Our patient is on the mend, but still needs to kick some bad habits. That's the rough verdict of an investigation published last week into measures aimed at stopping government IT projects going awry. It finds several "near misses" where new procedures identified flaws in government IT schemes and put them back on track.
The report will come as a relief to a government that is at a critical stage in several multibillion-pound IT contracts and about to sign at least one more.
In the report, the National Audit Office (NAO), parliament's investigative watchdog, says the Treasury's Office of Government Commerce has made significant strides in identifying why projects go wrong. However "these remain early days," said Sir John Bourn, the NAO's head, warning against complacency.
The tendency of big IT projects to go wrong is hugely embarrassing to ministers. Almost every initiative on which Tony Blair's government is staking its reputation - from fighting terrorism to creating choice in the NHS to cutting civil service numbers - depends on large IT systems working properly.
Huge sums of money are involved. The NAO reveals that central government departments spent £2.3bn on IT last year. That amounted to 16% of their total shopping bill, coming second only to accommodation costs. It is twice as much as government spends on roads. When local councils, the NHS and the armed forces are included, the total rises three-fold. IDC, a market research firm, says the British public sector spends about $10.1bn (£7.8bn) a year on IT, more than every other European country save France ($10.5bn).
After a series of high-profile fiascos in the 1990s, the government and IT industry put in place new measures to prevent further failures.
According to the NAO, the most effective is a review process called Gateway. This involves independent scrutineers examining every high-risk project at six critical stages in planning, procurement and implementation.
Gateway reviews classify projects as red, amber or green. A red rating requires the project team to take action immediately, amber means it can go forward provided recommendations are acted on before the next review, while green means the project is on target apart from minor matters.
Projects classified as "mission critical" to some aspect of government policy receive similar ratings, which are reported to the prime minister every four months.
Normally, results of Gateway reviews are secret. However, the report sheds light on the process by investigating how it worked in major projects run by the Department for Work and Pensions, the Home Office and the Driver and Vehicle Licensing Agency (DVLA).
The most dramatic turnaround was at a DVLA project, labelled Pact (Partners achieving change together). The idea was to set up a contract under which the agency would work with an IT outsourcing firm to create new services, such as online payments for car tax, while saving money.
A Gateway review in June 2001 concluded that the project was in a precarious position, with a large amount of work to be done before suppliers could be invited to bid.
While the shock "focused the attention of the board, advisers and prospective suppliers", the next Gateway 10 months later still produced a red light. Reviewers found that "continuing value for money had not been secured due to a lack of transparency of the commercial arrangements" - in other words, the agency would not know how much money the supplier would be making.
In response, the agency negotiated an "open book" deal with suppliers IBM and Fujitsu and a contract worth £550m was let in September 2002. The NAO reports the project is now going well, with electronic vehicle re-licensing launched in February this year. (It overlooks the fact that the DVLA has yet to publicise the service, available to cognoscenti at www.vehiclelicence.gov.uk.)
Two of the projects studied by the NAO originated in high-profile government IT failures: the Casework immigration system and the Benefits Payment Card. Both failed for well-understood reasons, the NAO says. Casework was "a classic example of a 'big bang' implementation which is now prohibited", while the Benefits Payment Card "lacked ... ministerial ownership and leadership". Thanks to Gateway, the NAO says, successor programmes are on track.
Computer suppliers welcomed the NAO's report. "Britain will only have public services based on value for money, efficiency and effectiveness when government and industry have successfully cultivated a modern relationship based on openness and trust," said Nick Kalisperas, director of public sector at Intellect, an industry body.
However, the NAO warns that public bodies still need to ensure Gateway processes are "ingrained in departmental thinking". It recommends that findings of reviews are disseminated more widely - but stops short of recommending their publication.
· Improving IT procurement, National Audit Office www.nao.org.uk
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