back to article Outsourcing overruns cost UK taxpayers £9bn

A think tank has called for 'root and branch change' in public services, following its damning report on ICT outsourcing Research by the European Services Strategy Unit shows that 105 outsourced public sector ICT contracts have significant cost overruns, delays and terminations. The unit examined large outsourcing contracts, …

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Paris Hilton

Capgemini?

Surprised Capgemini aren't on the list. ContactPoint has been delayed, yet again, and developers can't begin integrating systems with it because Capgemini haven't released the specs yet, or so the story goes. I also notice that one of their other public sector clients is HMRC! Hmmmm.

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Unhappy

Not in their interest ...

It is not in the interest of the private outsource to meet time and cost schedules. They know that the inept Government managers will allow the projects to overrun and so exploit that weakness, understandably. And so we find ourselves in the current situation where every single Government ICT project overruns at our (taxpayers) cost.

A root and branch review is right - but will any Government have the stomach to accept that they have not the savvy to run such projects with ministerial intervention? Or that their contract negotiations are feeble in comparison to those negotiated in the private sector?

I really wouldn't trust these people to run a train set let alone the country. But hey! So long as someone is getting rich at our expense. That makes it all okay then.

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Thumb Down

Highly predictable

The drive to outsource in the public sector is invariably driven by two main forces: cut costs and political dogma neither of which will lead to an effective service.

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Alert

The Mythical Man Month

I once studied project management with the Open University. Amongst the reading material as a short book, written by Frederick Brooks, titled The Mythical man Month. It really ought to be compulsory reading for all concerned with project work.

The reality is, project scope is trimmed to fit the budget, though the project requirements are left intact. So, as time progresses the omitted components are gradually re introduced until the original project has been reinstated. As these components were removed to reduce costs, the reintroduction must reinstate the costs. This was an omitted cost.

As the components were omitted from the design (assuming a design exists), then their reinstatement has the undesirable side effect of requiring the design to be reworked to accommodate them. This is an increased costs.

Any components which have been completed that require interfacing to the reinstated components must be examined to assess and resolve any impact. This is a new cost.

It is easy to see that changes made to a project once development has started are rather expensive, with three areas requiring attention, costs will escalate rapidly and far beyond the original estimates for development.

* The Mythical Man Month asserts that men and months are not interchangeable. It is only when the accountants realise this and that some tasks are immutable, that projects will ever be properly planned and funded.

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Mythical Spreadsheet Month

Mythical Man Month is a series of thoughts on two very big projects - the IBM 360 series of computers, and the 0S-360 operating system. These were comparable in size to the big failures we see today. One simple rule is if you have a big-ish project and it is slipping, the more people you add, the worse it gets. However there's much more to it than that, and it should be mandatory reading for all IT Managers. Unfortunately since it was written we have seen the rise of spreadsheet/plan-driven IT. Nowadays as projects slip, the big SIs just add in more spreadsheets, plans reports etc. One reason is you can charge say £400 for someone who produces working software whereas you can charge £1000 for a project manager who doesn't. And you can have as many project managers as you like. You're only limited by desk space and number of toilets. Having worked with EDS, Accenture, C******** and Fujitsu and doubt we will get away from this multi-billion waste. It's not just their fault by the way. The Public Sector ties them up in counter-productive bureaucracy and mind-bogglingly labyrinthine contracts. I don't see a way out until the world embraces Agile, and it won't happen any time soon.

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Jobs Horns

dear register reader

Dear Register Reader,

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yours bumbingly,

Gordon Br^H^HSmith

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Anonymous Coward

Is this ironic or what?

The people who collect the money that pays for all this are one of the victims of the mess, so they find it harder to collect the money.

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Silver badge

Meanwhile, in the commercial world

Every outsourcing project has met its goals and come in on time and at or under budget, no? So don't simply blame the sheer incompetence of our government (though heaven knows there's enough of that to go round) - look at the whole concept of outsourcing.

There is a genuine case that can be made for outsourcing a business activity, but this will almost always boil down to "we're not big enough to carry this out on our own". But the real reason why most outsourcing projects are approved is so that a short term 'profit' item can be fed into the financials for the next quarter/year (as the existing 'assets' are 'sold' to the outsourcer) and massaged by the beancounters to look like a real boost in business activity - increased bonuses and triple gins all round!

The headline "this move will save us £x billion over the next y years" is pure window dressing, and by the time anyone's left to evaluate the results, all those responsible will have taken their bonuses and run to the next 'opportunity'.

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Stop

When will they learn?

Or better still, when will they stop f***ing about with our taxes and realise that outsourcing is not the way forward? Having worked as a Civil Service IT officer and been privatised I will happily swear on a stack of the holy book of your choice that we managed the system better when we were Civil Servants. I have never in my born days worked for a more chaotic organisation than EDS. No-one seems to know who works for who, jobs are assigned on the basis of arse-kissing - sorry, networking, rather than ability and staff turnover is so fast that the management structure (such as it is) resembles a jelly. I used to love my work and was proud to be a Crown servant (although that's not fashionable these days). Now I dread getting up in the morning and spend my time trying to work out how soon I can retire.

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Pirate

Someone has got to pay

How can anyone be surprised about stuff like this?

It's endemic in the states too.

So many outsourcing contracts are rushed through with little to no cost analysis.

As a rule of thumb you can use when considering stocks if the company outsources then they usually also have extraordinary executive payouts if they are not corrupt through

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Just follow the money ....

One of the key features of these deals is that no matter how poorly the supplier performs they are never penalised for it. Indeed, the larger the overrun the more money they make. So, funnily enough, we are then treated to the utterly predictable spectacle of businesses seeking to maximise their profits. Like it or lump it, that's capitalism and the onus is very much on the customer not to put up with it.

So why are those on the Govt side so lamentably awful at negotiating and managing such contracts ? Just look at how much they're paid and all will become clear. They send a bunch of low paid (and frankly low ability) drones, the company sends a bunch of highly paid and well motivated (bonuses !) sharks. No contest.

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Anonymous Coward

Run Forest!

The above is true, the beancounters massage the figures, the bosses run to the next big project and its left to fend for itself in delivery (Usually India) which by then its someone elses problem.

Not nice, but with no final salary pension and no real benefits your best to change jobs/roles a lot in order to get cash to keep you in retirement and of course to make more money as your a 'success'.

Welcome to the world of I.T, and thats not simply outsourcing, its survival :)

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hmm

Having had the unfortunate pleasure of being contracted to a high profile government service i have seen overspending of an extreme nature.. one provider (after 2.5 years of trying to get a project going) added 20+ % plus there fees etc for non delivery of services to the baseline of the project increasing costs from approx 87k to over 400k...at the same time the managers and department heads decided that there would be no rate rises for the contract staff and that they would impose a 4 year cap on contractors, even though the majority of the contractors provided all the services and knew all the systems...

cannot wait for the olympics!!!!

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Black Helicopters

Derek Miers

Well it looks like we all agree - there are multiple culprits. Society is at fault ... yada, yada.

Another finger can be pointed at the inherent role of IT and their "relationship" with the business - I see it all the time. And its not that the public sector is necessarily any worse than those in the commercial world.

Business Management want a predictable service from their IT function. They have been taught that all of this stuff is far to hard to worry their pretty little heads about. IT need to write down everything that moves into a 400 page document (your classical functional requirements spec). IT then give Mgt about 2 days to read and inwardly digest coz otherwise their precious pet project is going to slip ...

Ask yourself this question - "Have you ever seen a Functional Requirements Spec that has stood the test of time?" ... i.e. that which was delivered (or better still required) is as was written down all those months or years ago. In my public speaking I ask this simple question when trying to get people to realise the implications of iterative development cycles (associated with BPM) ... and I have never, ever had anyone profer an example of a project that did.

We have taught biz users to think they can "outsource" the problem to IT, when of course they need to be intimately engaged in evolving a solution and ensuring it is successful.

Add to that the desire for IT to reduce risk (and the biz has seen what a mess they have made in the past), and you get a desire to find someone else you can take to court.

Summing up - Outsourcing these sorts of projects is tantamount to "Abbrogating Responsibility for Change". It is just something that an organisation just cannot outsource. Sure, get some project support resources from outside, but dont ask a multi-billion dollar consulting firm to save you money. They wont.

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Unhappy

HMRC experience

I spent 18 months as a technical consultant at HMRC over a decade ago. The civil servants I was working with were competent, concientious and eager to extend their abilities. My colleague and I were a good match for what we had to do (analysis and design), but at the end of 18 months there was nothing to show at all apart from yet another shelved design. This was the third project in a row that had failed to implement this particular requirement.

All three projects failed for the same reason: the upper levels of HMCE management were either grossly incompetent or much more interested in empire building and playing internal HMCE politics than in the departments' designated tasks. As far as I could see, competence and due diligence were non-existent above the project management level.

Internal politics: the next level up from project management were either empire builders or paid more attention to non-work interests than to the job they were paid to do.

Incompetence: their bosses didn't see that such practises were rife and kick arse appropriately.

It seems that nothing has changed in the interim.

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