James Governor's Monkchips

OOW2015: Oracle in the post big outsourcing era – the DVLA story

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I wrote a post recently about the huge changes facing the traditional outsourcing industry, driven by the need of enterprise customers to make digital transformations, increase product delivery velocity and improve customer experiences. What I didn’t expect however was that at Oracle Open World 2015 I would meet a customer doing just that, and sticking with Oracle as a cloud supplier.

The Driver Vehicle Licensing Agency in the UK is the very model of a traditional IT shop, or at least it was until the transformation currently being driven by the Cabinet Office and its IT change organisation the Government Digital Service (GDS).

I have spent a fair bit of time with GDS since its inception, partly because many of its people are friends of mine. It’s an organisation built from the ground up on the principles of the modern web – user research, agile development, open source and cloud. GDS is there to prove to hidebound civil departments that there is a better way of doing things, not by talking but by making things that look good and work well for the citizen. Of course motherhood and apple crumble always has its detractors – and there are those that claim GDS has only built pretty new front ends, without getting a handle on the processes and core transactional systems that constitute government IT. But then, antibodies embedded within billion dollar contracts would say that. You have to start somewhere, and the GDS mission is nothing less than the biggest IT transformation in any industry in any country in the world; it was always going to take time. The GDS transformation is now being distributed out to the Departments – The Ministry of Justice, Her Majesty’s Revenue and Customs and so on.

When Liam Maxwell started driving this change program, with direct top down support from Francis Maude, the traditional IT suppliers were directly in the firing line. It wasn’t just outsourcing that was under attack – Oracle was a particular bug bear – being an aggressive sales-driven company demanding considerable license fees for platforms that weren’t open source, such as the core Oracle database and Weblogic Application Server. It was hard to see how Oracle fitted into the new world. GDS made a public point of cancelling trips to Redwood Shores and visiting Mongo in San Francisco instead.

So when I met with DVLA in San Francisco at Oracle Open World 2015 I wasn’t sure what to expect – the old world or the new. It turns out I got both. Ian Patterson, who was seconded from GDS to run IT at the organisation, is definitely not afraid to take tough decisions, but he is also a pragmatist.

The DVLA’s IT outsourcing contract was a typical hideous outsourcing contract – the kind of thing we used to write about when I was a journalist at Computing in the mid to late 1990s – involving both Fujitsu and IBM, which had taken on responsibility for IT systems and the staff that managed them.

Patterson immediately identified the contract itself as the biggest problem in moving forward as an organisation.

“You’re going to spend £240m standing still, with £80m go to market for a new contract, in order to transform. I said why not transform now, to align?  Ditch the commercial constraints and create some internal capability.”

But the received wisdom is that cancelling such a contract would introduce too much risk. Patterson had to bring the new Permanent Secretary (the Civil Service term for the individual that runs a huge government department) along, and generally Permanent Secretaries are fairly risk averse.

The first task was to reskin the electronic vehicle licensing system, with the Systems Integrator claiming it would take a year and a million pounds. The new team rebuilt the citizen facing parts of the system itself in 7 weeks.

Patterson agreed that Financial and Procurement are not the right people to make choices about technical architecture and approach, which seems obvious, except it is how government IT has worked for the last 30 years.

“Why would you outsource skills and capability?”

I asked Patterson how the DVLA was moving forward given it had the contract in place. The answer was surprisingly straightforward – cancel the contract. After 22 years the DVLA once again took responsibility for running its own IT systems, in the process insourcing the staff that had previously been transferred to the supplier. 350 people came back with full TUPE (transfer of undertakings in terms of contractual employment terms) in order to run the mainframe and associated systems.

“Now we have full sight of the supply chain. We have full understanding of cost, and we know what’s in the black box of transactions and services”.

Then the GDS playbook kicked in. DVLA formed a partnership with startup incubator and coworking business TechHub and with local Universities. This allowed them to provide funding for 20 of their existing staff to reskill by undertaking Foundation Degrees in Computer Science whilst also recruiting talent from the local market.

“We picked people with the right attitude. The madness is we [usually] had people with tech background and education that took better paid jobs as managers, so let’s employ developers to work on our systems. Let’s create environments in which developers can thrive.

You can’t put digital in the corner. If you have separate corners the old keeps trying to stop the new. We have structures so people from the factory floor have a voice to the senior management team. We do a lot of internal communications. I protect people from the battles. That’s my job. I reengineered the team, but not all at once. I put a new senior team together from people inside the organisation.”

So what about Oracle?

“If you look at the licensing model, it was behind Systems Integrators. Now we can talk directly to people that build the software. You need a technological and strategic view. I don’t want to move to Oracle Cloud because it’s the only choice, but because it’s the choice we make. I want other cloud providers involved. I don’t want lock in if we move something to Oracle Cloud. If I want to put MongoDB in the Oracle Cloud, I want the flexibility to do that. The more that Oracle recognises the better it will be.”

Oracle is currently suffers negative perception for its aggressive approach to customers in licensing and relicensing deals, particular in virtual and cloud environments – so how does the DVLA deal with that?

“At the moment we have View Driver Record sitting in Skyscape (cloud platform) talking to our Oracle database. If you put that in cloud, you’d have to license every machine, so we got a license that allowed us to ping things around. I told Oracle if you’re willing to do that, I’ll have a lot of Oracle product. I said I will look at you in line with all the others, rather than just replacing you.”

Boom! It turns out the guy running IT at the DVLA sounds a lot like RedMonk.

“Software companies that are big are going to shrink or they’re going to change.”

But, Patterson added:

“Larry Ellison’s speech yesterday said all the right things to me.”

The bottom line is that in 2015 Patterson sees Oracle as a less risky bet than other cloud providers. Surprising perhaps, but he is a hard nosed type, and I have to say that although I have only met him once I trust him to spend the money I pay in taxes wisely, and make the right licensing and contractual decisions.

If Oracle can be flexible, and keep people like Patterson on side, it will be in a good position to make the transition to being a successful cloud provider. Plenty of people moan about Oracle’s approach to licensing discussions, probably justifiably, but let’s not forget who the customer is. As sadly we seem to have done for too long – outsourcing and vendor mega contracts can become too big too fail, but that’s actually not the supplier’s fault.

As the DVLA story makes clear contracts can be cancelled. Lock in is a two way street. Customers choose suppliers.

I should declare that Oracle paid my travel and expenses to OOW15, and set up the interview with Patterson, but I still felt he was playing a very straight bat, with me, and that he’s exactly what Oracle needs right now – to face really tough, IT savvy negotiators.

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