Examination of Witnesses (Questions 40-59)
DEPARTMENT FOR
TRANSPORT
9 JUNE 2008
Q40 Mr Bacon: I have just been reading
Lou Gerstner's biography; he was the chap who turned round IBM.
I would just like to ask each of you a question. Mrs Moorhouse,
you are a graduate of Cambridge.
Miss Moorhouse: Oxford.
Q41 Mr Bacon: I am sorry; I can see
how you could be offended by that. You were at Oxford where you
read PPE and then you were in the private sector for ten years.
If I may say so, you have a reasonably smart looking CV. What
degree did you take? What honours degree did you take?
Miss Moorhouse: Politics, philosophy
and economics.
Q42 Mr Bacon: What class of degree?
Miss Moorhouse: Upper second.
Q43 Mr Bacon: Mr Devereux, you were
reading maths at St John's College, Oxford. What class of degree
did you get?
Mr Devereux: I got a second in
the days before they divided them.
Q44 Mr Bacon: I am sorry about that!
What Lou Gerstner says in his book right at the beginning when
he takes over IBM and tries to figure out what is wrong with it
that IBM, just like the Civil Service, has a very large concentration
of very talented people who are highly educated. He says, "I
began to puzzle over how such intelligent people could arrive
at such a morass". What I want to know is how is it that
such intelligent people as yourselves arrive at such a morass.
Mr Devereux: I think in order
to answer that you are inviting me to conclude that I am in a
morass. I have told the Chair already that the situation we find
ourselves in, in this snapshot, is not acceptable. We will turn
this round. How did we get here? The NAO has written down at some
length the four or five contributory factors which actually all
connect with each other as you can see: the time, the pressure,
the need to actually get on and define business processes (which
you acknowledge are difficult to do). If you put all of those
things together it comes to a difficult position. Was it the failure
of intelligence to even perceive this? We took advice from some
serious people. We did not embark on this on a "Let's just
do shared services"; we have done quite a bit of work on
it. The whole reason for having an outline business case followed
by an interim business case once you have got a design is to enable
you to note some of these things. We went through it in stages.
It is the case, as the record shows, that in that critical period
from about April 2006 to August 2006—post the design and
post the letting of contracts to suppliers who we must assumed
believed they could deliver this thing for August 2006—a
lot of things came out which actually meant that it was not possible
to do it in that time.
Q45 Mr Bacon: You remind me exactly
of what Helen Ghosh said to us not so long ago about the Rural
Payments Agency: "We advised ministers it was possible when
in fact it was impossible".
Mr Devereux: I did not advise
ministers.
Q46 Mr Bacon: I did not say that
you did, but you just reminded me of what you said.
Mr Devereux: Well, I am sorry.
Q47 Mr Bacon: The thing that strikes
me is that the problems that you have encountered are in some
respects absolutely classic: the failure to test adequately. This
is not new; we had that in tax credits; we had that over the Criminal
Records Bureau; we had that over the Passport Agency. There was
the failure to have somebody clearly in charge. When I was first
on this Committee seven years ago we looked at the National Probation
Service and the implementation system strategy; it had seven managers
in seven years. The NHS IT systems had six bosses in five years.
The Bowman Radio Communication System had nobody in charge. It
says here quite clearly at paragraph 1.22 on page 16: "Neither
the Programme Board nor the Driver and Vehicle Licensing Agency
initially appointed any one individual in Swansea to coordinate
the overall design of, and activities across, the five teams,
or delegate sufficient authority to the teams to act without continual
reference to the centre. Consequently, progress reporting to the
Programme Board in the central Department was often confused and
contradictory." Higher up it says, "The division of
responsibility ... weakened reporting and accountability and slowed
communications. ...Contractors working on the Programme told us
that it was often difficult to resolve issues as they received
inadequate or insufficient guidance." Surely getting these
questions resolved early on of who is in charge, who is responsible
and how the Programme management is actually going to operate
is essential to making adequate progress. Why was that not done?
Mr Devereux: You will understand
that I have spent quite a long time preparing for this hearing
to try and make sure I understand that story. Let me just observe
the following: because this was going to be a departmental exercise
which necessarily required all the different seven business units
you describe to subscribe to a single set of processes and yet
it was being built by the DVLA and its contractor without trying
to make it entirely a DVLA takeover, there is a sort of inherent
tension in there which I fear was never adequately resolved.
Q48 Mr Bacon: It was the responsibility
of the people at the top running the show to identify those tensions
and to resolve them so that the poor contractors at the bottom
are not running around in seven different directions at once.
Mr Devereux: I agree.
Q49 Mr Bacon: It was not done, was
it?
Mr Devereux: We have to look at
this in three pieces. There was a period in 2005/06—virtually
the whole of that financial year—during which the Department
was engaged in the design process. At that stage, very clearly,
the central department was coordinating, because, for the reasons
I have given you, we wanted to make sure this was going to turn
up with a system at the end of the day which each of the agencies
would buy into. That is quite different by the time you get to
April 2006 by which time we have appointed a director of Shared
Service Centre in Swansea. That individual has themselves signed
contracts with IBM which are warranted to deliver the system that
we have now designed by a roll out date of 31 August 2006. There
is one story going on in respect of the design period, 2005/06;
there is another one going on in respect of April to August 2006.
Q50 Mr Bacon: If IBM are going to
fulfil their obligations or what it says it is going to do, you
have to fulfil what you say you are going to do. Paragraph 1.16
at page 13 it says clearly: "Early fixed price agreements
with IBM" (which would have saved you money presumably) "had
not been successful as the Department had not fulfilled its obligations
in terms of making appropriately skilled staff available or making
design specifications sufficiently clear". There is no point
entering into an agreement with IBM if, when it comes down to
it, you cannot make available the appropriately skilled staff.
Surely if you enter into the agreement you should make sure you
are able to make the appropriate skilled staff available or you
do not do it.
Mr Devereux: Correct.
Q51 Mr Bacon: But you did not.
Mr Devereux: What we did was recognise
that that commitment was required. It was clear to the chief executives
in each of the agencies that we needed staff to be deployed in
Swansea from their businesses with detailed knowledge of their
own processes and preferably with detailed knowledge of the SAP
system. The reality was that those staff were not delivered.
Q52 Mr Bacon: I would just like to
go back to something you said to the Chairman. You talked about
the timetable being aggressive by design. It was a wonderful piece
of euphemism actually. You said it was aggressive by design but
the safety valve for this was intended to be slippage in migration.
That sounds very much like, "We decided to do it fast and
if it did not work we would do it slow". That is basically
what you are saying.
Mr Devereux: You can parody it
in that way.
Q53 Mr Bacon: I am actually trying
to translate it into English that all of us can understand.
Mr Devereux: I did not say with
the intention of.
Q54 Mr Bacon: Neither did I; I said,
"And if it does not work we would do it slow".
Mr Devereux: No, you said "intended"
I think. We could have set off to design and do this in two years;
that was a choice open to us in 2005. That is effectively what
we have done, we delivered this in April 2007, we started in April
2005. We chose not to do that. We chose to intend to try to get
this delivered in April 2006 in a one year timeframe. If you were
to say to me, "Surely that was madness, why did you set such
an aggressive timetable; you must have had a plan B up your sleeve",
the recognition was that if we did deliver this in 18 months that
would still be a good outcome. The question is: do you think that
if you give an organisation—and certainly seven organisations—more
time, is that time well spent? The judgment the Board was taking,
quite deliberately was "No, let's put some pressure on this
organisation; let's make sure that we try to get this through".
Q55 Mr Bacon: Surely to goodness,
Mr Devereux, whether the time is well spent or poorly spent depends
on how it is managed from the top.
Mr Devereux: That is correct.
Q56 Mr Bacon: I would just like to
ask you about the testing. In paragraph 1.19 it says, "To
limit cost increases, in November 2006 the Programme Board removed
some technical elements of the Programme, including the full pre-production
environment." That is a wonderful way of putting it, but
imagine if you were developing a motor car and your bosses said
to you, "Mr Devereux, I know you are developing a motor car
but in order to save on cost increases we want you to remove the
full pre-production environment". When finally the car hit
the showrooms would you want to buy it or get into it or drive
it, when you knew the pre-production environment to this car had
been removed?
Mr Devereux: If you are understanding
by "pre-production environment" something that was on
the critical path to the first of April you are misunderstanding
what that is.
Q57 Mr Bacon: It means adequate testing,
does it not?
Mr Devereux: No, it does not;
that is what I am trying to describe. This piece of the software
system is basically there to replicate the built system in order
that subsequent releases could be safely tested off the live system.
Since in this period we are actually talking about getting to
the start of the first live system, it is strictly not on the
critical path.
Q58 Mr Bacon: It says further down
in that paragraph that they were actually in practice tested on
the live system: "When the first two agencies began using
shared services in April 2007, all further system upgrades and
remedial testing were conducted on the live system".
Mr Devereux: That is what I have
just said. The result of not having the pre-production environment
was that subsequent releases were tested on the live system.
Q59 Mr Bacon: What I meant was inadequate
testing of the thing before you go live. That is all I was trying
to say.
Mr Devereux: I am making a distinction
in that going live for DVLA and the DSA on the first of April
2006 did not strictly require the pre-production environment in
the way you have just described. It is required absolutely for
the safe testing of subsequent releases. What the Report is saying
is that actually in the first instance, that environment not being
available, that safe testing environment did not exist. That is
why we subsequently put it back in again.
Chairman: I am sorry, I cannot delay
your migration any more Mr Bacon, your time is up.
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