Q&A: EY director on the dangers of disaggregation and why local government is innovating more than Whitehall

Written by Sam Trendall on 27 July 2017 in Features
Features

John Thompson explains how his firm’s government engagements are evolving, and why the trend of ditching IT mega-deals has created ‘its own rogues gallery of failed projects’

'There is a growing sense that government is providing cross-departmental leadership in key areas', according to EY's John Thompson  Credit: PA

With operations spanning local councils and healthcare services, right through to the heart of government in Whitehall, the public sector is a major market for auditing and advisory giant EY. The firm provides public institutions with a range of offerings, including technology consultancy and infrastructure services, as well as its more traditional auditing business, covering areas such as tax, compliance, and fraud investigation.

John Thompson, a director in the firm’s Government and Public Sector practice, has been part of EY’s public sector business for over a decade. During that time, Westminster has witnessed four different inhabitants of 10 Downing Street, a couple of major overhauls of spending and strategy in the Cabinet Office, and the formation of the Government Digital Service. 

PublicTechnology catches up with Thompson to hear more about how his firm’s work with the public sector has changed over the years, and where it goes from here. The EY man shares his thoughts on the pros and cons of the SME-friendly disaggregation agenda, whether large systems integrators might begin to distance themselves from Whitehall, and how Brexit will impact government IT procurement and strategy.

PublicTechnology: Where does EY fit into the government’s technology supplier landscape?
John Thompson:
EY’s role is principally as a client-side advisor to government technology and change programmes, working alongside teams of civil servants, suppliers and other third parties. This ranges from technology architecture, design, and implementation, through to developing the associated commercial agreements with third parties.
As far as clients are concerned, we work across central and local government, including NHS trusts, agencies and arm’s-length bodies, and in defence. While we are not, and have no aspiration to be, a systems integrator, we roll our sleeves up in the real delivery of technology change, whether through supporting transitions, testing requirements, or the rest of the project lifecycle.
However, there are examples such as in the robotic process automation (RPA) space, where we are already working with public sector clients to build and roll out robotic solutions.

Has the way in which you engage with your government clients changed in recent years? If so, how?
Without a doubt. Government is changing, expectations are higher, and so, rightly, there is a great deal of focus on delivering value, especially where consultants are concerned. We’ve adapted to that – our risk appetite has evolved, and we do more and more work based on outcomes, rather than the input of people’s time. 
The other thing that’s changed is the extent to which government wants suppliers like EY to build the knowledge and skills of the civil servants we work with on a daily basis, be that in terms of technology, or any other aspect of delivering change. 

Do you think there’s currently a cohesive public sector IT and digital strategy, led by central government?
The public sector is so vast, and so diverse, and technology needs and capabilities are moving so quickly, that I wouldn’t envy anyone whose job would be to record it all, get it agreed by everyone, and then publish it. Five minutes later it would be out of date! 
However, there is a growing sense that government, and the central government departments, are providing cross-departmental leadership in key areas. This includes, for example, debt, robotics, management information and reporting, sponsored by a lead department, working with other parties to see it through to delivery. I think that’s a really positive step as, ultimately, accountability has always sat at a departmental level. 
Having said that, in some key cross-cutting areas, central functions like Government Digital Service (GDS) or Crown Commercial Service (CCS) can, and do, provide leadership, setting standards and supporting the development of platforms, for example with initiatives like Crown Marketplace.

How do your engagements in local government differ from those in central government – are there any themes or priorities that unite them?
Local and central government have been operating under financial constraints but it was local government that felt the heat first on a range of issues, most notably social care. As a result, necessity has become the mother of invention, and we are working on perhaps even more technically and commercially innovative projects at a local level than in Whitehall. For example, we’ve seen greater implementation of robotics within local government, as well as more risk/reward working. 
However, there are several common themes. There is a recognition that while IT is an enabler for change, it must be based on a deeper understanding of needs – be they those of citizens or civil servants. Also, the implementation of a technology project is now seen as a business change, and needs to be appropriately resourced, planned and engaged with the business it is impacting. Finally, and most profoundly, everyone is becoming focused on outcomes and benefits, right from business case through to in-life management.

Do you think the priorities of the Cabinet Office and GDS have changed since the focus on cost savings championed by Francis Maude?
I firmly believe that many of the changes that came about in the past few years were much needed. The imposition of robust spending controls, the creation of GDS and CCS, and the rebalancing of the IT supplier market were all necessary. 
It would be odd, however, if those priorities had stayed the same. The tendency to centralise, for example, created some friction between the centre and departments, particularly where the final accountability of those departments was threatened. 
Some of the suppliers – particularly the large systems integrators – that emerged from the contract reviews and changes of that period might justifiably feel that they have a role to play in solving some of the large and complex problems that face government in the coming years, in particular with the additional challenges of Brexit.

The current trend of disaggregated delivery brings its own challenges and issues... and my feeling is that the pendulum needs to swing back a little

Do you think the SME-friendly agenda being promoted within Whitehall is in danger of coming at the expense of the role big, experienced suppliers could play?
SMEs have a significant role to play in delivering technology change in the public sector. They bring agility, innovation and fresh perspectives. However, many of the large UK systems integrators have invested in developing talent and bringing complex new technology to market by using their financial strength, and have a deep understanding of the technology and process landscape in the UK. 
Furthermore, through their supply chains, they support hundreds of SMEs in bringing their ideas to reality. There also needs to be a proper balance in the supplier mix, which has been missing in recent years. A lack of engagement and demand risks leading larger organisations to choose to disinvest from the government marketplace, and I believe this would be detrimental to the objectives we all share.

How can, and should, big multinationals and SMEs work together for the good of the public sector?
Both parties need to be aware of what each other brings, and value it accordingly. The big systems integrators need to find interesting firms, and figure out how they can work together on specific opportunities successfully. I think SMEs need the opportunity and the time to find organisations they feel they are compatible with, and then agree a sensible and fair relationship – particularly with regard to swift payment, which is an issue where I think government, through the BEIS Prompt Payment Code, has made a positive start. Government itself has a big role to play here, in continuing to invest in market engagement and creation before procurement starts, bringing together supply chains, and in creating sensible contracting structures that allocate risk to the party best capable of managing it.

What are the pros and cons of disaggregating big contracts in the way the government has chosen to pursue in recent years? Are there instances where they might be better served by returning to a more overarching model?
The old model wasn’t perfect and mega-deals suffered for a host of reasons – not least their complexity, duration, and inflexibility. The list of programmes that failed, were delivered late, or delivered less [than intended] is long and well publicised. 
However, the current trend of disaggregated delivery brings its own challenges and issues, and is building its own rogues gallery of failed projects. Fundamentally, disaggregation introduces a technical, process and commercial integration risk that, in the current model, ultimately rests with the client. It is often questioned whether the client is equipped to manage this integration risk. 
Some have chosen to appoint service integration and management partners to oversee this, but it is very difficult to operate this effectively both from a pricing and liability point of view. Furthermore, disaggregation has increased the number of programmes that need business cases, programme management, finance and procurement experts, and a range of other support inputs. This expertise is in short supply in government and my feeling is that the pendulum needs to swing back a little.

Why do you think the ‘tower’ model has come to have such a bad reputation?
The tower model asks a great deal of both the client and suppliers, and places additional strain on these relationships. The model was new, poorly understood and implemented in a chaotic context, when it might have better suited a simpler approach. 
This lack of understanding, and a general environment that did not favour big suppliers, caused some to decline to participate in procurements, which exacerbated the situation further. All of these factors together created a situation where some of these programmes failed to deliver on demanding business cases. Given public scrutiny by the National Audit Office or Public Accounts Committee, it was inevitable that people would reach for answers as to why this has happened, and the model got some of the blame.

How do you see your relationship with the government and the wider public sector evolving and changing over the next few years?
Government is spending more on its suppliers, and so there is a greater focus on making this work, and making it efficient. To stay relevant in this environment, all suppliers need to improve their understanding of public sector objectives and outcomes. This means sharing ideas – both within the public sector and beyond – and bringing back good practice from overseas and other sectors. The recent One Team Government event is a great example of what can be done, and where the private sector should lend its support. Sharing in the development of standards for commercial delivery and technology such as blockchain are also good examples.
I see us moving away from being seen as simply a provider of bright, experienced people, and becoming a service provider in specialist areas, for example in robotic process automation. With Brexit, it is incumbent on all suppliers working in government to figure out how best we can help with this process – which I suspect will come down to more engagement, collaboration, and sharing of ideas.


John Thompson (pictured left) is a Director in EY’s Government and Public Sector practice

About the author

Sam Trendall is editor of PublicTechnology

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