The Bargain Bin Failures

Taken at face value, the figures look grim. At its inception, the National Programme for IT was touted as costing a mere £2.3 billion to design and roll out. That estimate swiftly rose to £6.2 billion. Now, the Government Agency responsible admits this figure did not actually include system implementation, focusing solely on development. Thus the final cost is going to run to at least £12.4 billion (and possibly as high as £20 billion). Staggering.

Cost overrun isn’t the only problem. The National Clinical Records System – an electronic medical records system housing the details of 50 million individuals – is at least two years behind schedule, while the ‘choose-and-click’ appointments system that allows GPs to book hospital appointments for their patients is now over a year late.

The stark truth is that few of us will be entirely surprised by these statistics. Tellingly, this project may not be an exemplar but it most certainly isn’t bad enough to make it into the IT Hall of Shame, the notorious home of the world’s most disastrous IT projects. To be honest, given the sheer scale of the NHS project it could have been a lot, lot worse.

Like many IT projects before it, the reasons why the National Programme for IT hasn’t proceeded entirely according to plan are fairly straightforward. First, it has suffered from the twin effects of least cost procurement and poor initial scoping. Thus requirements have changed, costs have risen and timescales have been extended. As such, all of the promised functionality may not be delivered.

Least cost procurement

An almost universal obsession with least cost procurement means that, all-too-often, the financial outlay for IT projects is specified at a level well below what everyone knows the true cost will be. We indulge in a curious form of self-delusion that we can still deliver a solid project for the lowest possible price. And we’re not just talking about cutting back on the fat.

Taken to extremes, this type of procurement cuts to the bone. Suppliers are forced into drastically reducing their prices to win the contract. They do so by either underestimating the cost – resulting in the cost spiralling out of control later on in the project – or, alternatively, they ‘cut their cloth’ accordingly and find ways of reducing costs to bring their price down.

Somewhere along the line this usually means compromising on quality. Suppliers will, for example, use less well-qualified staff or simply less members of staff to implement the project, and everyone is then shocked and amazed when it’s either late in finishing or just doesn’t deliver what’s needed.

In spite of all this, it seems that everyone wants to spend less on IT and data security. As tax payers we are supposed to be impressed that the Government is delivering value for money (tough negotiations with suppliers including Microsoft and Oracle duly delivering £860 million of savings on the National Programme for IT). However, in all walks of life, experience shows that the least cost route is rarely the optimal one to choose.

Element of self-delusion

The focus on least cost procurement of IT and data security systems exists for a variety of reasons. Both within the Governmental sector and commercial enterprise there can be a significant element of self-delusion. The harsh truth of the matter is that if a realistic figure were put on these programmes many of them simply wouldn’t get off the ground. Naturally, both taxpayers and business managers are keen to eke out value for money, but if projects are to be delivered fully-featured, on time and to budget then this consideration simply cannot override all others.

While I would not suggest that suppliers have it all their own way, many IT and data security projects have little chance of coming in on budget because the initial costings were in no way realistic. The Bargain Bin Mentality that pervades IT procurement produces contractual terms so tough they significantly reduce the likelihood that the project is going to be delivered fully-functional and on time.

A best cost procurement strategy, on the other hand, encompasses the requirement to negotiate a competitive price, which is not the same as the lowest possible price. This encourages procurement to be driven by a range of factors – including an ability to deliver.

Best cost procurement needs to be implemented hand-in-hand with a professional approach to project management that maximises the chances of the project succeeding and minimises wasted effort. After all, the basic building blocks of a successful project are the people that deliver it.

It’s here that you simply cannot afford to scrimp and save. You need an adequate number of good quality people who are motivated to deliver what’s needed.

Team building, good management

The most successful projects employ professional staff motivated by something greater than their fee. After all, human nature being what it is ensures that motivation solely by money means that staff will simply maximise the potential for themselves. This often undermines timely delivery, and will certainly bust the budget. A better approach is to use basic team building and management techniques that will motivate the staff. This involves constructing a ‘psychological contract’ such that staff buy-in to the project’s goals and are totally committed to the team ethic.

These techniques are widely used within enterprises and organisations to render the most from employees, but are rarely extended to project staff. However, it’s even more critical to employ these techniques in project teams because of their temporary nature (and the consequent psychological impact this has on those individuals staffing them).

Some of the best projects I have witnessed used basic techniques – such as regular whole project social occasions – to bond teams together. On one occasion, the project management team ran a regular training evening once a week for staff – but made no distinctions between in-house staff, supplier staff and contractors.

Tips for better projects

If you are implementing an IT or data security project, always use best cost procurement methods. If the budget is fixed, be realistic about what you can afford. Understand what motivates your staff and suppliers. Employ doers, not talkers. These are some of the basic building blocks for success.

Most important of all, though, if matters spiral out of control STOP! Review, reorganise and redeploy.