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HM Revenue & Customs Case Study: Technology Transformation Programme

Like other government departments, HM Revenue & Customs (HMRC) began a major e-business programme in 2002 in order to meet the targets set by government’s modernisation agenda. The entier team led the development of the strategy, delivery and implementation of a major technology transformation programme in support of an ambitious e-business programme.

The business challenge

HMRC’s technical capabilities were built around silos of information, with few ‘centres of technical excellence’ supporting old technologies on multiple platforms. There were 16 technical platforms, supporting 1500+ applications, which comprised of 400+ commercial off the shelf solution on desktops, 1000+ local applications and 150 bespoke national applications (e.g. 87 HR systems, 52 financial systems). The support provided for individual business systems did not provide the versatility and agility required to deliver ‘joined up’ service to internal and external stakeholders. There were flawed or non-existent service levels agreements between business, IS and their suppliers. With over 300 locations across the UK and abroad, the IT infrastructure was near breaking point and could not support the e-business services. The support costs were escalating year on year at a rapid rate and the quality of service was deteriorating. The IS division had 873 staff organised into 3 main areas: strategy & Support, Application Delivery and Service Management. The IS function needed to be structured in line with the new Operating Model developed within the business and the departmental objectives of becoming:

1. More cost efficient and effective
2. A leader of other Government bodies
3. Less complex and more flexible
4. Able to rapidly align to changing business and government drivers
5. An e-commerce –centric government organisation

The IS division had to undergo a radical and stepped change in its capabilities in order to achieve its stated objectives. The technical architecture had to be simplified to ensure it was capable of supporting e-enabled solutions. It had to identify and build the core competencies needed to provide a lasting and sustainable capability for the future.

Our approach

The entier team led the creation of a wide-ranging technology transformation programme (TTP). The entier team very rapidly built a strong understanding of the existing systems, skills and culture within HMRC. The team articulated a clear and consistent vision for the future state of the organisation, capabilities and systems and aligned the senior management around this vision and the entier team was able to:

1. Build a single strategic technical architecture supporting all new e-services and legacy environments
2. Stabilise the existing environment (data, applications, infrastructure) by rationalisation, decommissioning, wrapping, retirement and migration
3. Migrate the current technical platforms to a new strategic technical architecture aligned to industry best practice for service based architecture
4. Investigate and assess the existing HMRC’s capabilities and define the e-enabled capabilities
5. Build a new robust set of capabilities required for delivery of e-enabled and legacy solutions (people, culture, skills, processes, structure, tools, systems) and manage the transition
6. Provide a consolidated framework and series of processes to support legacy and e-enabled infrastructure
7. Create of a comprehensive Business Chang Lifecycle (BCL) covering all stages from strategy formulation to service management based on Dynamic Systems Development Method (DSDM) and aligned with OGC Gateway reviews
8. Create communication plans to support closer alignment of the business and technology teams
9. Develop a comprehensive sourcing strategy covering consultancy partners, Infrastructure partners, technical components partners and systems integration partners
10. Embed the capabilities in the permanent structure of the Department

The capability building strategy was largely organic and based on Capability Maturity Model (CMM): A core of experienced specialists from entier were deployed to seed the organisation with relevant skills and hence to transfer the skills into HMRC IS division. Separate work stream were created to address capability building (skills development and transfer, competency definition, cultural transformation etc) within its specialist area (development, testing, operations, procurement). All streams were centrally coordinated and supported by a Programme Support Office (PSO) and the central support was strengthened as the programme scaled.

In most areas the initial competency level for most skills set for HMRC IS staff were at the bottom of level 1. The weakest competency areas were:

1. The requirements processes (Requirements Management and Requirements development)
2. Integrated Product and Process development – project management & organisational environment

Delivering results

TTP was able to move the IS organisation from bottom of level 1 to level 2 in just over 18 months. The overall transformation from level 1 to level 3 took place in just over 3 years. The timescales were benchmarked against other organisations’ experience with the CMM framework and HMRC was at the top quartile of the scale despite its context of culture, unionisation and organisation. HMRC were also able to put in place the necessary infrastructure for a sustained change effort.

A world-class capability was formed which delivered major e-commerce programmes to a new technical platform and provided significant business benefits. Significant savings were made in effort saved (ranging from 10% to 50% saving) and improved speed of delivery (ranging from 20% to 50% improvement) throughout the lifecycle from design to live support.

The procurement capability provided significant savings by bundling disparate contracts for software and hardware and by bundling of contracts for other services. The new contract management capabilities allowed for improved commercial contract negotiations and management. The HMRC procurement of application components for the new strategic architecture became the ‘model’ for a cross government multi million £ strategic procurement for portal and application server software.

The transformed IS organisation required fewer people that the original organisation and was able to provide a flexible and quality service in response to rapidly changing business prioritises. HMRC is now recognised by Whitehall as one of the top performing delivery departments.