The Columbus Programme
On June 17 we completed the phased exit from Aspire, government’s largest outsourced IT contract (£10bn). Despite skepticism, we split Aspire, took control of our IT and created a ground-breaking commercial IT operating the model. Recognized as the government’s most successful major program, Columbus delivered on time with huge savings for taxpayers – creating a blueprint for any organization to follow.
HMRC’s IT supports the collection of more than £500bn in taxes from 50 million customers, keeps goods moving through customs on a 24/7 basis, and enables 7 million families to receive targeted financial support. The Financial Times ran a ‘Havoc’ headline (January 2015) when reporting the Public Accounts Committee’s nervousness over HMRC’s plans to end 20 years of outsourcing IT Services through one monolithic contract (c£700m per annum) known as Aspire. The contract was provided by four companies led by Capgemini. Aspire directly employed 5,000 IT professionals and had an ecosystem of 200 smaller IT businesses and represented 20 years of outsourced IT service. Such contracts were common in government and the IT industry but the Aspire contract was the largest in government covering one of the largest IT estates in Europe.
The service was reliable - why change? HMRC must provide stability whilst handling ever-increasing layers and volumes of data, respond to customers demanding better services and taxpayers who deserve economy. Far from supporting HMRC, that contract would obstruct us. HMRC’s Columbus Programme conceived a new model for the future involving a safe phased exit - insourcing some services and re-procuring others on smaller, shorter contracts. The new model was driven by a multi-supplier strategy that would allow HMRC to:
● bring ownership and delivery of IT back under the Department’s control - bringing strategic functions in-house and building internal architecture and design, service operations, and vendor management capabilities.
● lead IT delivery in-house, using a combination of in-house capabilities and multiple external suppliers to complete end-to-end technical delivery, and building in-house accountability and better risk management.
● re-procure selected services where in-house control is not critical.
● reduce supplier costs through reduced risk premiums, better utilization, utility pricing, commodity products, standard terms and conditions, and procurement processes.
Working with stakeholders across government the programme developed and implemented the new operating and commercial model which meant increasing in-house capability, including commercial, and redrawing the way we deliver services. The program began by rationalizing HMRC’s own IT teams to ensure its operating model focused on what it wanted to achieve, cleaning up accountabilities and recruiting two tiers of leadership right the way across the IT organization. It then secured the novation of the principal sub-contracts under Aspire to HMRC so that it took direct accountability for IT contracts with Accenture for the running and development of one the Department’s largest and most important IT applications - the National Insurance and PAYE Service (NPS); Fujitsu for its data centre hosting, bulk print and scan services; BT for its WAN; as well as Capgemini for most other application services and for system and services integration.
This took place in January 2015 after six months of extensive negotiations across the supply chain. The project reformed the terms of these contracts to make them more market-aligned and negotiated early insourcing of key functions in three waves that meant by October 2016 it had taken control of system and service integration right across the supply chain itself. It prepared for running relationships across multiple suppliers, introducing new collaboration schedules across all contracts, establishing a tiered model for managing suppliers and governance to match. The program led four key procurement exercises and successfully transitioned its bulk print, bulk scan, local printer and managed the desktop estate to four new IT suppliers.
In its fourth and final insourcing to mark the formal end of the Aspire contract on 30 June 2017, the project took control of IT engineering facilities and took the first steps in releasing cloud-based virtual developer and live support environments that are capable of being accessed right across the supply chain. 30 June 2017 also saw the culmination of innovative work with Fujitsu whereby the two organizations had worked together on a Build/Operate/Transfer arrangement that created hyper-scale cloud management capability inside HMRC ready for increased cloud adoption, including active/active deployments across multiple cloud providers with HMRC undertaking the cloud brokering itself.
Columbus has successfully exited HMRC from the contract, insourced and re-procured services and created an innovative government company - with no disruption to service or revenue. Columbus has cost less than the business case and is exceeding benefits (savings already exceed program cost). HMRC is now able to exploit new technology to transform services and has been pushing the market to develop the tools that it needs. The success of Columbus is crucial to delivering its aim of becoming one of the most digitally-advanced tax administrations in the world by 2020.
What Makes Your Project Innovative?
We believe the Columbus Programme is the largest public or private sector IT transformation project anywhere in Europe. Meeting or exceeding challenging objectives has been a constant way of life for those working on, and with, the Programme and as a result, Programme has set the blueprint for the future of government IT delivery. This multi-supplier strategy was bold and ground-breaking for the government. It required us to build strong capabilities in house to ensure that suppliers and services integrated well to deliver a service capable of delivering and supporting the HMRC goal of becoming the leading digital tax authority in the world by 2020.
The proposition enabled significant savings but was recognized as a high risk. The innovation was as much about the execution as the strategy…
• Creating the team for an unprecedented delivery: The Team secured the right people; built the skills and capability needed; and blended an effective team from across HMRC’s IT function, wider policy and delivery teams such as HR and legal, other parts of government, and delivery partners and suppliers - all working across multiple locations.
• Bucking the Trend: The multi-supplier strategy was bold and ground-breaking for the government. The Programme challenged industry trends and convinced major stakeholders across government to agree to a different operating / supply chain model including, at its core, to insource work to HMRC rather than simply assume continued wholesale outsourcing. This allowed HMRC to bring ownership and delivery of IT fully under its direct control by bringing strategic functions in-house and building internal architecture and design, service operations, and vendor management capabilities.
• Developing the 'How': The team developed approaches, tools and governance (e.g. technology roadmaps, detailed transition plans), many of which new and bespoke, to deliver the commercial negotiations, define and specify services, transition and transfer services. This included novating 250 contracts and awarding 10 new ones. The innovative use of a company wholly owned by the government (RCDTS) is being watched with interest across government. Our repeatable process for TUPE transfers will inform future transfers in HMRC and more widely in government.
• Building the new IT function: The team defined and implemented a new operating model, ways of working and the new teams in time to receive the insourced services and manage re-procured / extended contracts.
What is the current status of your innovation?
In 2013 we knew that the Aspire contract would need replacing having run from 2004 and having been extended in 2012 to 2017. When we looked at the future needs of HMRC and its IT function we recognized that:
a) it could not deliver the essential technology transformation we need in order to meet our strategic goals and that it tied us to systems that do not deliver change quickly enough.
b) its contractual ways of working are expensive, considerably above market rates and outdated with costs that rise year on year. Doing nothing was not an option. The contract brought good operational stability but had also engendered a risk-averse approach to the adoption of new technology and delivery techniques.
The net result is an inflexible and expensive technology estate that reliably brings in the tax revenues but both disappoints taxpayers in its digital presence, and staff with the plethora of applications they have to use. Meanwhile, we knew that digital and technology would underpin the transformation of HMRC:
• moving interactions with taxpayers online to remove the need for filing peaks.
• Converging the administration of tax regimes so that citizens and businesses can be managed and served as single entities, rather than independently for each tax they pay.
• Advanced data analytics to encourage upstream submission accuracy, and enforce downstream compliance.
• Adoption of cloud-based infrastructure to improve the speed of delivery, reduce costs, and increase the ability of disaster recovery across HMRC. This knowledge was worked up through a series of commissioned reviews, workshops, deep dives and thorough road tested of ideas with our partners across government.
As mentioned elsewhere, we worked closely in honing the eventual strategy and explained a comprehensive analysis of the options through a number of business cases arriving at the conclusion a multi-supplier based commercial and operating model was the best way to increase flexibility and control of the IT estate and to make the savings that future planning would also demand. Key tools used to realise this ambition varied but at the heart of the approaches were the elements of agile delivery supported by close programmatic support and oversight. Exiting the contract on June 30th, 2017 was the culmination of many critical stages and relentless and regular deliveries. To give a flavor of those key milestones, they included: 2 x project business cases approved by HM Treasury and Cabinet Office,4 x major reviews of the business cases, 250 contracts novated, 10 new contracts awarded, 1 x new IT function operating model delivered, 1 x new commercial model delivered, 4 x delivery waves completed, 4 x key services re-procured.
The success of the project has been evaluated so far through 3 specific Lessons Learnt Reviews and continuing activity by Internal Audit, most of which has been very positive. At this time an independent end to end Lessons Learned Review is being conducted by the Infrastructure and Projects Authority (IPA) in conjunction with HMRC’s change assurance function. In June 2017, just before contract end, the IPA commissioned a Programme Assurance Review. In the report, Colin Godbold, stated: “HMRC has novated the Aspire subcontracts with Fujitsu and Accenture, and successfully completed the transition of c. 750 Capgemini and Fujitsu staff and contractors in three “waves” into an HMRC wholly owned and controlled corporate subsidiary (RCDTS Ltd)”. “Overall, Columbus has made good progress both in delivery and financially. A strong and experienced team is in place to prepare for and deliver Wave 4 and transition to the re-procured services.” July 2017 - Mervyn Walker, Lead HMRC Non Executive (former director at British Airways) congratulated the team on the final wave of transitions which was delivered even more successfully, stating, “This transition has gone exceptionally well.” December 2016 - Tony Meggs, IPA Chief Executive summarised Columbus, stating, “Amongst Government’s Major Projects Portfolio, the Columbus Programme has bucked the trend by costing less than expected in the business case but delivering greater benefits.”
Collaborations & Partnerships
Close involvement with HM Treasury, GDS and Crown Commercial Services has been critical in developing our thinking so that our solutions represent the cutting edge of government practice and are consistent with government’s goals. Feedback from our partners has very much helped us shape strategies and solutions. At the same time, this has been a two-way process with partners also watch our results in areas that include IT, commercial, HR and program governance. Columbus has set the blueprint for the future of government IT delivery. The project team has worked closely with the Government Digital Service (GDS) and other stakeholders and has set the benchmark for:
● how to move away from massive outsource agreements.
● a new commercially enabled IT operating a model.
● how to deliver a multi-source model.
Users, Stakeholders & Beneficiaries
Not only have we engaged partners across government at both senior and working levels be it informally or through approval processes but we have ensured their close involvement by formally involving them in ongoing governance e.g. as members of our Programme Board. We have worked very closely with HMRC’s operations to ensure that the potential is realized. Transformative is a word that is frequently used by projects but not always matched by reality. In this case, not only has Columbus been a huge success, it has genuinely shifted HMRC’s IT function from being a service provider to a true delivery partner.
Results, Outcomes & Impacts
Columbus has allowed HMRC to take full control of its IT Architecture and IT operating and commercial model. The move from a single monolithic IT contract to a multi-supplier model has also removed a number of lock-ins. This gives HMRC direct access to the IT market and the latest technologies and the benefits to the organization are huge. The project has directly enabled HMRC to:
• deliver IT faster and cheaper - faster development lifecycles based on Agile, DevOps, Continuous Integration and User-Centred Design
• work towards a reduction in running costs of £200m per year – with benefits having already exceeded the cost of the Programme
• halve the average major project development life cycle from 18 months
• increase stability and resilience through moving around 60% of its systems onto virtual networks
• provide a 24/7 IT operation to protect against cyber attacks and keep services online
• build 6 Digital Delivery Centres and a Data Engineering Centre outside of Aspire, which in turn has transformed HMRC’s digital delivery capability and underpins the Department’s shift to a digital business and improvements for customers including:
- delivery of an award-winning Multi-Channel Digital Tax Platform that hosts all HMRC’s new digital services
- delivery of an award-winning Personal Tax Account that now has 11m users (and the business equivalent - Business Tax Account - has 2.8m users) - develop and deliver more than 60 new digital services for customers since 2014 - increased satisfaction levels for services - currently 81% for business tax account, 78% for personal tax account.
Challenges and Failures
Getting the Proposition Right Formulating a strategy that met our goals within a government context. We tackled this by:
• Repeated engagement with key partners, experts, and stakeholders.
• bringing in the experience we needed (e.g. commercial and financial directors, a strategic delivery partner).
• organizing into deliverable programs. Understanding Outsourced Services Commercial restrictions forced assumptions about services – many were broadly correct, but some services were more complex. We handled this through:
• commercial negotiations
• contingency planning
• managing risk
• being open with our stakeholders and remaining flexible Developing a Transition Process Transitioning staff into the organization was very complex with challenges from TUPE and pensions to engagement. We handled this through
• good legal support
• appointing a delivery partner and gaining knowledge transfer
• bringing in experts e.g. TUPE
• working with Cabinet Office partners.
Conditions for Success
Conditions would include:
• A clear strategically aligned vision
• Strong well governed commercial relationships
•Clear, constructive and open relationships with stakeholders across government
• Commitment to the goals and the support of all parties to the success of the innovation
• Strong knowledge of the purpose and operation of an organization’s business and its realities and needs
• A willingness to recognize fast that something is not working and work together on the appropriate action
• Genuine collaboration to remove obstacles, barriers and blockers
• Access to the right knowledge and capabilities
• Great leadership and a team with the right skills
This was a complex solution but at its heart, it is a basic and repeatable innovation which can be adopted in part or\ as a whole. For example, an organization may adopt a similar strategy and operating model or simply look at how we adopted a GovCo or at the TUPE processes that we developed. While the strategy is in some ways quite IT orientated, aspects such as GovCo and TUPE are universal and potentially repeatable for any discipline.
We are currently working on this very question. Our lessons are likely to include: Moving staff into the public sector or between Suppliers The pitfalls, difficulties and eventual solutions especially in areas such as the right arrangements for former civil servants, setting up benefits packages, engagement and the importance of accommodation. Setting up a GovCo This massively complex area involving factors from strategy and purpose through policies, objects, governance to operations. Commercial Negotiation Model and Phased Exit Our Commercial engagement was key to our success and the importance of a phased exit made the transition safer for HMRC and commercially viable for our suppliers.