Government cannot be expected to get its IT requirements right at the outset of major projects, according to Inland Revenue IT director John Yard, speaking at the Government UK IT Summit in London, earlier this week.
Despite this, Yard said that the initial procurement of major government projects was easier than managing the long-term relationships with suppliers.
Yard, who last December broke a £3bn, 10-year outsourcing relationship with EDS for a Cap Gemini Ernst & Young consortium, called for flexibility on both sides of a major outsourcing programme.
On the government side, it is not possible to get requirements right at the outset. "In the world of politics that is a fact of life, so there has to be give and take," he said.
"Partnership and trust are used glibly but give and take is difficult to do," he added.
"You can’t foresee the future therefore the reality is that contracts won’t cover everything, therefore you need to negotiate after the signatures.
"The contract has to be a framework, with pricing elements and the right to negotiate. In 1994 we had no mention of e-business or the internet in our contract - we had to cope with that.
"One of the key things is to separate out management of the contract from the management of the relationship," he added. "Ask why did we do it the way we did originally; what has changed; and, does it really make sense to change now?"
Yard said that there have to be incentives for suppliers as well as penalties. "If you over-penalise it gets in the way of co-operative behaviour because there is too big a sword of Damocles hanging over their heads. What is better - to have a 99.8% service deal and penalise suppliers if they fall short; or to have a 98% service deal with a bonus for every 0.1% extra? Therefore, look at a mix of incentives - but make sure you budget for the 99.8% in order to pay the bonus."
Yard supported the move towards faster procurement cycles. "In principle it is right to shorten the cycle," he said, but warned that the speed depended on the type of programme. He added that when it is a case of business transformation end of the scale procurement will necessarily be slower, whereas if the programme is more at the data centre end it is possible to do it faster."
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