English Heritage: Gateway to cost-effective IT

Case study: To provide consistent and high-quality IT services across more than 130 sites, English Heritage relies on outsourcing.Helen Beckett hears how a balance of good relations, effective penalties and flexibility does the trick

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The glass and chrome building in the City of London that houses English Heritage's headquarters reveals an organisation that is very much part of the modern age.

Although English Heritage is responsible for preserving history, it uses high-tech methods to discharge its duty.

A rejection of the status quo in favour of continuous improvement has also been the philosophy behind an outsourcing strategy put in place by English Heritage's ICT director, Mike McElwee.

For the past eight years English Heritage has outsourced the delivery of IT services to its 130-plus sites across the UK. Historical sites under its stewardship range from Hadrian's Wall in the north to Carisbrooke Castle (pictured) on the Isle of White, which makes providing an acceptable and consistent service in-house a tough call.

"We have to link all of our people and some are located on pretty inaccessible sites," says McElwee. "Many of the core staff needed for delivery are based in London and it would be difficult to maintain a pool of people with the experience to meet service level agreements. You could probably do it on a good day."

McElwee says the beauty of using an outsourcing supplier is that it is possible to parachute people in if there is a crisis. "An outsourcing supplier can give technical staff a broader and better career path too, so there is better continuity of staff," he says.

English Heritage first decided to outsource eight years ago. But when McElwee took up his post seven years ago, the incumbent outsourcing provider was "not terribly impressive".

Part of the problem was that, as with any contract nearing the end of its life, it was hard to inject purpose and commitment into the proceedings. "They were still a credible player but part of the process of going to tender was a desire to establish a new regime," he recalls.

English Heritage put out to tender a contract to run the helpdesk, 2,500 desktops, management of wide area and local area networks, and server hosting. It eventually selected Atos Origin, and the deal, worth £3.5m per year, has been running for four years.

This alone may be seen as proof that the supplier met the brief, but as the relationship matures, the deal is providing greater value to both parties, according to McElwee.

One pointer to this comes in the recent accreditation of both parties with ISO 20000, the quality standard for service management. Not only is it the only example of a supplier and client achieving accreditation side by side, but it has also been accompanied by a financial advantage. The Atos account manager for English Heritage has recently been promoted to a troubleshooting role within his company.

While English Heritage recognises it provides a training ground for Atos, it is not jealous of the financial reward this its supplier may reap elsewhere. Rather, self-interest dictates that English Heritage is keen on its supplier being successful.

"We both need to win," says McElwee. "The advantage to us is that I have a good case to get best value for money. My budget goes down in real terms year on year. Every year I need to demonstrate cost savings to the board."

Having a partner committed to a cycle of continuous improvement makes it all possible. "It is easier to defend my position here because I have the performance levels and high user satisfaction," McElwee says.

This sophisticated perspective did not arrive overnight but has developed as the partnership evolved. However, McElwee went into the tendering process and contract negotiations with his eyes open and recommends building certain provisions into the contract from the outset.

First, he advises organisations to take the advice of outsourcing specialists in framing the specification and contract. "It is something that most companies are likely to do every seven years - certainly not often enough to be any good at it." English Heritage hired Hedra, a consultancy firm that recommended a particular style of penalty regime.

"We had a penalty regime with our previous supplier but it was so complicated it could take three weeks just to get £500 off them," says Mc­Elwee.

The Hedra version recognises that things go wrong and is lenient with one-off incidents. However, consecutive problems or problems that occur repeatedly are punished by a system of fines that increase incrementally.

The other advice English Heritage received was to enforce penalties whenever SLAs were breached.

"There was a situation at the outset of our contract with Atos when we had to hit them with a £17,000 penalty. We were under pressure to let it go because they were 'settling in'."

Hedra pointed out it was important to impose the penalty to preserve the contract. "If penalties are waived, we were advised there is a danger that a contract can be invalidated by de facto practice."

McElwee believes it is a tribute to the quality of the external advice that unanticipated incidents occurring during the first couple of years did not cause major problems.

"When we referred to the contract they were all covered," says McElwee, who reiterates the importance of building in extra time and seeking expert advice when formulating a greenfield outsourcing contract.

When it came to specifying the scope of the outsourcing contract, reliable performance was top of the agenda. This had not always been satisfactory in the previous regime, with response times to faults being an area of particular dissatisfaction for English Heritage.

The new contract tightened up these times and set a target of 96%, below which penalties could be invoked. In working out the optimum benchmark in terms of attainability and price, McElwee simulated various scenarios. A target of 90% availability would be an appalling performance, he says. "It would mean that people would be without their computer for half a day every week."

English Heritage established a norm based on a maximum of 30 minutes downtime per user per month, giving Wan, Lan and server availability targets of about 99.8%.

McElwee also subjected all SLAs to "sensitivity analysis". "We asked whether a 99.8% target was achievable or whether dropping it a fraction would reduce costs significantly. I needed to find out whether we were overloading resource to achieve unfeasible SLAs."

Similarly, his team asked tenderers whether they could improve or add extra services at little or no cost. "The questioning was all part of the value for money equation. Are we paying over the odds for something we do not need or are we missing a trick?"

Challenge has also been an essential component for keeping the outsourcing contract on track. One of the best decisions the IT department made was to retain a technical quality assurance person in-house to test the outsourcer's propositions.

"Challenge is a fundamental tool for improving things - you cannot lose. Either the challenge is resisted, in which case the proposition is strengthened, or the idea is changed and that also represents an improvement."

However, this sort of culture can be a difficult terrain to negotiate. "People do not like challenge. Some technical staff in particular do not like it - they can be very wedded to their ideas. The thing you have to get across is that it is not about catching people out, but about improvement."

Conversely, the other behaviour that makes challenge possible is giving credit where it is due. The IT department regularly conducts customer satisfaction surveys and "outs" individuals who have attracted praise.

It was also important for English Heritage to decide which items to keep outside the outsource contract. Project management, for example, was deemed more cost-effective when done in-house. The trick is to get the team the right size so that staff are always busy.

"We employ at the trough level rather than peak, and can take on extra resource when necessary," says McElwee.

Similarly, software development is a specialist activity at English Heritage, with many conservation applications not available as off-the-shelf packages. Because of this, the organisation has a 10-strong team of developers, based in Swindon, to program applications, including conservation casework, archaeological databases and "the workflow that lets us do what we have to do". Most are written in C# and other web-friendly languages as all software is designed to be accessible from a browser.

Meanwhile, a clause in the outsourcing contract specifies that Atos can be brought in to supply optional extras when demand dictates. Atos project-manages, in conjunction with KPMG on occasions.

Underlying these extras is the understanding that both parties win. Atos gains extra revenue without the expense of having to go out to tender, allowing English Heritage to expect the very best value for any extras.

English Heritage has learned a lot about what does and does not make an outsourcing relationship work. One of the curious aspects of success is the importance of communication with internal customers, which can count for more than the speed or the quality of the fix, says McElwee. "Communication is a behaviour we reinforce with our onsite team."

Ultimately, says McElwee, the deal with Atos is successful "because the team they have onsite here and the relationship we have with them works very well".

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