Written evidence from XML Solutions
I am from a small company which specialises in advising
on large scale and government Healthcare ICT projects. I worked
on the National Programme for IT for seven years working for the
final two years as the Chief Architect on the NHS Spine. I learnt
a tremendous amount about the challenges—technical and commercial—of
modern Healthcare IT and large government projects. Further to
speaking with a clerk of the committee, Phillip Aylett, I have
agreed to make a short note on a few of the challenges that were
faced by the National Programme which have perhaps not been so
widely understood in the investigations to date. There are many
subtle problems which helped escalate the costs of the NHS National
Programme for IT. Some have been addressed in the NAO report.
Many other factors are perhaps only evident to those on the "front
line" of delivery and in what follows I attempt to explain
just a couple of these. I hope it will be of interest to the committee.
The first of the phenomena I want to discuss goes
some way to explaining the spiralling costs and inefficiencies
of many large government projects. The government has already
recognised that there are inefficiencies in these projects and
sensibly proposes to cap the size of projects in future. However,
this note elaborates one of the many subtle reasons why costs
spiral.
Every large programme inevitably has to allow for
elements of change. Whenever a new deliverable is negotiated,
the government reasonably wants to limit the potential profit
a private organisation can make on that change. In order to do
this they specify a fixed profit margin (somewhere between five
and fifteen percent depending on the type of change) on each change.
Although on the face of it this approach seems sensible it actually
encourages inefficiency in the system. When the government requests
a change the supplier must estimate the cost of the change. To
do this they will in turn talk to their sub-contractors. However,
because there is a fixed percentage that the supplier can make
there is no incentive for them to encourage their sub-contractors
to make the additions in the most efficient way possibly. In fact,
perversely there is a subconscious incentive for the main supplier
to encourage its subcontractors to be expensive because 15% of
five million is obviously a lot more profit than 15% of one million.
I should emphasise that in no cases do suppliers consciously overestimate
the cost of change. However, I have observed on many occasions
the collective unconscious of an organisation going through this
process and then watched the additional waste of effort as the
department of Health (or CFH) spend weeks arguing about the estimate.
In summary, the committee should consider finding
commercial structures which reasonably limit the profit a major
supplier can make but which none the less still encourage creativity
and efficiency in the supplier. If the committee are able to recommend
commercial relationships that resolve this issue they will be
providing a great service to future government projects, even
those of the relatively smaller £100 million scale.
The original requirements of the NHS National Programme
for IT included substantial services on the Spine which were to
be used by the LSPs. However, one area of hidden losses to NHS
patients is the lack of functionality that has been taken-up from
the Spine. It is worth remembering that the National Programme
was essentially an integration activity that relied on all parts
of that system working together. For example, the PSIS (the store
of the Summary Care Record) has been designed and built to support
much more than the basic records that are being used today. Similarly,
the Access Control Service, originally envisaged as a nationally
utilised system, is now likely to be extremely underutilised.
As such, many hidden losses result not from non-delivery of LSP
components but from the lack of utilisation of already delivered
Spine components. This is not necessarily to assume that all these
services should now be fully utilised, but the fact there they
have been paid for without their full value being gained by the
NHS should be recorded.[1]
In summary, the committee should consider quantifying these losses
in terms of the lack of adoption of Spine services and the general
reduced level of integration between systems.
I hope these notes have been of some use and wish
to offer the committee my sincerest wishes that they are able
to assess and provide useful recommendations for the future of
these services.
28 June 2011
1 I note that the NAO report appears to mark Spine
Services as "fully utilised". Whilst I would not want
to contradict this more measured report, that assumption does
not accord precisely with my understanding. Back
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