1. Post-bureaucratic government, open
platforms, and innovation: Why
government IT should never be the
same again
Mark Thompson
Judge Business School, Cambridge
Strategy Director, Methods Consulting
ICT Futures advisor, Cabinet Office

2. Transformational government?
„Joined up‟ public services
Disaggregation & outsourcing
„Agencification‟ private sector
commercial practices
Top-down, managerialist concepts
Business people appointed to
senior public sector roles
Emphasis on „customers‟ and
„contracts‟

3. Digital-era government?
Dunleavy & Margetts, 2010

4. …sounds innovative, but
…actually, this is not really what happened!
 Public sector aggregated supply, not demand
 No reference model across government; widespread “we‟re special”
 Government „outsourced‟ strategy & architecture
 Contracts priced for risk, which was never outsourced
 „Intelligent Customer‟ skills leeched away from public sector
 Track record of “stupendous incompetence” and bungling
Bespoke, complex, siloed, duplicatory, risky, and constrained - but
why would anyone want to do anything differently?

5. Level playing field?

6. Baked-in failure: IT is a good place to
start
An array of high cost programmes have run late, under-performed
or failed (terminated) over the last 20 years:
• Inadequate information, resulting in the Government being
unable to manage its needs successfully
• Over-reliance on a small number of large suppliers and the
virtual exclusion of small and medium sized (SME) suppliers,
which tend to be less risk adverse and more innovative
• Failure to integrate IT into the wider policy and business change
programmes
• A tendency to commission large, complex projects which struggle
to adapt to changing circumstances
• Over-specifying security requirements
• Lack of sufficient leadership and skills to manage IT within the
Civil Service, and in particular the absence of an “intelligent
customer” function in Departments

7. Further issues…
Lack of real understanding in government
Disjointed, „initiative‟ approach
No real mechanism for holding govt to account
No concrete plans for cascading into depts
„Commercial confidentiality‟ as barrier to transparency
Ignored recommendation to commission independent
investigation into suppliers
Insufficient attention to developing intelligent customer
capability within govt
Need to engage in honest debate with question of
public service redesign

8. Does this matter?
105 outsourced public sector ICT projects with significant
cost overruns, delays and terminations:
• Average % cost overrun 30.5%
• Total value of contracts: £29.5 billion
• Cost overruns totalled: £9.0 billion
• 57% of contracts experienced cost overruns
• Average percentage cost overrun: 30.5%
• 33% of contracts suffered major delays
• 30% of contracts were terminated
• 12.5% of Strategic Service Delivery Partnership contracts
Analysis (2007) of 105 projects terminated or substantially reduced
outsourced by CCG, NHS, LAs,
public bodies & agencies with
significant cost overruns, delays
and terminations. Cost increases
are often underestimated as
numbers reported usually only
include payments to contractors,
and not costs born by the client
such as additional client staff
engaged.

9. An Intelligent Customer?
The Government‟s inability to act as an intelligent customer seems to be a consequence of
its decision to outsource a large amount of its IT operations to the private sector.
The NAO noted that many IT contracts:
Are for a government body‟s whole ICT service, meaning that Civil Service Staff, knowledge
skills, networks, and infrastructure have been transferred to a supplier. This has effectively
locked government into specific contracts for the long-term.

10. So what’s different now?
Cabinet office is starting with IT…
…But the prize is public services itself!
Progressive recognition of:
 Focus on outcomes, open standards
 Commercial implications of emerging open platforms
 Ability of „utility‟ services marketplace to deliver citizen-based
services
An emerging reality:
 Systems & processes were traditionally integrated & clustered
around supplier/technology
 Dis-integration of systems & processes
 Re-aggregation into blended services, clustered around citizen

11. Public service delivery will
become unrecogniseable
Organisations will:
• transition from focus on inputs to outcomes
• play the emerging utility marketplace
• become increasingly fixated on standard ways of doing things
• ratchet up focus on TCO
• dis-integrate
• become a Component Trader
• re-aggregate
• redefine what „projects‟ are
The market will:
• Re-organise around platforms
• Penalise idiosyncrasy

12. Do YOU have…
An undifferentiated outsourcing contract?
A clear idea of TCO across your business?
An idea of how you will be able to deliver new
services, differently, using the utility model?
Confidence that you‟re paying bargain-basement rates for bargain-
basement commodities?
A Target Operating Model?
A comprehensive plan for exploiting the economics of the Open
Innovation revolution?
…a way to transition from focusing on inputs to outcomes, across IT
and then services?

14. IT has become an economic model

15. Bespoke products/services are
expensive

16. Moving from innovation to
commodity…

17. Innovation to commodity…

18. Supporting the innovation-
commodity process

19. Supporting the commoditisation
process

20. Different skillsets to manage these…

21. …and different activities

22. A new way of looking at IT-driven
services

23. Skilling up

24. Open Platforms & Innovation

25. …an unprecedentedly radical agenda

29. “…Aaahh, but of course this model applies only to
hi-tech / startups like Amazon or Google, and
certainly not to government!”

31. Extension of Open Innovation to
business logic
True…
 Open innovation lent itself particularly to tech
artifacts, e.g. code, that could be
standardised, chopped up & recombined easily
…And then along came…
 XML, wrappering, SOA, open APIs, web services
etc, allowing business logic to be
standardised, chopped up, parsed, and
purchased more accurately

33. Systems Integration

34. Systems dis-integration

35. Services re-aggregation

36. An increasing interest in/appetite for…
 Open standards
 Modularisation
 Commoditisation
 Virtualisation
 Utility/consumption models
 Post-bureaucratic delivery/new TOMs
 Shared services
 New, innovative services
 Cloud
 Resale/co-creation/revenue sharing
 New ways of working/mobile

37. The need for a ‘roadmap’…
Constrained Harmonised Embracing Exploiting
Complex landscape of Standardised Starting the journey Maximising the usage
technology and technology and to utility / Cloud of utility / cloud
business processes business processes Services services appropriate
Restrictive support Restrictive support to your business
and commercial and commercial
models models

38. …with a clear business case for
savings realisation
Cost
Constrained Harmonised Embracing Exploiting

39. Service dis-integration
Dedicated Shared Utility
Process
ICT
Services
People

40. Service Re-aggregation
Utility Service
People Shared Service
People
Process Dedicated Service
Process
People Process Technology
Technology Technology

41. ‘Revs and Bens’ in local govt will become
unrecogniseable
Utility Service
E-Forms (internal and
Shared Service customer facing)
Workflow
Case Document Management
Dedicated Management
(for appeals)
Service Mail-Merge
Customer Payment Engine
Database
Cash Receipting Engine

42. Local government example: people

43. Building a component-based reference model
“service A” + “service B”+ “service C”+ “service D”
Opportunity
Document
Management
Infrastructure
Training provision services
L&T Resources (on-
line content) Payments
On-line resources (e- Third party
learning) Mail / messaging
payments
Payments (utility-
based)
Payments
Processing Video conferencing
(media services)
Workflow Cash receipting
Output
Mail (collaboration)
Data Input
Market Maturity

44. Public service delivery will
become unrecogniseable
Organisations will:
• transition from focus on inputs to outcomes
• play the emerging utility marketplace
• become increasingly fixated on standard ways of doing things
• ratchet up focus on TCO
• dis-integrate
• become a Component Trader
• re-aggregate
• redefine what „projects‟ are
The market will:
• Re-organise around platforms
• Penalise idiosyncrasy

45. …and IT lies at the heart of new
delivery models!
Thank you