MEMORANDUM BY THE NATIONAL AUDIT OFFICE NOVEMBER Department for Work and Pensions: Information Technology Programmes

Transcription

1 MEMORANDUM BY THE NATIONAL AUDIT OFFICE NOVEMBER 2008 Department for Work and Pensions: Information Technoogy Programmes

2 Our vision is to hep the nation spend wisey. We promote the highest standards in financia management and reporting, the proper conduct of pubic business and beneficia change in the provision of pubic services. The Nationa Audit Office scrutinises pubic spending on behaf of Pariament. The Comptroer and Auditor Genera, Tim Burr, is an Officer of the House of Commons. He is the head of the Nationa Audit Office which empoys some 850 staff. He and the Nationa Audit Office are totay independent of Government. He certifies the accounts of a Government departments and a wide range of other pubic sector bodies; and he has statutory authority to report to Pariament on the economy, efficiency and effectiveness with which departments and other bodies have used their resources. Our work eads to savings and other efficiency gains worth many miions of pounds; at east 9 for every 1 spent running the Office.

3 Department for Work and Pensions: Information Technoogy Programmes Memorandum by the Nationa audit office November 2008

4 This memorandum has been prepared for the House of Commons Work and Pensions Committee to provide information on the Department for Work and Pensions Information Technoogy Programmes.

5 Contents Part One Introduction 4 Part Two Deveopment of the Empoyment and Support Aowance 15 Part Three Impementation of the Chid Support Agency Operationa Improvement Pan 18 Part Four Deveopment of the Customer Information System 21 Part Five Introduction of a Centra Payment System 24 Part Six The Pensions Transformation Programme 26 Appendix One 30 Appendix Two 34 This review was conducted by Lee Summerfied and Kara Rayner under the direction of David Carke. For further information about the Nationa Audit Office pease contact: Nationa Audit Office Press Office Buckingham Paace Road Victoria London SW1W 9SP Te: Emai: enquiries@nao.gsi.gov.uk Nationa Audit Office 2008

6 4 Part One Department for Work and Pensions: Information Technoogy Programmes Part One Introduction 1.1 This memorandum has been prepared for the House of Commons Work and Pensions Committee to provide information on the Department for Work and Pensions (the Department) Information Technoogy (IT) Programmes. It sets out: the genera poicies adopted towards programme deveopment incuding: the Department s partnering arrangements; and the progress it has made in renegotiating contracts with its main suppiers (Eectronic Data Systems (EDS) and BT) in order to meet its financia savings targets; the current state of pay on the Department s top 19 major change programmes (Appendix 1), indicating their cost outturn compared to budget and panned deivery date compared to date expected at the time of approva; the position on five major projects, incuding: programme aims and objectives; IT system deveopment and reease; and current project status; issues identified from previous Nationa Audit Office work on common causes of IT project faiure across Departments. 1.2 The Nationa Audit Office has not sought to provide an audit opinion on the Department s IT enabed projects or concude on the vaue for money of IT procurement incuded in this memorandum. The information used within the memorandum is drawn from Departmenta documents, interviews with ead officias and interviews with the Department s main contractors (Appendix 2). Costing and budget information contained within the memorandum has not been audited by the Nationa Audit Office. Department for Work and Pensions Portfoio of Change Projects 1.3 The Department has one of the argest IT estates in Europe it has 149 major appication systems that are operated by EDS through its existing hosting contract and an integrated voice and data network. The Department has to meet the diverse needs of over 20 miion customers, incuding the most vunerabe members of society, through a wide range of products.

7 Department for Work and Pensions: Information Technoogy Programmes Part One The Department is engaged in a major change programme aimed at putting its customers at the centre of everything it does. By 2011, it aims to deiver services to its customers in a competey different way. Athough IT is a major enaber for much of the change agenda, not a of the change programmes are soey focussed on major IT eements. The Pensions Transformation Programme, for exampe, aims to restructure and reorganise the way in which the Pension, Disabiity and Carers Service 1 operates and interacts with its customers, using IT as one of many enabers. There are some however that are amost entirey IT-based, such as the Customer Information System which wi enabe business change across the Department by providing a singe source of customer information. Athough not seen by the customer, this system shoud enabe more efficient handing of information and reduce the need for customers to provide the same information more than once. The Department has over 200 change projects; a summary of the 19 most significant IT enabed projects is at Appendix 1. The Department estimates that the tota cost of these IT enabed change programmes wi be 2,402 miion, spread over severa years, of which an estimated 46 per cent wi be spent directy on IT. Managing the Department s Information Technoogy programmes 1.5 Since 2004 the Department s interna IT expertise sits within Corporate IT. In Juy 2004, a new Chief Information Officer was appointed to head up the Department s IT transformation. Corporate IT operates aongside the Department s businesses to design and deiver technoogica soutions, enabe the Department to improve performance, reduce cost and modernise the services it provides to its customers. It has the chaenge of reorganising itsef to be better equipped to support the Department s overa change programme, with its emphasis on ean deivery to customers. This is being done against the backdrop of a reduced financia aocation whist providing improved service deivery. Its IT strategy aims to aign the business and IT direction. 1.6 In order to meet these demands, and contribute to the Department s overa efficiency chaenge, the Department s Corporate IT consoidated IT support for the whoe Department into a singe organisation. Two significant changes have been the creation of an Appication Deivery Centre and the consoidation of the Department s IT Service Deivery operations. The reorganisation brings together the fu IT community within the Department and aims to enabe more efficient and effective use of common approaches towards service deivery across the Department and to its outsourced suppiers in order to reduce dupication. 1.7 As we as re-designing the operating mode the Department has aso recruited staff into key posts from the private sector to up-ski its in-house IT operation. This has been underpinned by depoyment of a skis framework within which IT staff can deveop their skis. 1 The Pension, Disabiity and Carers Service was created on 1 Apri 2008, incorporating what were formery the Pension Service, and the Disabiity and Carers Service.

8 6 Part One Department for Work and Pensions: Information Technoogy Programmes 1.8 Since the tota number of staff working on IT within the Department overa has reduced and in particuar within Corporate IT (Figure 1). IT deveopment is primariy outsourced which means that the Department has had to become an inteigent customer so that it is abe to adequatey chaenge contractors assumptions and ensure the quaity of products and services being deivered. The Department has recognised the need to increase the skis and expertise of IT staff within the Department, the ack of skis being something it has been criticised for in the past by the Nationa Audit Office. 1.9 The Department has aso set out to achieve industry eading standards for the accreditation of its IT function. One component of this has been the achievement of Leve two against the five eve Internationa Capabiity Maturity Mode Integration (CMMi) an internationay recognised standard for assessing the IT capabiity of an organisation. The Department beieves that it is the first UK Government Department to achieve this. The Department is seeking to achieve Leve three in To further improve the Department s overa management of IT outsourcing, the Department has aso adopted Information Technoogy Infrastructure Library (ITIL). ITIL is a widey accepted best practice approach to IT service management drawing best practice from the pubic and private sectors internationay. Departmenta IT Costs 1.11 Over the ast four years, the Department s expenditure on IT has decreased from 1,071 miion in to 991 miion in (Figure 2). The Department estimates that by this wi reduce further to 718 miion, a reduction of more than 30 per cent The ifetime expenditure on IT specific eements of the Department s change programme is estimated at 1,107 miion, ranging from 1.6 miion for Provider Led Pathways to Work to 349 miion on the Pensions Transformation Programme. Its argest contract is with EDS; when this was reaigned in 2005 the Department anticipated spending on average about 520 miion annuay on services. The Department aso has contracts with a number of other IT providers. Figure 1 Department for Work and Pensions IT staff numbers to Overa tota number of 3,281 3,073 2,872 2,809 staff working on IT Number of staff in 1, Corporate IT Source: Department for Work and Pensions

9 Department for Work and Pensions: Information Technoogy Programmes Part One Athough IT costs are faing generay, around haf of the 19 most significant IT enabed projects are higher than originay forecast in the business cases, athough the variance fuctuates widey. The Department s governance process is such that initia project IT costs are estimated as part of the strategic outine business case stage. As the business case deveops into an outine business case then fu business case, these costs are refined, often increasing as part of this process. Additionay, some projects have their scope broadened to meet operationa or poicy needs. As poicy deveops, IT and other requirements need to be reguary impacted a number of factors can increase project costs eary in project design. Panned competion dates in the majority of cases have aso been extended compared with eary business case estimates. The Department s governance process chaenges change requests for extended competion dates and these are ony agreed on the basis of benefits being maintained and costs not increasing beyond toerance eves The strategic objectives for Corporate IT for are to: ive within its financia aocation; continue to increase IT capabiity across the Department; transform and innovate the IT services that deiver transformationa Government and Departmenta outcomes for customers; continuousy improve the performance, robustness and resiience of the Department s IT systems; continuousy improve the performance of the Department s IT suppiers; and successfuy deiver the Department s future IT contracts. Figure 2 Department for Work and Pensions IT costs to miions 1,200 1, ,071 1,035 1, , , Deveopment Operations Source: Department for Work and Pensions

10 8 Part One Department for Work and Pensions: Information Technoogy Programmes Provision of IT services across the Department for Work and Pensions 1.15 The main IT services for the Department are provided under contract by EDS and BT. On the amagamation of the Department of Socia Security and the Empoyment Service in 2001 the new department inherited a number of diverse and compicated contracting and IT suppy arrangements with both suppiers. The way these arrangements had grown up over time meant: EDS and BT were deivering aspects of the same service to different parts of the Department to differing service definitions, eves and contractua terms; there was mixed asset ownership. For exampe, the majority of hardware and software in the Department of Socia Security was purchased and owned by the Department whereas in the Empoyment Service the majority of data centre equipment was purchased and owned by EDS; services and conditions were argey bespoke and not based on industry standard principes and conditions. The smooth working of the IT arrangements was heaviy dependent on the experience of staff working in the Department and contractors; and the cost of the arrangements, given assumptions about the need to modernise and future activity eves were projected to be unaffordabe in the future The contracts and business reationships were reaigned under the Transforming EDS Services (TREDSS) and the Transforming BT Services (TBTS) programmes. New arrangements were put in pace incuding the Standard Services Business Aocation (SSBA) with EDS, and the Integrated Communications and Network Services (ICONS) contract with BT. Both of the reaigned contracts provide ceary defined industry standard services within recognised categories, caed towers, that can be measured for quaity and performance and price benchmarked. The towers reate to the provision of desktops, hosting, appication support and maintenance, appications deveopment and Service Integration and Management (SIAM) provided by EDS; and network provided by BT. Both contracts have a defined service transformation programme with specific initiatives and improvements to be introduced over the first two years of the contracts A significant aim of the TREDSS programme is to achieve cost reduction by: taking advantage of the more favourabe charges negotiated across services; reducing the number of days it takes to deveop or amend IT programmes by some 20 per cent; ower cost deveopment resources, expected to reduce aggregate spend by around 20 per cent; using more standard Commercia-Off-The-Shef products and services, as provided by EDS to other customers, avoiding the costs to the Department of speciay buit soutions;

11 Department for Work and Pensions: Information Technoogy Programmes Part One 9 cutting the number of oca computer servers and repacing them with fewer, more modern servers, deivering reductions in maintenance and support costs; purchasing desktops as a service rather than an item of hardware, enabing management of the whoe desktop estate to match demand and suppy, reducing its size more quicky as efficiencies are achieved; EDS reguary refreshing the technoogy used to deiver the services without the Department having to fund these investments separatey or resource separate infrastructure projects; and paying for the IT systems in units as they are used, rather than for the tota system The TBTS programme adopted simiar principes to TREDSS. It provides the Department with a singe, modern converged teephony and data network that has enabed new contact centre technoogy, offering major improvements in the handing of the growth in customer ca voumes Figure 2 shows the Department s un-audited estimated cost savings that it reports it has achieved through the reaigned contracts. Overa combined spend with EDS and BT appears to be on track to reduce by 40 per cent from the overa spend of 840 miion in to around 508 miion by Figures 3 and 4 overeaf show the reductions for EDS and BT individuay These savings figures do not take account of the economic cost savings. The economic cost is the amount the Department woud have had to spend under the od contracts to obtain the services they have received under the reaigned contracts. In practice the new contracts have deivered substantia new investment, such as increased bandwidth to cope with growth in transactions and the converged teephony and data network. The business case for both EDS and BT contract reaignment was based on economic cost savings projection of 1.5 biion by under the reaigned contracts. Since 2005, the Department estimates that it has achieved an economic cost saving of about 800 miion Both reaigned contracts remain on track to deiver improved capabiity and services through what the Department beieves is the argest IT Transformation of its kind in Europe. The reaigned contracts provided staff with amost 140,000 new desktop computers, around 7,000 encrypted aptop computers, and in excess of 108,000 new teephones, which make use of the new converged voice and data network. Under the contracts the Department has aso rationaised its data centres. A new contact centre service now enabes existing Jobcentre Pus contact centres to be joined together as a virtua service. This is intended to provide a better, more fexibe and more reiabe service for customers and enabe better management of over 18 miion cas each year at any of the Jobcentre Pus contact centres. The rest of the Department is expected to move to this new contact centre service by Spring 2009.

12 10 Part One Department for Work and Pensions: Information Technoogy Programmes Figure 3 Reductions in EDS contract cash spend to for IT services 1 miions Deveopment Operationa Source: Department for Work and Pensions NOTE 1 The figures for EDS reate to the annua payments for IT services. They excude exceptiona additiona payments, inked to the contract reaignment in to secure essentia investment to underpin improved IT and teephony and to promote the move from deferred payment (under PFI) to pay as you use. Figure 4 Reductions in BT contract cash spend to miions Deveopment Operationa Source: Department for Work and Pensions

13 Department for Work and Pensions: Information Technoogy Programmes Part One Over time there has been a steady improvement in the avaiabiity of the most important departmenta IT systems. In Apri 2008, 23 of these systems were avaiabe 100 per cent of the time and the others for more than 99.7 per cent of the time. In the month of August 2008, a 25 of the Department s critica systems were avaiabe 100 per cent of the time The EDS transformation programme is now fuy deivered and some suppementary work to compete the introduction of improved configuration management, the migration of midrange computers to more robust servers and the provision of more comprehensive management information wi finish in Spring After examining a options, the Department has decided to extend the reevant eement of its contract with EDS in order to secure the use of a new, high specification Data Centre. This is necessary because the Data Centre in Washington, Tyne and Wear, is approaching the end of its working ife and the Department needs to ensure that the two Data Centres now serving the Department provide maximum resiience and business continuity The Department has a suppier reationship management structure in pace with its main IT providers with Permanent Secretary and provider Chief Executive meetings to oversee the reationship as a whoe. Monthy executive meetings with providers serve to review operationa and programme performance. The Department has designed this structure to ensure strategic aignment between the Department and its key providers and to drive an agenda of continuous performance improvement and deveop effective partnership working. Overa, contractors tod us that the Department has got much better at understanding its own IT needs and communicating these to contractors, enabing them to negotiate better contract terms with suppiers The Department s contracts with EDS and BT are due to expire in 2010 and 2011 respectivey, athough there is, under the Access to Corporate Data (ACCORD) framework, an option to extend the contracts between the reevant parties to The terms governing such extensions vary between the contracts. The Department announced in Juy that it intends to hod a series of competitions to repace the existing contracts progressivey by The first competition is for the provision of IT Desktop services (which incudes the desktop and aptop computers used by the Department s staff) The timing of future competitions wi be determined by the Department s operationa need to sustain and improve services to citizens, and anaysis of market opportunities to deiver additiona vaue compared with existing arrangements. This may mean that it becomes advantageous to the Department, given the right terms, to extend eements of some existing contracts on an interim basis On 13 May there was a pubic announcement of the intended acquisition of EDS by Hewett Packard. This has now received the appropriate sharehoder and reguatory approva. The Department has secured the provision of a Parent Company Guarantee with Hewett Packard to underwrite the performance of the UK subsidiary.

14 12 Part One Department for Work and Pensions: Information Technoogy Programmes Review of seected programmes 1.28 In our report Deivering successfu IT-enabed business change the Nationa Audit Office ists common causes which have ed to project faiure in the past, incuding: ack of cear ink between the project and the organisation s key strategic priorities, incuding agreed measures of success; ack of cear senior management and eadership; ack of effective engagement with stakehoders; ack of skis and proven approach to project management and risk management; too itte attention to breaking deveopment and impementation into manageabe steps; evauation of proposas driven by initia price rather than ong-term vaue for money (especiay securing deivery of business benefits); ack of understanding of and contact with the suppy industry at senior eves in the organisation; and ack of effective project team integration between cients, the suppier team and the suppy chain A key theme for project faiure throughout the Nationa Audit Office s work in IT projects is governance arrangements. Key eements to successfu governance arrangements incude: having a Senior Responsibe Owner; cear roes and responsibiities; cear accountabiity for the project; appropriate committees and boards in pace to monitor and review the project; and processes for adequate reporting and escaation of significant issues The Department has addressed this issue by improving its governance arrangements. Governance aims to provide the accountabiity required by the Permanent Secretary for the stewardship of programmes and projects within the Department. Improved governance is supported by a drive to improve the capabiity of project staff, incuding Senior Responsibe Owners, through accredited training where necessary. It sets the standard against which projects wi be audited for compiance with Departmenta procedures.

15 Department for Work and Pensions: Information Technoogy Programmes Part One As of June 2003, a projects within the Department are required to estabish a governance and escaation structure within an agreed framework (Figure 5). The introduction of the Department s Investment Committee and Change Deivery Committee in 2005 has further reinforced this requirement. These committees are responsibe for top-eve decision making on matters of change contro, escaated risks and issues, cross-departmenta dependencies and project financia status There are three main ways that the Department seeks to provide assurance on the impementation of its projects: Gated Review Process a Departmenta interna process that takes pace during the ifecyce of a project and aows progress to be measured against the reevant business change, technica, financia and commercia ifecyce criteria and provides assurance that the project can progress to the next stage of deveopment. Figure 5 Department for Work and Pensions governance and escaation structure Business Board / Change Deivery Committee Executive Team Members Programme Board Business Executive Programme Governance & Contro Project Steering Committee Business Sponsor Gated Review Process Interdependencies Risk Cost Schedue Progress Project Live Running Change Lifecyce Expert Domains Source: Department for Work and Pensions

16 14 Part One Department for Work and Pensions: Information Technoogy Programmes Change Lifecyce provides standard product tempates, reuses expertise and ros and provides a structure through which best practice and essons earned can be shared. It has been deveoped to aid the Gated Review Process and contributes to the successfu deivery of change; and Office of Government Commerce Gateway reviews hed before key decision points in the ifecyce of a procurement project. They identify key issues that need to be addressed for the programme or project to proceed Considering these issues, we coated information on five of the Department s most significant change programmes where depoyment of IT is critica to the success of the overa aims of the programme. In tota these five projects represent 74 per cent of the Department s 1,107 miion ifetime panned expenditure on IT within the 19 most significant programmes as set out in Appendix 1. In addition, these are amongst the most significant for the Department in terms of business impact. They are: Empoyment and Support Aowance; The Chid Support Agency Operationa Improvement Pan; Customer Information System; Centra Payment System; and The Pensions Transformation Programme.

17 Department for Work and Pensions: Information Technoogy Programmes Part Two 15 Part Two Deveopment of the Empoyment and Support Aowance 2.1 The new Empoyment and Support Aowance repaces incapacity benefit for new customers from October The Empoyment and Support Aowance offers personaised support and financia hep for customers who are not working due to iness and disabiity. Centra to the Empoyment and Support Aowance are new medica assessments which examine what the customer can do rather than what they cannot. 2.2 Impementing the new aowance was a sizeabe and compex chaenge. The programme incuded definition of poicy and end-to-end business processes, an underpinning IT and teephony programme and a range of products and activities that enabe staff and those in reated Departments, agencies and contractors to deiver the new service. The enabing IT and teephony incuded a Customer Account Management system which captures and enabes processing of customer requirements, an extension of the Jobseekers Aowance Payments System (which enabes payment of the aowance), changes to around 60 interfacing systems and enhanced teephony. The main IT contractors, appointed through competition, are Accenture, EDS/Hewett Packard and BT. 2.3 The programme went ive nationay on 27 October 2008 as panned. New caims are taken at six contact centres. One Benefit Deivery Centre Stockton and the associated Jobcentre Pus offices in the Tees Vaey is acting as a traibazer adopting the fu approach where the Customer Account Management system and Jobseekers Aowance Payments System process automaticay transfer data between each other. At the other 63 Benefit Deivery Centres staff wi have to rekey manuay data from the Customer Account Management system into the Jobseekers Aowance Payment System. This requires 500 more staff than wi be required when the systems interface eectronicay. This staged approach to roing out new IT was adopted by the Department as a ow risk strategy, enabing aspects of the new IT system to be fuy tested before being roed out across the whoe system. It is panned that the fuy integrated process wi be roed out to the 63 Business Deivery Centres in five phases between Apri and September To date the project has cost 219 miion and projected spend to competion is expected to be just under the budgeted 295 miion. The project is on time despite being chaenging and has been over a reativey short time scae of around two and a haf years. The egisation covering the aowance was not finaised unti the Summer of 2008.

18 16 Part Two Department for Work and Pensions: Information Technoogy Programmes 2.5 As the project ony went ive at the end of October and the fu process for deaing with an appication for Empoyment and Support Aowance payments takes around 13 weeks, it is too eary to come to any definitive view about its success but it has been impemented on time. It wi take time, however, to be fuy impemented as with any change of this scae. 2.6 Project management of the programme incuded: Operationa engagement: The project was conceived as a business change programme with enabing IT rather than an IT project driving business change. The programme s Senior Responsibe Owner was Lesey Strathie (at that time the Chief Executive of Jobcentre Pus) and key posts in the project were hed by experienced staff from the business. Other peope and groups with business and operationa experience were invoved at every stage of the project incuding the design phase. The Department consider that this ed to there being a strong business focus, ensuring that poicy design decisions were practica and operationa and in ine with operationa considerations such as benefits simpification. Simiary, the Department consider that the potentia use of IT was informed by business, poicy and operationa issues. Effective governance arrangements: The project s governance arrangements incuded: individuas on boards such as the Programme Board having specific Terms of Reference setting out their own roe and accountabiities. Participants were experienced and with sufficient seniority to take action when required; key aspects of the project being ed by Departmenta staff rather than consutants; reguar management information to the various groups; a pan with specific miestones was deveoped; and active risk management with the emphasis on taking action to mitigate risks rather than just identifying and reporting them. Independent review and assurance: The programme was subject to review by the Office of Government and Commerce Gateway team and by the Department s Risk Assurance Division. Further ad hoc assurance reviews were carried out by others incuding the Department s advisers, Cap Gemini. Coaborative commercia arrangements: The contract with the main suppiers was et through competition and cear deivery accountabiities were negotiated with contractors. The project adopted a coaborative partnering approach to working with the three main contractors which depended on a high eve of communication and participation in decision making and the buiding up of trust between the Department and the contractors.

19 Department for Work and Pensions: Information Technoogy Programmes Part Two 17 Re-using technoogy aready deveoped: The project reused existing IT concepts and systems wherever possibe, reducing the risk and cost of designing entirey new IT. This increases the degree to which systems are common with those used on other parts of the Department and its Agencies. The technoogy used in the Customer Account Management system was derived from that adopted for The Pensions Transformation Programme (paragraph 6.1). Communicating with staff and customer groups: The Department has communicated with staff and other stakehoders, such as heathcare practitioners, about the new Aowance and the appication and assessment process. This has incuded deveoping a communications pack for providers, Press and onine advertising, artices in magazines, and a range of customer information products that have been consumer tested. Adopting and earning essons: The Department has paced emphasis on earning essons from other programmes that have worked we such as the ro-out of Jobcentre Pus but aso from projects that have worked ess we. There is a poo of peope within the Department who have worked on change programmes and can bring essons earned to projects. In addition, the project has sought to capture essons earned from the Empoyment and Support Aowance programme itsef and proposes to compie a egacy handbook setting out approach and essons earned. Emphasis on earning and deveopment: The project has invoved the training of around 10,000 staff to operate the new arrangements and IT. A further 5,000 staff wi be trained in the next year. The training was schedued so that it coud be as cose to programme aunch as possibe to prevent earning decay but aso to fit in with business pressures such as peak times of work or hoiday periods. Much of the training was carried out face to face by experienced in house staff rather than, for exampe, by e-earning, as this was preferred by many staff and was considered by the team to be more effective. 2.7 As the programme advances into the impementation phases the project team remains in pace and continues to operate in the same way monitoring risks and taking action where appropriate.

20 18 Part Three Department for Work and Pensions: Information Technoogy Programmes Part Three Impementation of the Chid Support Agency Operationa Improvement Pan 3.1 The Chid Support Agency s three year Operationa Improvement Pan was announced in February 2006 and was designed to improve the Agency s performance in parae with Sir David Henshaw s review of the chid maintenance system. This review eventuay ed to the Chid Maintenance and Other Payments Act 2008, estabishing the Chid Maintenance and Enforcement Commission which took responsibiity for the Chid Support Agency s functions, peope and assets from 1 November Athough responsibiity for the Chid Support Agency has now passed to the new Chid Maintenance and Enforcement Commission, the Operationa Improvement Pan continues to focus on improving the operationa capacity of the Agency and its deivery to cients, providing a patform from which to impement the reforms set out in the Chid Maintenance and Other Payments Act Impementation of the Operationa Improvement Pan incudes funding for further improvements to the Agency s business, not just the IT system. The budget for the pan was 321 miion to be spent over three years, of which 120 miion is additiona finances with the remainder being made up from existing agreed Chid Support Agency budgets and money recovered from contractors foowing a engthy commercia dispute. The Operationa Improvement Pan is now in its fina year. 3.4 The Operationa Improvement Pan initiay focused on improving cient service, buiding capacity and capabiity within the organisation, and in the fina year focusing on improving IT effectiveness and on compiance and enforcement. A key component of the Operationa Improvement Pan has been the restructuring of the business and its operations. During 2007, Chid Support Agency staff were reorganised into new workgroups, to create teams and skis aigned with the customer ife cyce. 3.5 Enhanced IT is a key enaber of the business outcomes required by the Agency. The Operationa Improvement Pan aims to rationaise and enhance the existing IT system rather than deveop a new system. As we as contributing to the achievement of business targets, improvements in the existing IT systems shoud aso estabish a stabe patform to support the effective impementation of the new Chid Maintenance and Enforcement Commission. The IT reeases aim to enabe improvements in: case and cash compiance; debt management;

21 Department for Work and Pensions: Information Technoogy Programmes Part Three 19 business productivity and backog reduction; accuracy; and customer service. 3.6 The cost of the IT eement of the project was originay estimated at 110 miion with current spend of 98 miion up to and incuding the atest system reease in September The Department estimates that the tota IT spend wi be 108 miion up to the end of the Operationa Improvement Pan, in Apri System deveopment and reease 3.7 The Chid Support Agency core IT system, known as CS2, was deveoped by EDS to support the 2003 reforms. About two thirds of the tota caseoad is now managed using the CS2 system, whie a third of cases remain on the origina chid support computer system and the two systems continue to run aongside each other. EDS continues to be the main suppier of the IT soution within the Operationa Improvement Pan. BT is aso a key strategic suppier and has been working with EDS and the Agency to introduce changes to the teephony and infrastructure required to support both the IT deveopments and the business reorganisation. 3.8 The Operationa Improvement Pan committed to improving the IT systems before the end of March The technica soution was aimed at rationaising the existing system to provide a greaty enhanced capabiity. The IT soution that was required to address these objectives was to be deivered in phases. 3.9 Productivity Reease 1, one of the first and the most significant of the IT reeases, was designed to enhance and provide support for the organisationa changes impemented as part of the overa Operationa Improvement Pan, ensuring that cases and cas are routed to the correct teams; providing a structure based on cases rather than tasks; vaidating the integrity of a case, identifying those that need a eve of correction, and either ensuring that they are corrected or removing them into a speciaist area for processing Productivity Reease 1 was reeased in September 2008, once the Agency was satisfied that the go-ive criteria had been met. The Agency s eary thinking was that the IT coud possiby be in pace by Juy 2007, which was ater revised to March 2008 once it had estabished the compexity of what was required, so it was some six months ater than expected. The Agency, taking into account the compexity of Productivity Reease 1, adopted a significanty extended, muti-stage testing approach than had been originay panned for. This incuded five dress rehearsas to practice the activities and processes using the system. Testing aso incuded a three week period of ive ike testing using ive data, where users progressed cases on the test system as if it were ive to identify issues and supporting processes. This enhanced testing approach provided additiona assurance that the panned upgrade was fit for purpose.

22 20 Part Three Department for Work and Pensions: Information Technoogy Programmes 3.11 Foowing testing, there were no known defects prior to reeasing Productivity Reease 1 in September 2008, and it was introduced with both the computer system and teephony working as expected. Project status 3.12 The overa Operationa Improvement Pan is driven by a number of key performance targets, the majority of which are reported to have been aready met (Figure 6) The reease of Productivity Reease 1 in September 2008 is expected to contribute further to the achievement of these performance targets. In addition to the expected deivery of an additiona 12 minutes of caseworker productive time per day, it shoud aso provide the IT toos needed to support the new ways of working the Agency aready has in pace. The reease supports an increase in caseworker productivity, improves cient service by routing cas direct to the caseworker teams that are responsibe for the cient case and aows the Agency to focus on meeting March 2009 commitments to provide a stabe patform for the Chid Maintenance and Enforcement Commission to buid upon The Chid Maintenance and Enforcement Commission has now issued an invitation to tender for an IT system to support its work from It is anticipated that the CS2 system and the system that it was repacing, Chid Support Computer System, wi remain unti a decision has been made regarding the transfer or migration of cases to the Chid Maintenance and Enforcement Commission. Figure 6 Chid Support Agency performance Measure March 2005 Actua Appication Processing March 2008 Target Actua March 2009 Target Performance at September weeks 30 per cent 65 per cent 77 per cent 80 per cent 85 per cent 18 weeks 36 per cent 80 per cent 83 per cent 85 per cent 90 per cent Unceared new appications Teephony 225, , ,000 90,000 76,000 Average answer time 100 seconds 30 seconds 20 seconds Less than 30 seconds Number of chidren benefiting Cases in receipt of maintenance Maintenance coected/ arranged (year to date) Arrears coected (year to date) 18 seconds 542, , , , , , , , , miion 970 miion 1,010 miion 1,080 miion 1,088 miion 68 miion 120 miion 126 miion 220 miion 149 miion Source: Chid Support Agency (un-audited figures)

23 Department for Work and Pensions: Information Technoogy Programmes Part Four 21 Part Four Deveopment of the Customer Information System 4.1 The Department s Customer Information System project was initiated in Juy 2003 to deveop a singe database of customer information by September 2007, as a repacement for two existing egacy systems: the Departmenta Centra Index, which hods around 90 miion records; and the Persona Detais Computer System, which contains around 37 miion records. 4.2 The Customer Information System project is entirey IT focussed and sits within The Pensions, Disabiity and Carers Service. By providing a singe accessibe database, it wi have wide appication across the Department, centra and oca government. It wi be instrumenta in transforming many business processes where customer information is essentia. For exampe, both the Pensions Transformation Programme and the Empoyment and Support Aowance programmes draw information from the Customer Information System. 4.3 The key objectives of the programme were to: improve vaue for money by sharing information more efficienty; contribute to improved customer satisfaction through asking for information just once; reduce fraud and overpayments through having more consistent and accessibe information on customers; and provide a singe and compete view of a customer and the information avaiabe around 24 hours a day. 4.4 The Department estimates that the net investment costs in the Customer Information System wi be 88 miion, against its origina panned net investment of 40 miion. Costs are higher than estimated because of the significant increase in scope to meet growing Departmenta and interdepartmenta demands for access to the database, and the need to service mutipe Customer Account Management systems. The system aso unexpectedy had to interface with a variety of compex egacy systems that had been expected to have been superseded prior to the Customer Information System being reeased. The onger, phased approach of the project refects this.

24 22 Part Four Department for Work and Pensions: Information Technoogy Programmes 4.5 The Department expects reaised benefits of 39 miion foowing the decommissioning of the two information egacy systems. Other economic benefits for the Department and other users wi fow from the access to the singe database, for exampe Her Majesty s Court Service wi have an improved means of recovering outstanding fines and Loca Authorities wi abe to reduce overpayments because of better access to up to date customer information. System deveopment and reease 4.6 The Department contracted with Accenture to undertake the design, deveopment and impementation of the system. The impementation of the system incuded the data upoad from existing systems as we as the management and co-ordination of changes to existing departmenta egacy systems and integration of components deveoped by other suppiers, for exampe EDS and BT. 4.7 The Department s contractua arrangements with Accenture aimed to encourage cose working with other suppiers where necessary through agreement that neither party woud seek remedies from the other for deays in deivery within sensibe toerances. 4.8 An incrementa reease strategy of the Customer Information System was adopted by the Department and set out its origina panning documents when these reeases were expected. There have been five main reeases to date (Figure 7). Figure 7 Customer Information System IT reeases Reease 1: Deivered in March 2005 (expected October 2004) Reease 2a: Deivered in Juy 2005 (expected May 2005) Reease 2b: Deivered in February 2006 (expected September 2005) Reease 2c: Deivered in March 2007 (expected March 2006) Reease 3: Deivered in March 2008 (expected September 2007) Provided: a singe accurate view of the customer; a tracing function; and access to a imited set of benefit award data. Provided: partia access to information for 408 Loca Authorities and Her Majesty s Court Service. Provided: preparation for the decommissioning of existing systems; functionaity for Department for Work and Pensions Debt Management; enhanced tracing; and address vaidation. Provided: partia access to information for Her Majesty s Revenue & Customs; Nationa Insurance and Chid Reference Number aocation; and information on Independent Living Fund, Student Loans, Death Registers and Winter Fue Take up. Persona Detais Computer System decommissioned. Source: Department for Work and Pensions

25 Department for Work and Pensions: Information Technoogy Programmes Part Four A further reease is being panned but this sits outside of the origina scope of the Customer Information System project. The aim of any future reease woud be to provide greater access to the system to a arger number of other Government Departments, for exampe the Driver and Vehice Licensing Agency. If accompished, this woud make the Customer Information System a shared service across Government rather than a Department for Work and Pensions system. The panning and resources for this additiona reease is under a separate project Going forward with the Customer Information System consideration is being given to the ownership of this shared service, the costs of running it across mutipe Departments and how to manage the information as departments need to update information. Currenty data is drawn reguary from Her Majesty s Revenue & Customs systems to popuate the system, but this is to suppement data rather than to repace the information that the Department for Work and Pensions hods. Project Status 4.11 The Customer Information System is now in use and is referred to as in a steady state. It is now being operated by EDS as part of existing contractua arrangements. There are currenty some 200,000 users, with those outside of the Department for Work and Pensions having partia access to the system. Both the Departmenta Centra Index and the Persona Detais Computer System have now been decommissioned having been graduay phased out in order to protect the business from faiure. The Department does not beieve that staff are fuy utiising the system yet, athough now that the egacy information systems have been decommissioned it is hoped this wi improve The fu reease of the Customer Information System was 13 months ater than originay panned, going fuy ive in October 2008 rather than September 2007, because of the major extension of the project s scope The Customer Information System has not yet received fu data security accreditation under the new Cabinet Office rues for persona data. Work is underway to reach the necessary eve.

26 24 Part Five Department for Work and Pensions: Information Technoogy Programmes Part Five Introduction of a Centra Payment System 5.1 The Centra Payment System project was estabished in Apri 2003 as part of the Payment Modernisation Programme. It was initiated to provide a quaity, vaue for money, integrated package of financia services, which provides payments to customers that are secure, accurate and timey. In Apri 2004, the Centra Payment System project estabished itsef as a separate project to the Payment Modernisation Programme. 5.2 The key objectives of the Centra Payment System are to provide the Department with an IT payment system that wi: receive information from its benefit systems; issue payments to customers in their preferred payment methods; and provide standard accounting, contro and reconciiation functions for those payments. 5.3 It is expected that the Centra Payment System wi transform the way that 123 biion worth of benefit payments are paid to customers. The Centra Payment System is viewed within the Department as a critica component of the IT infrastructure that is expected to act as an enaber for much of what the Department is seeking to achieve through its IT modernisation programme. In particuar it wi enabe the Department to: pay benefits and aowances to a customers and some third parties; offer fexibiity to support future method of payment faciities to support its customer base, for exampe fast eectronic payments; and provide fu accounting information regarding payments, at transaction component eve to ensure appropriate financia management and accounting of Annua Managed Expenditure. 5.4 The estimated expenditure on the introduction of the Centra Payment System is 178 miion against panned expenditure of 90 miion. The scope of the origina project was significanty smaer than the current panned system. The origina scope was for the repacement of existing payment processing software and excuded an integrated accounting soution. Furthermore, the integration scope of the system increased from four egacy systems to nine. The Department s current work towards a Centra Payment System is the third attempt at centraising benefit payments.

27 Department for Work and Pensions: Information Technoogy Programmes Part Five 25 System deveopment and reease 5.5 In March 2006 the Department contracted Siemens to work with them to design, buid and impement a Centra Payment System using a Commercia-Off-The-Shef system as its base. This decision was based on the Departments assessment of the proposas across a range of criteria, incuding cost, and was on baance the most competitive proposa. In addition it was fet that the proposa met the Department s deivery and performance needs not withstanding Siemens imited experience in deivering the type of IT soution being asked for by the Department. The contract with Siemens was due to run unti In March 2008, however, with Siemens having competed the proof of concept in 2007, the remaining design and buid eements of the IT system, that had originay been contracted for, were brought back in-house. Steps to terminate its agreement with Siemens were taken by the Department on the basis that a miestone date had passed without the miestone deiverabe being achieved. Foowing negotiations between the Department and Siemens, a variation to the contract was agreed, giving the Department access to expertise within Siemens but bringing the project back in-house. 5.6 The competed proof of concept work provided the Department with assurance that the system was abe to dea with the voume of benefit payments it needed to process. The system was tested with 30 miion payments in an overnight run, a far greater number than those with which the Department expects the system to have to dea. Project Status 5.7 The high eve design of the system is now being undertaken by Departmenta staff supported by consutants and contractors where necessary. EDS, under the Department s ongstanding contract, are expected to support programme deveopment and deivery. The Department aso has resources provided by Siemens as part a variation in the agreement with Siemens which was agreed in August 2008 when the Department s termination was withdrawn. 5.8 The deveopment of the Centra Payment System is sti in the design stage. The resoution of changing suppiers unexpectedy has been muti-faceted and the project has had to deveop an aternative suppy strategy supported by an adjusted project pan and roes and responsibiities. Project deivery is underpinned by the need to engage speciaist Departmenta support to assure deivery of the IT product. 5.9 The deveopment of the system is now an estimated six months behind; however, continuing with its origina suppier the Department estimated that deivery woud have been some 18 months ater than expected.