Charity Finance Directors Group

Post-bureaucratic government, open platforms, and innovation: Why government IT should never be the same again

Mark ThompsonJudge Business School, CambridgeStrategy Director, Methods ConsultingICT Futures advisor, Cabinet Office

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Transformational government?Joined up public servicesDisaggregation & outsourcingAgencification private sector commercial practicesTop-down, managerialist conceptsBusiness people appointed to senior public sector rolesEmphasis on customers and contracts

Digital-era government?

Dunleavy & Margetts, 2010

actually, this is not really what happened!Public sector aggregated supply, not demandNo reference model across government; widespread were specialGovernment outsourced strategy & architectureContracts priced for risk, which was never outsourcedIntelligent Customer skills leeched away from public sectorTrack record of stupendous incompetence and bungling

Bespoke, complex, siloed, duplicatory, risky, and constrained - but why would anyone want to do anything differently?

sounds innovative, but

Level playing field?

An array of high cost programmes have run late, under-performed or failed (terminated) over the last 20 years:Inadequate information, resulting in the Government being unable to manage its needs successfullyOver-reliance on a small number of large suppliers and the virtual exclusion of small and medium sized (SME) suppliers, which tend to be less risk adverse and more innovativeFailure to integrate IT into the wider policy and business change programmesA tendency to commission large, complex projects which struggle to adapt to changing circumstancesOver-specifying security requirementsLack of sufficient leadership and skills to manage IT within the Civil Service, and in particular the absence of an intelligent customer function in Departments

Baked-in failure: IT is a good place to start

Lack of real understanding in governmentDisjointed, initiative approachNo real mechanism for holding govt to accountNo concrete plans for cascading into deptsCommercial confidentiality as barrier to transparencyIgnored recommendation to commission independent investigation into suppliersInsufficient attention to developing intelligent customer capability within govtNeed to engage in honest debate with question of public service redesign

Further issues

105 outsourced public sector ICT projects with significant cost overruns, delays and terminations: Average % cost overrun 30.5%Total value of contracts: 29.5 billionCost overruns totalled: 9.0 billion57% of contracts experienced cost overrunsAverage percentage cost overrun: 30.5%33% of contracts suffered major delays30% of contracts were terminated12.5% of Strategic Service Delivery Partnership contracts terminated or substantially reducedAnalysis (2007) of 105 projects outsourced by CCG, NHS, LAs, public bodies & agencies with significant cost overruns, delays and terminations. Cost increases are often underestimated as numbers reported usually only include payments to contractors, and not costs born by the client such as additional client staff engaged.Does this matter?

An Intelligent Customer?The Governments inability to act as an intelligent customer seems to be a consequence of its decision to outsource a large amount of its IT operations to the private sector.

The NAO noted that many IT contracts: Are for a government bodys whole ICT service, meaning that Civil Service Staff, knowledge skills, networks, and infrastructure have been transferred to a supplier. This has effectively locked government into specific contracts for the long-term.

So whats different now?Cabinet office is starting with IT But the prize is public services itself!Progressive recognition of:Focus on outcomes, open standardsCommercial implications of emerging open platformsAbility of utility services marketplace to deliver citizen-based servicesAn emerging reality:Systems & processes were traditionally integrated & clustered around supplier/technologyDis-integration of systems & processesRe-aggregation into blended services, clustered around citizen

Public service delivery will become unrecogniseableOrganisations will:transition from focus on inputs to outcomesplay the emerging utility marketplacebecome increasingly fixated on standard ways of doing thingsratchet up focus on TCOdis-integratebecome a Component Traderre-aggregateredefine what projects areThe market will:Re-organise around platformsPenalise idiosyncrasy

Do YOU haveAn undifferentiated outsourcing contract?A clear idea of TCO across your business?An idea of how you will be able to deliver new services, differently, using the utility model?Confidence that youre paying bargain-basement rates for bargain-basement commodities?A Target Operating Model?A comprehensive plan for exploiting the economics of the Open Innovation revolution?a way to transition from focusing on inputs to outcomes, across IT and then services?

IT has become an economic model

Bespoke products/services are expensive

Moving from innovation to commodity

Innovation to commodity

Supporting the innovation-commodity process

Supporting the commoditisation process

Different skillsets to manage these

and different activities

A new way of looking at IT-driven services

Skilling up

Open Platforms & Innovation

an unprecedentedly radical agenda

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Aaahh, but of course this model applies only to hi-tech / startups like Amazon or Google, and certainly not to government!

Extension of Open Innovation to business logicTrueOpen innovation lent itself particularly to tech artifacts, e.g. code, that could be standardised, chopped up & recombined easilyAnd then along cameXML, wrappering, SOA, open APIs, web services etc, allowing business logic to be standardised, chopped up, parsed, and purchased more accurately

Systems Integration

Systems dis-integration

Services re-aggregation

An increasing interest in/appetite for

Open standardsModularisationCommoditisationVirtualisationUtility/consumption models Post-bureaucratic delivery/new TOMsShared servicesNew, innovative servicesCloudResale/co-creation/revenue sharingNew ways of working/mobile

The need for a roadmap

with a clear business case for savings realisation

CostConstrainedHarmonisedEmbracingExploiting

ICTPeopleProcess

ServicesDedicatedSharedUtility

Service dis-integration

Service Re-aggregation

Revs and Bens in local govt will become unrecogniseable

Local government example: people

Building a component-based reference model Opportunity

Market MaturityDocument ManagementMail / messagingPaymentsWorkflowCash receiptingservice AL&T Resources (on-line content)Infrastructure servicesVideo conferencing (media services)Mail (collaboration)Payments (utility-based) + service BTraining provision On-line resources (e-learning)Payments + service CData InputProcessing Third party paymentsOutput + service D

Public service delivery will become unrecogniseableOrganisations will:transition from focus on inputs to outcomesplay the emerging utility marketplacebecome increasingly fixated on standard ways of doing thingsratchet up focus on TCOdis-integratebecome a Component Traderre-aggregateredefine what projects areThe market will:Re-organise around platformsPenalise idiosyncrasy

and IT lies at the heart of new delivery models!

Thank you