The Challenge of Digital Landfill
A decade into a new millennium, much of our IT infrastructure is fit for digital landfill – and we are continuing to pour money into it at an alarming rate.
The current approach to IT is to custom-build systems and incrementally change them as required. As the degree of change increases over time, so does the complexity of the system – driving up the cost of change exponentially. Eventually a point is reached where starting afresh is cheaper than changing the existing system and the cycle begins again.
The existing system is confined to a digital landfill, in some cases just months after deployment. Unless there is a significant re-evaluation of our approach to IT and innovation, we will continue to follow this evolutionary blind alley and risk economic competitiveness and public service delivery.
According to Oracle, “the average company spends from 60 to 85 percent of its IT budget maintaining legacy applications that fail to meet the changing competitive needs of the business.” While the systems continue to work, they haemorrhage money at a huge rate – and the risks and impacts of failure are enormous.
As the volume of services delivered through online channels increases, the reliance on IT infrastructure becomes more critical. When the technology fails, the public feels the pain, businesses lose customers and Governments lose legitimacy.
Government IT – underskilled and over-complex
There is no definite figure for how much Government spends on IT. The Operational Efficiency Programme estimated spending between £16bn and £20bn, while other estimates put the figure several billions lower – and higher.
Quite how Government can begin to consider cost savings or new ways of delivering services when it is working with a multi-billion pound margin of error is beyond this humble CEO, but clearly something has to change.
Much of this money is being spent simply to keep the lights on – and being paid to a small group of incumbent suppliers who are making sizeable profits in the process. Many large corporations face the same problem: they are beholden to support costs to keep business-critical systems working, while running the risk that if a system fails they have no means of quickly replacing it.
In Government, large IT-enabled programmes have too often gone wrong because experienced people who understand both the applications and the technology have been lost, with the domain knowledge of entire systems handed over to outsourcers or lost through retirement.
The drivers that have led to this crisis – a desire for small, year-on-year cost savings and doing more for less – are fundamentally wrong and not only will they cost taxpayers more in the long term, but they risk having a chilling effect on Government’s ability to scope, deliver and run IT projects.
These drivers have led to a tendency to use quick and dirty fixes, while designing systems which lack agility, that has resulted in the sprawling, Heath-Robinson-like fragile and insecure edifices which best embody many Government IT systems. Any change magnifies the existing complexity, and ultimately the system ceases to be fit for purpose, destined for the digital landfill.
Part of the thinking behind these drivers – and the culture that underpins them – is that Government is uniquely complex, with a vast customer base, facing insurmountable obstacles to service delivery that the private sector cannot comprehend.
Yet in a climate where data accuracy and security is of paramount importance, and the barriers faced by commercial competitors are ever lowering, arguably the private sector has a far tougher time than Government.
Furthermore, the Government seems far more predisposed to a view of the world which precludes the possibility of change – while every business lives with the knowledge that one significant change in its market could make the difference between vast expansion or bankruptcy.
So what is the fundamental difference? Recognising change is inevitable and innovating to find new and improved ways of delivery.
Removing the Digital Landfill
Current approaches to resolving digital landfill creation are embedded in yesterday’s thinking, are often half-baked, and only scratch the surface. They tinker with the status quo, looking for incremental top-down cuts in costs and not fundamental change. There is still a focus on saving costs by cutting skilled IT staff (as suggested recently by London Mayor Boris Johnson) but this only reinforces the vicious circle.
With government systems especially, but also with commercial systems, the accretion of legacy systems can only be addressed through bold, lateral and step-change approaches.
- Firstly, there needs to be a fundamental bottom up review of what is actually needed in delivery – at the “who gets what payment when and how” level.
- Next, the business process requires radical simplification and step change savings of the order of 50%+ (rather than 10-30%) demanded.
- The third stage is to find innovative new ways to achieve these new radical goals.
Setting the drivers for step-change innovation
Step change innovation will only be actively sought when either strategic or real pressure demands it. To achieve the end goal of transforming the status quo, the process and drivers must first be focused on looking beyond the boundaries of current norms. Once the boundaries of discussion are broadened, step-change innovations can be sought out – and once they are found, the processes must be in place to adopt them and overcome the inevitable vested interests and risk-adverse mindsets that are commonplace in business and government.
Where can these ideas be found? Innovation comes from the smaller enterprises and rarely from the larger incumbents. There is no incentive for incumbents to adopt real innovation. If an IT-enabled operation costs £2bn a year to maintain and one asks the incumbent supplier to make 50% saving they will not. They have £1bn to lose and will do whatever they can to not lose that. However, a non-incumbent has £1bn to gain and will do whatever they can to find a way of achieving that gain. Necessity does breed invention.
Equally, procurement is too often framed in terms of the current landscape rather than seeking out these innovations while due diligence barriers limit access to the wider pool of innovative suppliers.
The UK has bright, lateral and resourceful innovators who are currently squeezed out by incumbent prime contractor suppliers. There is a need to seek out this insight, the lateral thinking around alternative approaches, as these are the types of innovation that can transform services and significantly cut costs – the step change visions.
Government and industry need to fundamentally rethink procurement practices, reward innovators internally and engage much more actively with the smaller enterprise community to drive real innovation forward.
Paving the way for Innovation
It has been said in many forms that humans are motivated by two things – fear or greed.
With this in mind, we cannot hope that squeezed budgets will be enough to deliver radical thinking or significant innovations. Indeed, despite the recessionary pressure on IT departments across the world we have seen little by way of innovation. In search of relatively modest savings, inevitably supply chains have been squeezed, ongoing projects have been reduced in scope and some have been cancelled altogether.
As IT has become a significant boardroom and Government issue, innovation has been a victim of the influence of two risk adverse cultures. Firstly, those with managerial responsibility for IT and their boards who are mutually-culpable in allowing risk aversion to drive decision making and strategy; and secondly, incumbent suppliers who have little incentive for innovative implementations. The result is a poor structure in practice for introducing innovation.
Ultimately, the profitability of the status quo – a problem worsened by the emergence of a few dominant suppliers, particularly in the UK – has all but shut-down supplier side innovation. The drivers from purchasers, particularly government, have focussed on keeping the lights on and incremental savings. Few have been bold enough to lay their career on the line to champion innovation against the vested interest and risk aversion they face at every turn.
Avoiding the Digital Landfill
Changing systems and applications should be easy, low-cost and low-risk. That requires a change in not just how we approach legacy systems, but how we develop new ones.
IT is heading down an evolutionary blind alley. While coding languages or development processes may come and go, the fundamental approach to system development needs to change. Without this fundamental change and designing systems which can evolve, we will continue to build systems that in a few expensive years will only be fit for the digital landfill.
For both government and industry, there is a clear warning to be heard – if the status quo continues the UK risks sacrificing international economic competitiveness, public service delivery and tens of billions of pounds – all to a ‘digital landfill.’ The IT industry is currently straight jacketed by vested interest masquerading as best practice. This cannot continue.
The underlying premise of IT should be to make change a fluid, low-risk and low-cost process. A system which can be evolved at low-risk and low-cost will not end up in the digital landfill – while those which are brittle and difficult to change will.
These systems should join those already confined to the digital landfill – and we should look with determination to the alternative means of delivering in a different way using innovative ideas, technologies and processes.
Martin Rice, CEO, Erudine
(ITadviser, Issue 60, Winter 2009)