Serious failures in how a £200m IT contract has been managed have been exposed in a Scrutiny review.

The States signed the deal with Agilisys in 2019, but it has failed to deliver in some key areas of the transformation promised.

Spiralling costs have seen a major programme stalled, there have been major outages, day-to-day support needs have overwhelmed the system and projects not delivered as expected.

The Scrutiny review concentrates on what happened up to early 2023 and Policy & Resources has argued that there has been significant work to improve things in the last two years.

Agilisys says the majority of recommendations made throughout the report have already been addressed and implemented.

Delays and wasted money

Scrutiny’s panel found that the implications of entering the 10-year partnership with Agilisys were not fully understood from the outset.

“The scale of the work required was underestimated and, most crucially, the level and volume of retained technical expertise within the public sector needed to effectively manage and oversee the contract with Agilisys was totally inadequate,” the report says.

“This lack of retained internal resource and, arguably, capability meant that adequate and effective oversight and monitoring of the contract was not in place from the beginning and throughout at least the first three years of the contract’s operation.

“This deficit in management and effective public sector staff oversight led to significant problems, leading to programme implementation delays and money being wasted.

“The governance structures put in place may have looked appropriate on paper, but it is clear from a review of the notes produced in the programme management meetings that the level of effective challenge provided to Agilisys was, in the opinion of the Panel, insufficient in certain areas.”

Major difficulties

They reviewed four main areas: major system outages in late 2022 and early 2023; the implementation of the IT elements of the Revenue Service transformation programme; the implementation of the IT elements of the MyGov transformation programme; and the provision of day-to-day IT support.

“Serious mistakes were made on the programmes reviewed.

“It was not realised early enough that the large programmes reviewed were encountering major difficulties, leading to the required technical solutions not being completed within either the allocated time or budget.

“Furthermore, Agilisys experienced difficulties in delivering some of the requested software developments, and these delays impacted, in some cases significantly, on the overall costs of the ongoing programmes reviewed.”

There were problems on both sides.

“The capabilities and experience of some of the staff supplied by Agilisys was questioned by some public sector staff working on the programmes reviewed.

“Agilisys senior staff have admitted that high staff turnover existed in this area at that time and that they had difficulty in recruiting and retaining suitably qualified development staff.

“In the MyGov programme it was also clear that not enough work was undertaken by the States early enough in the process to produce a sufficiently detailed Statement of Work that would enable the software development required by Agilisys to be produced efficiently and effectively.”

Change in leadership within both Agilisys and the public sector in late 2022, led to the panel observing “significant recent improvements” in contract and programme management.

The costs

Total States IT expenditure was £41.8m. in 2020, £42.26m. in 2021 and £41.4m. in 2022.

The spend on Agilisys was £35.8m in 2020, £35.29m. In 2021 and £34.85m in 2022.

The review makes five recommendations based around leadership, strategy, investment, expert advice and management.

Recommendation 1 – Leadership
The SMC believes it is essential that a credible, qualified, and empowered Chief Information Officer (CIO) or equivalent is put in place to guide and execute major strategic IT decisions. The suitability, experience and technical expertise of this postholder is essential if the contract is to deliver on the improvements that were anticipated when it was signed in 2019.

Recommendation 2 – Strategy
The States must put in place a clear technology strategy for future action. Unless this step is accomplished, the Panel believes it is likely that sub-optimal decisions will continue to be made leading to sub-optimal outcomes.

Recommendation 3 – Investment
The SMC believes it is then essential to ensure appropriate investment is available to deliver the target operating model, without significant investment progress cannot be made.

Recommendation 4 – Expert advice
The SMC recommends the establishment of an IT Advisory Board populated with both IT industry and business expertise primarily to assist political decision making in setting the correct IT strategy moving forward. In the future the government should have access to high level business & technology advice when negotiating major contracts or appointing senior technical staff.

Recommendation 5 – Management
The final recommendation of the SMC is that supplier management needs improvement and specialist IT contract management needs to be improved to oversee an outsourced contract of this nature.

P&R and Agilisys respond

Deputy Bob Murray, the Policy & Resources Committee member who leads on providing political oversight for corporate services, said: “It is accepted that the States has faced significant challenges in effectively managing a contract of the size and complexity as that awarded to Agilisys in 2019.

“These challenges have been recognised in recent years, with the result being that the Head of the Public Service took steps to make improvements to the oversight of the contract and apply appropriate challenge on its delivery.

“As such – and given the timeframe reviewed by SMC was 2019 to early 2023 – the recommendations in its report largely align with the changes already introduced or in progress.

“While we naturally want to ensure there is sufficient focus on the improvements made in the last two years in particular, we absolutely acknowledge there has been a period of adjustment needed and the performance and oversight of the contract was not where it needed to be.

“We do, however, believe that the IT provision and its resilience will continue to improve in the coming years.”

Agilisys said it was important to recognise that it inherited a legacy IT estate that had been under-invested in for over 20 years, creating significant challenges that required expertise and innovation to address.

The company’s CEO Andrew Mindenhall said: “I would like to acknowledge the tenacity and commitment of all the individuals across the partnership who have been pivotal in delivering the changes identified, as well as the professionalism and resilience shown in sometimes challenging situations.

“Together, we have made significant strides in building the digital foundations needed to support the island’s future.”

Scrutiny Management Committee President Deputy Yvonne Burford said: “”I am pleased to be able to publish the full Scrutiny review into the States contract with Agilisys.

“This has been a complex piece of work and I would like to thank in particular the four members of our community with significant IT experience who assisted the Committee as members of the Review Panel, as well as all those who contributed to the Call for Evidence”.

The full report it is available at www.gov.gg/scrutiny

More to come…