Recently, I’ve been speaking to many boroughs about the procurements of their key services. It is clear that some council services are dominated by a small number of technology companies in the local government space. 

Incumbency isn’t inherently problematic when the market is highly competitive and interoperability standards ensure a level playing field. Incumbent suppliers offer advantages: they drive innovation, incorporate new technologies, and simplify contract management by serving as a sole supplier who manages all subcontractors. They are also staffed to meet additional requirements like social value and detailed financial reporting.

However, this process has significant weaknesses. Long-term contracts struggle when specifications are unknowable or shift due to policy changes, technological innovation, or staffing volatility.

The options for moving from incumbents are difficult and often presented close to market expiration. Boroughs may be stuck in the unenviable situation of trying to bring in new suppliers, change market dynamics, deal with legal challenges all while trying to procure a new large contract and effect massive transformation on a tight deadline.

In these types of situations, a complete shift to an in-house built solution is very difficult and taking the responsibility for such a shift is often daunting.

So what is the way forward?

We have some ideas that can help one move out of the incumbency trap.

Understand that the buyer owns the risk 

Recognise that risk is never owned by the supplier. As the commissioner of services, the risk of non-performance of a system that is accessed by residents is always going to be held by the borough. Whether a process is a bought-in or in-house is of no concern to the residents. Once you understand this, you need to know when to start.

Know when to start 

Getting out of the incumbency trap is a difficult task that starts from the first day you sign or resign the contract with the supplier. Innovation needs to become an ongoing process taking place during the lifetime of your existing contracts. Whatever timescale one thinks one needs to get out of an incumbent relationship before the next contract award, it will never be enough and planning for a date on ending the incumbent contract and switching on a new system will rarely work out due to unexpected contingencies or problems in the way the new software works. You need to not think in terms of a ‘new for old’ contract approach and think differently.

Take a different approach 

Big change looks scary because it is. So instead concentrate on starting small and scaling up. Our LOTI fellow, Omid Shiraji and I spent some time recently discussing the Strangler fig architectural approach as a way to get out of legacy systems. The pattern is taken from nature. Strangler figs wrap themselves around a host and can augment or replace them. The approach suggests that one can incrementally migrate away from a legacy system by gradually replacing specific pieces of functionality with new applications and services. As one replaces features from the legacy system bit by bit, the new system eventually comprises all of the old system’s features. This approach shrinks the importance of the old incumbent system so that one can eventually move away from it.

Doing this at the same time as simplifying and commodifying bits of the incumbent system can also yield big results. In the last few decades, a lot of IT and online services have moved from being bespoke pieces of specialised equipment to commodity items. Recognising when that is happening and making the shift to more commodity services can often result in big savings with the savings passed on directly to the borough rather than absorbed.

Replacing critical parts of a live system with resident data running through it is fraught with risks. A better approach would be to experiment in a safe space that won’t affect line of business systems if and when they go wrong.

Create a safe place to experiment with different ways of doing things

At LOTI we believe that boroughs need a safe space – literally a dedicated room or area of the council office – for experimenting with new technologies and developing new ideas that can improve services that sit outside normal governance, business processes and procurement rules. 

It is important not to limit the experimental space to only being about technology. Make sure that experimentations with people, processes and data can take place. 

This space is not connected to any live service, enabling tools and approaches to be tested freely and has the lightest touch governance with a high tolerance for failure as experimentation is isolated from live customer systems and resident data. 

Alongside this free approach, is a requirement for quick and easy procurements so that teams can rapidly test, learn and grow. 

Get procurement foundations right

Getting the procurement foundations right is fundamental to creating a safe space for experimentation. Incumbent contracts are normally for high value, long-time periods and have extensive timelines to awards. The innovation boroughs need to do will not fit into this form of procurement. 

Using the innovative and flexible G-Cloud framework with the appropriate procurement approach can mean that you can do a legally valid procurement and contract sign off in a day. 

When risk is isolated in a test-bed environment and is small scale, Boroughs need to use this light-touch option to get projects started without delay. Reducing the time to contract for IT stops it becoming the main focus of innovation and a greater focus can take place on people, processes and data.

Focus on people, processes and data first 

At LOTI, we always talk about the need to change people, processes and data as well as technology to get a return on investment and achieve business outcomes. All the case studies that we collected across boroughs show that when these elements are integrated, the results are outstanding. In fact, starting with the people, processes and data first can often yield the majority of the benefit with the technology component much easier to implement in the end. 

At one Council, the social care case management systems were cumbersome, inefficient and had been in place for over two decades. By redesigning workflows the Council cut inefficiencies so that social workers spent less time looking at screens and more time with service users. The process was so effective that no further technology was needed to be implemented to get savings.

None of these LOTI ideas make the process easy, but can provide a framework for understanding and approaching reducing the incumbency trap.

At LOTI,  we are looking to support boroughs creating a safe space for experimentation and are interested in helping boroughs with all aspects of procurement through a new Basecamp space. If you have any ideas for better approaches or want to learn more about this new Basecamp space, let us know!