HMRC slashes IT budget in half in two years making an enviable target for every business

Bt Martin Banks

The recent Guardian Government Computing conference featured an eye-opening presentation from Phil Pavitt, the CIO and Director in Charge of HMRC, the UK Government’s primary source of revenue. A report from the conference sets out how Pavitt and his team has cut the department’s IT budget in half in just two years. And this does mean big numbers, down from £1.4bn to £700m.

Given HMRC’s exceedingly well-reported track record with over-budget, under-performing IT projects over the years, this does seem to be a startling achievement. What is more it begs the question that if HMRC can achieve such a dramatic result in an area that, by definition, is mission critical to Government finance, what does it presage for the future of mission critical applications in the private sector?

One issue that it does identify is that the age of applications proliferation – where businesses end up with half a dozen or more different applications doing the same job because different departments or divisions have selected their own solutions – is fast coming to an end. Yes, some of this proliferation has been inevitable through the acquisition of other businesses, but the results at HMRC demonstrate what can be achieved by cutting their lifecycle short as soon as possible.

One example Pavitt quotes is the Department’s use of CRM applications which, given the fact all businesses and working individuals are their customers, can be classed as mission critical to the Department’s effectiveness. But CRM is probably the poster child of applications proliferation and HMRC was no exception. Two years ago it was using 31 different CRM applications, which seems an exceptional `achievement’ even in the CRM sector. Today there is just one CRM system.

The Guardian story also highlights a commercial arrangement where one supplier performs first the migration from old applications, then the upgrade to the latest versions across the Department. It quotes Pavitt as saying: “The cost of the new platform is much cheaper than the running and the maintenance of the old platform. Freeing up and reinvesting that money means we’ll replace every single application – two-thirds of our infrastructure – in the next four years for the outlay of less than £20m, when the original bill was closer to £200m.”

His next target is the existing call centre systems, which he indicated suffer unplanned downtime for two or more hours a week. In a service where the demand is always high, and the users’ state of mind normally bordering at least on `anxious’, that introduces what Pavitt understatedly terms `a level of inefficiency’. His target is to get this service as close to 100% as possible.

The process of stripping back on the proliferation of different important applications running the same tasks is likely to become endemic across IT departments over the next few years, and even the most critical of mission critical applications are unlikely to be excluded from at least the potential of being culled.

Cloud-based services are only going to accelerate this trend, as it offers the fastest and lowest cost method for delivering such change. This then begs another question for IT departments across the board: have you yet started to ear-mark the applications that can be culled as soon as possible from your infrastructure, and have you yet started to plan the shortened lifecycles necessary for many of the rest?

The dramatic savings achieved by HMRC show that putting off this inevitable without very good cause will no longer win any popularity polls.

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