3 Lack of Information
14. The data we needed to assess the current state
of government IT proved hard to come by. To overcome this lack
of information we sent a questionnaire to a number of Government
Departments to secure more detail about their IT operations. The
quality of the responses was variable.[33]
This was not because Departments were unwilling to release this
information, but because the data we requested did not exist.
The Minister was open with us about the lack of information
on this issue:
the quality of our central data is very poor.
When we were renegotiating contracts last summer with the biggest
suppliers, the central data was woefully inadequate, and we only
got the data in the first instance by asking the suppliers themselves.[34]
The Government has already committed to improve the
quality of the data held centrally.[35]
15. Having access to up-to-date and accurate information
about government IT is essential if the Government is to reform
its IT successfully. Without it the Cabinet Office will be unable
to monitor and enforce its programme of reforms. We were particularly
shocked to learn that, on coming to office, the Minister had to
ask the IT suppliers for information about the value of their
contracts. We welcome the Government's commitment to rectifying
this situation. We recommend that the Government work with the
NAO to identify which data it needs to gather to monitor the progress
of its reforms and outline in its response to this Report what
information will be collected by departments and how frequently
this data will be gathered.
Benchmarking
16. Our evidence shows that central government IT
expenditure is less cost-effective than either the private sector
or local government. Socitm's annual IT Trends survey indicates
that local government secures better value for money than central
government:
It is widely accepted that 3% is a benchmark
of good practice in the private sector service industries for
ICT spend as a percentage of total revenue expenditure. Socitm
benchmarking in recent years has demonstrated that local government
organisations spend consistently less than 3% [on ICT...] the
average for the percentage of total revenue expenditure spent
on ICT in central government departments is at least 5%.[36]
Other figures confirmed this. According to the UK
Central Government IT Benchmarking Study conducted by Gartner[37]
in 2005 median total cost of ownership per Government desktop
was running at £2,300, when best practice was around £1,800
a year[38] The Network
for the Post-Bureaucratic Age found that Departments were paying
between £800 and £1,600 per annum for each computer.
Other figures have shown that the Cabinet Office spent an average
of £3,664 per desktop computer for each full-time employee.[39]
At a time when the annual deficit is necessitating large reductions
in public spending, such waste is unacceptable.
17. In addition to paying higher than average prices
for some goods, Sir Phillip Green's efficiency review of government
spending also identified a high degree of price variation for
the same item across different Departments.[40]
The review identified the "very poor" quality
of data as one of the reasons for the Government's failure to
achieve better value for money. Similarly Socitm pointed out that:
Benchmarking is an essential first step to service
improvement. [...]The very fact that it is so difficult to obtain
comparative data about ICT costs and performance for central government
speaks volumes.[41]
18. When we raised these issues with Ian Watmore
he agreed that the Government should do more to assess and compare
its expenditure and performance, saying it was "a really
fertile area to explore".[42]
However, he cautioned that there could be difficulties in attempting
to secure benchmarking data for more complex projects, such as
those that dealt with retirement pensions.[43]
19. The SMEs that contributed to our private seminar
were unimpressed by this response, saying that benchmarking was
routinely conducted amongst their private sector clients, even
for complex bespoke projects. They did not agree that the nature
of government presented any special challenges. They also alleged
that a lack of benchmarking data enabled large systems integrators
(SIs) to charge between 7 to 10 times more than their standard
commercial costs.
20. The poor benchmarking of central government's
IT expenditure is unacceptable. Without this information it will
not be possible for the Government to advance effectively its
cost reduction agenda. We recommend that the Government should
investigate the claims of overcharging put to us and seek to identify
reliable and comparable cost benchmarks, and collect accurate
information from departments in order to compare with those benchmarks.
Where possible bespoke projects should also be benchmarked, and
the Government should trial ways of conducting benchmarking exercises
for its more complex projects. The Government should use independent
and specialist advisers and the NAO to assist with identifying
objective benchmarking measurements.
TRANSPARENCY
21. Making detailed information on IT expenditure
publicly available for scrutiny would enhance the Government's
ability to generate savings, by allowing external challenge of
its spending decisions. The Government has already taken steps
to provide more information about IT projects and expenditure
in general, especially through the work of the Transparency Board
and its publication of contracts on Contract Finder.[44]
22. To realise the full benefits of transparency,
this is not sufficient. More information should be made public
by default. If the Government want external experts to suggest
ways of how it can reduce expenditure, publication of the raw
spend on IT reveals little. Wherever possible the Government should
provide information about system architecture and design, about
the hardware and software it uses, and the rate paid for commodities
and services. This would enable external commentators and the
incumbents' competitors to be in a better position to suggest
ways in which existing systems and services could be delivered
differently, as well as at a lower cost. In the longer term it
would enable potential alternative suppliers to compete more effectively
for blocks of work.
23. We recognise that there will be resistance to
this approach. Governments have traditionally limited their ability
to publish this information by signing commercial confidentiality
agreements with companies. In future such agreements must be severely
restricted to enable the Government to publish detailed contractual
information about how much they are paying for different services
and products within a contract. This should disadvantage nobody
if all suppliers are treated the same. Our predecessor Committee
examined the issue of commercial confidentiality in government
contracts in 1998. It concluded that those bidding for government
contracts should regard the need to be open about what they were
providing to government as "part of the cost of doing
business with the public sector" arguing that "publishing
details of successful tenders may encourage new suppliers to come
forward with more competitive bids when contracts are renewed."[45]
24. More challenging will be the obstacles to using
this information to achieve a better deal once a contract has
been signed. The Government cannot easily cancel an existing contract
if it subsequently receives ideas for a better or more cost effective
approach. In some cases it will be necessary to wait until a contract
comes up for renewal to realise these savings. Therefore the Government
should seek to disaggregate its large contracts to reduce both
their scope and length. The Government should also consider, as
an interim measure, renegotiating terms with the incumbent, encouraging
the company to reduce cost where other groups have provided evidence
that it is possible to deliver outcomes in a more effective manner.
It could also encourage the incumbent supplier to sub-contract
the work to another company better able to reduce costs.
25. Making data about expenditure available is
not only a good discipline for departments; it also allows the
Government to harness independent views on how to deliver services
more cost effectively. The Government should publish in full all
contracts. It should publish as much information as possible about
how it runs its IT to enable effective benchmarking and to allow
external experts to suggest different and more economical and
effective ways of running its systems. Feedback it receives based
on this information should be used to challenge and hold to account
current providers, and to renegotiate, disaggregate and re-compete
existing contracts where it becomes clear that more cost effective
delivery mechanisms are available.
33 Available on-line at Error! Bookmark not defined.
Back
34
Q 497 [Mr Maude] Back
35
Q 522 Back
36
Ev 136 Back
37
A leading information technology research and advisory company. Back
38
Quoted in "G-Cloud will save £1.2 billion says John
Suffolk, government CIO", CIO, 19th October 2010.
See Error! Bookmark not defined. Back
39
"Cabinet Office paying £3,664 per desktop computer",
PC Pro 13 May 2011 Error! Bookmark not defined. Back
40
Error! Bookmark not defined. Back
41
Ev 137 Back
42
Q 503 Back
43
Q 531 Back
44
Error! Bookmark not defined. Back
45
Public Administration Select Committee, Third Report of the Session
1997-98, Your Right to Know: The Government's Proposals for
a Freedom of Information Act, HC 398 Back
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