Revenue cannot afford a failure

This week will see the largest ever transfer of IT staff, systems and intellectual property in the public sector.

This week will see the largest ever transfer of IT staff, systems and intellectual property in the public sector.

It will mark the culmination of the decision announced last December by the Inland Revenue to terminate a decade-long outsourcing agreement with EDS and replace it with a consortium led by Capgemini.

The decision was a brave and potentially risky attempt to break the shackles of supplier lock-in that concern all those using outsourced services in the public sector and far beyond.

It was also one that public sector IT professionals and observers, as well as some of the most powerful suppliers in the world, thought would never happen.

Even the complex competition devised by the Inland Revenue and the Office of Government Commerce, which included the unprecedented payment of millions of pounds towards suppliers' bidding costs, was not enough to persuade IBM to bid because it feared the outcome was preordained.

Once the decision to replace the incumbent was made, the Inland Revenue, EDS and Capgemini set out to make the transition as smooth as possible. The Revenue faces technology challenges around self-assessment and tax credits and EDS and Capgemini know that a trouble-free handover is essential to enhance their reputation as responsible suppliers in an increasingly competitive market.

With the handover imminent, there will be considerable satisfaction at the Inland Revenue about progress so far. However, there are still risks and issues to be resolved. On page 1 we highlight question marks over the transfer of a small number of key staff from EDS to Capgemini. On page 16 we highlight the concerns of tax professionals and businesses about the impact of a decline in service.

And looming behind all of this is the merger of the Inland Revenue with Customs and Excise to create a super finance ministry. Two sets of systems and two sets of outsourcers will be merged in one of the most complex central government IT projects yet seen.

With the House of Commons Public Accounts Committee last week attacking Customs and Excise's e-business transformation strategy for spending more than £100m "without a rigorous business case," and for ignoring Treasury project management best practice guidelines, we will need more than reassurances that lessons have been learnt and that mistakes have been rectified.

After so many well-publicised government IT disasters, it is in everyone's interest - not least the taxpayers and the IT industry - that the Inland Revenue gets its outsourcing transfer right.

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