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DVLA brings IT back in-house after decades of outsourcing

After the DVLA's two-year project to bring its IT back in-house, its outsourcing strategy – set up during the Thatcher years – came to an end in September 2015

Karl Flinders
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Published: 05 Oct 2015 10:30

The Driver & Vehicle Licensing Agency (DVLA) outsourced its IT for more than two decades until September 2015, when the organisation completed a two-year project to bring it all back in-house

When its major Partners Achieving Change Together (Pact) IT outsourcing contract with IBM – previously PwC – Fujitsu and Concentrix came up for renewal after 13 years and £1.6bn spent, the DVLA weighed up its options.

This move in-house – completed on 12 September – led to more than 300 staff moving to the DVLA from suppliers, taking its total IT workforce to more than 630. It will save at least £225m over 10 years on top of £70m saved on the cost of procurement. It plans to become an agile IT organisation.

But the 13-year contract that was terminated is only part of a story that involved former prime minister Margaret Thatcher and IBM and ICL/Fujitsu for more than 30 years.

The DVLA is the second biggest UK organisation for direct debit payment – collecting £6bn in car tax – and has bigger UK revenues than Amazon.

Although the DVLA had outsourced for more than 20 years, the decision to bring IT back in-house only took DVLA CEO Oliver Morley a few days to make, after joining the organisation in 2013.

Morley, who ran the National Archives before joining the DVLA, initially went back through old files about the outsourcing contract before making any decisions.

He was surprised to see a note about the outsourcing contract from Margaret Thatcher to a private secretary. “It was very political and, being before the days of procurement rules, there was a real desire to buy British,” said Morley.

He added that the DVLA had no choice but to outsource because “the complexity and challenge in the future was too great for it to cope with”.

External partners have provided the DVLA with IT services for 22 years, with the likes of EDS and IBM playing system integrator roles.

“We took the decision to insource two days after my arrival at the DVLA, in November 2013,” said Morley.

Enabling IT to support digital transformation

Iain Patterson, chief technology officer at the DVLA for the transition period, said that, when the contract came up for renewal, the team did what government departments do and looked at the service integration and management (SIAM) and tower models for IT outsourcing.

“We looked at the architecture and the cost of standing still, which we estimated to be in excess of £230m, and to run a procurement programme would have cost £80m,” he said.

But it was not just about money, it was also about enabling IT to support digital transformation – which was part of the reasoning for Morley’s appointment, with his background in digital transformations.

The previous contracts did not fit the organisation's digital future, because they did not allow for fast changes in response to business demand. In the past it would take weeks to get the contract right to allow for even small changes.

“If you are going to transform an organisation digitally you have to own the IT,” said Morley. “You need to be your own systems integrator or you do not have the ability to change."

Read more about DVLA IT

  • The DVLA is looking for a new CIO as incumbent Iain Patterson completes major insourcing projects and moves back to Cabinet Office
  • The DVLA is seen as one of the early adopters in the public sector drive to provide digital services to save government £1.8bn per year
  • The DVLA’s renewed vehicle tax website has had a troubled launch, with the site crashing due to high demand
  • The Driver & Vehicle Licensing Agency partners with startup incubator Tech Hub to launch a digital workspace in Swansea

This is key because the organisation will not do everything itself but will be its own systems integrator.

“For the most part we are doing it ourselves but we have plenty of partners [suppliers] – big and small – still with us, who will be doing a large part of the work. But we have the relationship directly with them, we co-ordinate delivery, we have mixed development teams and it is very important we own the overall model,” said Patterson.

“We have taken out the complexity of a manager over a technology company and we are managing the services and contracts directly. The first thing we insourced was our architecture teams which has allowed us more than two years to design ourselves out of contracts,” he added.

Delivering digital skills

Looking forward to going it alone, the DVLA has made sure there will be skills and technologies available both in-house and in the supplier community to support its future plans. It has invested in IT talent at its Swansea base and is communicating with tech communities and universities about its plans.

“We are also retraining people to give them digital skills," said Patterson. "What we find with large monolithic contracts is the suppliers are not investing in their people because they are attempting to deliver on their contract and want a rate of return.”

Morley said that in the past the DVLA could not attract the right IT talent itself and even IT professionals in its hometown of Swansea with the right skills would be overlooked. “There was a saying that if you were an IT professional in Swansea and wanted a job at the DVLA you would have to go to London and see Fujitsu," he said.

But this has now been turned on its head, added Morley: “If you live in Swansea and work in IT this is a great place to work.”

The IT teams at the DVLA have mainly focused on the legacy technologies, but new staff will be skilled in digital and open-source technologies. “We want to give them new skills and create a digital organisation, which is not just about technology,” said Morley.

A recent hackathon at the DVLA saw a team of mainframe specialists win, which proves skills are transferable, he added. “But you have to give them interesting challenges."

Going digital

The DVLA is now moving digital at a rapid pace. A total of 90% of its customers use digital services today compared with 66% two years ago; it has abolished the physical tax disc; and has abolished the counterpart to the driving licence. “I would put us against anyone in the public and private sectors in terms of how much digital transformation we have done,” said Morley.

Patterson added that there was a lot of government involvement in the DVLA’s insourcing project and lessons have been learned which will be shared across government departments.

Following the completion of the project Patterson is moving back to the Cabinet Office and the DVLA is advertising for a replacement. “We are recruiting a new CIO for the new world,” said Morley.

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