HMRC’s Aspire IT outsourcing contract with Capgemini is beginning to deliver savings to HMRC and is likely to generate another £1.2bn in savings by 2017, a senior official claimed this week.
HMRC deputy chief information officer Mark Hall revealed the background economics of the 10 year Aspire contract at the Government ICT 2011 conference in London on Tuesday.
Many people didn’t understand what was happening within HMRC and the role IT was playing in transforming its strategy and reducing the UK budget deficit through more effective revenue collection, Hall told the audience.
“Our IT interacts with everyone in the UK and is critical part of the UK economy. Our online services have grown. On filing day we have been third busiest web site in the world. A lot of people will file over the last week. Across the whole of HMRC, we process over one billion transactions.”
The main plank of HMRC’s information and communications technology (ICT) was the Aspire deal, one of the biggest in the public sector, which accounts for 99% of HMRC’s IT spend. Capgemini is the prime contractor within an “ecosystem” that includes 240 suppliers, Hall said.
The rolling, 10-year IT outsourcing contract has been a source of controversy since HMRC removed the previous contractor EDS and selected the Aspire consortium. The original costs swelled over the original budget to more than £10bn, but have now been reined in, according to Hall.
“The contract was let in 2004 and renegotiated in 2006, 2008 and 2009. We significantly reduced the cost through the last contract negotiations. We've seen £152m of savings to date with a further £1.2bn intended through 2017.”
In spite of grumbles from the tax profession in previous years, Hall said HMRC has “the best levels” of service availability still. “Over the past three years we've seen a 70% improvement in terms of the number of hours lost through IT failure,” he said.
The current managerial buzz within HMRC is a new “customer-centric” strategy that will help it meed the government’s demands to reduce its cost base and reduce the deficit over the next four years. At another public sector IT conference in October, Jane Front of HMRC’s individual customer directorate explained how segmenting customers had improved customer service standards.
Customer-centric strategies are nothing new to the private sector, but are still novel in the public sector, Hall said. Segmenting the HMRC customer base and formulating different responses and strategies for different groups and circumstances was helping him to achieve the spending review target to reduce IT costs by 25%.
Money the IT team saved from cost reductions could be reinvested internally, which allowed it to replace 25,000 PCs without having to seek additional investment.
It's a time of great change, Hall concluded. “The reduced budget is a driver for efficiency, not a blocker. We need to do things differently.”