The Department for Work and Pensions has slashed £1.5 billion from IT costs over five years.

The savings were achieved partly through the aggressive rationalisation of IT, since 2005, and the introduction of utility computing. Equally attributable were the choice of a standardised desktop and software architecture, work on a much in-demand contact centre, and the introduction of a VoIP network.

Dean James, chief operating officer, today told the Government IT Conference in London: “As part of a business transformation, we built a platform that was scalable, introduced lean methodology, and used industry standard services and technology.”

The move to utility-based computing meant the DWP saved money because it “only pays for services it consumes”, he said, and “avoids a typical vendor-led pricing model”.

Ranked number one in the CIO 100 DWP has 110,000 staff and fields millions of calls each day.

The department has over £3 billion worth of IT work out to tender. Today it said it had moved to a “more collaborative” relationship with its suppliers in order to improve delivery and develop new ideas on transforming its technology and processes.

Its changing relationships with providers are clearly under the microscope as the contract award process goes ahead. Two weeks ago HP, the lead supplier to the DWP, lost a vast desktop infrastructure contract to Fujitsu, thought to be worth in excess of a billion pounds. Under that contract EDS, now owned by HP, prided itself on the considerable change made at the department.

HP runs a number of other tranches of work at the DWP, and has retained its hosting services contract. But its application maintenance and integration services tranches are still out to tender.

HP has a chequered history at the DWP, in spite of the desktop and transformation successes. A £450 million Child Support Agency system, built earlier in the decade, was found to have 500 faults, and the DWP has spent large amounts of money fixing the problems.

HP has had a tough month. It faced a huge strike of its contractors working at the DWP, as they protested over pay freezes and job cuts. Days afterwards, it lost out in a highly-publicised fraud lawsuit brought against it by a private sector customer, broadcaster BSkyB, and faces potential damages of around £200 million. It plans to appeal.