Treasury targets £2.3 billion annual IT savings

Tags: A Efficiency Government iS Office Outsourcing Savings Shared Services Treasury

21 Apr 2009

The Treasury’s Operational Efficiency Programme has recommended that £7.2 billion of annual efficiency savings could be achieved on government IT and back-office operations.

Published on the eve of the budget, the Treasury said its year-long programme examining operational spending in the public sector showed the scope for £15 billion of efficiency savings.

A whopping £2.3 billion annual efficiency savings are targeted from government IT spending and better management, review of costs and governance of IT-enabled change programmes.

Although the NHS IT programme is not mentioned, the scale of the savings sought indicate there are no sacred cows.

The report argues better management information, benchmarking and “review of costs and better governance of IT-enabled change programmes” can achieve £4 billion of annual savings on back office operations and £2.3 billion annual savings on IT spending.

The review, led by by Dr Martin Read, forms one of five strands of the Treasury’s Operational Efficiency Programme, which was launched last July.

Dr Read’s review of back office systems and IT has aimed particularly at “better governance of IT-enabled projects, and greater standardisation and simplification of IT across the public sector."

His recommendations include the need to: “strengthen the governance of IT-enabled change projects (including the requirement that ministers and accounting officers are regularly updated on high risk projects and briefed on projects where the delivery confidence is not high)."

Other recommendations include “strengthening the existing Gateway assurance processes (including the introduction of “starting gate” reviews of all IT-enabled change projects)."

The report also urges developing the internal IT capability within the public sector and continue to professionalise the IT function.

The other four strands of the review focus on collaborative procurement, led by Martin Jay; asset management and sales, led by Gerry Grimstone; property, led by Lord Carter of Coles; and local incentives and empowerment, led by Sir Michael Bichard.

Another key recommendation made within the report is that different parts of the public sector, including local government, the health sector and the police, “should accelerate the use of shared services both between similar bodies and across services in a geographical area."

It says greater use should be made of NHS Shared Business Services and similar outsourcing operations.

The five advisors commissioned by the Treasury to investigate possible efficiency savings state uin theior foreword to the report: “The private sector never stops seeking greater efficiency in the ways that it purchases and provides services, and neither should government.”

Link

HM Treasury

Operational Efficiency Programme final report

Jon Hoeksma

Readers Comments

Savings? look no further than LSPs

mr.acute.cio@live.co.uk

21 Apr 09 18:58

Without doubt, NHS IT departments can be more efficient in both project management and operational services, but a couple of years working with LSPs in both implementation and operations makes me realise they are no better than most NHS IT services.

In fact their lack of NHS knowledge, difficulty with the size / technical complexity / clinical relationships and their poor data centre management is matched only by their suspect internal communications. Couple this with the SHA’s/CfH working to contract and it is little wonder that so little has been achieved at such a cost in money and lost opportunity progress.

I would think the only place where real new progress can really be counted by some is Mental Health and Community areas, certainly not the Acute sector.

But back to money: for many years the NHS has worked to POISE, PRINCE, Business case, benefits management and ITIL standards. Individually, many Trusts have made very successful IT system and EPR procurements / implementations. We have also learned how to work with suppliers through "cautious" partnerships based on clear specifications, implementation plans and milestone payments. What have we gained with NPfIT – precious little.

So if then Treasury is looking for savings, let them look no further than the LSPs and the SHA’s. Let Trusts buy Cerner and Lorenzo direct from suppliers, at a nationally agreed price. Lets dump these costly middle men.

Civil Servants recommend more red tape

22 Apr 09 14:49

Of course, why didn't we think of it before? We need more 'governance', more reporting for the benefit of politicians and more gateway processes. I'm not quite sure how that's going to save money, given vast amount of time and effort that already goes into negotiating the Byzantine workings of CFH. In what world does more red tape equal cheaper? This is a major contributing factor to the relatively poor delivery of systems.

Treasury mandarins? More like lemons.

A Different Approach

23 Apr 09 12:42

Let me propose a different approach. Streamlining the IT budget (or even setting it to zero) is not going to deliver the 3 - 4% efficiency savings per year required. IT can contribute but its not going to be the focus.

Where we can really help is providing the information to support the hard decisions required of the business and give advice and guidance how to manage the business change. It's also a good time to push data quality since knowing the NHS Number, responsible PCT and correct clinical code can greatly increase income.

Is this the opportunity to move from IT to information?

How to save money. Lessons from history

tim.benson@abies.co.uk

24 Apr 09 14:18

Those with long memories will remember what happened in the last two recessions.

Following the Winter of Discontent (1978), the government abandoned the world-leading computer projects in the Experimental Computer programme and handed them over for support by the people who ran the regional payroll systems.

Around the time of Black Wednesday (1992), the government slashed health care IT expenditure by scrapping HISS, RMI and medical audit programmes and issued an edict that required all capital expenditure on computer systems (over £5,000) to be backed by a full business plan, tested for private finance, and approved by both the Department of Health and the Treasury. Only one scheme was approved in five years. The healthcare IT industry was decimated.

History never repeats itself exactly.

Tim Benson

Ref: www.bmj.com/cgi/content/full/325/7372/1086

A huge step forward

01 May 09 15:52

The recent operational efficiency programme report on IT savings to be achieved across government is a huge step forward.

The transformation agenda across government needs to step up and champion the use of simplified models that allow for comparisons of service and spend to be compared in the global marketplace. Through this approach, not only will government achieve value for money but it will also reap the benefits of a much improved and simplified IT service from providers. This also allows for greater flexibility in the future and opens the door for more innovation.

Creating genuinely sustainable models that incentivise both internal functions and outsourced suppliers to collaborate and optimise delivery is achievable. It has been proven most notably by the Department for Work and Pensions (DWP), who recently successfully completed a transformation programme to move to standard services across their IT estate and now have not only delivered huge cost savings but enjoy a vastly improved service from what was there before.

Large programmes such as the NHS IT Programme could similarly benefit from adopting such an approach and they should be encouraged to complete value for money studies to compare their current pricing and performance to the marketplace.

From Gary Bettis – Serco Consulting