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Editor's Notes

1. WelcomeGreat to be here again. I’ve spent the last 15 years helping CIOs and IT Directors improve their IT Functions including a 3 year spell as an IT Director in central government. At North Highland I’m our global lead for CIO services. Today I’d like to share Our thoughts on - The IT function - The Digital Transformation - and their roles in reducing the cost of government and thereby the national debt.and hopefully get some of your thoughts too.If you’d like to follow on your own device the slides are available at …
2. I’ll be very brief on the Debt as I think we are all familiar with that, moving quickly on to the contribution IT can make and the challenges facing the IT function if it is to play a significant role.North Highland’s business has been built on being the ‘friend of the CIO’ and we’ve improvedcapability in many of our clients IT functions. I think today many PS IT functionsstand at a junction with Transformation Champion one way and irrelevance the other. I’ll finish by talking about what we think they need to do to take the road to stardom.
3. The red bars on the left show we’ve increased PS debt every year since 2001-2 and we are going to be increasing it until 2018The annual interest on that debt is about £45Bn or to make that real £1500 a year from every person paying income taxYou can see from the pie chart it’s not an insignificant amount. It’s the same as our spend on DefenceWe stop increasing the debt by 2018 if we achieve the £25Bn cuts the Chancellor outlined last week.From 2018 we can start paying back and the interest will decrease, but it’s a long road.
4. One thing we can all agree on. It’s a big problem, and it’s not going away anytime soonAnd whilst that is not a great position, it is a great opportunity that we must seize. Transforming large established organisations requires a crisis that everyone can unite behind and this is ours.
5. So focusing on two major contributions the IT function can help with. The first is to reduce the cost of IT which the OfT estimated at £13.8Bn for 2011-12.If we could reduce this by 25% over the next few years we would end up saving £3.45bn a year.
6. Better sourcing models, sharing risk, more efficient procurement, using SME’s and cheaper solutions such as open source may be able to deliver this.The second is to help the operations outside of the IT function save money by transforming.
7. Transforming isn’t just about IT but IT has a huge roleThe current digital by defaultfocus on services and transactions for the top 25 exemplars will deliver £1.7Bn annuallyThe Policy Exchange report last year estimated savings of £24Bn per year could be realised through digital transformation by 2020.
8. But this isn’t necessarily a choice!Indeed, we believe that some of the internal changes IT needs to make to reduce cost will also give it the agility it needs to help the rest of the organisation reduce costs So what’s the status and the challenges ahead…
9. At the close of 2013 almost every element of the Government digital strategy had been proved - somewhere
10. G-Cloud has proved we can do agile procurement - £77m March-Oct 50% on SMERecently joined by Digital Services Framework opened in Nov with 183 suppliers of which 84% are SMEs.
11. Gov.uk – Agile in PS at scale. The 24 Ministerial departments all live on Gov.uk
12. William Perrin did a great job of showing us the power of information in 2008 The Open data movement in government is now past critical mass. Looking at: - data.gov.uk and the ToGo package - the Government Interrogating Spending Tool (GIST) and you can see there has been a very fundamental mindset shift.
13. Channel Shift Savings are provenGov.uk is an order of magnitude cheaper than it’s successors.The transactions explorer gives transparency on the cost by channelAll of this is fantastic progress, which has been exciting to watchbut it’s a few hundred people driving the change in a population of 5m.Now the trailblazers and heroes have provided the trail2014 is the year we need to follow en-masse. This year we all have a choice…. to follow the trailblazers, or be part of the legacy problem.For IT functions following presents some huge challenges and I think their actions next year will determine whether they can become digital efficiency champions or get stuck on the slow road to irrelevance.
14. This Triangle I’ve drawn represents a simplified ecosystem of public sector IT supply. I think there are some quite fundamental changes required at each Vertex And it’s very difficult to change the fundamentals of how you do things if those you work with aren’t changing too.
15. The IT function itself needs to move from trying to outsource overall risk - ‘one throat to choke’ to sourcing simpler commodity services where its’ easy to switch any one supplierIt needs to - build technical knowledge in-house about how the services are integrated - move from 5 year refresh to monthly releases - focus on building to change rather than building to last, - work with the business on their ideas, - play with solutions that might meet the user need, Stop demanding a detailed statement of requirements before considering a change
16. Procurement needs to Focus less on the art of procurement and more on the customer needsIt needs to tolerate risk, both in the process and in the contractsMore agile procurement means less fire and forget more ongoing managementIt needs to create contracts that are simpler to get into and to get out ofIt needs to move away from contracts that provide a technology refresh in exchange for years of sweating the assets and are hugely focused on contractual ‘keep the lights on’ SLA’sIt needs to become fast lean and agile
17. IT BPO Suppliers have built businesses on delivering against keep the lights on contracts for their clients as cheaply as possible.Often buying run contracts and making the margin on changes the ‘run contract’ gives them a monopoly on.They need to change to a business model that isn’t so dependent on the long guaranteed revenue streamsThey need to be able to compete for smaller bits of work continuouslyThey need to get to grips with new technologies and new build cycles.
18. So each vertex has to effect a fundamental change, And in many organisations the drive for change is coming from outside this ecosystemThe first question on digital leaders lips when looking at transforming services is rightly “what is the user need” so they are often working with Customer services, Marketing, Communications or a Service Transformation programme, which may or may not have IT on board
19. So what we often see is a Service Transformation programme using Agile methods reaching out to IT: - it has changing requirements, - it doesn’t have a detailed specification, - it wants to try something that is likely to change as they go, - it wants to go live in a few weeks and the plan after that is unclearThis is difficult for most IT functions, even if they are open to it, the ecosystem might not be equipped to deal with it. There will probably be a need to procure something quickly They might need to get an API from one of their suppliers working quicklyContracts not built for this scenario might get in the waySo the likely result is……very different views from either side
20. The IT ecosystem views the programme as cowboys
21. The programme views the IT ecosystem as the department of No.And they don’t co-operate
22. This is not a UK PS problem. The growing turf war in the private sector between marketing and IT is well documented but not resolved.If it’s war, there will be casualties on both sides, and progress will be slowed, but if IT functions choose to fight we don’t think this is a war they are going to win.So… what should those of us on the IT side do…
23. So I think IT functions need to act fast and be very proactive in addressing this agendaI’ve identified 7 things I think they need to do, it would be useful for us to all share where we are on these, you can share and see that by completing the short poll Now as we go through, or throughout the day.
24. The Public Sector debt problem creates an essential unifying burning platform for transformation, our opportunityVirtually all the elements of the digital strategy have now been proven somewhereBut it’s a few people doing some really good work (a few 100 out of 5m LG&CG civil servants)and to accelerate the pace we need to follow en-masseIf IT functions are going to be part of this they need to be very proactively preparing themselves, otherwise they will be viewed as the “dept. of no” and left with the soul destroying job of keeping the legacy IT lights on and getting a kicking every-time they go out. I believe transformation will deliver value quicker if todays IT function can be tomorrows Digital Efficiency champion