Cabinet Office & Treasury Score Own Goal with “Catch 22”: More Myths, Realities & Escalating Risks? – Best Blogs Series

English: East entrance of HM Treasury Français...

English: East entrance of HM Treasury Français : Entrée Est de HM Treasury (Photo credit: Wikipedia)

This blog was originally published in September 2013. But ahead of the UK’s general election next month, many of the issues raised still seem relevant.


Regular readers of this blog will know that I have repeatedly highlighted the increasing likelihood of failure from Local Authorities relying on Shared Services programmes to achieve draconian cuts in budgets (mandated by the Coalition Government). Last week, I  cautioned against spending another £5 Billion on capital investment, citing the Government’s capacity to avoid the next omnishambles. Most of this year, I have also been leading a campaign to get the Cabinet Office to reverse its Catch 22 policy  which, in my view and that of many colleagues, is not in the national best interest. The Rt. Hon. Francis Maude MP, Minister for the Cabinet Office and Paymaster General has claimed that the Government’s Catch 22 controls over independent executives, consultants and contractors has saved circa £1 billion. Unfortunately, the reality, highlighted this week, is that the Catch 22 policy is a fatal own goal, with circa £3 billion plus of cost savings at increasing risk of delay, overspend and failing to meeting their policy objectives. The Government’s flagship welfare reform programme is just the latest casualty. Before examining welfare reform, let me highlight the likely consequences of Catch 22:

  1. Cost reduction targets by the Public Sector for innovation and processes improvement are likely to be missed, so that the swathing budget cuts will increasingly fall on front line services
  2. Opportunities to cut waste in benefits and other public services will be missed or delayed years, putting more pressure on tax payers
  3. Public Sector workers are increasingly likely to take industrial action, with its associated impact on service and quality
  4. The UK’s once proud and World beating independent executive and contingency labour sector is likely to be permanently weakened, with many top quality independent executives exiting the industry, retiring or going overseas. The same entrepreneurial independent executives could have helped the Government achieve both Public Sector Cost Reduction and Private Sector growth but sadly the opportunity is likely to be permanently lost.

Now let’s take a closer look at this week’s news about the Government flag-ship welfare reform programme:

If the Department of Works & Pensions (“DwP”) (which represents twenty-three percent of total public spending) is seriously at risk of not achieving targeted cost reductions what chance is there for the rest of the Public Sector? DwP is often heralded as one of the best-managed departments. Unfortunately, this time DwP is also critically dependent upon HMRC to deliver a new real-time system to an extremely tight time schedule. Why didn’t implementing an enormous, cross-departmental IT programme, at the same time as savage head-count reductions, plus Catch 22 sound alarm bells? Also why were simplistic assumptions about the number of claimants with access to the internet not independently validated?

At the moment, Chancellor Osborne’s A Plan is looking increasingly at risk. It seems that the Government’s reform agenda was never properly challenged by top class professionals, like independent executives. Without independent validation of bottom-up costings and risk assessment, such an ambitious reform agenda is like a run-away train – a crash waiting to happen. Of course, the Government still has many consultants in play (despite Catch 22) but their independence, objectivity and track record gives some room for concern. Let’s take a helicopter view of the emerging scenario:

  1. Public Sector cost reduction is increasingly likely to give way to cuts in front-line services, as reality replaces myths and risks crystalize
  2. Government policies to stimulate private sector growth have been far too weak and ineffectual. The Government has consistently failed to stimulate short-term demand, especially investment, as increasingly strongly advocated by the IMF and OECD.
  3. Increasing downside risk on global growth and from the Euro crisis has meant that Plan A’s assumptions are now increasingly buried in sand.

What will Chancellor George Osborne do next? Because of his relative inexperience prior to becoming Chancellor is he perhaps unduly sensitive to changing direction?

I suppose what worries me most is the absence of joined up thinking and holistic planning across the Coalition Government – surely this is both dysfunctional and wasteful (see the Cabinet Office’s update of pan-government plans)? For clarity, let me quickly recap on what I regard as the Public Sector reform life cycle (this is quite different to Best Practice in the Private Sector, as I have previously described):

  • Outline reform agenda (manifesto, Coalition agreement)
  • Outline policies (Green & White Papers)
  • Define policies and provide way forward (Bills and Acts of Parliament)
  • Define strategy
  • Delivery
  • Post implementation review

I struggle to understand the Government’s detailed strategy, especially on introducing innovation in the Public Sector. One of the Government’s senior strategy consultants is McKinsey. By chance I noticed that McKinsey were citing Kenya and Georgia as Best Practice exemplars for innovation in government, arguing that a willingness to take bold risks can make government services better and cheaper.

The Coalition Government are, of course, taking enormous risks but I am concerned with the effectiveness or robustness of risk mitigation – this is different to the pan-government risk register sponsored by the Cabinet Office and the Treasury.

My advise to the Government is simple. For cost-effective risk mitigation on Public Sector transformation programs, deploy independent executives client-side on both strategy formulation and delivery phases.

Public Sector Catch 22: The Role of “IT” in Business Transformation – Best Blogs Series

This was originally published in April 2011. It seems appropriate as austerity policies dominate the forthcoming UK general election.


This is my fifth blog which looks at the critical choices being faced in the UK Public Sector both at the National and Local level.

The first two articles were: UK Local Authorities and Shared Services: Cost-Cutting – Myth or Reality?, and Public Sector Performance: Catch 22 type Dilemmas.

This is now the third of four related blogs:

1. Cost Cutting Vs. Cost Reduction (Blog 1)
2. Business Transformation (Blog 2)
3. The Role of IT in Business Transformation (Blog 3) – focus of this blog
4. Strategy and Politics (Blog 4)

Before focusing specifically on IT, it is worth talking stock in the wider context, looking at progress in overhauling public services. This week the authoritive Economist leads it’s UK news with a headline entitled “Dave’s amazing adventure“. The secondary headline reads “Overhauling the public services proving slower and harder than the government once hoped”. The article concludes that Coalition Government’s vision of a public sector enlivened by greater competition and less dependency on state funding is holding up well. However, the article identifies numerous examples where the reform agenda is seriously struggling. Without effective reform, we are left with a reduced funding which in the main leads directly to cuts in front-line services. Government reforms are similar to Business Strategy in the Private Sector – without an effective business strategy, customer performance, quality and financial returns are progessively marginalized, leading to a progessive downward spiral. Success requires vision, strategy (reform), leadership and effective transformation. This blog focuses on IT strategy and how it supports transformation.


Technology (or IT) is one of the three critical elements of Business Transformation, along with Processes and People. It is essential to understand that IT does not offer a silver bullet for providing strategic advantage. There are very few cases like the SABRE airline reservation system where IT directly enabled strategic advantage.

IT has offered us Best Practice and Best of Breed options. Best Practice is recommended as lower-risk and more cost-effective for non-strategic options. Best of Breed is recommended where the business is going for first-mover or lowest-cost advantage – IT is supporting strategic options.

Over the last ten years, Tier 1 ERP providers like Oracle and SAP, plus their value-added network of implementation partners have had rich pickings. On the one hand, there has been new work from the constantly changing technology but also from the increasingly important business solutions to support both Best Practice and Best of Breed models. Business cases are justified on lower costs of operating standardized processes, deploying self-service and self-help, with high levels of automation. Implementation partners also offer Shared Services and Outsourcing solutions, with near-shore and off-shore options to take advantage of Labour Cost Arbitrage (cheaper to do the job in India or China).

For an ERP, Shared Services or Outsourcing Solution to be effective, People and Processes must receive appropriate sponsorship and resources, as well as IT. In my experience of over a dozen ERP/Shared Services programmes, there is enormous pressure for IT to take the lead and call-the-shots. IT Transformation is only able to offer first level Business Transformation (Localized Exploitation). For the four higher levels of Business Transformation (identified in Venkatraman’s pioneering research at MIT), it is essential that the leadership and sponsorship is business-based, with IT held in check as an enabler.

IT is quite prolific and enormous focus is required to ensure that businesses get value and are not dazzled by the latest technology. Outsourcing and off-shoring IT has become increasingly popular but it is not without its challenges – on the other hand there is clear evidence that stock/share prices have responded favourably when leading businesses have announced outsourcing/offshoring decisions.

For the Public Sector both at the national and local levels, IT presents an enormous challenge, both in terms of cost-effectiveness, quality and customer service in continuing services. In the case of business transformation, the risks are compounded because IT is frequently a more powerful force than Processes or Employees.

This week we have seen Francis Maude, Minister for the Cabinet Office publish the Coalition Government’s ICT Strategy (information, communications and technology). In his forward Francis Maude identified the following challenges that had been identified by the Coalition Government:

• projects tend to be too big, leading to greater risk and complexity, and limiting the range of suppliers who can compete
• Departments, agencies and public bodies too rarely reuse and adapt systems which are available ‘off the shelf’ or have already been commissioned by another part of government, leading to wasteful duplication
• systems are too rarely interoperable
• the infrastructure is insufficiently integrated, leading to inefficiency and separation
• there is serious over-capacity, especially in data centres
• procurement timescales are far too long and costly, squeezing out all but the biggest, usually multinational, suppliers
• too little attention has been given at senior level to the implementation of big ICT projects and programmes, either by senior officials or by ministers. Similarly, senior responsible owners (SROs) have rarely been allowed to stay in post long enough.

Francis Maude identified the following remedial steps, which either had been or would be implemented:

• introduce new central controls to ensure greater consistency and integration
• take powers to remove excess capacity
• create a level playing field for open source software
• greatly streamline procurement and specify outcomes rather than inputs
• create a presumption against projects having a lifetime value of more than £100 million
• impose compulsory open standards, starting with interoperability and security
• create a comprehensive asset register
• create a cross-public sector Applications Store
• expect SROs to stay in post until an appropriate break in the life of a project/programme; and
• encourage boards to hold ministers and senior officials to account on a regular basis for the progress of ICT projects and programmes.

From a strictly technology perspective, all the above actions seem eminently sensible and appropriate. It is revealing that the Government ICT Strategy does not mention how technology strategy is going to support Business Strategy nor the Business Transformation agenda.

We established earlier that for effective Business Transformation there is need to carefully blend the following three strategies:

1. Technology, plus
2. Processes
3. People

It is very significant that there is no mention of Technology supporting Transformation, nor dovetailing with the other pivotal elements of effective transformation, namely People and Processes strategies. This is quite alarming, given the cost-cutting that the Treasury is mandating with available funding envelopes. It would seem to indicate that there is no over-arching approach to transformation across Government, with Technology being addressed in effective isolation as an area of significant funding.

Francis Maude’s address mentions that the CIO Delivery Board will publish a strategic implementation plan, in collaboration with the departments and the Treasury by Summer 2011. Perhaps, the strategic implementation plan will give us some insight as to how technology will support transformation activities?

Effective transformation is really important because the greater the savings from transformation, the lower the level of cuts from front-line services. Why are transformation activities being excluded by the Government? Is it the reform agenda (strategy), political will, Public Sector leadership, inertia? Is it because of the shortage of transformation specialists and champions in the Public Sector? Perhaps, it would now be timely to reconsider the Cabinet Office’s Catch 22 type controls on consultants and interim managers? Catch 22 controls mean that some of the UK’s most talented and experienced transformation specialists are on the bench. The UK probably has the most developed interim management community in the World – surely this is a competitive advantage wasted?