Dear Tim,
New Year greetings! I enjoyed our Christmas drinks. A vigorous discussion - and you did ask me to put down a few notes to capture the essence of the issues we debated.

As a CIO working in the public sector, you have to respond to a very different set of influences and drivers than my own private-sector background can always relate to - realities that fed much of the heat of our discussion. None the less, I do believe that I articulated some fundamental developments as to how IT can now be better sourced and your departmental resources better focused. One key message is of a real opportunity to take costs out now - very relevant to your work given current government agendas.

The first is automation. During the last decade, vendors in consumer services, for example, have pioneered the automation of the server farm to a very high degree. Remember that statistic about one human being responsible for the operation of 2500 servers? There is now a great accumulation of operational experience in these ‘factories' that serve the consumer marketplace. Work with the grain of component failure; assume that kit will fall over with a certain frequency and operate accordingly. Endlessly segregate and back up the myriad data flows and process images so that the utilisation of kit can be driven to very high levels by endlessly reallocating what kit is doing what in real time. The result? Levels of capital utilisation combined with a flexibility that delivers underlying data processing costs of a different order of magnitude than anything existing UK government arrangements can match.

The second is virtualisation. You understand what this is about but I think you underestimate its wider impact. We have both grown up in an IT world where software and systems had to be built as complex, integrated structures, thousands of lines of code built to intricate designs with every operational aspect so tightly coupled into the whole that the initial creation is inevitably a time-consuming and expensive exercise. Change remains even more so. People-intensive work, a vast industry of IT services, has grown up exploiting ‘bums on seats' business models in application development and maintenance and systems integration.

SOA enables the virtualised world of the loosely coupled: tightly integrated technical towers of legacy systems re-architected as sets of loosely integrated standalone software systems. And software systems are what enable business processes, and business processes delivered for use are services. So will the government's legacy of tightly integrated technical towers be re-architected as a set of loosely integrated standalone services?

Which took us to my third point, directly sourcing services. There is a growing range of individual services directly sourceable off the web. Where these individual services are generic in their nature, the size of the potential marketplace encourages competition that drives costs of production and delivery right down. Consider the Google Apps desktop services offer priced at $50/£33 per user per year - I bet you're paying at least 10 times that in your department!

So back to your concerns. You're right, even with a generic service such as payroll each government department probably has some discrete requirements. In the virtualised world, such bespoke features can be delivered by adjusting a generic service at the margin - look how easily you can tune's online CRM services. This is a far more economical and much quicker route to getting the bespoke features you need than paying for brand new code specific to your department.

And security? Betfair handles more financial transactions each day, I believe, than the combined operations of all of Europe's stock exchanges: highly automated and with proven security. Other leaders in commoditised online services know that any lack of security will kill their brand. I believe that security is more excuse for inaction than a reality.

Back to our debate. Your department needs to focus on what its real purpose in life is. Running server farms is certainly not one of them, and there are now suppliers who have automated their operation to a very high degree. I suspect that consolidation of the myriad government datacentres into a few world-class facilities to match the productivity now achieved by the consumer service giants will take out a lot of cost. And once you are confident that you can ‘bespoke' at the margin, a single government-wide set of desktop or payroll services will release further costs on a major scale. Even better, once you have confidence in their security, why not source such standard services directly from the public marketplace?
I said I doubted that UK government departmental requirements for underlying infrastructural and back office ‘stuff' were that special. Your resource focus needs to shift to the ‘stuff' that is genuinely special to your department and its policy remits.

A Happy New Year!