Taking it back in-house
What lessons does the insourcing of ICT by the Driver and Vehicle Licensing Agency provide for other public sector organisations?
Two years ago, the Driver and Vehicle Licensing Agency faced a dilemma. Its long-running contract for outsourced IT – dubbed PACT – was due to expire in September 2015, after more than a decade in place and with costs running to more than £1.5bn. As the agency weighed up its options for the future, top of chief technology officer Iain Patterson’s mind was the concern that DVLA’s ageing and expensive IT estate – hard to upgrade and divided between 330 separate suppliers – could end up hobbling the agency’s wider plans to go digital.
“We know that approach is persistent in government – they’ve gone for these monolithic outsourced contracts and the managed service approach,” Patterson explains. “But that deprives you of understanding your full, end-to-end supply chain and what’s happening in your technology estate. It means that you can’t move forward with new technologies because you’re constrained by the contract.”
Determined to break the cycle, the DVLA opted for a bold solution – it decided to bring its IT capability back in-house. As the agency’s chief executive Oliver Morley explains, he’d only just got his feet under the table when the call had to be made. “I’d been there for two days effectively and I was asked at the end of a meeting – ‘is this an approach you agree with?’ My response to that was, ‘Well I’ve never not run my own IT’. As far as I was concerned there was only really one direction we could go in.
There’s a long history of DVLA and outsourced IT, with IBM and Fujitsu. You can actually go back to my previous job at the National Archives and you can see the high-level political discussions between Margaret Thatcher and others around computer procurement – this has been going on forever. This is really the first time in 22 years that DVLA has been in proper control of its own IT.”
The move to bring the estate in-house has seen 302 staff transferred into the civil service from the private sector, and Morley says the DVLA is expecting the change to result in savings of “around £220m” over the next decade.
Absorbing those staff has resulted in the headcount at DVLA going up at a time when the agency is aiming to reduce its workforce. But as Patterson explains, the latest additions to the civil service – whose transfer has been welcomed by the PCS union – aren’t all that new. “A lot of these people were already in our premises and occupying one of our floors in the building,” he says. “They were parking in our car park, and we were paying a substantial amount in day rates. So it’s just a different mechanism for how we’re going to pay them.”
As well as helping the DVLA to meet the target – outlined in its three-year strategy – of saving 30% on its 2014/15 running costs by next year, the pair believe the insourcing move will help to make the agency a more appealing place for people with digital skills to work.
“In Yes, Minister the DVLA is seen as this kind of fate worse than death,” Morley jokes. “I took that extremely personally. My view was that DVLA should be one of the most interesting places to work in government.”
He adds: “If your entire model is going to Fujitsu for your external resource, for example, then it’s not going to be hugely attractive to people to start building their skills and go to DVLA for a career in technology or digital. But as soon as you start changing that narrative and saying: ‘Well, actually, DVLA is the core of its own technology’, people become attracted and interested in working with you.”
To try and ensure that the DVLA can still find the right staff locally, the agency – which has been based in Swansea since the ‘60s – has also teamed up with nearby universities and sponsored an initiative called Tech Hub, a network founded by local software entrepreneurs to encourage the sharing of digital ideas, resources and workspace. As well as helping to upskill the DVLA’s own staff, Morley says TechHub has helped to foster "a local market" for skills and products that the agency can then draw on – although Patterson says there was some initial scepticism about whether that could be done.
“We were challenged about how we were going to ensure we got the right capability and skills in Swansea – as if it's the end of the world! The reality is when you study Swansea and what it's got, it's got a fantastic university and campus and investment in computer sciences. There's a very good technology mix. But people always found they had to leave and go all the way to London [to get skills] just to get back to Swansea, find a job, and work in their home environment, which was ridiculous…
“We wanted somewhere where people who set up companies would want to go to and innovate. And we wanted to make sure that if they were successful in creating good products we could access that through our commercial mechanism, G-Cloud.”
Morley says the agency is taking a realistic approach to staff retention – accepting that tech experts are often likely to want to move in and out of jobs and onto the next project, rather than seeking out a role for life.
"If people leave us but we are able recruit easily because there’s a vibrant technology market locally, then that’s fine – I have no problem with that,” the DVLA chief says. "Our focus has been on building the ecology, making sure there’s a vibrant market.”
He is quick to add, however, that if the digital staff the agency has helped to train do decide to move on, he wants it to be "to a better job”.
“If they’re leaving to something that’s rubbish then I’m not hugely impressed. Ideally, they would go off and work for Google. That’s where I want to be – where people have developed their career to the extent that they’re going to somewhere that’s really good. One day they’ll maybe come back, or at least they’ll talk of their time at DVLA, and therefore other people will want to come to us.”
That certainly fits with civil service chief executive John Manzoni’s vision of a “more permeable” workforce. But one thing firms like Google can promise digital talent is money. With the civil service braced for another four years (at least) of payrises capped at 1%, does the DVLA really believe it can compete with the big guns?
“Pay is only one factor,” Patterson says. "If you’re a technologist who gets good money but you’re working with old technology, that’s not going to take you forward and you’re not going to be that interested […] We do understand – and there’s a lot of work that’s been done with our HR colleagues – about what the longevity is of somebody that goes on to be a developer […] It would be disingenuous to say we want a developer to stay for 15 years in the civil service. They don’t. The idea is they come and they go. And that keeps you with fresh blood coming through, with new skills, bringing innovation with them.”
Morley agrees, saying that the kind of projects DVLA’s IT staff are likely to be working on under the new in-house model are worlds apart from the routine tasks of old.
“If you look at the past, you would be working for a systems integrator on changing a mainframe – and everybody would basically be getting at you because the system wasn’t working. Whereas the future is working on some of the most interesting technology, with a direct line to the CEO and CIO, and with a direct impact on 37 million customers, being able to get feedback almost instantly.
“It’s quite a different world as a technologist. It’s actually quite convincing as a job offer. And the salary is competitive. You know, it’s not outrageous, but it’s competitive and the lifestyle is great.”
With two major digital projects now out of the way – scrapping the paper counterpart to the driver’s license and abolishing the tax disc – Patterson, who was seconded to the DVLA from the central Government Digital Service team, is now heading back to the heart of Whitehall.
The precise details of Patterson’s new role at GDS have yet to be finalised, but the CTO clearly sees lessons for the wider civil service in the way the DVLA and GDS have gone about working together.
“The relationship's been really good because we didn't segregate between what's technology and digital,” he says. “You can't disaggregate them. Understanding where you're going with your technology absolutely enables your digital strategy."
GDS staff haven’t always seen eye-to-eye with the DVLA throughout the agency’s digital overhaul, Morley admits. “We've had our moments, it's probably fair to say. We definitely have had moments with GDS where we've disagreed. But you know, at the core, we've agreed on the approach, and fundamentally this is the right thing to be doing."
Morley says he believes the collaboration has worked because the driver agency has taken the lead, with GDS playing a supporting role.
"That’s fundamental for a project of this scale, of this importance, that we have owned it. Iain has kind of had to stand between two stalls, and has done so brilliantly. But where it’s come to the crunch, it’s been DVLA and DVLA’s board that has had to make the key decisions and the teams have been majority-DVLA. GDS’s model is not sustainable if it’s going to do it all itself."
Patterson agrees on the need for "a healthy tension” between GDS and the departments as government continues to refine its approach to technology, "because departments obviously know their business better than the centre does”.
But he’s also keen to stress the need for "a strong central direction and strategy”, and he’s clear on the risk posed to government if it doesn't learn some of the lessons GDS has tried to teach over the past four years.
"It's fair to say technology vendors have successfully managed, over decades, to disaggregate government in a way where they can sell the same things over and over to different departments in a slightly different or customised way, prolonging their longevity within that contract space. We decided that we would break the mould in DVLA because we felt it was possible – we did our homework."
And as the DVLA’s IT staff get used to their new life as civil servants, the agency’s chief executive sums up what’s at stake: “On the upside, we have complete control. On the downside, we have no-one else to blame!"