Adopt a “Competitive Innovation” approach to most major IT systems contracts
by jamesfirth on July 14, 2010 at 10:59AM
It’s well documented how many government departments have wasted public money when commissioning IT systems. From databases to websites headline figures in the order of tens of millions have been spent on systems which have either failed to deliver, could have been implemented at a tenth of the price, or both.
Whilst I acknowledge that government has only ever strived to do things well and create the “right” system, the current approach which centres on a reliance on a few preferred IT providers has proved time and time again to fail to deliver value for money.
The reliance on the “big four” IT systems providers and a willingness to accept these large companies’ marketing claims at face value has lead to massive over-pricing in the market.
Smaller companies have been overlooked because of the perceived risk to delivery and long-term support, yet these smaller innovative companies have delivered cost-effective solutions for large commercial operations where cost constraints are more prevalent.
The paradox is thus: that a smaller company may fail to deliver a system costing around £1m yet the large established providers typically won’t “get out of bed” for less than £20m.
The solution is what I term Competitive Innovation. Continuing the above crude example, several smaller companies, say seven in total, would each be commissioned to create competing systems at a cost of £1m each. The best system would be selected and the risk of non-delivery mitigated. Total project cost would save £13m.
Some doubt that such savings could be made, yet my company created a budget management system for private companies working on government contracts at a cost of around £500,000 because the approx £32m revamp of a government system was still unable to provide the functionality that the private companies needed to track the performance of their commission within the agency (see http://www.budget-bathmat.com).
The price tag for bespoke or tailored systems in the private sector I estimate to be a least one whole order of magnitude lower than the cost of similar government systems in the instances where I’ve had access to price information.
How the idea could be implemented
In the late 1990’s I saw elements of “Competitive Innovation” work within the US Department of Defense (DoD) procurement of target tracking technology whilst working for an innovative UK company. The DoD had commissioned several private companies to create competing systems as “technology demonstrators”. Live trials of limited scope were performed on the rival systems, and the winner was then awarded a full contract.
Such an approach could be adopted to IT spend within UK government. For example, when a new website is required, several small web development companies could be commissioned to create functional demonstrators of how they believe the problem could best be solved. These companies would be given only very basic scratch (BoB – Back of Beermat) requirements and access to key stakeholders to capture the detailed requirements in any way they see fit. The contracts would be worth typically £50,000-£200,000 and the combined cost of 5-7 competing “throw away” demonstrators would in my professional opinion be less than the cost of the preliminary “requirements capture” phase using traditional development models.
Yet the advantages are clear – functionality can be tested at a very early stage, giving all stakeholders (including the general public) a chance to test and provide feedback and delivery risks are mitigated.
As with all methodologies this approach clearly does not suit all cases. It’s particularly well suited in situations where a large amount of development is required to create a new system, either because no alternative exists on the market, or the alternative is prohibitively priced.
Also this approach does not eliminate the need for experienced consultants working within government, although the role and expertise of these consultants will shift from being experts in the “established” systems (the “big four”) to being experts at software systems design and software engineering.