A Stupid Sourcing mention on the BBC!

Thanks to Dave Orr who took time off from his diligent pursuit of the truth behind the SouthWest One outsourcing contract to point me towards an interview with Andy Green, the CEO of L0gica, the IT firm, on BBC radio. Here’s the quote, as reported by Tony Collins in Computerworld.

“Evan Davis and three business leaders have discussed on BBC R4′s The Bottom Line the failure of IT-related projects, particularly the NHS IT scheme NPfIT. The BBC programme was entitled “Cock-ups and Conspiracies” and had as one of the guests Andy Green, Chief Executive of Logica. He said of the NPfIT:
“It is a stupid thing for the supply chain to have answered, and it’s a stupid thing for the customer to have asked for.”

Green, who joined Logica as CEO in January 2008, said he was in one of the bidders for the NPfIT when he was at BT.”

Do we think he’s read about our launch of Stupid Sourcing? I do hope so – I’ll send him the link anyway. And of course there was so much to admire in the NHS IT programme from a Stupid Sourcing perspective. The lack of stakeholder buy-in, moving the goalposts half way through by creating self-standing Foundation trusts, suppliers committing to stuff they didn’t actually know how to build.. all Stupid Sourcing classics.

Going back to the Surrey and West Midlands Police outsourcing, our first example of Stupid Sourcing, the aspect of a single supplier delivering a very wide range of disparate services really doesn’t have a good track record. I was involved some years back with a government agency that for various reasons had got themselves into a single outsourcing contract that covered all construction and facilities management services, IT, various other back office stuff, travel management, etc.

It was a disaster. The firm who won it were basically a construction firm with a bit of FM capability. So they outsourced IT to a speciality firm, who then of course had an incentive to undermine the Prime contractor. Their aim was to get the client to let the IT contract separately when the main contract came to an end – and sure enough that happened.

In the meantime, the fighting between prime contractor and sub-contractors affected the service the client received. And over time, the original supplier lost more and more of the work, performance declined, and they lost income, profits and probably interest over time.

There is no single firm who can do everything Surrey and West Midlands want, so we’re into consortia, Prime and sub-contractor arrangement or similar. Again, formal consortia have a poor track record – the London Tube maintenance contracts being perhaps the best / worst example.

I knew someone on the inside of one of those consortiums, and the internal arguments between the consortium members over who would carry out which elements of the work, cross-charging and profit sharing way over-shadowed the customer facing requirement and priorities.

That’s what I fear Surrey and West Midlands will face if and when they get into a contract with some ugly consortium or “prime contractor with named sub-contractors”. I honestly can’t think of a single case where this sort of arrangement has worked well, and to have any chance, it would need very skilled financial, contract and operational management of the supplier(s).

So do these Forces have that capability? Do they have the expertise to baseline the current performance levels and measure the supplier? Do they understand how to ensure service levels and performance indicators can be used?

Well, we’ll try and ask them those questions. But until we find evidence to the contrary, yes, this really does look like Stupid Sourcing!

 

Comments

  • David Orr:

    It is only “stupid sourcing” if the motivation is honourable and about saving money.

    If the motivation from the people in charge of letting the contract is about self and ambition (that is unbounded by what is best for the public body) and that meets up with unscrupulous & commission/bonus-driven private contractors, then in personal/career and short term profit terms it is far from “stupid”.

    By the time it all goes well & truly pear shaped, most of the contract “architects” are long gone or paid off for failure.

    Can the PM and the country join the dots up though….?

    “Our railways are crowded and expensive,” Mr Cameron said. “Compared to the French, Dutch and Swiss railways our fares are 30 per cent higher, our running costs 40 per cent higher and our public subsidy is double.

    “You have to admit, it’s something of a miracle to achieve high fares, big subsidies and poor performance – all at the same time.”

    His PM’ly conclusion: Let’s have a giant PFI scheme for new roads and unbelievably compare it to the water industry, who after 20 years have the same leakage wasted water rate as on privatisation (at 4% infrastructure replacement per year, it should all be almost totally new by now)!

    State owned utility companies from France & Germany fill their utility boots here in the UK because there are higher profits and less regulation. End of.

    I recently got asked (by a journo) for examples of successful large outsources in any sector and I couldn’t think of any.

    Regular bloggers: Please feel free to provide examples……

    • Huhh?:

      It would be great to hear from the rather aggressive chap from IBM who periodically puts a torpedo into outsourcing bashing folk…

Join the Conversation

* Required fields  [email address will not be published]

*