UK: Policy to Programme: Avoiding Risk in the Public Sector

As part of its agenda to modernise public services UK Government is proposing some very large IT-enabled change programmes. In his first of a series of white papers John Newton looks at the policy issues behind this and considers commercial techniques that could add value in helping Governments manage top-level policy risks.

The UK Government won the 2001 general election on a platform for modernisation of public services – health, schools, transport, welfare etc. The policy implied major investment in business transformation, the creation of new delivery structures and radical changes to the delivery mechanism – all underpinned by technology. Shortly after the election huge expenditures on IT related programmes were announced, for example:

• Over €8bn^* for "e-transformation" of Government services between 2003-2006
• €3.5bn+ for massive IT updates in the National Health Service
• Nearly €1.5bn for IT in the Criminal Justice Sector

Specific programmes include:

• ASPIRE - a programme to transform the Inland Revenue (taxation) service
• Health Local Service Provision – aiming to sign up five IT services groups to supply services to NHS on a region by region basis
• Defence Information Infrastructure (DII) - the Ministry of Defence (MoD) programme to acquire new infrastructure and systems integration services.

Major policies still in discussion, such as an identity card scheme, will drive significant additional investment.

Having made its policy Government is now translating it into action – therefore its political future, at least in part, rests on delivering a portfolio of business and IT programmes to modernise public services.

As Peter Gershon points out in the referenced quote, will all this money really generate more effective and efficient services? Given the pubic sector’s poor reputation for delivery of business change and related IT projects should not Government be looking at using commercial techniques to help achieve success?

In this paper we consider the strategic emphasis of turning policy in to action and at techniques which can:

• Improve decision making
• Reduce the risk of failure
• Improve effectiveness in delivery

All of which, if successful, will improve both Government’s execution of policy and its image.

Portfolio Management is a current "hot topic" for consultants and analysts which, in the private sector¹ and in US government, is offering the potential for real rewards. Essentially Portfolio Management is about evaluating possible investments that can be made by an organisation and selecting those that offer the greatest return. In its current guise it is geared towards the commercial world.

In this paper we make the case that Portfolio Management can be adapted to help the public sector be better at both making and translating policy.

Making the transition from policy to delivery of services on the ground is a significant challenge. In Fujitsu we are developing models of processes in government. For example, Figure 1 below looks at the processes needed to take forward policy in a way that will achieve success in delivering IT based programmes. Consider:

Here we start in Make and follow the arrow round to take a view of how policy can come to be implemented, and how a political aspiration can translate itself to a measurable delivery outcome.

This is policy initiation and development – which may require legislation. There are many influences - an election promise, response to public opinion, looking for the next election victory and so on.

Policy may also be driven by external, but planned, events such as trade agreements and internal cooperation against crime as well as the unexpected – conflict, famine etc.

In the real world some policies never leave the Make box – public opposition or defeat in parliament offer two reasons.

Policies can also be scrapped in development if there are real difficulties foreseen in implementation – but in many cases it is later in the process that these, potentially costly, issues arise. Governments need to have more effective review processes between Make and Translate to offer the chance to change policy before going forward.

In most governments once a policy has been decided it will be passed to a department or agency for implementation. The department’s main task is to try to turn the policy into a deliverable framework which can be passed down from the top of the department into the core business for delivery.

The department should have in place a business strategy that is, or can be, aligned with and facilitate its policy implementation task. Unfortunately this is not always the case and translation of policy into delivery can go dreadfully wrong. For example a department’s strategy could be based on decentralisation and devolution – which will not suit a "command and control" target-led approach. There is controversy in the UK at present as to whether the Department of Health and the Health Service are caught in this trap.

Recognising the problem, some parts of government in UK and elsewhere are starting to use tools such as Portfolio Management but the move through Translate to Deliver can still be fraught with risk because the problem may have arisen from poor decision-making in the Make process.

Also programme delivery is often carried out by those who were responsible for the policy translation – which does not provide the best perspective for an impartial approach to issues and risks.

The activities in this box are crucial to the successful outcome of a policy. The way in which citizens view delivery has a lot in common with the way customer service operations are perceived by customers of private companies. As with the private sector these citizens often hold negative views about the public sector. Therefore a poorly perceived delivery process can damage well-planned policy.

For example recent legislation in Britain requires anyone working with children to have a criminal record check carried out. Unfortunately delivery has not been wholly successful and the checking service is finding difficulty in meeting demand. As a consequence the policy aims have been put at risk through poor delivery.

High profile failures can therefore be caused by poor policy, poor implementation or poor perception of delivery. So to avoid these failures governments need to understand what they should not attempt to do, where they need to take care in implementation and how the results will be perceived.

So we ask - "if Make and Translate were done better then possibly Delivery would have a better chance of success?"

In this box reside all the fundamentals of doing the business of government – people, premises, IT infrastructure etc., usually within a single government department. This paper doesn’t look at risks and issues in this area, but a future one will.

In the UK, and no doubt elsewhere, a number of high profile public sector projects have "failed". Failure can cover the range from complete abandonment to inability to deliver the benefits originally claimed.

Popular perception is that most of these failures occur within the "IT" components of the programme. It is always easy to blame "the computer" and subsequently the contractor.

However, it is not always the civil servants or their IT services partners that are to blame. Rather, are the right questions being asked early enough?

• Are policy objectives actually achievable?
• Can the processes be made to work?
• Can business requirements be met?
• Does the policy offer real value?
• Can we implement the IT components?
• Is there a way of catching "unimplementable" policies early enough so that changes in translation can be made before hitting the delivery stage?
• Is Government so consumed by the need for delivery that it’s not understanding policy and programme risks early enough?

Without budget or timescale pressures it might be possible to deploy enough resources to ensure that all these issues were tackled – but this is the real world. Government has to discover where the real opportunities, benefits and risks are to improve policymaking and delivery against the real constraints surrounding it.

First consider the issue of moving from Translate to Deliver – understanding the policy translation risk to help improve the chances of successful delivery.

A UK government body called Office of Government Commerce (OGC)² provides support services for oversight of programmes and projects of all kinds – not just IT. OGC calls the stages of its review process "Gateways". When the process was originally introduced it focused mostly on the procurement stages for deliverables – the original Gateway stages were delivery based and (from a generic perspective) focused on:

• Gateway 1: Business Justification – is there a business case supporting the programme or project?
• Gateway 2: Procurement and Source of Supply – have the necessary tasks been done to obtain the resources for delivery?
• Gateway 3: Investment Decision – given the above has been done, is it still wise to spend the money?
• Gateway 4: Readiness for Service – post-development, is the project read to go?
• Gateway 5: Benefits Evaluation – post-implementation, what benefits were achieved?

But were projects put through this scheme being reviewed early enough? In other words was the Translate risk being looked at before the delivery project started? Was the implication of a portfolio of interlinked work being look at sufficiently?

OGC has recognised this issue and introduced Gateway 0 – Strategic Assessment.

Gateway 0 focuses on the strategic needs of the delivery task itself. It aims to provide assurance to a management board that the business requirement has been adequately researched (in our terms that the Translate task has been completed effectively) and fits within a department’s overall business strategy – which also has the beneficial effect of discovering any flaws in that strategy. OGC also believes that that this review will capture how a portfolio of projects aims to deliver the overall objectives, and that management structure, monitoring and resourcing are appropriate.

In the context of this paper, then, Gateway 0 helps resolve some the issues raised earlier, for example the existence, or otherwise, of a departmental strategy able to rise to the delivery task given to it.

Gateway 0, both as an approach and a process, is relatively new but is catching on in central government programmes in the UK. Large agency programmes and even some local government developments are being covered too, often at the request of the organisation developing the programme itself.

Portfolio Management also provides sound and consistent criteria to get away from the "IT blame" culture by ensuring that delivery projects are aligned against the requirements from the Translate process.

But is this early enough?

In Fujitsu’s view, no. It is believed that there needs to be an even earlier review, Gateway "minus 1" one might call it, which can act as an iterative filter between the Make and Translate process in our model.

And in this, we believe, Portfolio Management can play a significant role.

Portfolio Management is an integrated set of processes, techniques and tools that when consistently applied to a portfolio of investments and programs allows for:

• Selection of investments that have the greatest potential
• Effective programme planning and execution to return the greatest possible value to the business
• Ongoing governance and active management of the portfolio to ensure the required value is achieved.

As we noted previously it is mainly employed in the commercial sector but in this context let us consider government as a company:

• Assume the Cabinet as the Board, the Prime Minister the CEO – the President the President – a federal structure might be more difficult to imagine but lets keep going.
• Parliament (legislature – MPs, senators etc) and by proxy through the democratic system the people would be the shareholders.
• Senior civil servants would be heads of departments or divisions, and so on down the chain.
• Shareholder value could be measured through economic performance, law and order, quality of life, health and so on which is enhancing the quality of life of the population. Measures of performance could be things like detection rates for police forces, waiting times for operations, transport punctuality.

The last bullet is very important. Many companies and governments set targets only for things that can be measured easily. Portfolio Management can help aggregate and synthesise other measures for less tangible processes.

Whereas in the private sector Portfolio Management offers to "assist enterprises in selecting, executing and managing an optimum set of programs/investments (the portfolio) that allows them to minimise risk and maximise value to their organisation" we can write, for the public sector:

Portfolio Management can "assist governments in selecting, executing and managing an optimum set of policies (the portfolio) that allows them to minimise risk and maximise value to the state or communities within it"

Now consider the business drivers for Portfolio Management and map these to managing a government policy portfolio (as Figure 2):

From the above the conclusion is that the "commercial" to "government" mapping fits well if "policies" (or outcomes) are substituted for "investments" and the appropriate changes are made to the value measurements.

Below are the considerations for obtaining successful outcomes in the public sector:

• Governments could tackle the issues surrounding policy making, translation and delivery through use of commercial techniques – in this example Portfolio Management.
• The main challenge facing governments and the public sector in the electronic era is being able to make and implement policy to enable effective delivery.
• Government is generally getting to grips with project and programme management issues but needs to get smart in the "policy-making factory" and sort out problems there as early as possible before entering the delivery space.
• Techniques such as Portfolio Management could prove valuable as a robust means of filtering policy portfolios.

In conclusion Fujitsu believes that it’s rarely the technology that causes a government programme to fail but rather that political, economic and social risks can be the overriding factors. The application of commercial analysis techniques to high-level government could help to mitigate these risk areas. Use of these ideas could help government:

• Gain the confidence to manage a range of disparate projects across boundaries with multiple stakeholders, achieving known benefits and outcomes.
• Sensibly prioritise and select those aspects of the policies and programmes that will deliver the greatest impact to society.
• Move from a project-oriented perspective to a view of implementing change through a balanced policy portfolio.