UK to implement what has already been agreed[insert link to report] because the slow take-up by the UK public sectoris still costing us £billions year in fraud and inefficiency.

[In retrospect I should have said half a dozen and included Andrew Miller, Chi Onwurah and Stephen Timms] 

Standardsmay be boring but they are important and those who do not participatein their formation get stitched up because the on-line world isdominated by monopolists running cartels which use standards games tolock in their customers and rig markets to their own advantage.

The on-line world is dominated by an interlocking hierarchy of cartels
•     Chipsets: ARM, IBM, Intel and who?
•    Global access: Google and Microsoft
•    UK access:  BT, Arqiva, Virgin, Vodafone/O2, EE  and resellers
•    Global switching : Alcatel-Lucent,  CISCO and Huawei
•    On-line Advertising:  Google and its acolytes
•    On-line  Retail:  Amazon, eBay and who?
•    Identity: Experian, Lexis Nexis,  Equifax , Call Credit   
•    Content: News International, TimeWarner, Netflix
•    Storage: EMC, Hadoop. Oracle, SAP   
•    Cloud: Amazon, Google, HP and IBM

TheInternet has been described as a cartel masquerading as anarchy.  Thebasic concepts may be simple and imply freedom and lack of control butthe reality is that it is now run by American Patent and Copyrightlawyers and lobbyists for their clients. To take a simple example. 10%of the world population now transact over mobiles. That nearly alwaysmeans an Arm or Intel chipset set in a phone that uses Android orWindows operating systems to find sites via Google. In the UK yourmobile signal will reach the peering centre via one of half a dozennational mobile and wifi services sharing  Arqiva Masts and BT routersand exchanges.

•    The Western economies are in recession 
•    Therefore monopolists can only  grow by vertical integration

Butthe Western World has not recovered from a banking crisis caused by agovernment created lending bubble in parallel with the dotcom boom. Themonopolists are therefore trying to eat each others’ lunch. BT is movinginto content to attack Sky and squeeze Talk Talk. They are retaliatingby moving into infrastructure in co-operation with City Fibre.  Amazon’sresale agency operations are attacking e-Bay. e-Bay is thereforehelping traditional retailers fight back against Amazon. The moviestudios are backing Netflix to take out the pirates on one side and theUS cable operators on the other. Google is taking on almost everyone.

How long before “G**gle-pay” makes an update on your financial status available to its customers before the payment reaches your bank?

•    Politicians and regulators are in ignorance, captivity or both
•    Competition cannot survive without enforced open standards

Centralgovernments and regulators are bewitched and enslaved by the lobbyistsand lawyers employed by major players. Google is now the second highestspender in Washington, behind GE but ahead of Apple, AT&T andeveryone else. In London it is said to spend more than the rest of the ICTindustry added together, save for BT which may get through even more. More-over many others are in their thrall because almost all on-linepromotion depends on positioning in Google searches.

The layers of standards: technical, Structural, service and business 
Component    Data definitions, Chipsets, software modules
Architecture   “Rules” for interconnectivity of devices, modules etc
Performance  Capability and performance of products and services
Process        Business models, service level agreements, liabilities

Thereare many layer models but this slide may help make sense of some of thegames being played.  Almost all modern systems involve hierarchies ofcomponents from multiple sources.  X805 is the ITU framework standardfor complex networked systems. It tracks dependencies, which versions ofwhich components and processes are used, to which standards they wereaudited, by whom and when. Its use depends access to libraries of therelevant audit results. Meanwhile major players talk open standards, inorder to invade new markets and then seek to lock in customers viaproducts and services that are vertically integrated using patented orcustomised sub-features.  Last week I was given the example of atelecoms supplier who had to take on extra staff because BT uses anon-standard on-line invoicing and payment system, and he has no wish tobe locked out from serving other customers.

The criticalimportance of Data Definitions as a foundation of effectiveinter-operability has not been over-taken by the wonders of fuzzy bigdata. Forty years ago, as a very young senior programmer, I was loanedto the auditors to help them check the value of our work in progress.One of my tasks was to help them merge part number master files withdifferent prices for supposedly identical electrical components. It wasonly later than I learned that some of the biggest differences were todo with testing for mean time between failure. A well known Germancarmaker lost its reputation for reliability when it used componentswhich began to fail after barely one year instead of ten to fifteen.

Wehave similar confusions over standards for certificating identities andcontracts.  Some services accept no liability for errors, likegovernment departments claiming Crown Immunity. Many US based serviceslimit their liability for $500 under the laws of the Commonwealth ofDelaware. Notaries take liability for up to a £million and Scriveners,the hidden monopoly at the heart of world trade, accept unlimitedliability – but exercise a rigor that is alien to most of the on-lineworld .

Why is progress so difficult given that HMG is supposedly in support?
•    Who is the opposition: customers and competitors?
•    Who are your potential allies: customers and competitors?
•    Those who have nothing to gain from procrastination but pain
•    You have to work to make standards less boring for politicians

Untilrecently UK central government commonly spent 30% more than Germany orHolland and double local government for equivalent IT services. It thentried to get the oligopoly suppliers to offer cuts of at least 10%. Itcould not get them to do so, except in return for extended contracts. Ithas therefore blocked new spend other than via frameworks, such asG-Cloud and PSN, which supposedly embed open standards. It is alsotrying to enforce spending cuts on Local Government of around over 30%and on some central government departments of 50%. These can only be metby cutting and merging services.    

HMG also aims to spend 25%of its spend via SMEs, but has yet to develop procurement routines thatwill enable these to lead innovative bids with support from largeplayers. But one of the advantages of inter-operability should be toreduce the risk of failure because the product or process can besupported or replaced by another supplier, albeit not necessarily at thesame cost. In the private sector this can be seamless with processes,as well as components, dual sourced. 

So what is not to like?

Thefirst problem is that those responsible for policy and implementationare used to big consultancies earning big fees for organising bigprocurements. They do not have the mindsets, let alone skills, to planincremental change, with small procurements staged over time. These arealso alien to most major consultancies.

One consequence is thatlittle business is yet flowing through the G-Cloud and PSN frameworksand the silos of state and their strategic partners have been spinningout the contracts of yester-year, hoping to ride out the drive forreform. 

They will fail because the Treasury has run out ofmoney. In consequence some large suppliers beginning to look at how towork with SMEs to bid for Local Government business, where the marketsare more open. They are not finding it easy because those in key rolesfind it much easier to justify prolonging existing contracts or to usesubtle variations, such as non-standard e-procurement and e-invoicing tolock SMEs into their supply chains as opposed to bidding in their ownright or, worse, via their competitors. 

Also we should notforget that one of the reasons for opposing change to common processes,particularly e-invoicing linked  robust, well-controlled  procurementand payment processes is to protect or prolong opportunities forfraud.    

I therefore recommend you submit evidence to the Labour Party Digital Government policy studies in parallel with inputsto Cabinet Office consultations, Select Committee Enquires and relevantConservative Party policy studies. I also recommend very publicco-operation via the all-party Digital Policy Alliance. We need toensure that the opponents of reform have nothing gain to gain but painby attempting to procrastinate until after the 2015 election.

Ihave a morass of material from reviews of DWP, HMRC, Cabinet Office andEU proposals for Identities, Real Time Information and so on. Mostindicates the value of twin track strategies for tax and benefits:separating the routines for the 80 – 90%, whose fortunes are reasonablypredictable, from the processes for helping the 10 – 20% who are in mostneed as they move drift in and out of work (usually with the smallfirms who are making such a predictable hash of RTI) or otherwise lurchfrom crisis to crisis. I also have much material on procurement andinvoicing which suggests we should facilitate choice between competingframeworks – so that customers can split procurements according to whichprovide them with attractive choices/prices and suppliers can supportthose which reach attractive customers at affordable cost.

Onceagain effective inter-operability standards are central to success – butfirst we have to put the benefits into political context – so that theycease to be boring.