Whitehall must adopt a more strategic approach to digital transformation, finds IfG

Written by Jim Dunton on 29 October 2018 in News

HM Treasury needs to iron out a guidance mismatch to aid the production of better business cases, a new analysis has found

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Whitehall departments must adopt a more strategic approach to digital transformation and embed programmes into their departmental plans, while HM Treasury needs to iron out a guidance mismatch to aid the production of better business cases, a new analysis has found.

A new paper from the Institute for Government focuses specifically on the effective use of business cases that civil servants seeking funding for transformation projects are required to produce and found that they were often not used effectively.

It said that while at least 19 digital transformation programmes were currently under way, with a lifetime cost amounting to £38bn, business cases supporting the programmes tended to suffer from a failure to recognise inherent uncertainty in the proposals.

Report authors Tess Kidney Bishop – a researcher at IfG, and Sally Howes – a transformation associate for the Infrastructure and Projects Authority, said the current non-recognition of inherent uncertainty in transformation programmes meant that projects tended to get locked into “fixed and unrealistic timelines”.

They said that official business-case guidance published by the Treasury encouraged project proponents to offer “unreasonable certainty in timelines, costs and benefits” and encouraged upfront assessments rather than a “testing, learning and adaptation approach”.

Kidney Bishop and Howes also observed that the process for approving financing in the Treasury and departments encouraged the development of individual programmes to manage transformation, rather than incremental change that was managed by service leaders.

“It has generally been easier for departments to get new capital investment for programmes than to increase their resource spending to cover transformation, especially in the current fiscal context,” they said.

They acknowledged that Whitehall was taking steps to build a better framework for implementing digital transformation, but also said that the work was at an early stage and “not yet widely known or trusted” beyond the cross-government transformation peer group, which brings together transformation directors general from different departments.

The report recommends that the new strategic approach to digital transformation must be adopted more widely and in a way that is led by accounting officers, executive teams and boards, rather than being delegated by them. It proposes the 2019 Spending Review as a good opportunity to start such a strategic approach, with a greater focus on business planning and less focus on business cases.

“This more coordinated approach should be reinforced by departments, the Treasury and the Cabinet Office by ensuring that digital transformation is more central to Single Departmental Plans (SDPs) and aligned to the government’s transformation strategy,” Kidney Bishop and Howes said.

“These SDPs should be actively used to manage digital transformation and measure progress, including by providing funding to those running public services and other business services to manage improvements and prevent legacy systems building up.”

Kidney Bishop and Howes also said there was a mismatch between Treasury guidance on “agile digital and IT projects” and the “7 Lenses of Transformation” guidance produced by the Government Digital Service and the Infrastructure & Projects Authority.

They said the Treasury guidance should be amended so that it covered digital transformation programmes and encouraged testing, learning and adaptation.

“The Treasury and others involved in approving business cases should put more weight on observing the results of that testing than on the unrealistic degree of certainty in initial business cases,” Kidney Bishop and Howes said.

They concluded: “Digital transformation brings benefits which are important but hard to measure and quantify. Treasury guidance should recognise benefits which are hard to quantify, such as the capacity to respond more flexibly to policy changes, and the ability to develop more responsive services.”

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