Weak supplier management hinders digital government | JP
The State of digital government review, published by the Department for Science, Innovation and Technology, has portrayed the highly fragmented nature of public sector digital services.
A root cause of the problems with public sector digital services, according to the review, is that fragmentation is a feature of the system. One of the challenges noted by the authors of the review is that public sector organisations are independent bodies with limited mechanisms to contract services from each other.
“Most choose to build and maintain their own technology estate, inhibiting standardisation, interoperability and reuse, and constraining the ability to benefit from scale,” the review stated.
This leads to inconsistencies in architectural design, product management, operations and development between organisations, and hence fragmented digital services. For instance, compared with services such as remote banking, which is used by 86% of adults, the review reported that approximately half of central government and NHS services still do not offer a digital pathway.
Budget and supplier management issues
The review noted that while the government budget for technology initiatives was £26bn in 2023/24 (5.9% of the government’s operating fund), data from Gartner suggests this is 2.9% lower than the percentage of operational expenses spent on technology in similar-sized organisations.
The review warned that this underinvestment in technology increases long-term costs and the total cost of ownership, with maintenance of legacy systems costing three to four times that of modern alternatives, as demonstrated by HMRC’s contracts for the maintenance of Cobol systems.
It also reported that the government tends to be biased towards new programmes, with insufficient prioritisation of effective operation and maintenance of legacy assets.
The review’s authors warned that legislation often comes without additional funding, which forces reprioritisation of previously allocated budgets.
The funding challenge is set to worsen given that digital and data projects are moving from capital expenditure towards subscription-based services, which increases the reliance on committed ongoing funding.
The shift from outsourcing to building internal teams and buying platform services is also covered in the review. The authors noted that government procurement and supplier management processes have not changed from a focus on a capital purchase model to a subscription-based model and the move away from on-premise systems towards software as a service (SaaS) and cloud computing.
They also pointed out that systems integrators have become the dominant service providers, acting as resellers for major platforms. The technology supply chain has consolidated over time as platform providers take on more traditional supplier roles, such as hardware provider, datacentre provider and database software provider.
The review recommended that government sourcing decisions should more actively incorporate these market drivers and conditions, as well as requirements and preferences of the contracting organisation.
Another area of concern raised in the review is the ability of public sector bodies to take advantage of shared services, identifying seven resellers that provided Google products (services, software and licences) across 12 departments with 10% in missed volume discounts. It also found that the government was exposed to VMware’s pricing increases following the Broadcom acquisition due to the lack of a cross-government commercial agreement.
Additionally, it said each of the NHS’s 209 secondary care entities negotiates and buys its own infrastructure – including cloud, networking and end user computing – and each of the 320 councils largely negotiates its own technology agreements outside of buying groups.
Fragmentation and data integration complexity
Looking at why government digital services appear to be disconnected, the review found that a combination of technical limitations, risk-averse cultures, unclear regulations and different governance standards is leading to data fragmentation. The review’s authors reported that legacy systems pose a major challenge to real-time data sharing, such as Cobol systems in HMRC, which require additional software to share data via application programming interfaces (APIs).
Another of the issues identified as making digital public services less than ideal is the challenge for councils to ensure that systems and data are interoperable. This is often due to barriers put in place by legacy IT suppliers and/or the high costs of APIs needed to integrate different systems. This, according to the review, significantly hinders digital transformation.
Overall, the review warned that underinvestment in technology and a heavy reliance on legacy systems mean artificial intelligence (AI) and emerging technologies will continue to be underutilised due to the cautious cost/benefit-driven funding approaches applied to nascent technologies. It said this lack of investment means public sector bodies are missing automation, productivity and service delivery opportunities.
Secretary of state for science, technology and innovation, Peter Kyle, said the review shows the gap between the state and the private sector. Describing the review as, “a comprehensive evaluation of the United Kingdom’s public sector digital infrastructure and capabilities”, he said: “Successes are too often achieved despite the system: they rely on the dedication of experts doing their best with limited resources, navigating processes which were not designed for a digital age, and implementing policies which were not designed to be digital first.”