Delivering successful IT-enabled business change - National Audit ...

The National Audit Office scrutinisespublic spending on behalf ofParliament. The Comptroller andAuditor General, Sir John Bourn, isan Officer of the House of Commons.He is the head of the National AuditOffice, which employs some 850 staff.He, and the National Audit Office, aretotally independent of Government.He certifies the accounts of allGovernment departments and a widerange of other public sector bodies;and he has statutory authority to reportto Parliament on the economy,efficiency and effectiveness withwhich departments and other bodieshave used their resources. Our worksaves the taxpayer millions of poundsevery year. At least £8 for every£1 spent running the Office.

contentspreface 4This report has been prepared underSection 6 of the National Audit Act 1983for presentation to the House of Commonsin accordance with Section 9 of the Act.John BournComptroller and Auditor GeneralNational Audit Office13 November 2006The National Audit Officestudy team consisted of:Theresa Crowley, Paul Dodimead,Alec Steel, Matthew Harris andMomodu Kawa, under the directionof Mark DaviesThis report can be found on the NationalAudit Office web site at www.nao.org.ukFor further information about theNational Audit Office please contact:National Audit OfficePress Office157-197 Buckingham Palace RoadVictoriaLondonSW1W 9SPTel: 020 7798 7400Email: enquiries@nao.gsi.gov.uk© National Audit Office 2006Terms used in this report 6Executive summary 10Part 1Why departments need to deliver 24IT-enabled business change successfullyThe purpose of our report 26Our sources of evidence and the structure 26of our reportPart 2Ensuring senior level engagement 29Lessons from our case studies 29How equipped are departments to deliver senior 31level engagement?Part 3Acting as an intelligent client 33Lessons from our case studies 33How equipped are departments to act as an 36intelligent client?

Part 4Realising the benefits of change 39Lessons from our case studies 39How equipped are departments to realise the 41benefits of IT-enabled business change?Bibliography 42Appendices1 Methodology 442 Gateway Reviews and mission 46critical reporting3 DAO(GEN)07/04 Delivering Success in 49Government Acquisition-Based Programmes& ProjectsPhotographs courtesy of alamy.com

prefacePREFACETo remain efficient and competitive all modern societiesneed to embrace the opportunities provided by newtechnologies to deliver better services more cost effectively.In its November 2005 IT strategy TransformationalGovernment, Enabled by Technology, Government setitself a clear challenge to deliver new and existing servicesmore efficiently, increasingly designed around the needsof customers and citizens rather than for the administrativeconvenience of providers.To bring about these changes requires a significant financialinvestment in information technology and with that comesrisk. Over the last ten years, the National Audit Officeand the Committee of Public Accounts have reportedon a number of high profile and expensive IT failuresoverseen by government departments. Such failures haveangered and bewildered citizens and taxpayers and causedfrustration and dismay to those directly affected.This report, however, is about success; how IT-enabledbusiness change can be got right. Drawing on 24 casestudies from the public and private sectors here in the UKand overseas, the report demonstrates that major IT-enabledprogrammes and projects – including those in Government– can and do succeed and can deliver real and lastingbenefits to citizens – for example the Department forWork and Pensions’ Payment Modernisation Programmecosting over £800 million is providing a quicker and moreconvenient service to the public.Major IT-enabled programmes and projects will becomplex and risky, involving innovative but often highlyvolatile technology and the need to respond to changesto requirements including externally triggered changes, todevise new business systems or draw together existing ones,and to demonstrate to those who have to operate or use thenew technology that it will meet their needs.We do not in this report consider the issue of the differenttypes of contracting arrangement, whether highly legalisticwith exacting penalty clauses for non-performance, orones based more upon partnership. Much depends uponthe type of IT-enabled change in question and whetherroutine or highly innovative and therefore inherentlymore risky to all parties. Contracting arrangements andcommercial management in central civil government willform the subject of a further National Audit Office report,building on the Office’s work on major Defence projects 1and our report on HM Revenue & Customs’ ASPIRE, whichhighlights lessons for departments preparing to re-competeIT contracts. 2 These reports form part of a National AuditOffice programme of forthcoming reports on IT-enabledchange, which include our reports on e-enabled servicesand shared services, both planned for 2007-08.1 See for example: National Audit Office (2006) Using the Contract to Maximise the Likelihood of Successful Project Outcomes, Report by the Comptrollerand Auditor General, HC 1047 Session 2005-2006, 7 June 2006. London: The Stationery Office, which contains the National Audit Office’s ContractStrategies Tool: A structured approach to developing defence procurement contracting strategies.2 National Audit Office (2006) HM Revenue & Customs: ASPIRE – the re-competition of outsourced IT services, Report by the Comptroller andAuditor General, HC 938 Session 2005-2006, 19 July 2006. London: The Stationary Office.Delivering successful IT-enabled business change

prefaceAs the Committee of Public Accounts has pointed outfrequently in the past and expects to see, it is primarilythe responsibility of individual departments through theirAccounting Officers and boards to make sure that theydeliver successfully IT-enabled business change and donot embark upon major programmes or projects wherecompetence and capacity are in doubt. To achieve this,they need to have the appropriate capability and capacity,drawing on a range of skills and with the board takingfull ownership of the change. This report should act asan encouragement to those in Government responsiblefor IT‐enabled business change to believe that success isentirely possible. But from the outset such change requiresclarity of purpose, clear leadership and commitmentfrom the very top – including Ministers – and good plansundertaken by competent and capable people.Delivering successful IT-enabled business change

terms used in this reportTERMS USED IN THIS REPORTAudit CommitteeBenefits realisationCapability reviewsCapacity buildingCentre ofExcellence (CoE)Chief InformationOfficer (CIO)Chief InformationOfficer CouncilCommon Causes ofProject FailureThe Audit Committee is appointed to support the Accounting Officer in monitoring the corporategovernance and control systems in the organisation. The Audit Committee supports the AccountingOfficer by offering objective advice on issues concerning the risk, control and governance of theorganisation and the associated assurances. It has no authority in its own right, over the operationsof the organisation or those bodies which conduct audit and assurance work (including InternalAudit). It should, however, advise the Accounting Officer on the adequacy, and the appropriatenessin the light of both known and emerging risks, of the work plans of those bodies, including InternalAudit, which conduct audit and assurance work. http://www.nao.org.uk/guidance/finaud_and_corpgov.htm; http://www.hm-treasury.gov.uk/media/8D2/62/audit_committee_handbook2003.pdfRealising the benefits projected in the business case – usually new, more effective or more efficientservices – and achieving return on investment.Reviews of government departments targeted at underlying capability issues that impact on effectivedelivery, such as: do departments have the right strategic and leadership capabilities; do theyknow how well they are performing, and do they have the tools to fix their problems when theyunderachieve; do their people have the right skills to meet both current and future challenges; dothey engage effectively with their key stakeholders, partners and the public?Measures to increase the knowledge and skills needed to deliver a programme or project.Programme and Project Management (PPM) Centres of Excellence were established in departmentsin 2003 and 2004 as one of the six key Cabinet actions to strengthen the delivery of governmentIT-enabled programmes and projects. They are intended to provide strategic oversight, scrutiny andchallenge across a department’s portfolio of programmes and projects, to act as a focal point forsupporting individual programmes and projects, and to drive the implementation of improvementsto increase the department’s capability and capacity in programme and project delivery.All main government departments now have a Chief Information Officer at or near board level whois responsible for championing the department’s IT programmes and projects and managementof its overall portfolio. Most Chief Information Officers have a background in the IT industry, butsome are generalist officials who undertake the Chief Information Officer role in conjunction withother responsibilities.The Chief Information Officer Council is the first initiative to bring together Chief InformationOfficers from across all parts of the public sector to address common issues and to spread goodpractice across government.Joint NAO-Office of Government Commerce document aimed at those managing or otherwiseinvolved in the delivery of projects across government (see Appendix 3, Annex).http://www.ogc.gov.uk/sdtoolkit/Reference/ogc_library/bestpracticebriefings/causesprojfailure.pdfDelivering successful IT-enabled business change

terms used in this reporte-Government Unit(eGU)Governmentprocurement codeIntellect ConceptViability ServiceIntellect ITSupplier Code ofBest PracticeIntelligent clientInter-operabilityIT-enabledbusiness changeKey programmesLegacy systemsMission criticalprogrammesand projectsOffice ofGovernmentCommerce (OGC)The e-Government Unit (eGU) is a unit of the Cabinet Office and is responsible for formulatinginformation technology (IT) strategy and policy, developing common IT components for useacross government, promoting best practice across government and delivering citizen-centredonline services. In 2004-05, the e-Government Unit put in train a series of measures to improvedelivery by drawing on best practice in the public and private sectors. These include bringingtechnology and business functions together through the establishment of a Service TransformationBoard and establishing a Chief Information Officer Council to manage the government portfolio ofprogrammes and projects.The Government Procurement Code of Good Practice sets out the core values and behaviour forall members of central civil government’s supply chain, both government organisations and theirsuppliers. It is a code of conduct for all members of the supply chain that encourages participantsto work together openly and co-operatively. It also represents a commitment that they are seriousabout wanting to be better customers and better suppliers, within relationships that can bringmutual reward. The Code has been jointly developed by the Office of Government Commerce(OGC), representatives from other government departments and representatives from industry.It forms part of OGC’s guidance portfolio. The Code is not intended to have legal effect, althoughit is consistent with EC Rules and Procurement Policy Guidelines.This is a five-stage service provided for a small fee by the IT industry trade body Intellect.1) Department submits a short written description of business need to Intellect. 2) Intellect invitesselection of suppliers to comment. 3) Workshops facilitated by Intellect to exchange informationbetween department and suppliers. 4) Intellect prepares Concept Viability Assessment based onsuppliers’ collated responses. 5) Concept Viability Assessment made available to all interestedsuppliers prior to official procurement process. (See: www.intellectuk.org/markets/groups/senior_it_forum/concept_viability.asp)Code of Best Practice setting out standards of professionalism that all providers of informationsystems and services to Government should endeavour to meet. (See: www.intellectuk.org/markets/groups/senior_it_forum/mechanism.asp)An organisation with the knowledge, skills and authority required to negotiate with and manageboth suppliers and users and to contract with suppliers.The ability of a system or a product to work with other systems or products.Modifications to business processes to achieve business goals, supported and enabled by IT.The key mission critical programmes (currently 15) with especially significant delivery orreputational impact for Government as a whole.Systems already in use that will support or interact with the business change programme or project.Mission critical programmes or projects are defined as: “A: essential to the successful delivery of(i) a major legislative requirement OR (ii) a PSA target OR (iii) a major policy initiative announcedand owned by the Prime Minister or a Cabinet Minister OR B: If the programme or project is notsuccessful there are catastrophic implications for the delivery of a key public service, nationalsecurity or the internal operation of a public sector operation.The Office of Government Commerce is an independent office of the Treasury and works withpublic sector organisations to help them improve their efficiency, gain better value for money fromtheir commercial activities and deliver improved success from programmes and projects.Delivering successful IT-enabled business change

executive summaryexecutive summary1 The successful delivery of IT-enabled businesschange is essential for improving major public services,but experience in the public sector in Britain also showsthat achieving such change is particularly complex andchallenging in terms of the scale of the changes required,the cross-government co-ordination needed, and thetechnical issues around joining new and old systems.2 The Committee of Public Accounts and the NationalAudit Office have examined many failures, identified whathas gone wrong and made recommendations on how toavoid similar mistakes in the future. But, in addition toidentifying mistakes and their causes, it is important torecognise that there have been many successful centralgovernment IT-enabled programmes and projects that aredelivering real and lasting benefits to citizens, whetherby increasing access to services or reducing the cost tothe taxpayer. The purpose of this report is to demonstrate,drawing on a range of case studies from centralgovernment and elsewhere, how such successes havebeen achieved and to enable lessons from what has gonewell to be transferred to new and existing programmesand projects in government.3 In this report, we therefore identify 24 examples ofsuccessful programmes and projects; one third of themare drawn from British central government departmentsand agencies, and the rest from elsewhere in the publicand private sectors in the United Kingdom, and from thepublic sector overseas (Figure 1 on pages 11-13). Thediversity of the case studies (which appear in Volume 2of this report) demonstrates that success is achievable inboth public and private sectors. The report draws out theactivities and behaviours that have helped deliver this.Our report also draws on widespread contact with the ITindustry and central government departments in Britainand our consultations in the United States.4 Analysis of our case studies identified three key andrecurring themes in successful programmes and projects:nnnthe level of engagement by senior decision makersof the organisations concerned;organisations’ understanding of what they neededto do to be an “intelligent client”; andtheir understanding of the importance ofdetermining at the outset what benefits theywere aiming to achieve and, importantly, howprogrammes and projects could be activelymanaged to ensure these benefits were optimised.5 In the light of these three themes, we makea Recommendation to departments in the form ofKey Questions they should ask themselves beforeembarking on IT-enabled change. Based on analysisof our case studies and other fieldwork, we also makeRecommendations to central departments about whatmore can be done across government to supportdepartments. In doing so, we hope this report will assistgovernment departments and other public bodies toimprove their capacity to bring about successfulIT-enabled business change.10Delivering successful IT-enabled business change

executive summary124 examples of successful IT-enabled business changeCentral governmentDepartment for Work and PensionsProgramme/project costs 1£824 millionThe Payment Modernisation Programme has transformed the payment of benefitsand pensions by paying entitlements directly into recipients’ bank accounts.Department of Trade and Industry£34 millionConsumer Direct provides consumers with a single access number to freeadvice when problems arise when dealing with traders.Department of Trade and Industry — Small Business Servicec.£17 millionBusinesslink.gov.uk is a website providing support, advice and services tobusinesses in the UK.Department for Environment, Food and Rural Affairs – Eaga Partnershipc.£1 millionFor citizens at risk of fuel poverty, the Warm Front Scheme provides a packageof energy efficiency and heating measures to install or upgrade insulation andheating systems in their homes.The Pension Service£297 millionPension Credit was a new entitlement that had less rigorous means testing andreplaced the Minimum Income Guarantee.Vehicle and Operator Services Agency£9 millionOperator Self Service has modernised the approach to issuing Heavy GoodsVehicle Licences by redesigning the business process and IT support forthe vehicle licensing business, enabling operators to carry out most licencetransactions online at any time.OGCbuying.solutions£2 millioneSourcing provides secure collaborative tools used by procurementprofessionals and suppliers to conduct strategic procurement activities online,including tendering, negotiation, contract award and management, to delivervalue for money procurement solutions to the public sector.Environment Agency£200,000The Fishing Rod Licences project transformed a fixed-hours Post Office basedservice for 1.2 million transactions a year to a self-service system enablingcustomers to purchase fishing licences online at any time.Other public sectorTransport for London£234 millionThe congestion charge was introduced to reduce traffic congestion in CentralLondon by levying a flat rate fee upon drivers entering the congestion zoneduring the Monday–Friday working day.Delivering successful IT-enabled business change 11

wreathstarsTextexecutive summary124 examples of successful IT-enabled business change continuedOther public sector continuedNorthern Ireland Criminal Justice DirectorateProgramme/project costs 1£48 millionThe Causeway Programme links the case management systems of the sixmain Northern Irish criminal justice agencies.Transport for London£40 million capital costThe Oyster ® card is an electronic smartcard, introduced in 2003, as partof the Prestige Project, a private finance initiative to renew, operate andmaintain all the Transport Authority’s ticketing infrastructure.Scottish Water£14 million“Promise to resolution” – an integrated customer management and fieldservice programme – introduced a new customer service contact centre andwork scheduling system to improve both efficiency and performance.UK TransplantThe National Transplant Database provides a fast and accurate matchingsystem to enable organs to reach patients as soon as organs becomeavailable for transplant.Running costs partof annual budget ofc.£14 million (2005-06)Cambridgeshire County CouncilThe Council transformed its governance structures following the introductionof portfolio management.£90,000 providedby the ODPM (nowthe Department forCommunities and LocalGovernment), plusinternal staff and seniormanagement timeCity of Edinburgh CouncilAs part of its “Smart City Programme” to modernise the Council’s back officesystems and processes, the Council undertook a modernisation of its servicesof Planning and Building Standards to enable individuals, construction firms,architects and solicitors to submit applications electronically and to findplanning related information online.Part of wider “Smart CityProgramme” to modernisethe Council’s back officesystems and processesInternational public sectorUnited States Department of Defensen/aThe Identity Management Programme provides military personnel with aCommon Access Card to improve identity assurance and reduce fraud.New York City Mayor’s OfficeUS$25 millionThe New York City 3-1-1 Citizen Service Center provides access to allgovernment information and non-emergency services in the New York Cityarea through a single telephone number. NYC 3-1-1 is available 24 hours aday, with operators providing services in over 170 languages.12Delivering successful IT-enabled business change

executive summaryOther public sector continuedCity of AnaheimProgramme/project costs 1US$1.2 millionThe Enterprise Virtual Operations Center brings together real time data fromthe City of Anaheim’s emergency services and makes the data securelyaccessible via the Internet, enabling city officials to see what is happening onall the City’s critical response fronts.Office of the Revenue CommissionersThe Republic of Ireland’s Revenue On-Line Service (ROS) enables customersto both pay their taxes and file their returns online. The ROS CustomerInformation Service allows customers and their agents to view details of theirRevenue Account.€40 millionBritish ColumbiaNetwork BC is a dedicated project office within the Ministry of Labour andCitizen Services that works with British Columbia’s remote communities andthe private sector to improve citizens’ access to the Internet.Leveraged existinggovernmenttelecommunicationsspending of Canadian$245 million(over 4 years)Private sectorAPACS£1.1 billionThe UK payments trade association's chip and PIN programme is a new,more secure way to pay with credit or debit cards.Britannia Building SocietyThe “Really Big Programme” involved replacing the Society’s complete ITinfrastructure to create a “single view” of each of its customers and their savingsand investment accounts, mortgages, loans and other financial products.£60 millionPrudential UKThe “Single View” customer service transformation programme wasintroduced to improve customer marketing and account administration byproviding staff with an integrated view of all the products and services eachcustomer has purchased from Prudential UK.£37 millionNorwich Union‘Pay As You Drive’ insurance uses Global Positioning Satellite (GPS)technology to calculate monthly insurance premiums based on how often,when and where people drive.n/aNOTE1 Costs are those incurred by the programme/project in its life time, as provided by the case study body. They are not the subject of National Audit Office audits.Delivering successful IT-enabled business change 13

executive summary6 Many of our Recommendations focus on theneed for greater stewardship and accountabilitywithin individual government departments and acrossWhitehall more generally. Beyond this, the Committeeof Public Accounts has emphasised frequently the needfor greater public transparency and accountability indepartments’ performance in managing their programmesand projects and, in particular, that the results of OGCGateway Reviews should be published. At the timeof publication of this report, recent decisions by theInformation Commissioner in support of disclosure werethe subject of legal appeals by the Office of GovernmentCommerce. While there are arguments in favour of andagainst disclosure – which will be ultimately for theCourts to decide – Gateway Review reports form only onemeans to achieve greater departmental accountability forthe management of major IT-enabled programmes andprojects. The introduction of the Annual Report of thee-Government Unit in November 2006 offers a new andsignificant opportunity for greater accountability and tomake public for the first time information on departments’aggregate expenditure on IT programmes and projects,and achievement against plans. Already in Defence, eachyear the cost, progress and performance of 20 of the largestdefence projects are the subject of a Major Projects Reportaudited by the National Audit Office. 3 The provision ofcomparable information about the performance of civilIT-enabled programmes and projects would be in linewith the more general thrust towards transparency in themanagement of departments through developments such asthe publication of departmental capability reviews.Recommendation for departmentsembarking on major IT-enabledbusiness change7 At the earliest point of any IT-enabled business change,the department should be able to demonstrate that it hasconsidered and addressed the nine Key Questions set out inFigure 2. The issues raised by the questions are fundamentalto successful delivery and, before undertaking contractualor other major commitments, departments should be ableto demonstrate that they have put in place the capacity tosuccessfully tackle the challenges posed.2Nine Key Questions for departments embarking onmajor IT-enabled business changeEnsuring senior level engagement1 Is the board able to make informed judgements about thedepartment’s capacity to manage change?2 Does the department have in place a decision makingstructure that will ensure strong and effective leadership ofthe IT-enabled business change?3 What incentives exist to drive performance?Acting as an intelligent client4 Does the department have the necessary programmemanagement skills?5 What is the natural division of duties between theProgramme and Project Management Centre of Excellenceand the Chief Information Officer?6 How will the department establish and promote an openand constructive relationship with suppliers?7 How clear is the department about the business process thatit is seeking to change or develop?8 Does the technology exist to deliver the change?Realising the benefits of change9 Beyond immediate technical success, how will widerbenefits be secured?These questions are discussed further below.Source: National Audit Office8 The Key Questions are set out under the three keysuccess criteria identified in our case studies. They areaddressed to those individuals within departments andagencies who have a pivotal role to play in bringing aboutsuccessful IT–enabled business change. These are primarilyAccounting Officers and their executive boards, and “SeniorResponsible Owners” who, for major programmes wouldthemselves be board members and who, as their titleimplies, have a personal responsibility for ensuring that eachof the programmes and projects under their charge achievesits objectives and delivers the projected benefits. There arealso questions (in particular Questions 6-8) for ProgrammeManagers who perform a vital role in support of SeniorResponsible Owners, handling the day to day managementof the programmes in question, including providingoversight of the various individual projects that often formdiscrete but essential parts of the wider business change.3 For example, National Audit Office (2005) Ministry of Defence: Major Projects Report 2005, Report by the Comptroller and Auditor General, HC 595-ISession 2005-2006, 25 November 2005. London: The Stationery Office; National Audit Office (2005) Ministry of Defence: Major Projects Report 2005Project Summary Sheets, Report by the Comptroller and Auditor General, HC 595-II Session 2005-2006, 25 November 2005. London: The Stationery Office.14Delivering successful IT-enabled business change

executive summarynnThere is particular risk where a business changeinvolves several organisations coming together tojoin up activities, requiring additional governancearrangements to promote a common sense ofpurpose and a culture of joint responsibility. Here across-departmental board is needed, as happened inthe case of the Department of Trade and Industry’sBusinesslink.gov.uk initiative, with sufficient seniorityto demonstrate the commitment of the partner bodies,clear and up-front terms of reference, and a capacityto take collective decisions for the benefit of theprogramme as a whole rather than for the individualinterests. A cross-department project board will alsobe needed. For its initiative to improve citizens’ accessto the Internet, British Columbia’s Ministry of Labourand Citizen Services set up a dedicated project office– Network BC – to bring together the governmentministries, health authorities and other public bodiesand to manage the upgrade programme.To ensure that risks are well-managed, Boards andAudit Committees will need to satisfy themselvesthat the department’s programmes and projects areproceeding in a timely manner through externaland internal assurance processes. In particular, inaccordance with earlier guidance 4 , they will needto take steps to assure themselves that IT governanceis sufficiently robust to deliver key services byrequiring regular advice and reports from internalauditors where large changes and upgrades to ITinfrastructure are planned or in progress; that businesscases are robust, projected benefits are measurable,and financial and other controls are sufficient totrack benefits; and that programmes and projects aremaking timely progress through Gateway Reviews, theoutcomes of which are communicated to the AuditCommittee. Forty-two per cent of Audit Committeeswere never briefed on the results of Gateway Reviews;only 26 per cent received quarterly briefing; andonly 42 per cent of internal audit and assurancedepartments received copies of all Gateway Reviews.Q3 What incentives exist to drive performance?nIn the commercial sector, IT-enabled business changeis often the prime factor in whether a businesssucceeds or falters. As our case studies demonstrate(for example Britannia Building Society’s “Really BigProgramme” to replace its complete IT infrastructurennto create a “single view” of each customer’s savingsand investment accounts, mortgages, loans andother financial products) these are essential buildingblocks for competitive advantage. Reflective of thatrisk, incentive and performance regimes exist in theprivate sector to make sure that those charged withdelivery are motivated to succeed and that they drivethrough the benefits.Key success factor in our case studies: seniormanagement who demonstrate commitment tothe change.In departments and agencies, while there is a clearcommitment to public service, there are few materialincentives. The Review Body on Senior Salaries 5 hasrecommended that Government should consider thepayment of non-consolidated market allowances and“golden hellos” to attract high level specialists tothe Senior Civil Service. This is helpful for recruitingthose with the skills and expertise needed to managelarge programmes of IT-enabled business change.But not all government departments have yet createda “risk culture” that rewards well managed risktaking. 6 Beyond basic salary levels lies the importantissue of financial incentives and career planningto help motivate senior management to undertakethe well-managed risk taking entailed in deliveringsuccessful IT-enabled business change.A lack of longer-term commitment to realisationof benefits in departments and agencies is alsodemonstrated across government in that currently(April 2004–June 2006) only five per cent of allGateway Reviews are Gate 5 Benefits EvaluationReviews, a percentage that has increased littlesince 2002-2004 (Appendix 2, Figure 11).TheDepartment for Work and Pensions’ PaymentModernisation Programme, which has been througha successful Gate 5 Gateway Review, has developeda benefits realisation plan assigning responsibilityfor promoting and securing benefits to namedindividuals – benefits owners – over the mediumtermof the first few years’ following implementation.4 HM Treasury and Office of Government Commerce (2004) “Building a Cooperative Assurance Relationship between Internal Audit, Departmental GatewayCoordinators and Centres of Excellence”. http://www.hm-treasury.gov.uk/media/8BA/50/ocg_audit_190105.pdf5 Review Body on Senior Salaries (2006) Report No. 62, Twenty-Eighth Report on Senior Salaries, Cm 6727. London: The Stationery Office.6 National Audit Office (2004) Managing Risks to Improve Public Services, Report by the Comptroller and Auditor General, HC 1078-I Session 2003-2004,22 October 2004. London: The Stationery Office.16Delivering successful IT-enabled business change

executive summaryActing as an intelligent clientQ4 Does the department have the necessaryprogramme management skills?nKey to the success of our case studies was arecognition of the need to build the capability andcapacity to deliver major programmes and projectsand, within this, the key role played by the programmemanager. While there have been previous initiativesto build a cadre of such managers within government,some of whom are now running major programmesand projects, these initiatives have not beencompletely successful. Numbers in the programmeand project management specialism have doubledsince 2004, but remain low at 2,300 across the civilservice. In recognition of the need to strengthen thisaspect of delivery capacity, one of the current maininitiatives of the e-Government Unit is to broaden anddeepen professional skills in managing IT-enabledprogrammes. This includes adopting the competencyand skills framework of Skills for the Information Age. 7at different rates and in different ways acrossgovernment. In some departments, Centres ofExcellence have the requisite authority to influenceprocurement and recruitment strategies, while inothers their role is restricted to that of informationmanagement. In our survey, only half of SeniorResponsible Owners considered their Centre ofExcellence a hub for the dissemination of goodpractice or lessons learned; while only 38 per centrated their contribution as very or fairly good.The Programme and Project Management(PPM) Specialism supports staff in governmentwho wish to follow a career in programmesand projects rather than line-oriented careerpaths. It brings together all PPM specialists incentral government and agencies, concentratingon helping, advising and supporting thoseindividuals who are experienced or qualifiedprogramme and project staff, to develop theirskills and careers.Key success factor in our case studies: buildingcapacity and capability.Key success factor in our case studies: buildingcapacity and capability.nWhere third party consultancies are used,mechanisms are needed to build in-house capabilityand to provide a return on consultancy spendby requiring knowledge to be transferred fromconsultants to programme and project staff withinthe department. The Vehicle and Operator ServicesAgency, for example, agreed at the outset of theOperator Self Service project that its consultantswould facilitate transfer of knowledge and skillsthroughout the business change.nIn part because they are the creation of two differentparts of central government – the e-Government Unitand the Office of Government Commerce, as yetthe relationship between Chief Information Officersand Programme and Project Management Centres ofExcellence is not fully clear. While there are examplesof where both are working well, there is a danger thatthe two will duplicate the actions of one another, withvague responsibilities and confused reporting lines.Q5 What is the natural division of duties betweenthe Programme and Project Management Centre ofExcellence and the Chief Information Officer?nThe Office of Government Commerce’s EmbeddingCentres of Excellence Programme, introduced in2003, measured departments’ progress in settingup Programme and Project Management Centresof Excellence against established standards. Sincecompletion of the centrally-run programme in 2005,the role of Centres of Excellence has developedQ6 How will the department establish and promote anopen and constructive relationship with suppliers?nOur case studies indicate repeatedly the importanceof establishing from the outset strong, constructiverelationships between clients and suppliers, typifiedby shared governance arrangements, joint teamsand establishing an environment in which each sideis comfortable challenging the other. Sometimesthese involve simple devices such as the Republic7 http://www.cio.gov.uk/transformational_government/implplan/ p.24.Delivering successful IT-enabled business change 17

executive summaryof Ireland’s Revenue On-Line Service where thesuppliers and Revenue staff were co-located in anopen plan office away from existing offices, or in thecase of the Britannia Building Society where all teammembers wore Britannia’s badge. Open relationshipsbetween clients and suppliers also bore fruit in thecase of Pension Credit where the joint team was ableto offer constructive challenge to some 50 requestsfor requirement changes.Q7 How clear is the department about the businessprocess that it is seeking to change or develop?nKey success factor in our case studies: creatingconstructive relationships with suppliers.Before embarking on change, a department musthave a complete understanding of its currentbusiness processes and how its stakeholders interactboth with the business and between themselvesand a clear understanding of what it wants thenew business process to achieve. These need to becoupled with good appreciation of the likely impactof the business process change on service levels,productivity and different stakeholders. Our casestudies (for example the Northern Ireland CriminalJustice Directorate’s Causeway Programme) showthe commitment and amount of time taken by thoseembarking on complex transformations to get thebusiness process clear to start with. This knowledgeis crucial if an organisation is to engage with theIT industry as an intelligent client, providing aclear specification to potential suppliers to enablethem to determine the most cost-effective systemfor achieving the department’s goal and to designproposals to implement the business change.Uncertainty over possible impacts should be probedand tested by organisations piloting new businessprocesses, building prototypes to demonstratepracticalities, and canvassing opinions from thosewho will actually have to change their behaviours toengage with the business change.Q8 Does the technology exist to deliver the change?nnKey success factor in our case studies: designingand managing the business the change.Our report Improving Procurement 8 recommendedmore proactive management of suppliers and earlierengagement before and during the earliest stagesof procurements. For IT-enabled business change,departments should consult at an early stage withthe industry to take market soundings and to test theviability of proposed IT-enabled changes and therobustness of the procurement strategy to deliverthese; for example, by making use of mechanismssuch as Intellect’s Concept Viability Service.Key success factor in our case studies: managingthe risks of the IT solution.Within this, there needs to be robust and wellevidenceddiscussion about why and where thebusiness change cannot make use of off-theshelfsystems and software and how the changewill address issues of connection between thedepartment’s new and existing systems. For example,for the Department for Environment, Food andRural Affairs’ ”Warm Front” Scheme Manager, EagaPartnership was confident that its in-house IT staffhad the skills and capacity to develop the secureweb-based portals needed; whereas for ScottishWater’s new integrated customer management andfield service programme, to keep down costs thebusiness lead of the project made an early decisionto adopt off the shelf technology, despite significantpressure from the IT department that a bespokesystem was needed.8 National Audit Office (2004) Improving Procurement: Progress by the Office of Government Commerce in improving departments’ capability to procurecost‐effectively, Report by the Comptroller and Auditor General, HC 361-1 Session 2003-2004, 12 March 2004. London: The Stationery Office.18Delivering successful IT-enabled business change

executive summaryRealising the benefits of changeQ9 Beyond immediate technical success, how will widerbenefits be secured?nnnMany of our case study organisations needed toengage in significant work with customers, usersand wider stakeholders to ensure that the designof the change met their needs and that interestedparties supported the change. To realise the benefitsprojected in the business case of a major IT-enabledchange, departments will need to identify the keystakeholder groups at the earliest stage and toengage with them throughout the change to ensurethat their needs are addressed and their support andcommitment gained and maintained.Key success factors in our case studies: sellingthe benefits to users and winning the support ofwider stakeholders.When embarking on an IT-enabled business change,our case studies, for example the Republic of Ireland’sRevenue On-Line Service, illustrate the importanceof being clear from the outset about issues such aswho will champion change amongst users, and howtheir energies and support can be put to best effect.Conversely, areas of potential resistance and doubtneed to be identified, and steps taken to counter andconvince; otherwise there is a danger that the changedoes not fulfil its potential, even where the technicalsolution is successful. Here, the use of market research(an approach taken for example by the Departmentfor Work and Pensions’ Pension Credit) can assistdepartments in identifying how best to phase the rollout of the change to different key customer groups.To realise the benefits of change, departments needto ensure therefore that business cases are not usedsolely as mechanisms to secure funding, but set outhow the business change will be achieved, what thebenefits will be and, importantly, what machinerywill be put in place to drive the achievementof those benefits. This requires assigning clearresponsibility for promoting and securing benefitsto named individuals (for example, the Departmentfor Work and Pensions’ Payment ModernisationProgramme benefits realisation plan).nnnKey success factor in our case studies: optimisingthe benefits.Business cases and benefit plans need to be subjectto robust internal scrutiny by the department’s Centreof Excellence, which should also be involved inregular reviews and revisions of the business casethroughout the programme or project to ensure thatin the light of policy changes and other changes tothe external environment, the projected benefitsremain realistic, relevant and realisable.The introduction of resource accounting, combinedwith the drive for increased efficiency means that,elsewhere in government, there is a clear incentive– and need – for departments to be in a positionto know how well they are using their assets. Yet,historically, for IT-enabled change, this informationhas often been lacking, with few OGC GatewayReviews at Gate 5 (Benefit Evaluation) having beencarried out to assess for each programme and projectwhether the benefits hoped for have actually beensecured. While the percentage of programmesand projects that reach Gate 4 (Readiness forService) and go on to Gate 5 has improved(Appendix 2, Figure 12), more needs to be done.As a consequence, the Office of GovernmentCommerce Supervisory Board has agreed thatfrom 2006-07 all programmes and projects mustundertake a Gate 5 Review within 12 months ofcompleting a Gate 4 Review. Gateway Reviewsare only one aspect, but with increasing crossdepartmentalprogrammes and projects, clear andfirm arrangements will need to be put in placeto ensure accountability and responsibility forrealisation and optimisation of business benefitsacross the departments and agencies involved.Management of the department’s portfolio ofprogramme and projects should include monitoringof benefit realisation plans to ensure that benefits areoptimised, both in terms of financial savings and inimproved services to citizens.Delivering successful IT-enabled business change 19

executive summaryEight recommendations for central departments10 In order for departments undertaking IT-enabled change to have themaximum chance of success, there are actions that central departments can taketo strengthen processes and structures within government (Figure 3).3Eight recommendations for central departmentsPurposeRecommendation forRecommendationRelated key findingsEnsuring senior level engagement1 To ensure that Ministersare briefed at asufficiently early stageto understand and actwith an appropriateawareness of those risksOffice of GovernmentCommerce ande-Government UnitTo agree with departments a clearframework for ministerial briefing.n 52 per cent of mission criticaland high risk programmeSenior Responsible Ownersdiscussed progress withtheir Minister at least once aquarter, but 21 per cent had noprogress discussions with theirMinister (paragraph 2.11)2 To improvedepartments’management of theirportfolios of IT-enabledprogrammes andprojects and addressshortcomingsOffice of GovernmentCommerceTo improve the use of Gateway andmission critical data by:a) making greater use of lessonslearned data to inform Ministers,Accounting Officers, the ChiefInformation Officer Council andothers responsible for managementof the programme and projectportfolio about good and badpractice, and in particular toidentify the impact of the Gatewayprocess on programmes andprojects over time and whetherdeficiencies identified by GatewayReviews are being addressed; and,n the percentage of “Green”Gateway Reviews has fallenwhile “Red” Reviews haveincreased (Appendix 2,Figure 13)n 77 per cent of Centres ofExcellence received copiesof all Gateway Reviews(paragraph 2.18)b) providing a clear messagethat Gateway Reviews should beroutinely copied to the department’sCentre of Excellence, as happensalready in many departments,and to the department’s ChiefInformation Officer so that lessonslearned are disseminated acrossthe department.3 To ensure thatdepartments receiveconsistent messagesabout how to achievesuccessful deliveryOffice of GovernmentCommerceTo liaise closely with thee-Government Unit and ChiefInformation Officer Council as theydevelop portfolio managementand governance and projectcontrol principles for IT-enabledprogrammes and projects and totake account of these in its bestpractice guidance and GatewayReview processes.20Delivering successful IT-enabled business change

executive summary3Eight recommendations for central departments continuedPurposeRecommendation forRecommendationRelated key findingsActing as an intelligent client4 To ensure that rolesand mechanismswithin departmentsare co-ordinatedand coherentOffice of GovernmentCommerce ande-Government UnitTo:a) communicate clearly todepartments the expected divisionof roles and responsibilitiesbetween Commercial Directors,Chief Information Officers,Senior Responsible Ownersand Programme and ProjectManagement Centres of Excellence;n support to Senior ResponsibleOwners from Centres ofExcellence was variable, withonly 38 per cent rating theircontribution as very or fairlygood (paragraph 3.26)Office of GovernmentCommerceb) require departments to provideto the Office of GovernmentCommerce a model of theirarrangements so that the divisionof responsibilities is communicatedclearly to those responsible forimproving programme and projectmanagement across government;n 53 per cent of SeniorResponsible Owners stronglyagreed or agreed that theirCentre of Excellence was a hubfor the dissemination of goodpractice or lessons learned;48 per cent strongly agreed oragreed that it monitored andmeasured the performance ofindividual programmes andprojects (paragraph 3.26)Prime Minister’sDelivery Unitc) ensure that departmentalcapability reviews establish thatdepartments have carried outsuch mapping and allocation ofresponsibilities; and,n 58 per cent of SeniorResponsible Owners met withtheir Chief Information Officer atleast monthly (paragraph 3.27)Office of GovernmentCommerced) provide benchmarking standardsto enable Accounting Officersto assess whether their Centre ofExcellence is strengthening thedepartment’s capability to deliverIT-enabled and other programmesand projects.n 76 per cent of programmeSenior Responsible Ownersdiscuss progress with theirAccounting Officer at least oncea month (paragraph 2.11)5 To ensure that civilservice generalistsand IT professionalsare equipped tomeet the challenge ofdelivering IT-enabledchangeCabinet Office,e-Government Unitand Office ofGovernment CommerceTo co-ordinate the work of theProfessional Skills for Governmentprogramme, the Programme andProject Management Specialism,and the Chief Information OfficerCouncil with its responsibility forthe IT profession in government,in order to ensure that senior civilservants are equipped to overseemajor change programmes andrealise their benefits by:a) ensuring that both specialistsand non-specialists receivetraining in programme and projectmanagement, strategic thinking,and communications and marketing– skills key to the management oflarge-scale change;n 75 per cent of SeniorResponsible Owners spent aminority of their time on theirrole (paragraph 2.12)Delivering successful IT-enabled business change 21

executive summary3Eight recommendations for central departments continuedPurposeRecommendation forRecommendationRelated key findingsActing as an intelligent client continuedRealising the benefits of change6 To ensure thatdepartments makesound investmentdecisions and realisethe benefits of ITenabledprogrammesand projectsOffice of GovernmentCommerceOffice of GovernmentCommerceOffice of GovernmentCommerceOffice of GovernmentCommerceOffice of GovernmentCommerceb) ensuring that Senior ResponsibleOwners of mission critical andhigh risk programmes and projectsare selected on the basis of acompetency-based selectionprocedure that ensures that thosenominated have the skills andexperience to oversee such change;c) providing ongoing supportand mentoring for SeniorResponsible Owners;d) developing a means to provideclear career pathways forprogramme and project managersacross government; and,e) increasing the take up ofOffice of Government Commerceguidance and other central supportby senior civil servants chargedwith responsibility for programmesand projects.To ensure that programmes andprojects are brought into theGateway system as early aspossible by requiring departmentsto copy to the Office of GovernmentCommerce and to the ChiefInformation Officer Council outlinebusiness cases for all mission criticaland high risk programmes andprojects (followed in due course byfull business cases and significantchanges in scope in businesscases); and to require all businesscases to be accompanied by abenefits realisation plan, based onOffice of Government Commercebest practice and endorsed by theAccounting Officer, that identifiesbenefits, how ownership andaccountability for benefits deliveryis to be assigned across thedepartment, how customers andother users are to be persuaded toadopt any new IT-enabled services,and how benefits will be tracked inthe short and medium term of up tofive years’ after implementation.n 71 per cent of Heads ofCentres of Excellence werefairly or very concernedabout a lack of skillsand proven approach toproject management andrisk management in theirdepartments (paragraph 3.21)n 53 per cent of SeniorResponsible Owners ofmission critical and high riskprogrammes and projects arein their first Senior ResponsibleOwner role (paragraph 2.14)n numbers in the Programmeand Project ManagementSpecialism have doubled since2004, but remain low at some2,300 across the Civil Service(paragraph 3.20)n Some 13–23 per cent of SeniorResponsible Owners had notused relevant OGC guidance(Figure 9, paragraph 3.29)n currently (April 2004–June 2006) only five per centof all Gateway Reviews wereGate 5 (Benefits Evaluation)Reviews (Appendix 2,Figure 11).22Delivering successful IT-enabled business change

executive summary3Eight recommendations for central departments continuedPurposeRecommendation forRecommendationRelated key findingsTo consolidate the recommendations above and to assist departments in developing their delivery capability7 To improvedepartments’capability to deliverIT-enabled businesschange and otherprogrammes andprojectsPrime Minister’s DeliveryUnit and Office ofGovernment CommerceAs ongoing follow up todepartmental capability reviewsand the Recommendation fordepartments and Recommendationsto central departments above, toprovide an annual “stock take”for Accounting Officers on theirdepartment’s management ofmission critical programmes andprojects, including selection ofand support to Senior ResponsibleOwners, timeliness of andresponse to Gateway Reviews,and performance of Centresof Excellence.8 To clarify forAccounting Officerstheir responsibilitieswith regard to ITenabledbusinesschange and othermission critical andhigh risk programmesand projectsHM TreasuryTo ensure that Treasury guidance,including Government Accounting,makes clear to Accounting Officerstheir responsibility for the effectivegovernance of mission critical andhigh risk programmes and projects.Delivering successful IT-enabled business change 23

part onePart oneWhy departments need to deliver IT-enabledbusiness change successfully1.1 Information technology is playing an increasinglycentral role in the provision of major public services;whether the payment of benefits, the provision ofhealthcare, protecting the public, or simply the day-to-dayinteractions between government and citizens for servicessuch as obtaining a new driving licence, or for seekinginformation such as overseas holiday advice. Across thewhole public sector, government spends about £14 billiona year on new and existing information technology andrelated services. 9 In November 2005, TransformationalGovernment, Enabled by Technology set out governmentstrategy for delivering IT-enabled public services in thetwenty-first century. Alongside a clear drive for greaterefficiency in the way services are provided, the strategycalled for public services to be designed and co-ordinatedmore around the needs of the citizen or customer, notthe provider. This requires a better understanding of theneeds of different groups of citizens, such as older peopleor parents, or business entities, such as farmers or smallbusinesses. It also often involves the introduction ofnew IT systems, which to operate successfully, requireorganisations to work together around re-designed businessprocesses, and the marriage of new and often innovativetechnology with older “legacy” IT systems, dating from adifferent era, and designed for different purposes.1.2 To deliver the Government’s current objectives,as well as working towards the vision set out inTransformational Government, there were at the timeof this report some 120 mission critical or high risk ITprogrammes and projects in train across UK central civilgovernment. Each faces a different set of challengesand the very scale of many creates particular issuesaround complexity, cost control and the inter-operabilityof different systems, particularly where more thanone government department or agency is involved.A fundamental principle behind much of this increasedinvestment is that it will deliver better cost effectivenessthrough the streamlining and amalgamation of corporatesupport activities and a reduction in traditionalpaper‐based methods. The financial risks associated withIT-enabled business change are due therefore not only tothe scale of the programmes and projects themselves, butto the benefits they need to achieve and the pressure toproduce return on investment.1.3 Across government, central departments have mademajor efforts to strengthen and improve departments’ability to manage the Government’s portfolio of IT‐enabledprogrammes and projects. At the highest level, there hasbeen since 2001 a Cabinet Sub-Committee, the Committeefor Electronic Service Delivery, chaired by the ChiefSecretary to the Treasury and the official owner of theTransformational Government strategy. In 2004-05, thee-Government Unit put in train a series of measures toimprove delivery by drawing on best practice in the publicand private sectors. These include bringing technology andbusiness functions together through the establishment ofa Service Transformation Board and establishing a ChiefInformation Officer Council to manage the governmentportfolio of programmes and projects. Initiatives are alsotaking place (Figure 4) to develop the IT profession anddepartments’ capacity to manage IT‐enabled programmesand projects.9 Cabinet Office (2005) Transformational Government, Enabled by Technology, Cm 6683. London: The Stationery Office, p.4.24Delivering successful IT-enabled business change

part one1.4 To improve management of suppliers, the Officeof Government Commerce and the IT industry bodyIntellect have developed the Government ProcurementCode and the IT Supplier Code of Best Practice. TheChief Information Officer Council has asked the Office ofGovernment Commerce to undertake a review to assessthe capacity of the IT industry to deliver the portfolio. TheChief Information Officer Council is also working withIntellect to implement a supplier management initiative tostrengthen relations between suppliers and government.The Chief Information Officer Council aims to improveperformance of programmes and projects by ensuringthat departments engage with suppliers at the earlieststage, have the same individuals deliver the totality of theprogramme or project, and involve suppliers in all levelsof the governance process. In turn, suppliers are calledupon to ensure that they put their best available staff intoproject teams.1.5 Most departments now have a Chief InformationOfficer (often with direct experience of the IT industry).Where IT-enabled business change is of high strategicimportance, the Chief Information Officer will often bea board position (as is the case with the Departmentfor Work and Pensions). The Chief Information Officer’sresponsibilities may include overseeing the department’sportfolio of IT programmes and projects and ensuring thatthey are properly aligned to the department’s strategicobjectives. Chief Information Officers can play a crucialrole in providing assurance that the risks to departments’finances and business posed by major change programmesare being managed effectively. This follows practice inthe United States where, for the last decade, it has beenmandatory for every Federal Government Agency toemploy a Chief Information Officer, with a set of keyresponsibilities enshrined in legislation and clearly definedduties to ensure a consistent approach across FederalGovernment (Figure 5).4Six point plan to develop the governmentIT Profession5The Chief Information Officer role in United States’Federal AgenciesThe shortage of skills is being addressed by the CabinetOffice, as part of the wider Professional Skills for Governmentprogramme, through a six point plan to strengthen skills andcapacity in IT within government.n Professional Competency Framework to support the sharingof best practice and people across central government.n Networking and mentoring by individuals working inthe same area (for example, service delivery) acrossdepartments to encourage the sharing of best practiceand experience.n A Government IT Academy to develop professional skillsand capabilities that distinguish them as IT Professionals.n Private sector collaboration: the members of the ChiefInformation Officer Council have recently joined CIOConnect, a network of the Chief Information Officersrepresenting most of the top 300 companies in Britain.n Communication to reach 50,000 IT staff and theirmanagers, along with a regular e-Bulletin, Chief InformationOfficers will meet face to face with as many of theirdepartment’s IT staff as possible in their role as the localHead of Profession. Individuals have the opportunity toregister an interest in the profession and engage with theagenda of the government IT profession.Under the terms of The Clinger Cohen Act 1996:n the Chief Information Officer must develop, maintain andfacilitate the implementation of IT architectures;n the Chief Information Officer is responsible for the agency’shuman capital requirements;n the Chief Information Officer must provide advice and otherassistance to senior management of the agency to ensurethat information technology is acquired and informationresources are managed in a manner appropriate for thatagency; andn the Chief Information Officer must report to the head ofthe agency.In addition, Chief Information Officers are required by theE-Government Act (2002) to make an annual report (Exhibit300) to the Office of Management and Budget, giving ahigh level summary, which includes any IT investment’sjustification, project plans, benefit-cost analysis, acquisitionplan, risk management plan and enterprise architecture plan, toenable the Office of Management and Budget to determine ifinvestment funding should be recommended or continued.Source: Government Accountability Officen Partnership: working with professions with the sameagenda, including Information Management, InformationSecurity and Information Assurance, Communications,Procurement, Programme and Project Management.Further details may be found at:http://www.cio.gov.uk/itprofession/about/themes.aspDelivering successful IT-enabled business change25

part oneThe purpose of our report1.6 In the face of major initiatives to use IT to realignservices and the introduction of roles and mechanismsto improve delivery of IT-enabled change, what we havetherefore attempted in this report is to identify throughexamples of successful IT-enabled change how thatsuccess has been brought about, the key contributoryfactors and, most importantly, how these can bereproduced in government departments.1.7 Identifying such case studies has not been an easytask; despite asking many people in both the supplier andclient communities in this country and overseas, as well asa range of other bodies. This may be because, as noted bythe Standish Group report (2004), delivery of IT-enabledbusiness change is a major challenge for all organisations,whether public or private. 10 Alternatively, this may bebecause to define success in major business transformationsmeaningfully is not easy; or it may be that people aresimply reluctant, particularly in United Kingdom centralgovernment, to proffer examples of what went well whenfaced with a widespread perception, borne out of a numberof major and costly failures, that IT-enabled businesschange is not something to associate publicly with success.1.8 This last issue of risk aversion is one of the mainreasons for this report. We have found a perceptionamongst a wide body of commentators within industryand Whitehall that well publicised failures are drivinga culture of risk aversion amongst those responsible fordelivering IT-enabled change, which in turn risks poorerdecision making, lost opportunities for innovation andultimately poorer value for money for the taxpayer. MajorIT-enabled business change is risky: IT is not a steady andstable commodity like building a new road. And yet whatIT-enabled programmes and projects can deliver – whenthey go right – by way of reduced costs or better, moreresponsive services is significant. In the case of the PaymentModernisation Programme, for example, the move awayfrom paper based order books to electronic payment intocitizens’ bank accounts has reduced processing cost pertransaction from 67 pence to one penny.1.9 In defining success, we have focused on thoseprogrammes and projects that deliver benefits. Routinely,success has been measured against three basic criteria– delivery on time, to specification and to budget. Whilethese are important disciplines for programme and projectmanagement and a project may be a success in terms ofachieving a new technical implementation, our workshopwith the Public Sector Chief Information Officers’ Councilhighlighted the importance in measuring success ofrealising the projected benefits of any IT-enabled change –whether these are significant improvements to the qualityof existing services to citizens, businesses, or others, thegeneration of efficiency gains, or the ability to offer newand possibly innovative services.Our sources of evidence and thestructure of our report1.10 Featured in this report are therefore 24 IT-enabledprogrammes and projects that to one degree or anothercan be classed as successes and met the following criteria:nnnnsignificant degree of business transformation;significant delivery of benefits;diversity of examples in terms of size and types oftransformations; and/ordeemed successful by their respective organisationsand by others in the industry.1.11 The case studies have not been the subject ofNational Audit Office audits, but have been prepared inconjunction with the organisations concerned, takingin their views on the essential ingredients that helpedthem deliver success. We do not comment on the widerperformance of those bodies or their suppliers, focusinginstead on the key principles and practices to emergefrom the case studies. The case studies are drawn fromthe public and private sectors within the United Kingdom,as well as a number from the public sector overseas,on the advice of the Office of Government Commerceand the e-Government Unit, suppliers, industry awardbodies, consultants and professional bodies, other auditinstitutions and our own knowledge.1.12 They cover a range of activities from developingInternet- or contact centre-based services to majoroverhauls of businesses processes – whether drivingefficiency and change within organisations or using ITto support new services and products for customers orcitizens. They range in scale from the Environment Agency’sdevelopment of electronic fishing rod licences, to theDepartment for Work and Pensions’ Payment ModernisationProgramme costing over £800 million. From these, we havedrawn key principles applicable to successful delivery ofIT-enabled change in central government, as well as in thewider public sector and elsewhere.10 Standish (2004) Third Quarter Research Report. West Yarmouth, MA.: The Standish Group International Inc.26Delivering successful IT-enabled business change

part one1.13 There are of course many routes to deliveringIT‐enabled business change successfully. Here, we focuson three core principles common to all our case studyorganisations, regardless of whether they were in thepublic or private sector, or the size, complexity or type ofchange they were undertaking:nnnensuring senior level engagement;acting as an intelligent client; andrealising the benefits of change.Within these are ten key activities that guided the behaviourof our case study organisations (Figure 6 overleaf).1.14 The three core principles were important for allof our case studies, the specific activities also, butthe demands of different types of business changebrought different activities to the fore. For innovativetransformations reliant on leading edge technology, forexample Norwich Union’s ‘Pay As You Drive’ TM insurance,extensive testing of technical viability was needed. Sometransformations have captive audiences, for example theUnited States’ Department of Defense Common AccessCard, the users of which are military personnel and theirfamilies, civilian staff, and contractors. Beyond thesegroups, to succeed many business changes must convincecustomers and clients of their benefits, requiring themto change the ways in which they operate. This includescitizens, businesses and professional groups who may beturned against business changes that do not meet theirneeds. Lessons from our case studies are set out inParts 2–4 of the report under the three themes describedabove: ensuring senior level engagement; acting as anintelligent client; and, realising the benefits of change.1.15 To supplement the findings of our case studies andto understand how the key principles can be replicated ingovernment departments’ present and future IT programmesand projects, we consulted widely through workshopswith major IT suppliers held in collaboration with Intellect,presentations to the Intellect Public Sector SuppliersCouncil, a workshop of government Chief InformationOfficers (CIOs), interviews with IT industry tradeassociations, professional bodies, suppliers and consultancyfirms, and interviews with the central government bodiesmost responsible for IT-enabled business change acrossgovernment – the e-Government Unit and the Office ofGovernment Commerce. This work was supported by acensus of central government Centres of Excellence and asurvey of Senior Responsible Owners of mission critical andhigh risk IT-enabled programmes and projects. To draw oninternational experience, we also visited the GovernmentAccountability Office to discuss developments in thedelivery of IT-enabled business change in United States’federal government and visited a Federal GovernmentAgency for discussion with its Chief Information Officer.These findings form the second section of Parts 2-4 “Howequipped are departments to deliver”.1.16 Further details of our methodology – how weidentified our case studies, and the census, survey,workshops, focus groups and interviews that we carriedout are given in Appendix 1. Appendix 2 contains analysisof Gateway Review and mission critical reporting data.The full case studies appear in Volume 2 of this report.Delivering successful IT-enabled business change27

part one6Core principles and activities that contributed to successDemonstratingcommitment tothe changePrioritising theprogrammeand projectportfolio in linewith businessobjectivesCreatingmechanismsfor clear andeffective decisionmakingEnsuring seniorlevel engagementSelling thebenefits to usersRealising thebenefitsActing as anintelligent clientManaging therisks of the ITsolutionOptimising thebenefitsWinning thesupport of widerstakeholdersCreatingconstructiverelationships withsuppliersBuilding capacityand capabilityDesigning andmanaging thebusiness changeSource: National Audit Office28Delivering successful IT-enabled business change

part twoPart twoEnsuring senior level engagement2.1 In Part 2, we set out the lessons from our case studies,survey findings and other evidence on the importanceof senior management creating the right structure andproviding the right support to maximise the chance ofachieving successful IT-enabled business change.Lessons from our case studies2.2 Our case studies demonstrate that senior levelengagement is crucial for successful delivery in three ways:nnnby providing mechanisms to prioritise theprogramme and project portfolio in line withbusiness objectives;by creating a clear decision making structure withagreed lines of accountability so that the rightdecisions are made swiftly and in line with businessstrategy; andby demonstrating that senior management iscommitted to the change.Prioritising the programme and projectportfolio in line with business objectives2.3 Good portfolio management at board level helpsensure that decisions about the priority of programmesand projects are clearly in line with the organisation’sbusiness strategy, that there is the capacity to supportthem, and that the portfolio represents the optimumbalance between benefits and risk. Our case studiesinclude good examples of corporate governancestructures that enabled organisations to prioritise theirprogrammes and projects, supported by a dedicatedfunction providing the board with the information neededto take informed investment decisions. Prudential UK’sBusiness Transformation Group, for example, produces aquarterly report to assist its board to prioritise resourceson its largest value initiatives. To manage its programmeportfolio, Cambridgeshire County Council set up BusinessDevelopment Area Boards, chaired by the Chief Executiveor Deputy Chief Executive, supported by a CorporateProject Office responsible for providing an overview ofcurrent programme activities, the strategic objectivesbeing pursued, issues, risks and benefits.2.4 Short timescales combined with clear objectives anddirection can help keep the change a top managementpriority, focusing senior decision makers on managingrisks and tackling problems head on. A number ofthe IT‐enabled changes featured as cases studies wereachieved against tight timescales. The New York City 3-1-1Citizen Service Center, for example, met a target to beoperational within a year, and for “Warm Front”, the EagaPartnership signed up to a contractual arrangement forthe successful introduction of a new IT-enabled businessprocess within six months.Delivering successful IT-enabled business change29

part twoCreating mechanisms for clear and effectivedecision making2.5 Decisive decision making minimises delays,releases tied up resources and avoids additional costs,particularly where supplier contracts are on a “time andmaterials” basis. This is particularly important for thosemajor government programmes that are cross-governmentinitiatives requiring co-ordination of a number ofdepartments’ decision-makers. Here, it is important toestablish up front governance arrangements with jointboards and hierarchies to enable the partners to takeimmediate decisions, or to escalate problems rapidly tomore senior decision makers.2.6 For Businesslink.gov.uk, an initiative to create asingle interface between the whole of UK governmentand UK business, the Department of Trade and Industryneeded cross-government support. The Department setup a Programme Board of chief executives or seniormanagement team members of the organisations involved.Clear terms of reference set out the agreed commitmentof Board members, and their seniority enabled theProgramme Board to make clear decisions on behalf of theorganisations it represented.2.7 British Columbia’s Network BC put in place agovernance model with an Executive GovernanceCommittee with representation from the various publicbodies involved to provide strategic direction andultimate dispute resolution and a Council of ChiefInformation Officers to make ongoing managementand operational decisions. For Transport for London’sOyster® card Programme, the programme director settime limits for resolving issues, after which a decisionwould be imposed. This encouraged the programmeteam and suppliers to resolve issues quickly. To ensureit was alerted to major problems, Britannia BuildingSociety’s board maintained financial oversight of its“Really Big” transformation programme by agreeing alow (3 per cent) budget contingency. When unexpectedcosts arose, the programme manager provided a range ofoptions to enable the board to decide how to proceed.Senior managers responsible for Transport for London’sCongestion Charge programme understood clearlythe decisions they could make and made themselvesaccessible to the delivery team so they could readilyaddress issues, whether political, technical or operational,as they arose.Demonstrating commitment to the change2.8 Where change has been inspired from the top,for example in the case of the development of the NewYork City 3-1-1 Citizen Service Center or Transportfor London’s congestion charging, the resultant strongleadership and commitment has in turn prompted thecreation of machinery to provide effective direction andmanagement of that change. Leadership of the changeby top management of the business also helps avoid therisk that focusing on the IT aspect of the business changeleads organisations to vest too much responsibility for thetransformation in the IT function. Board directors of thebusiness unit are better placed to understand the impactof the transformation on customers, working practices,financial efficiencies and marketing opportunities.2.9 The role of top management can be crucial inmanaging risk to the reputation of the organisation andits programme from announcing goals and timetablesfor programme and projects that are aspirational ratherthan realistic, resulting in negative publicity when notachieved. Major business changes create uncertaintyand media interest will be high. Negative publicity candamage the reputation of not only the change programme,but also the organisation as a whole. In the private sectorin particular, this can affect the behaviour of investorsand customers and the organisation’s profitability. In thepublic sector, it can dissuade intended users from tryinga new system and create a negative profile that absorbsmanagement time and additional costs to correct. ForNYC 3-1-1, for example, the Mayor’s objective was todeliver the new system in one year, with tight completiontargets for different parts of the programme. To avoidraised expectations, however, no public commitment wasmade to a “go live” date and no announcement was madeuntil the system was actually in operation.2.10 A powerful champion can be an effective way ofdriving through complex change, but vesting authority ina single decision maker is not the only solution. PrudentialUK’s Chief Executive adopted a collegiate approach for its1000 day Transformation Programme, with a governancemodel which rotated responsibility for programmemilestones to a different board member every quarter,ensuring that there was widespread engagement andcommitment, and spurring each business area in turn todeliver its aspects of the business change.30Delivering successful IT-enabled business change

part twoHow equipped are departments todeliver senior level engagement?2.11 Within departments, there has been a move towardsimproved governance arrangements for IT-enabledprogrammes and projects and greater involvement ofboards and Ministers. Every mission critical programmeand project now has an assigned Minister and SeniorResponsible Owner, 11 as well as a programme or projectmanager, each with a clear set of responsibilities.There is relatively good interaction between SeniorResponsible Owners of programmes and AccountingOfficers, with three quarters (76 per cent) saying thatthey discussed progress with their Accounting Officerat least once a month. However, the picture is less clearwith Ministers; there is a risk that without clear andregular communication programmes fall out of alignmentwith ministerial objectives or that Ministers are not fullyinformed about emerging risks to delivery. Our surveyidentified that while a half (52 per cent) of programmeSenior Responsible Owners met with their Minister atleast once a quarter, 28 per cent had discussions less thanonce a quarter, and a fifth (21 per cent) had not discussedprogress with the nominated Minister.2.12 The size and complexity of many governmentIT-enabled change programmes and projects and theassociated risks require that Senior Responsible Ownersspend the time needed to discharge their responsibilitiesfully. Having Senior Responsible Owners at or near boardlevel means that they can exert influence so that theother parts of the business are aligned to the change andfully signed up to delivering its benefits. However, suchindividuals need to devote time to that role if they are to beeffective. For most (75 per cent), the role occupied only aminority of their time, with half (45 per cent) spending under20 per cent of their time on their programme or project.2.13 This has implications for the management ofsuppliers, who in our workshops saw the level ofcommitment to IT-enabled business change of seniormanagers in public sector organisations to be less than inthe private sector, where changes are market-driven, withthe potential, if got wrong, to threaten the very existenceof the organisation. Changes in the public sector wereperceived to be driven by a range of factors influencingand modifying ministerial policy.2.14 Our survey of Senior Responsible Owners alsobrought out the relative inexperience of senior civilservants in running mission critical and high riskprogrammes and projects, with half (53 per cent) being intheir first Senior Responsible Owner role.2.15 Our analysis of Gateway data shows that issuesabout programme and project governance (“Roles andresponsibilities”) also remain high on the list of Gatewayreviewers’ concerns (Figure 7 overleaf).2.16 An enhanced level of senior management engagementhas been driven in part by the requirement for departmentsto report regularly to the Prime Minister through theOffice of Government Commerce on the status of theirmission critical programmes and projects (further detailsare in Appendix 2). Also important is the Gateway Reviewprocess (currently the subject of a refresh programme)which has raised the visibility of the quality of departments’performance in managing the business change.2.17 In our survey, we found widespread support indepartments for the Gateway process. Regardless of the“Red-Amber-Green” outcome, 98 per cent of SeniorResponsible Owners rated the quality of the conclusionsfrom their last Gateway Review as either “very” or“fairly” good.2.18 Gateway Reviews are “owned” by the SeniorResponsible Owner of the programme or project andwhile this is important for securing Senior ResponsibleOwners’ support for the process, the potential of theReviews to enhance scrutiny of individual programmesand projects and wider dissemination of “lessonslearned” is not being fully exploited. Only three-quarters(77 per cent) of Centres of Excellence received copiesof all Gateway Reviews. For the remainder that do not,this damages their ability to act as a focal point forsupporting departments’ capability and capacity both intheir “policing” role and as conduits for dissemination ofgood practice.11 In December 2002, Ministers agreed six actions that targeted areas of weakness in the delivery of IT-enabled programmes and projects. Action 6: All highrisk and Mission Critical projects to have clearly identified (i) responsible Minister (ii) Senior Responsible Owner and Project Manager with good relevanttrack records.Delivering successful IT-enabled business change31

part two7Between the periods July 2003 to February 2004 and March 2004 to March 2006 the percentage of “Red” issuesraised in Gateway Reviews of IT-enabled programmes and projects fell in three of the top five categories, butconcerns about skills and resources roseTotal red issues: 92 (July 2003-February 2004); 321 (March 2004-March 2006)Adequate Skills and Business ResourcesRoles and ResponsibilitiesBusiness CaseRisk ManagementStakeholder/Communication0 2 4 6 8 10 12 14 16 18 20PercentageRed risks identified March 2004–March 2006 Red risks identified July 2003–February 2004Source: Office of Government CommerceNOTEJuly 2003-February 2004 is the period reported on in the National Audit Office report Improving IT Procurement.2.19 More importantly, Gateway Reviews of missioncritical and high risk programmes and projects were notalways communicated to those responsible for internaland external scrutiny and challenge. Just under half(42 per cent) of Audit Committees were not briefed on theresults of Gateway Reviews and only a quarter(26 per cent) received briefing quarterly. The ability ofAudit Committees to provide constructive challengeis further weakened in that in only 42 per cent oforganisations do internal auditors get copies of allGateway Reviews.2.20 Currently, therefore, exisiting mechanisms for scrutinyare insufficiently exploited because the disseminationof Gateway Reports is not standardised. The Office ofGovernment Commerce intends to use a single point ofcontact to co-ordinate its engagement with departmentson both Gateway Reviews and Centres of Excellence.This would help ensure that Centres of Excellence receiveconsistently copies of all Gateway Reviews and are betterplaced to spread the lessons learned. Copying GatewayReviews to Chief Information Officers would have the addedbenefit of helping put them in a position to provide boardsand Accounting Officers with the assurance that they needthat such programmes and projects can be delivered.32Delivering successful IT-enabled business change

part threePart threeActing as an intelligent client3.1 To succeed in major change programmes,organisations need the knowledge and skills to act asan intelligent client. These include forming productive,value-for-money relationships with suppliers, an in-depthunderstanding of the business process the organisationis seeking to change, the level of technical challengeinvolved and how to meet it, and clear understanding ofthe additional resources and skills needed to supplementexisting capabilities. 12 Successful change programmes werecharacterised by the effort their organisations put into:nnnnbuilding capacity and capability;creating constructive relationships with suppliers;designing and managing the business change; andmanaging the risks of the IT solution.Lessons from our case studiesBuilding capacity and capability3.2 All our case studies owe much of their success to thequality of their programme and project managers. Some ofour case study organisations had the in-house capacity toundertake the roll out of the business change. The City ofEdinburgh Council’s e-Government Unit, for example, hasa cadre of programme and project management specialistswith PRINCE2 qualifications who can be seconded toCouncil departments undertaking change programmes.Others recognised at the outset however the gaps in theircapability and contracted with third party consultancies tofill them.3.3 This third party advice centred on assistance toorganisations in shaping their requirements and testing thequality of bidders’ proposals. Such testing included visitsto potential suppliers’ existing facilities to see if they coulddeliver what they promised. For its Payment ModernisationProgramme, the Department for Work and Pensions forexample examined the operation of large contact centreswith facilities to store benefit order books securely.3.4 Third parties were also used to provide independentquality assurance. Britannia Building Society, for example,contracted with consultants to validate quarterly, or asthe programme approached major delivery milestones,whether the conditions for success were in place.3.5 An important part of working with consultants isto learn from their experience in order to develop thecapability to manage future changes and secure longerterm benefit for the public sector. The Vehicle andOperator Services Agency agreed at the outset of theOperator Self Service project that its consultants wouldfacilitate transfer of knowledge and skills throughout thebusiness change. Initially, for example, consultants ledand coached a dedicated contract management team tomanage suppliers. Over time, internal expertise increasedand reliance on consultants was removed. In workingwith consultants to trial its new integrated customermanagement and field service programme, ScottishWater ensured that process design skills were transferredfrom the consultants to the front line staff. This enabledfront line teams to introduce further improvements to theprocess changes.12 Office of Government Commerce, OGC Gateway Review 2, Procurement Strategy.Delivering successful IT-enabled business change33

part threeCreating constructive relationshipswith suppliers3.6 Our case studies illustrate the importance assystems are developed and implemented of establishingrelationships of openness and trust between client andsupplier. Clients need sufficient understanding of theissues facing the supplier to know when problems arise, asinevitably they will, why and to determine whether theyare due to poor performance or genuine difficulties that allparties need to work together to resolve. Equally, suppliersneed to make sure that their understanding of the client’sneeds is clear – and to challenge where this is not thecase. This can be assisted by the development of jointgovernance arrangements.3.7 In working with the Department for Work andPensions on the launch of Pension Credit, for example,EDS operated “open book” accounting, giving theDepartment access to the company’s project accountingrecords so it could establish how much EDS was payingfor hardware, software and subcontracted consultancy.The Northern Ireland Criminal Justice Directorate’sCauseway Programme built a strong collaborativerelationship with its main supplier Fujitsu Serviceswhereby, at each stage of the programme, Fujitsu providedthe Causeway management team with open access to itsdesigns and specifications so it could obtain a secondopinion from an independent company specialising inquality assurance.3.8 Where an organisation’s project staff work in jointteams with suppliers and contractors, relatively simpledevices can build team cohesion and help delivery.Some of our case studies co-located their staff withthose of the supplier. The Republic of Ireland’s RevenueOn‐Line Service, for example, co-located its programmestaff with those of its suppliers Accenture and BaltimoreTechnologies in an open plan office, away from existingRevenue offices. For its “Really Big” change programme,Britannia Building Society built mixed project teams ofits own and suppliers’ staff and fostered a sense of teamidentity by all team members wearing Britannia’s badge.3.9 Programme and project delivery benefits whensuppliers can offer constructive challenge to their clients,an approach which forms one of the ten commitments inthe Intellect IT Supplier Code of Best Practice endorsedby the Office of Government Commerce. British Telecom,for example, required the City of Edinburgh Councilto put in place a governance structure to ensure seniormanagement oversight for the modernisation of itsPlanning and Building Standards services. Further intoa programme, constructive challenge can highlightunrealistic, unsafe or technically unfeasible requirementsor mid-programme changes. For Pension Credit, theopen relationship between the Department for Work andPensions team and EDS paid dividends when differentbusiness units of the Department made some 50 requestsfor requirement changes. The project team and EDSworked to challenge and find other solutions for many ofthe changes, avoiding significant additions to the cost anddelivery time of the programme.Designing and managing the business change3.10 An essential pre-requisite for engagement withsuppliers is the need for the client to be clear aboutwhat the business transformation is aiming to achieve.Government departments are frequently administeringsystems, such as benefit payments, built on primarylegislation modified over decades by secondary legislation,regulations and case law. IT-enabled business change mayexperience problems because the organisation fails tounderstand and communicate to suppliers the processesit is seeking to transform. Reflected repeatedly in our casestudies is the effort organisations put into mapping outclearly the new business process, probing its robustness,and trialling and testing assumptions with those who haveto operate or use it. For its Causeway programme, theNorthern Ireland Criminal Justice Directorate spent eightmonths mapping the business processes involved to ensurethat the new system was feasible.34Delivering successful IT-enabled business change

part three3.11 Scottish Water drew on its field operation staff’sexperience to design, operate and check its new integratedcustomer management and field service programme.In-house business analysts worked with consultantsCelerant to trial the new process at designated field sitesand to work through a range of scenarios before committingto purchase software to implement the process. Similarly,the Vehicle and Operator Services Agency drew on thepractical experience of front line staff to develop and assessthe advantages and disadvantages of a range of businessmodels and process options to deliver a new commercialvehicle licensing service. As a result, front line deliverystaff could use their experience of processing applicationsto make important contributions to the design of theself‐service application process. In both cases, involvingfront line staff had the added advantage of building thecredibility of the new process within the organisation.3.12 Where users are outside the organisation, involvingthem early in the design of the change is important toestablish whether it will meet their needs and to increaselikelihood of take up. OGCbuying.solutions, for example,involved key public sector customers in designing itseSourcing solution and eAuction facility.3.13 Wherever possible, our successful case studiesavoided the strain on organisational resources and thetechnical and reputation risks of “big bang” roll outs andphased in the business change. Ireland’s Revenue On‐LineService was rolled out in phases, with the simplesttaxes and processes – filing and paying VAT returnsand employers’ withholding taxes – acting as “proof ofconcept”, demonstrating that the system worked andbuilding support for the change. The Department for Workand Pensions’ Payment Modernisation Programme rolledout firstly long-term payments – war pensions and ChildBenefit – whose recipients would not create a constantchurn by moving quickly on and off the system. Less“steady state” benefits, such as Jobseeker’s Allowance,were implemented at later stages.3.14 For Pension Credit, the Department for Work andPensions allowed demand to build up gradually, testingthe new processes before volumes rose. Demand wasmanaged by adjusting advertising levels and promotionstrategies. The Department also gave itself additional searoom by giving citizens an 18-month window in whichto take up the Credit. Similarly, the Environment Agencylaunched its online fishing rod licence service to coincidewith the annual low-season sales period, thereby reducingpotential demand on the system and minimising the risk oftechnology failure.Managing the risks of the IT solution3.15 Our successful case study organisations endeavouredto reduce the risks by relying wherever possible ontheir existing IT infrastructure, mature technology andoff‐the‐shelf software. Re-using the existing infrastructuremeans that systems already have skilled support staff andare well understood by the organisation, as well as themore obvious savings through lower procurement costs.3.16 For novel changes, development funding may bejustified to ensure that the proposed change will work.The Northern Ireland Criminal Justice Directorate’sCauseway programme to link the case management systemsof criminal justice agencies broke new ground. Therewere few examples worldwide to follow and there weredoubts over the technical viability of passing large amountsof information between six different case managementsystems. To establish the feasibility of the IT solution, theCauseway team undertook a six-month proof of conceptexercise with three short listed suppliers, each of whomreceived funding to develop a prototype demonstrationsystem. The Causeway team brought in third party technicalconsultants to help evaluate the demonstration systems,which uncovered significant weaknesses in one supplier’sprototype. The prototype phase helped Causeway gaugewhether it could overcome the main technical hurdlesbefore committing major expenditure, to select the bestsupplier, and to incorporate feedback from key stakeholdersto improve the final design.3.17 For software, it is often easier, cheaper and less riskyto modify a business process to make use of tried andtested off-the-shelf packages available from commercialapplication vendors than to develop bespoke software.This may also have additional cost and supply benefits.The United States’ Department of Defense, for example,chose standard Java Card technologies for the CommonAccess Card for its Identity Management Programme.This offered access to competing card vendors, ensuringcontinuity of supply if one supplier went out of business,and mixing and matching of different suppliers’ softwareand hardware to obtain the most cost-effective package.Scottish Water introduced its new integrated customermanagement and field service project as part of aprogramme to achieve 40 per cent savings in operatingcosts by 2006. To keep down costs and optimise return oninvestment, the business lead of the project made an earlydecision to adopt off the shelf technology supplied byOracle, despite significant pressure from the IT departmentthat a bespoke system was needed. This allowed a fasttrack implementation of the software, with the firstinstallation completed in 90 days.Delivering successful IT-enabled business change35

part three3.18 Others have taken a hybrid approach. EagaPartnership, for example, was confident that its in-houseIT staff had the skills and capacity to develop the secureweb-based portals needed by its Home Energy Advisersand installation contractors to update central records fromtheir home or office through the Internet. This approachwas allied to an off-the-shelf Oracle Financials andCustomer Relationship Management implementation.3.19 The use of mature rather than innovative technologyreduces risks to the reliability of the system, butconsiderable risks are likely to remain, particularly wheresystem inter-operability is involved. The NYC 3-1-1programme, for example, depended on consolidating thecall centres from 40 different New York City agencies.Risk was managed through a phased roll out of the system.While all agencies were linked to the 3-1-1 system as thefirst point of contact for citizens, initially only 11 werefully consolidated into the 3-1-1 call centre, with theremainder becoming fully integrated over time.How equipped are departments toact as an intelligent client?3.20 A common characteristic of our case studies is theleadership and competence displayed by the programmeor project manager. Such appointments are critical to thesuccess of an IT-enabled change. Yet these appointmentshave not always been handled well in governmentdepartments, leaving the programme or project exposed.The experience of suppliers in our workshops was thatalthough they have improved, public sector programmeand project management skills still lag behind those ofthe private sector, as do commercial skills and marketawareness. Since our report on Improving IT Procurement,membership of the government-wide Programme andProject Management Specialism has almost doubled fromsome 1,200 in 2004 to 2,300 in 2006, but the numbersremain small in relation to Civil Service staffing.3.22 Constructive relationships with suppliers emerged asone of the strongest drivers for success in our case studies.In our workshops with major IT suppliers, we found thatgenerally they had seen improvement in government ITprofessionals’ understanding of the business of the ITsector and our survey found that 80 per cent of SeniorResponsible Owners had involved their main supplier(s)in their last Gateway Review. In addition, relationshipswith suppliers were not considered a cause for concernby most Centres of Excellence, but a quarter (23 per cent)expressed concerns about one of the National Audit Officeand the Office of Government Commerce’s commoncauses of failure of IT projects “lack of effective projectteam integration between clients, the supplier team andthe supply chain”; and 23 per cent were concernedabout “lack of understanding of and contact with thesupply industry at senior levels in the organisation”.Better working relationships were being fostered thoughpractices such as regular joint reviews, shared “learnedlessons reports”, and regular, informal feedback.3.23 Although supplier relationships had improved,a key difference between private and public sectorclients highlighted in our supplier workshops was thatit was easier with private sector clients to create openrelationships (Figure 8) and a sense of common purposeand shared risk. As our case studies show repeatedly, suchrelationships can be achieved however in both sectorsand were crucial for the successful delivery of many ofour case studies (for example, the Payment ModernisationProgramme and Britannia Building Society). They alsobrought other programmes back on track (for example,Pension Credit, where at one point relationships betweensuppliers were deteriorating to the detriment of solvingtechnical problems). Openness also encourages suppliersto constructively challenge clients’ proposals, particularlywhen requirement changes are likely to increase risks anddelay delivery (paragraph 3.9).3.21 The scarcity of skills was reflected in our surveyfindings. Of the National Audit Office and Office ofGovernment Commerce’s “eight common causes ofproject failure” listed in Appendix 3, “lack of skillsand proven approach to project management and riskmanagement” was a cause of concern for 71 per cent ofHeads of Centres of Excellence. This was also an issuefor Gateway reviewers, “adequate skills and businessresources” (Figure 7 in Part 2) being identified as anincreasing area of concern.36Delivering successful IT-enabled business change

part three3.24 In addition to programme and project managementskills, our case studies, for example Scottish Waterand Revenue On-Line, put considerable effort intounderstanding the business process they wanted toimplement and investigating the viability of proposedIT solutions so they could communicate clearly to theindustry at the procurement stage what was required.While this report focuses on delivery rather thanprocurement, market sounding is an important partof planning the business change process. Few of theCentres of Excellence or the Senior Responsible Ownerswe surveyed had made use, for example, of Intellect’sConcept Viability Service, yet the Service is designed tohelp organisations test and refine the thinking behindmajor business changes before going to the market tocontract with suppliers.3.25 Given the relative lack of experience of many SeniorResponsible Owners (paragraph 2.14), there is a clear needfor departments to ensure they are supported by sourcesof professional expertise. Delivering Policy workshops, forexample, have been established by the Cabinet Office,HM Treasury, the Office of Government Commerce and theNational School of Government as best practice for missioncritical policies and programmes. They aim to smooth thetransition from policy development to implementation byassisting the lead policy official and/or Senior ResponsibleOwner and their teams to address the common causes ofunsuccessful policy delivery and to plan how the policy willbe implemented. The Office of Government Commerce’sExecutive Support Service supplies experienced, accreditedindividuals to act as mentors to Senior Responsible Ownersor to provide advice and guidance as Non ExecutiveMembers of Programme Boards.8IT suppliers’ key differences between private and public sector clientsThe relationship between client andcontractor is always open and honestClients undertaking IT-enabled businesschange are realistic about how much risk theycan transfer to contractorsPublic sector543210When business objectives change, anassessment of the impact of those changesis always madePrivate sectorThere are always cleardefinitions of how the benefits ofprojects are assessedClient organisations alwaysensure that the project is positionedas a wider business change ratherthan purely an IT changeClients are clear about the risks involvedin IT-enabled business changeClient organisations place a high degree ofimportance on the process/change managementskills of the contractor at the tender stageSource: Ipsos MORI-NAO IT suppliers workshops (n=21)NOTE5 indicates a strong rating. 1 indicates a weak rating.Delivering successful IT-enabled business change37

part three3.26 Within departments, Centres of Excellence weredesigned to occupy a central position and to provide bothscrutiny and support to Senior Responsible Owners, ChiefInformation Officers and Ministers. Their contribution ishowever variable, with a striking 38 per cent of SeniorResponsible Owners having no involvement with aCentre of Excellence, 20 per cent rating the support ofthe Centre of Excellence as poor, and only 38 per centrating its contribution as very or fairly good. Only aroundhalf (53 per cent) of Senior Responsible Owners stronglyagreed or agreed that their Centre of Excellence was a hubfor the dissemination of good practice or lessons learnedand half (48 per cent) that it monitored and measured theperformance of individual programmes and projects.3.27 Chief Information Officers are another importantsource of potential support and expertise to SeniorResponsible Owners and our survey showed that58 per cent of Senior Responsible Owners met with theirChief Information Officer at least monthly. The creation ofthe Chief Information Office role raises the issue howeverof the co-ordination of their responsibilities with those ofCentres of Excellence and the contribution of each in, forexample, supporting Senior Responsible Owners, buildingcapability and capacity in programme and projectmanagement of IT-enabled change, and spreadinggood practice.3.28 As well as the support of colleagues, thoseresponsible for programmes and projects made useof a range of guidance tools produced by the Officeof Government Commerce. Both Heads of Centres ofExcellence and Senior Responsible Owners found Officeof Government Commerce guidance helpful (Figure 9),indicating that use of these products has increased since2003-04 when we last examined this issue. 133.29 Some 13–23 per cent of Senior Responsible Ownershad not used the different types of guidance however,indicating further scope for the Office of GovernmentCommerce to make senior civil servants more aware ofwhat is available. This is consistent with our ImprovingIT Procurement report where we noted that experiencedusers were more familiar with such guidance.9Centres of Excellence and Senior Responsible Owners found OGC guidance helpfulOGC Guidance centres of Excellence: Senior Responsible Owners: Senior Responsible Owners:guidance “very helpful” Guidance “very helpful” Guidance “not used”or “fairly helpful”or “fairly helpful”% % %Managing Successful Programmes 94 73 15PRINCE2 90 70 13Guidance on Management of Risk 90 70 15Successful Delivery Toolkit 87 65 23Source: National Audit Office13 National Audit Office (2004) Improving IT Procurement: The impact of the Office of Government Commerce’s initiatives on departments and suppliersin the delivery of major IT-enabled projects, Report by the Comptroller and Auditor General, HC 877 Session 2003-2004, 5 November 2004. London:The Stationery Office.38Delivering successful IT-enabled business change

part fourPart fourRealising the benefits of change4.1 Benefits realisation is an ongoing process thatbegins at the earliest stage of any change programme.Organisations must understand what they are trying toachieve and the costs and benefits of achieving it, andput in place measures to determine that the benefits havebeen realised. Otherwise, there is no obvious driver topush and promote the purpose of the planned businesschange. Successful change programmes:nnnsold the benefits to users;won the support of wider stakeholders; andcontinued to optimise the benefits aftercompletion of the programme or project.Lessons from our case studiesSelling the benefits to users4.2 A programme or project may be delivered totime, specification and budget, but a system no oneuses represents failure not success. This is particularlyimportant for IT-enabled changes to public services,which to be successful may need to convince millions ofpeople of either the need for or the benefits of changingtheir behaviour. A major factor in the success of our casestudy organisations was their understanding of the scope,magnitude and implications of the changes they wereproposing to implement, who would be affected and whatwould persuade users to adopt the new system.4.3 When the Department of Trade and Industry beganthe introduction of Consumer Direct, some local authoritieswere reluctant to change existing local Trading Standardsservices. The Department ran a communication andstakeholder engagement campaign to highlight the benefitsof Consumer Direct through a dual approach, marketing thenew service not only to local authorities, but also amongpotential customers, by using mail shots to target streetswhere residents were least likely to be aware of how tocomplain about poor standards of goods and services.4.4 Roll out may involve market segmentation to buildsupport among key customers first. For its Oyster ® card,Transport for London targeted through posters, pressadvertising and emails those customers most likely to takeit up – season ticket holders accustomed to paying fortheir travel in advance. Similarly, the Vehicle and OperatorServices Agency targeted big customers with substantialtruck fleets through trade meetings and events, with theaim of converting to the new system the 12.5 per cent ofcustomers responsible for 50 per cent of the transactions.4.5 For some major changes, users may need specialfacilities to participate. The success of the Department forWork and Pensions’ Payment Modernisation Programmedepended on converting 15 million customers’payments to electronic methods. This required a clearcommunications strategy to persuade customers, many ofwhom had no bank accounts and some of whom had poorcredit histories, to forgo collecting benefits and pensionsin cash in favour of receiving money paid into an account.Delivering successful IT-enabled business change39

part four4.6 The UK payments trade association’s chip andPIN Programme needed to overcome a mismatch in thepriorities of retailers and banks. For banks, the benefits ofthe change were through the potential for reduced creditcard fraud. For retailers, the scheme created additionalcosts because they were obliged to replace point ofsale equipment. In keeping both sides at the negotiatingtable, the Programme was supported by Government, themost powerful stakeholder, which pushed both parties totackle credit card fraud. The chip and PIN team designeda targeted approach to convince retailers of the meritsof the change by devising different strategies accordingto their market share. The largest and most influentialretailers were invited to participate in meetings with seniorrepresentatives of the team. Smaller retailers were targetedby their banks, which provided promotional literature andtelephone support lines.Winning the support of wider stakeholders4.7 To realise the projected benefits of the change,organisations need to communicate the benefits of theirnew systems not only to users, but also to those in aposition to influence the success of the system and ofthe organisation as a whole. Wider stakeholders mayinclude investors, customers, trade unions, regionaland local authorities, lobby groups, consumer groups,professional bodies, and voluntary and community bodiesrepresenting the interests of particular communities orsectors of society. Stakeholder consultation is particularlyimportant in sectors with strong lobby groups and whereconsultation may be a statutory requirement.4.8 In their initial planning, successful organisationsidentify wider stakeholders and determine how they willcommunicate and consult with them to win their support.In the planning phase of Ireland’s Revenue On-LineService, the project team invited to workshops influentialstakeholders, including professional bodies, tax agents,accountants and large businesses, to explain the plansand to address concerns. Further marketing included mailshots and touring mobile units to demonstrate the newsystem to potential customers, including directors andsenior partners in businesses and accountancy practices.For the Department of Trade and Industry’s ConsumerDirect programme, a tailored communications planallowed the Scottish implementation of consumer directto address stakeholder concerns and helped developenthusiasm for the project.Optimising the benefits4.9 To determine whether a programme or project hasbeen successful, clear criteria to measure success must bebuilt into the business case and effort taken at the end ofthe process to establish whether they have been achieved.Benefits may include reduced costs, improved serviceor the ability to offer new services. Steering citizens andbusinesses towards self-service transactions deliveredthrough the Internet, for example, can achieve substantialefficiency gains. The Irish Revenue Commissioners haveset a staff redeployment target to achieve a 30 per centincrease in the number of staff engaged on compliancework by the end of 2007. Achieving this target will begreatly assisted by the increased take up of online filingon the Revenue On-Line Service, which has eliminatedthe need for manual processing of paper returns. In thecompetitive financial services market, the BritanniaBuilding Society’s “Really Big Programme” was crucial inmaintaining its edge. By giving staff access to a customer’swhole product profile, staff could identify opportunities topresent customers with new products and services.4.10 Important for the full realisation of benefits are plansto monitor not only immediate benefits, but also benefitsthat may be realised long after the end of the programme.Tracking over time enables organisations to make moreinformed investment decisions about IT-enabled changein the future and can generate improved return on anyoriginal investment by continuing re-assessment of hownew systems can be developed and put to greater use.After its contact centre for insurance products wentlive, Prudential UK sought to improve the ratio of callshandled at the first level of contact by improving theservice to avoid customers having to be passed on to themore expensive second tier of specialist staff. Similarly,New York City uses data from its 3-1-1 system to improveservice delivery, and continuous up-training makes callhandlers more confident about dealing with a wider rangeof issues. Analysis of call patterns is used to examine, forexample, the time taken to fix a pothole, follow up on anoise complaint, or replace a streetlight. Data are alsoused to plan services. Complaints about crime, noise oranti-social behaviour can be analysed for peak times andlocations to help schedule police patrols.40Delivering successful IT-enabled business change

part four4.11 The United States’ Department of Defense hasdetermined that its Common Access Card reducedthe time taken to issue an identity card to 15 minutescompared with hours previously. To maximise benefits,however, the Department of Defense has an ongoingprogramme to devise new uses for the Common AccessCard, including developing its ability to do web-basede-business and adding a biometric to the card to improveidentity authentication.4.12 The Department for Work and Pensions’ PaymentModernisation Programme benefits realisation plan willmonitor benefits, including reduced transaction costs,reduced fraud, and savings in staff and other operationalcosts until 2009-10. This required commitment fromacross the Department and its agencies to track, measure,refine and optimise benefits. The benefit realisation planassigns clear accountability to “benefit owners” whoare signed up to achieving the plan’s targets. A ResidualIssues Team has been put in place to optimise benefitsfurther; for example, by reducing transaction costs throughbringing down the proportion of customers still receivingpayment through the more expensive option of cheques.4.13 The National Health Service’s organ transplantservice UK Transplant undertakes constant analysis of itsNational Transplant Database; for example, to improve theallocation procedures for donated organs. This helps betteridentify the most suitable patients and ensures vital organsreach them as quickly as possible. The Database alsoneeds to be flexible to adapt to new policy options, suchas enabling new procedures for live donations.How equipped are departments torealise the benefits of IT-enabledbusiness change?4.14 Suppliers in our workshops reported that, in theirjudgement, both public and private sector bodies tookseriously the issue of benefits realisation but, as Figure 8above indicates, public sector clients were less likelyto position the IT-enabled change as an integral part ofwider business change and were less clear about howto define the benefits. A key means to achieving suchbenefits involves early and informed engagement withstakeholders. Another of the National Audit Office andOffice of Government Commerce’s “eight common causesof failure” (Appendix 3): a “lack of effective engagementwith stakeholders” caused concern to 42 per cent ofCentres of Excellence.4.15 Benefits evaluation is a key and final stage of theOGC Gateway Review process. Our analysis of Officeof Government Commerce Gateway data (Appendix 2– Figure 11) shows that only four per cent of all 720Gateway Reviews of IT-enabled programmes and projectscarried out between June 2002 and June 2006 were Gate5 (Benefits Evaluation) Reviews; although the percentageof programmes and projects that reach Gate 4(Readiness for Service) and go on to Gate 5 has increased(Appendix 2, Figure 12). To address this, the Officeof Government Commerce Supervisory Board hasagreed that from 2006-07 all programmes and projectsmust undertake a Gate 5 Review within 12 months ofcompleting a Gate 4 Review, unless there are specificcircumstances such as the delivery date being beyond thetwelve month period.4.16 Beyond the immediate post-implementation period,optimisation of benefits involves tracking and positivelypromoting sustained improvements to business processesin the longer term. With the introduction of resourceaccounting and the drive for increased efficiency, there is,elsewhere in government, clear incentive for departmentsto make maximum use of their assets. However, whereIT-enabled business change is concerned, informationon the costs and benefits has often been in short supply,as has information on how well programmes andprojects are realising benefits. In addition, longer-termbenefits optimisation can be hampered by dilution ofaccountability through often significant changes instaffing of government IT-enabled programmes andprojects as one phase ends and another commences.The solution is the approach adopted by the Departmentfor Work and Pensions in their benefits realisation plan– that of assigning responsibility for promoting andsecuring benefits to named individuals – benefits owners– over the medium-term of the first few years’ followingimplementation. This approach is being promoted by theOffice of Government Commerce as good practice.Delivering successful IT-enabled business change41

ibliographybibliographyAustralian National Audit Office (2002) Management of an IT Outsourcing Contract – Departmentof Veteran Affairs, May 2002. Audit Report No. 46 2002-03.Australian National Audit Office (2004) Measuring the Efficiency and Effectiveness of E-Government,October 2004. Audit Report No. 26 2004–05.Booz Allen Hamilton (2004) Beyond e-Government – The world’s most successfultechnology-enabled transformations.Cabinet Office (2000) Review of Major Government IT Projects – Successful IT: ModernisingGovernment in Action, (the “McCartney Report”) May 2000. London: Cabinet Office.Cabinet Office (2005) Transformational Government Enabled by Technology, Cm 6683.London: The Stationery Office.General Accounting Office (1994) Improving Mission Performance through Strategic InformationManagement and Technology: Learning from leading organizations, GAO/AIMD-94-115, May.Washington DC: GAO.General Accounting Office (2001) Maximizing the Success of Chief Information Officers: Learningfrom leading organizations, GAO-01-376G, February. Washington DC: GAO.General Accounting Office (2004) Information Technology Investment Management: A frameworkfor assessing the improving process maturity, GAO-04-394G, March. Washington DC: GAO.General Accounting Office (2004) The Federal Enterprise Architecture and Agencies’ EnterpriseArchitectures Are Still Maturing, GAO-04-798T, May. Washington DC: GAO.Gershon, P. (2004) Releasing Resources to the Front Line: Independent review of public sectorefficiency. London: HM Treasury.Government Accountability Office (2004) Federal Chief Information Officers –Responsibilities,Reporting Relationships, Tenure and Challenges, GAO-04-823, July. Washington DC: GAO.HM Treasury and Office of Government Commerce (2004) Building a Cooperative AssuranceRelationship between Internal Audit, Departmental Gateway Coordinators and Centres OfExcellence. http://www.hm-treasury.gov.uk/media/8BA/50/ocg_audit_190105.pdfNational Audit Office (2000) New IT Systems for Magistrates’ Courts: The Libra Project, Report bythe Comptroller and Auditor General, HC 327 Session 2002-2003, 29 January 2003. London: TheStationery Office. [All NAO reports may be downloaded from the NAO website: www.nao.org.uk]National Audit Office (2000) The Cancellation of the Benefits Payment Card Project, Report bythe Comptroller and Auditor General, HC 857 Session 1999-2000, 18 August 2000. London:The Stationery Office.42Delivering successful IT-enabled business change

ibliographyNational Audit Office (2004) Improving IT Procurement: The impact of the Office of GovernmentCommerce’s initiatives on departments and suppliers in the delivery of major IT-enabled projects,Report by the Comptroller and Auditor General, HC 877 Session 2003-2004, 5 November 2004.London: The Stationery Office.National Audit Office (2004) Improving Procurement: Progress by the Office of GovernmentCommerce in improving departments’ capability to procure cost-effectively, Report by the Comptrollerand Auditor General, HC 361-1 Session 2003-2004, 12 March 2004. London: The Stationery Office.National Audit Office (2004) Managing Risks to Improve Public Services, Report by the Comptroller andAuditor General, HC 1078-1 Session 2003-2004, 22 October 2004. London: The Stationery Office.National Audit Office (2005) Dealing with the Complexity of the Benefits System, Report bythe Comptroller and Auditor General, HC 592 Session 2005-2006, 18 November 2005. London:The Stationery Office.National Audit Office (2005) Ministry of Defence: Major Projects Report 2005, Report by theComptroller and Auditor General, HC 595-I Session 2005-2006, 25 November 2005. London: TheStationery Office.National Audit Office (2005) Ministry of Defence: Major Projects Report 2005 Project SummarySheets, Report by the Comptroller and Auditor General, HC 595-II Session 2005-2006,25 November 2005. London: The Stationery Office.National Audit Office (2006) HM Revenue & Customs: ASPIRE – the re-competition of outsourced ITservices, Report by the Comptroller and Auditor General, HC 938 Session 2005-2006, 19 July 2006.National Audit Office (2006) Progress in Improving Government Efficiency, Report by the Comptrollerand Auditor General, HC 802 Session 2005-2006,17 February 2006. London: The Stationery Office.National Audit Office (2006) Using the Contract to Maximise the Likelihood of Successful ProjectOutcomes, Report by the Comptroller and Auditor General, HC 1047 Session 2005-2006,7 June 2006. London: The Stationery Office.Office of Management and Budget (2002) Implementation Guidance for the E-Government Act 2002,M-03-18, http://www.whitehouse.gov/omb/memoranda/m03-18.pdf.Review Body on Senior Salaries (2006) Report no. 62, Twenty-Eighth Report on Senior Salaries,Cm 6727. London: The Stationery Office.Standish (2004) Third Quarter Research Report. West Yarmouth, MA.: The Standish GroupInternational Inc.Delivering successful IT-enabled business change 43

appendix oneAppendix ONEMethodology1 Fieldwork took place between July 2005 andJune 2006.Case studies2 We reviewed a wide range of programmes andprojects put forward as successful, excluding those thatcould not demonstrate significant take up by users or clearbenefits, and selected 24 as case studies that most stronglymet the following criteria:n significant degree of business transformation –significant changes to work practices or interactionswith stakeholdersnnnsignificant delivery of benefits – programmes– and projects realised either financial ornon-financial benefitsdiversity of examples in terms of size and typesof transformations – web transformations, backoffice transformations, large and small internalprocess changes, business-to-business andbusiness‐to‐consumer transformationsdeemed successful by their respective organisationsand by others in the industry.3 The case studies included public and private sectorsin the UK and the public sector overseas. The privatesector examples include winners of industry awards andprogrammes and projects nominated by major suppliersand consultants, including IBM, Oracle, Deloitte, EDS,Capgemini and Hedra plc. Central government exampleswere nominated by the Chief Information Officer (CIO)Council and the Office of Government Commerce, as wellas suppliers. Some nominees emerged from workshops atthe sector trade association Intellect. Overseas exampleswere gathered from Supreme Audit Institutions, suppliersand contractors in the Republic of Ireland, the UnitedStates and Canada.4 For each case study, we conducted semi-structuredinterviews with programme and project managers (some40 in all). Interviews lasted from 1.5 to 3 hours and werewherever possible taped and transcribed. Transcriptswere analysed to draw out key principles and activitiescommonly found in successful IT-enabled business changeprogrammes and projects.5 At the end of the fieldwork, we conducted athematic analysis of the case study evidence, whichidentified the three core principles of successfulIT‐enabled business change described earlier.Supplier workshops6 Two half-day workshops were held in collaborationwith Intellect (the trade association for the UK IT industry)– 17 attendees for the public sector and five for the privatesector – of major IT suppliers to public and private sectors.These were facilitated by Ipsos MORI, who recorded andtranscribed the proceedings and subjected them to thematicanalysis. The workshops addressed three key issues:nnnHow can government departments deliver large,complex IT-enabled business change projectsmore effectively?Are there key differences between how thepublic and private sectors manage key points ofvulnerability, immaturity and risk in the projectlifecycle and if so, are there lessons from the privatesector that the public sector could adopt?How should success in an IT-enabled businesschange project or programme be measured andevaluated beyond budget, time and quality?44Delivering successful IT-enabled business change

appendix oneCIO workshop7 A further workshop set up in collaboration with thee-Government Unit and facilitated by Ipsos MORI, washeld with seven government Chief Information Officers(CIOs) to explore:nnnexamples of successful IT-enabled business change;the role of CIOs in IT-enabled business change; andhow the CIO role should develop in the future.Ipsos MORI recorded, transcribed and analysedthe proceedings.Interviews with industry expertsand suppliers8 Semi-structured interviews and consultations wereundertaken with IT industry trade associations, professionalbodies and consultancy firms, involving some 30 directorsand senior representatives from the British ComputerSociety, CIO-Connect, Institute of Directors (Senior PolicyAdvisor), Society of Information Technology Management,Accenture, Atos Origin, BT, Capgemini, Deloitte, EDS,Fujitsu, Hedra, HP Laboratories, IBM, Oracle, PAConsulting Group, SAP and Siemens Business Services.These focused on identifying major factors contributingto the delivery of IT-enabled business change, barriers tosuccess and examples of successful business changes.9 Interviews were also conducted with the centralgovernment bodies most responsible for IT-enabledbusiness change across government – the e-GovernmentUnit and the Office of Government Commerce.Census and survey10 A census of central government Centres ofExcellence and a survey of Senior Responsible Ownersof mission critical and high risk programmes and projectswere conducted by Ipsos MORI to capture views on bestpractice and how the delivery of IT-enabled businesschange could be strengthened in government (Figure 10).10Centres of Excellence census and SeniorResponsible Owner surveyInternational comparison11 A visit to the Government Accountability Office inthe United States was undertaken to discuss developmentsin the delivery of IT-enabled business change and therole of the Chief Information Officer, and a visit to aFederal Government Agency for discussion with its ChiefInformation Officer.Expert reviewNumber Returns Response rate%CoE census 31 31 100SRO survey 42 40 95Senior Responsible Owner (SRO) survey sample of 42(56 programmes and projects covered; 13 SROs were SROsfor more than one programme or project) based on populationof 84 covering 107 programmes and projects in departmentswithin the NAO’s remit involved in IT-enabled mission criticalor high risk civil programmes and projects. SROs whoseresponsibilities included areas covered in the questions– Chief Information Officers, Centres of Excellence or Officeof Government Commerce guidance were excluded. Wheredepartments had more than one, every alternate programme orproject was selected.Source: National Audit Office12 With the assistance of Intellect, our findings werepresented at interim and final stage to the Intellect PublicSector Suppliers Council to validate them with industryexperts and to provide expert feedback and review.Delivering successful IT-enabled business change 45

appendix twoAppendix twoGateway Reviews and mission critical reportingGateway Reviews1 Gateway data of IT-enabled programmes andprojects show that although the number of programmesand projects entering the Gateway process has remainedrelatively steady, rising slightly from an average of 14 amonth to 15 a month, more programmes are now enteringat Gate 0 (Figure 11). This is an improvement since2004-05 when the Committee of Public Accounts raisedconcerns that, despite Gateway Reviews being mandatoryfor high and medium risk programmes and projects,30 per cent were bypassing Gates 0 and 1, entering theprocess after the business case had been prepared. 14Concerns remain however about the final stage of theprocess. By June 2006, 468 IT-enabled programmes andprojects had entered the Gateway process. Of 83 ITenabledprogrammes and projects that completed theirGate 4 (Readiness for Service) stage by June 2005, overallonly a third (33 per cent) went on to a Gate 5 Review byJune 2006; although the percentage of programmes andprojects that reach Gate 4 and go on to Gate 5 increasedfrom 28 per cent to 36 per cent between 2003 and 2006(Figure 12). As a consequence, the Office of GovernmentCommerce Supervisory Board has agreed that from2006-07 all programmes and projects must undertake aGate 5 Review within 12 months of completing a Gate 4Review, unless there are specific circumstances such asthe delivery date being beyond the twelve month period.2 Across government, scrutiny and oversight ofGateway Reviews have been strengthened with theintroduction in 2005 of a process whereby the NationalAudit Office receives copies of letters from the Office ofGovernment Commerce’s Chief Executive to AccountingOfficers where a programme or project under theircommand receives consecutive “Red” Gateway Reviews.This raises the visibility of highly specific risks toprogrammes and projects to make sure Accounting Officersengage with the risks and take action to address them.11More IT programmes are entering the Gateway process at the beginning (Gate 0 Strategic Assessment), but therehas been little increase in the percentage of Gate 5 (Benefits Evaluation) ReviewsGate Jun 02 – Jun 02 – Apr 04 – Apr 04 – Total Reviews Total ReviewsMar 04 Mar 04 Jun 06 Jun 06 Jun 02 – Jun 02 –Jun 06 Jun 06n % n % n %Gate 0 Strategic Assessment 50 16 125 31 175 24Gate 1 Business Justification 56 18 64 16 120 17Gate 2 Procurement Strategy 64 21 60 15 124 17Gate 3 Investment Decision 84 27 63 15 147 20Gate 4 Readiness for Service 49 16 76 19 125 17Gate 5 Benefits Evaluation 8 3 21 5 29 4Total IT-enabled programme and project reviews 311 100 409 100 720 100Source: Office of Government Commerce14 Committee of Public Accounts (2005) The Impact of the Office of Government Commerce’s Initiative on the Delivery of Major IT–enabled projects,27th Report of Session 2004–05, 6 April 2005, London: The Stationery Office.46Delivering successful IT-enabled business change

appendix two3 Another potential issue of concern is that over the period April 2004to June 2006, for IT-enabled programmes and projects the percentage ofGateway Reviews designated as “Green” fell to 10 per cent (from 20 per centfor June 2002-March 2004), while “Red” Reviews increased from 30 per centto 34 per cent, indicating more detection by reviewers of issues needingimmediate action (Figure 13). As we commented in our report on ImprovingIT Procurement, “Red” Reviews at early stages can indicate that the GatewayReview process is working effectively 15 , but the Red-Amber-Green changes aredifficult to interpret. Are reviewers becoming tougher and/or more cautious/riskaverse, is the management of programmes and projects deteriorating, or are theprogrammes and projects being undertaken more risky? In addition, the Officeof Government Commerce does not currently track the progress of individualprogrammes and projects through the Gateway process, which makes it difficultto assess where particular problems arise.12A third of IT-enabled programmes and projects that completed theGate 4 (Readiness for Service) stage of the Gateway process reachedGate 5 (Benefits Evaluation)Period Total Gate 4 programmes %and projects going onto a Gate 5 Reviewby June 2006IT-enabled programmes and projects 36 10 28completing Gate 4 Review stageby March 03IT-enabled programmes and projects 47 17 36completing Gate 4 Review stageApril 03 – June 05Total 83 27 1 33Source: Office of Government CommercesNote1 Two additional Gate 5 Reviews took place directly from Gate 3 Reviews.13Red, Amber, Green status of Gateway Reviews of IT-enabledprogrammes and projectsPeriod red Amber greenn % n % n % TotalApril 04–June 06 138 34 232 57 39 10 409June 02–March 04 94 30 154 50 63 20 311Total 720Source: Office of Government Commerce15 National Audit Office (2004) Improving IT Procurement: The impact of the Office of GovernmentCommerce’s initiatives on departments and suppliers in the delivery of major IT-enabled projects, p.24.Delivering successful IT-enabled business change 47

appendix twoMission critical reporting4 Across government, the requirement for departmentsto report regularly to the Prime Minister through theOffice of Government Commerce on mission criticalprogrammes and projects has improved their visibilityand accountability. Due to the constant evolution of thelist, it is difficult however to detect whether increasedvisibility of programmes and projects and the actionstaken by the Office of Government Commerce as a resultof Key Programme reporting are contributing to successfuldelivery and whether, as might be expected, individualprogrammes and projects are moving towards the “Green”end of the spectrum as they near completion (Figure 14).In addition, the decline between 2004 and 2005 in thepercentage of “Green” rated mission critical programmesand projects is difficult to interpret due to the change from2005 to the four-colour rating model of Red, Amber/Red,Amber/Green, Green.5 While the nature of mission critical programmes andprojects means that they may remain risky endeavoursthroughout their life cycle, there is scope for the Office ofGovernment Commerce to monitor the status of individualprogrammes and projects over time to probe any apparentshortfalls in performance and to ensure that the necessaryinterventions are identified and monitored.14Between 2004 and 2005 the percentage of “Red” rated mission critical programmes and projects remainedrelatively constant while “Green” ratings declinedReport date Total Mission Mission Mission not Totalprogrammes/ critical status critical status critical status ratedprojectsred Amber greenn % % % % %July 2006 1 91 10 22 7 42 14 6 100December 2005 2 97 11 22 48 12 6 100November 2004 117 14 56 28 3 100July 2004 122 9 49 35 7 100February 2004 112 9 50 38 5 100October 2003 100 13 45 37 5 100July 2003 113 9 49 36 6 100KeyRedAmber/RedAmber(superseded)Amber/GreenGreenHighly problematic – requires urgent and decisive action.Problematic – requires substantial attention, some aspects need urgent attention.Either: 1) Key issues – e.g. funding/business case, Ministerial and official-level leadership, and deliverability of majormilestones – impacting successful delivery, or 2) Major variances from plan.Mixed – aspect(s) require substantial attention, some good.Good – requires refinement and systematic implementation.Source: Office of Government CommerceNOTES1 Some departments have not yet discontinued the classification “Amber”.2 The schedule of mission critical reporting was curtailed in March 2005 by the General Election.48Delivering successful IT-enabled business change

appendix threeAppendix threeDAO(GEN)07/04 Delivering Success in GovernmentAcquisition-Based Programmes & Projects1 Horse Guards Road LondonSW1A 2HQ30 March 2004Brian GlicksmanTreasury Officer of AccountsFor enquiries about distribution of this and otherDAOletters, please contactMangai RajasinghamTel: 020-7270-5362Fax: 020-7270-4311mangai.rajasingham@hm-treasury.x.gsi.gov.ukwww.hm-treasury.gov.ukall extant DAOs are found at http://www.hmtreasury.gsi.gov.uk/fmra/accounting/dao/dao.htmDAO(GEN)07/04Dear Accounting OfficerDELIVERING SUCCESS IN GOVERNMENT ACQUISITION-BASED PROGRAMMES & PROJECTSSummary and PurposeThe purpose of this letter is to advise Accounting Officers:nnthat procedures introduced in January 2003 by the Office of Government Commerce to improve the delivery ofIT‐enabled programmes and projects are now extended to all acquisition-based programmes and projects;that, as a result, the responsibilities of Accounting Officers outlined in DAO (GEN) 01/03 to assure their majorIT-enabled projects against common causes of project failure are now extended to cover all majoracquisition-based projects.The list of common causes of project failure against which Accounting Officers are asked to assure their projects has beenupdated by OGC and NAO to reflect this broadening of scope and is enclosed at Annex 1.Action and Contacts1 A Major Project is defined as one that scores 41 or more on the Gateway Risk Potential Assessment or is prioritisedas Mission Critical.2 Accounting Officers are asked to:abnote the expansion of scope of the procedures introduced in 2003 from IT-enabled to acquisition based.ensure, from the date of this letter, that all Mission Critical and High Risk acquisition-based projects do notsuffer from any of the common causes of failure as identified by the OGC and NAO.Delivering successful IT-enabled business change 49

appendix threecddraw this letter to the attention of appropriate staff in their departments and Executive Agencies, to theattention of the Chair of their Audit Committee, and to the attention of staff in their NDPBs.note that enquiries about the actions described above should be addressed to the OGC Service Deskon 0845 000 4999, ServiceDesk@ogc.gsi.gov.uk3 DAO (GEN)01/03 detailed six actions agreed by Ministers to strengthen the delivery of IT-enabled Governmentprogrammes and projects. Ministers decided in December 2003 that these actions will apply to all acquisitionbasedprogrammes and projects. The revised actions are:abcdefNext StepsDepartmental Programme/Project Management Centres of Excellence to cover all acquisition based, and allmission critical and/or high risk programmes/projects, including agencies and NDPBs.Accounting Officers to provide assurance on all mission critical and high-risk acquisition-based projects, thatthey do not suffer from the common causes of failure identified from OGC and NAO experience.Mandate no big-bang implementations and developments (i.e. mandate modular, incrementalimplementations and developments) for IT-enabled programmes and projects, unless approved by centralscrutiny group (Chief Secretary to the Treasury, Minister for e-Transformation, OeE, OGC).No government initiative (including legislation) dependent on IT to be announced before analysis of risks andimplementation options has been undertaken.Prioritise all acquisition-based programmes and projects as Mission Critical, Highly Desirable or Desirable.All mission critical and high risk acquisition-based programmes and projects, to have a clearly identified:(i) responsible Minister and (ii) Senior Responsible Owner, and Project Manager, with good, relevanttrack records.4 The arrangements developed for confirming Accounting Officer assurance of IT-enabled projects will now extend toencompass other acquisition-based projects. OGC advises that following a Gateway 1 review of a Mission Criticalor High Risk acquisition-based project, Accounting Officers should satisfy themselves that the project does notsuffer from any of the common causes of failure. Having done so, a signed note to this effect should be placed onthe relevant project file.5 Where Mission Critical and High-Risk acquisition-based projects have already completed a Gateway 1 review(business justification), but have not gone live, this assurance check should be completed by 1 May 2004.6 The Gateway criteria are being amended so that subsequent Gateway reviews will check for the existence of theappropriate record. The absence of such a record will result in an automatic Gateway recommendation that theproject should not proceed until this requirement has been met.7 Separate guidance is being issued to Departmental Centres Of Excellence to cover these new arrangements.8 This letter replaces DAO (GEN) 01/03, which is hereby cancelled.Yours sincerelyBrian GlicksmanTreasury Officer of Accounts50Delivering successful IT-enabled business change

appendix threeAnnex: NAO/OGC agreed list ofcommon causes of project failure1 Lack of clear link between the project and theorganisation’s key strategic priorities, including agreedmeasures of success.2 Lack of clear senior management and Ministerialownership and leadership.3 Lack of effective engagement with stakeholders.4 Lack of skills and proven approach to projectmanagement and risk management.5 Too little attention to breaking development andimplementation into manageable steps.6 Evaluation of proposals driven by initial price ratherthan long-term value for money (especially securingdelivery of business benefits).7 Lack of understanding of and contact with the supplyindustry at senior levels in the organisation.8 Lack of effective project team integration betweenclients, the supplier team and the supply chain.Questions to ask1 Lack of clear link between the project and theorganisation’s key strategic priorities, including agreedmeasures of success.nnnnnnDo we know how the priority of this projectcompares and aligns with our other delivery andoperational activities?Have we defined the critical success factors (CSFs)for the project?Have the CSFs been agreed with suppliers andkey stakeholders?Do we have a clear project plan that covers thefull period of the planned delivery and all businesschange required, and indicates the means ofbenefits realisation?Is the project founded upon realistic timescales, takingaccount of statutory lead times, and showing criticaldependencies such that any delays can be handled?Are the lessons learnt from relevant projectsbeing applied?nHas an analysis been undertaken of the effects of anyslippage in time, cost, scope or quality? In the eventof a problem/conflict at least one must be sacrificed.2 Lack of clear senior management and Ministerialownership and leadership.nnnnnnnDoes the project management team have a clearview of the interdependencies between projects, thebenefits, and the criteria against which success willbe judged?If the project traverses organisational boundaries,are there clear governance arrangements to ensuresustainable alignment with the business objectives ofall organisations involved?Are all proposed commitments and announcementsfirst checked for delivery implications?Are decisions taken early, decisively, and adhered to,in order to facilitate successful delivery?Does the project have the necessary approval toproceed from its nominated Minister either directlyor through delegated authority to a designated SRO?Does the Senior Responsible Owner (SRO) have theability, responsibility and authority to ensure that thebusiness change and business benefits are delivered?Does the SRO have a suitable track record ofdelivery? Where necessary, is this being optimisedthrough training?3 Lack of effective engagement with stakeholders.nnnnnnnHave we identified the right stakeholders?In so doing, have we as intelligent customers,identified the rationale for doing so (e.g. the why, thewhat, the who, the where, the when and the how)?Have we secured a common understanding andagreement of stakeholder requirements?Does the business case take account of the views ofall stakeholders including users?Do we understand how we will manage stakeholderse.g. ensure buy-in, overcome resistance to change,allocate risk to the party best able to manage it?Has sufficient account been taken of the subsistingorganisational culture?Whilst ensuring that there is clear accountability,how can we resolve any conflicting priorities?Delivering successful IT-enabled business change 51

appendix three4 Lack of skills and proven approach to projectmanagement and risk management.nnnnnnnIs there a skilled and experienced project team withclearly defined roles and responsibilities? If not, isthere access to expertise, which can benefit thosefulfilling the requisite roles?Are the major risks identified, weighted and treatedby the SRO, the Director, and Project Manager and/or project team?Has sufficient resourcing, financial and otherwise,been allocated to the project, including anallowance for risk?Do we have adequate approaches for estimating,monitoring and controlling the total expenditureon projects?Do we have effective systems for measuring andtracking the realisation of benefits in the business case?Are the governance arrangements robust enough toensure that “bad news” is not filtered out of progressreports to senior managers?If external consultants are used, are they accountableand committed to help ensure successful andtimely delivery?5 Too little attention to breaking development andimplementation into manageable steps.nnnnnHas the approach been tested to ensure it is not ‘bigbang’ for example in IT-enabled projects?Has sufficient time been built in to allow forplanning applications in Property & Constructionprojects for example?Have we done our best to keep delivery timescalesshort so that change during development is avoided?Have enough review points been built in so that theproject can be stopped, if changing circumstancesmean that the business benefits are no longerachievable or no longer represent value for money?Is there a business continuity plan in the event of theproject delivering late or failing to deliver at all?6 Evaluation of proposals driven by initial pricerather than long-term value for money (especiallysecuring delivery of business benefits).nnnnIs the evaluation based on whole-life value formoney, taking account of capital, maintenance andservice costs?Do we have a proposed evaluation approach thatallows us to balance financial factors against qualityand security of delivery?Does the evaluation approach take account ofbusiness criticality and affordability?Is the evaluation approach business driven?7 Lack of understanding of and contact with thesupply industry at senior levels in the organisation.nnnnnnnHave we tested that the supply industry understandsour approach and agrees that it is achievable?Have we asked suppliers to state any assumptionsthey are making against their proposals?Have we checked that the project will attractsufficient competitive interest?Are senior management sufficiently engaged with theindustry to be able assess supply-side risks?Do we have a clear strategy for engaging with theindustry or are we making sourcing decisions on apiecemeal basis?Are the processes in place to ensure that all partieshave a clear understanding of their roles andresponsibilities, and a shared understanding ofdesired outcomes, key terms and deadlines?Do we understand the dynamics of industry todetermine whether our acquisition requirementscan be met given potentially competing pressures inother sectors of the economy?52Delivering successful IT-enabled business change

appendix three8 Lack of effective project team integration betweenclients, the supplier team and the supply chain.nnnnnHas a market evaluation been undertaken to testmarket responsiveness to the requirementsbeing sought?Are the procurement routes that allow integration ofthe project team being used?Is there early supplier involvement to help determineand validate what outputs and outcomes are soughtfor the project?Has a shared risk register been established?Have arrangements for sharing efficiency gainsthroughout the supply team been established?If any of the answers to the above questions areunsatisfactory, an acquisition-based project should notbe allowed to proceed until the appropriate assurancesare obtained.Explanatory notesAn acquisition-based project is one that has a significantelement dependent on the supply of goods and/or servicesby a third party supplier or suppliers. Whilst it is notessential for the goods or services to be provided by asingle supplier, the contribution of the third party supplieror suppliers should be considered significant if a failure todeliver on their part attracts public criticism.A high-risk project is one which scores 41 or more againstOGC’s Gateway Risk Potential Assessment framework.A project is defined as a unique set of co-ordinatedactivities with a finite duration, defined cost andperformance parameters and clear outputs to supportspecific business objectives.By value for money is meant “the optimum combinationof whole-life cost and quality, fitness for purpose to meetuser requirements” (Government Accounting).Printed in the UK for the Stationery Office Limitedon behalf of the Controller of Her Majesty’s Stationery Office5461135 11/06 65536Delivering successful IT-enabled business change 53