Waste and inefficiency in outdated government IT systems

A recent BBC article has drawn attention to the extraordinary amount of wasted expenditure on outdated IT systems in government. The article, drawn from a Cabinet Office report entitled ‘Organising for Digital Delivery’, notes that the government’s use of outdated technology – with some systems being over thirty years old – has troubling implications for cyber security, since such devices “fail to meet even the minimum cyber security standards”.

On top of this, the data which these systems house – surely a key reason for ‘keeping the lights on’, as this extravagant maintenance program is known – is largely unusable. In short: the only thing stopping cyber criminals from accessing sensitive government information is that the data can’t be extracted from their ancient systems.

The price tag for keeping these systems alive is an astonishing £2.3 billion per year – almost half of the government’s £4.7 billion annual IT expenditure. The report predicts that, over the next 5 years, any amount from £13 billion to £22 billion will be spent propping up obsolete IT infrastructure.

It is fair to say that some of the government’s defences – such as the fact that Alan Turing’s notable paper on computing “was published only in 1937” – are not hugely persuasive. Given that the taxpayer is footing the bill for this enormous level of waste, it’s worth noting that there are ways to address outdated systems while reducing costs and increasing efficiency – methods which the government needs to embrace.

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Outdated systems, lost productivity

Historically, UK governments have struggled to efficiently embrace digital transformation. Casting our minds back to 2002, the government at the time attempted the “National Programme for IT in the NHS” – a project designed to digitally integrate England’s health service over a three-year period. In fact, due to ongoing technical problems, the programme had to be dismantled as late as 2011, costing the taxpayer approximately £24 billion in today’s money.

This does not mean that digital transformations shouldn’t be embraced. The costs of cutting corners or brushing outdated technology under the carpet can be substantial. As one study from IT managed services provider Managed 24/7 notes, workplace technology failures cost UK companies a collective £35 billion per year.

Research by Curry’s PC World makes a similar claim, finding that businesses lost around £2,752 each per year on lost time and productivity due to outdated technology for workers. Microsoft have even found that 91% of customers would cease doing business with a company if they so much as perceived it to be relying on outdated technology.

Whether in government or business, then, a reluctance to invest in technology is clearly a mistake, leading to increases in costs and a lack of trust or faith in the underlying enterprise.

Investing in technical fluency

Those responsible for addressing the government’s current levels of wasted IT expenditure may find that businesses offer positive, proactive case studies that highlight the value of embracing digital transformation. A 2020 study from Deloitte, for instance, has found that digitally mature companies – those that have embraced various aspects of digital transformation – saw net revenue growth of 45% and net profit growths of 43% compared to industry averages.

The same study has found that the benefits of digital maturation are not limited to profits, but to a range of outcomes including increased efficiency, better product and service quality, and higher levels of both customer satisfaction and employee engagement.

A study from McKinsey is even more strident, noting that “by digitising information-intensive processes, costs can be cut by up to 90% and turnaround times improved by several orders of magnitude.”

Part of the ‘Organising for Digital Delivery Report’ includes a commitment to “investing in developing the technical fluency of senior civil service leadership.” The enormous waste of taxpayer money should certainly be sufficient motivation to follow through with this resolution, but the examples of businesses and organisations which have embraced digital transformation can help the government to understand the potential these investments hold.

This proposed training process should be accompanied by a reflection on the advantages of digital transformation – not only as a means of cutting costs and reducing waste, but as a change in the culture of government which will see increased productivity, better services for the taxpayer, and a much higher degree of trust in the essential mechanisms that keep the country’s wheels turning.

Written by Adrian Overall, CEO and founder of CloudStratex

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