HM Revenue & Customs moves UK tax systems to the cloud

HM Revenue & Customs (HMRC) starts moving the IT systems that collect tax to the cloud, with much of the work going to Fujitsu

HM Revenue & Customs (HMRC) has started moving the IT system that collects tax in the UK into the cloud.

The department has finally completed the break-up of its Aspire outsourcing deal, which cost £800m per year. HMRC converted the overall contract with prime contractor Capgemini into three separate agreements. The new deal turns the two main sub-contractors – Fujitsu and Accenture – into direct contractors. The process, known as novation, took nearly three years to complete.

The deals represent approximately £2.8bn for Fujitsu across the lifetime of the Aspire contract - roughly 28% of the total; £1bn for Accenture; and the remainder to Capgemini.

The completion of novation means HMRC is now working with Fujitsu – which provides most of the datacentre hardware that runs the UK tax system – to migrate to the cloud.

“We now have direct relationships with Capgemini, Fujitsu and Accenture. Now we have got those relationships, that also means we have started some of the transition work, particularly with Fujitsu,” said HMRC chief digital and information officer Mark Dearnley, at a Public Accounts Committee (PAC) meeting in Parliament yesterday (16 March 2015).

“The infrastructure is all of the hardware – the servers, discs and all the storage that everything is on – and with Fujitsu we have already started the process to move off the dedicated hardware we have been on to date, and on to the private clouds they have been building for us.”

Read more about HMRC's Aspire outsourcing deal

In-house servers' 6.7% utilisation

At a previous PAC meeting in October 2014 to discuss the future of the Aspire contract, Dearnley revealed that HMRC’s servers had a utilisation rate of just 6.7%, due to the large peaks it had to accommodate for the self-assessment deadline. But moving to a cloud infrastructure will allow more effective access to compute power and greater flexibility, he told MPs.

“I think we talked last time about the utilisation of our current servers being very low - about 6%. That means we can have much higher utilisation. Even more importantly, private clouds get us in the position where we can start to move workloads - move the running of the applications between different providers and different datacentres,” he said.

“So, with Fujitsu and this model, over the next two years we get into a place where our infrastructure becomes portable and, instead of having to buy from dedicated datacentres, we can actually start to use the sort of digital services framework that the Crown Commercial Service offers us, and use many more providers to give us our infrastructure.”

Aspire is the largest IT outsourcing deal in the UK government, responsible for collecting £500bn of tax every year. The contract is due to expire in June 2017, by which time it will have cost the taxpayer more than £10bn. The PAC said earlier this year that it doubts that HMRC can move away from Aspire by that deadline.

HMRC services already in the cloud

But Dearnley told the committee this week that some services are already using cloud technologies.

“This year, through the self-assessment peak at the end of January, we ran two types of service – because it is our first year of using the cloud in anger,” he said.

“We ran our sort of traditional classic, for some of the stuff you use, which was all on dedicated infrastructure that had been sized for the peak minute of the peak hour of the peak day - and that infrastructure went in nine months in advance. 

"On the other side, where we were doing some of our new digital services, we were actually dynamically changing the number of services available, based on the number of users and the predictions for the next day. 

"So we have already started. We are not in a ‘turn them up and down every minute’ situation, but certainly on a daily basis now we are able to choose how many servers we have.”

Multiple supplier savings

The move away from the single monolithic Aspire deal to using multiple providers – and more in-house capability – is expected to save HMRC £200m per year, although Dearnley told the PAC meeting the total transition costs over the next five years will amount to £600m, with £100m of that being spent this year.

The business case for the Aspire transition plan was signed off by the Cabinet Office and the government’s Major Projects Authority, but is awaiting formal sign-off by the chancellor, George Osborne.  

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