Forget the ‘big bang’

Written by Simone Hume on 1 October 2015 in Opinion
Opinion

Disaggregation allows public sector ICT managers to cut costs, improve efficient and manage risks, says Simone Hume.

Over the years many government organisations have outsourced their ICT services to large system integrator (SI) organisations. However, by doing so, they also outsourced the responsibility for successful delivery and sacrificed both agility and innovation.

Implementing this type of strategy has led to difficulties for many organisations, including contract lock-ins, lack of skilled resource, business risk in moving away from the chosen supplier, capital investment in out-dated infrastructures and an inability to take advantage of new technologies, to name but a few problems.

The world has changed. Government has woken up to the fact that having a few large SIs controlling billions of pounds of government ICT spend isn’t driving innovation or efficiency and, more importantly, isn’t delivering good services to UK citizens.

Disaggregation challenges 

There has been much debate around the tower model, whereby IT is broken down into component services, with each of those parts outsourced to a specialist supplier. Stimulated by Government Digital Service (GDS) and Cabinet Office discussions, the model aims to deliver the benefits that an effective disaggregated ICT service environment offers.

Much of the debate around ‘tower models’ seems to be missing the fundamental skills challenge facing public sector bodies. Not every department has the in-house expertise and governance to manage multiple suppliers and successfully integrate their services. In some instances, this is driving departments into the relative comfort of old-style procurement practices. As a consequence cost-savings, innovation and agility are being diluted.

The debate has now moved on. It is no longer about whether services should be disaggregated, but rather how best to achieve it at the lowest cost, with minimal risk to service continuity.

Delivering transformative services requires a significant commitment to rapidly gaining the in-house skills needed to take overall control of the disaggregated service environment to deliver the required benefits for users and citizens.

Until the skills and experience gap for disaggregated service management (DSM) can be bridged, it will remain tempting for departments and agencies to pass too much responsibility to third-party SI specialists who may have a better understanding of the technology, but unfortunately not always of public sector users’ needs and business priorities.

Furthermore, adopting such an approach dilutes the ambitions and benefits of the disaggregation strategy and restricts the opportunity to engage directly with new suppliers (SMEs in particular), thus slowing down business-led transformation and innovation.

Moving from a fully outsourced environment to a disaggregated model, whereby a department takes control of its own services, requires cultural change across the organisation and supply chain. Departments need to instil personal and collective empowerment throughout their organisation in order for staff to take control, be clear about their requirements and take ownership for delivery.

 

This will lead to departments challenging, driving and demanding better services from suppliers, at better prices, to meet their user needs.

Achieving disaggregation’s aims

In order to accelerate the journey towards a truly disaggregated service environment, teams must be flexible, agile and totally focussed on delivering the organisation’s objectives and priorities, whilst managing the risk of moving away from traditional outsourced models.

To achieve this, the public sector can successfully adopt either of the following strategies: multi-source with in-house service integration or multi-source with external managed services/Service Integration and Management (SIAM).

Whichever strategy is adopted, it is vital that the responsibility and ownership for delivering the business outcome must remain within the government department and that overall control of ICT systems and infrastructure must not be passed to a third-party after the initial transition period.

Managing and mitigating risk

The management of risk is key in the transformation of ICT service delivery envisaged by disaggregation. Clear identification and management of risk will mitigate their potential impact and therefore eliminate the related cost of a disaggregation project failing to meet its original goals.

In addition, government has recognised that procurement and ICT acquisition policy has been inadequate and ineffective in managing risk and cost. Policy now supports government departments in their journey to disaggregation.

For example, procurement policy stipulates that no large, single, multi-year contract will be allowed for ICT services and that these services should, going forward, be disaggregated into smaller, modular cloud-as-a-service propositions.

Moreover, in a disaggregated service model, with shorter and smaller contracts, the risk to service represented by any one supplier is reduced. It is easier to replace an under-performing supplier than to fundamentally renegotiate or terminate an entire service contract. This reduction of risk should be reflected in the pragmatic application of appropriate ‘suitable supplier’ tests applied during procurement, removing one of the main barriers of entry for new suppliers

It should be noted that the move to a fully disaggregated service is unlikely to be successful as a ‘big bang’ exercise. Migration plans should reflect a staged approach, application by application or service by service, which allows the risk to be managed whilst at the same time maintaining pace and momentum for the transformation.  In many cases this will mean starting to disaggregate some services before the existing contracts come to an end.

Reducing costs

Throughout government, there is a determination to make every taxpayer penny count. This has included a full overhaul of how ICT is procured and used across the public sector in order to transform service delivery and achieve the best possible value for money.

The focus on innovation, agility and value for money was not possible when the vast majority of government ICT spend was with a small number of traditional, large ICT vendors. This left the public sector paying more for technology solutions yet falling behind in the acceleration of technology-enabled transformation being delivered in the commercial sectors by a host of new SME suppliers.

Therefore a multi-vendor sourcing strategy in the government supply chain –rather than the traditional approach of a single supplier or prime contractor model – allows each supplier to specialise in their area of expertise, raising the overall standards of delivery for the full department solution.

This provides government with the ability to quickly switch suppliers to a higher-performing, or more competitive, vendor during the life of the service.  G-Cloud has led the way, by reducing contract lock-in for departments, lowering barriers of entry for new suppliers that bring a wealth of innovation to departments who previously didn’t have access to such services, and by actively supporting a multi-vendor strategy.

Conclusion

Government policy has created the opportunity for departments to move away from large, cumbersome contracts that restrict innovation and delay service improvements, often at a cost outside the original agreed scope of the contract.

With the resource constraints and level of organisational change required to successfully move to a disaggregated service model, engaging with SMEs is crucial.

Furthermore, with the addition of new procurement frameworks, such as the Digital Marketplace G-Cloud, government departments are now able to procure services more quickly than ever before. As a result, disaggregated service procurement provides government with the opportunity to regain control of their business requirements, deliver improved operational effectiveness and reduce risks and costs.

Simone Hume is head of public sector at cloud services provider Outsourcery

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