Gilbert Verdian - PwC: The UK's New Service Integration And Management (SIAM) Model Of Procurement and Integration

Gilbert Verdian - PwC: The UK's New Service Integration And Management (SIAM) Model Of Procurement and Integration



Gilbert Verdian, Director, PwC delivered this presentation at the 2014 ADM Congress. Event attendees were able to hear presentations from senior government ministers and defence officials with a focus ...

Gilbert Verdian, Director, PwC delivered this presentation at the 2014 ADM Congress. Event attendees were able to hear presentations from senior government ministers and defence officials with a focus on the theme 'What does government want of industry?'

The Congress will connected industry delegates to government ministers and Department of Defence Personnel as well as speakers from Prime contractors and SMEs. A diverse program of speeches, panel discussions and workshops addressed key defence developments, capability innovations, project management, defence procurement and planning for the future. For more information about the annual event, please visit the conference website:



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Gilbert Verdian - PwC: The UK's New Service Integration And Management (SIAM) Model Of Procurement and Integration Gilbert Verdian - PwC: The UK's New Service Integration And Management (SIAM) Model Of Procurement and Integration Presentation Transcript

  • UK's new Service Integration and Management (SIAM) Model of Procurement and Integration February 2014
  • Agenda • What HM Government is mandating and how it's leading by example • Policy changes and a disruptive shift in Government thinking • Operating differently out of necessity and during austerity • Delivering value for money for the taxpayer • Advantages and disadvantages of a multi-source model PwC 2
  • Spending cuts During the Financial Crisis PwC 3
  • 2010 Spending Review • 500,000 public sector jobs by 2014-15 • 20% cuts across all Departments • Home Office 6% • Foreign Office 24% • Cabinet Office 35% • £6bn of Whitehall savings - double the £3bn promised • MoD cuts of 8%, less than most other departments but enough to mean: • • PwC 42,000 service personnel and civil servants will lose their jobs over the next five years high-profile equipment such as Harrier jump jets, the Ark Royal aircraft carrier and Nimrod spy planes will be scrapped. 4
  • 2013 Spending Round PwC 5
  • 2013 Spending Round - Defence 2.83 Further savings and efficiencies include: • rationalisation of the defence estate, including the sale of surplus land and buildings, likely to generate running cost savings across the estate of up to £350 million per year by 2014-15; • sales of the telecommunications spectrum and corporate assets (including the Defence Support Group and the Marchwood Sea Mounting Centre), likely to raise in excess of £500 million over the Spending Review period; • • savings from contract renegotiations with the defence industry; • annual savings of over £300 million per year by 2014-15 from civilian and military allowances; and • • efficiencies and improvements in military training; reductions in commodity spend. By focusing on maintaining key operational capabilities and by cutting out waste and inefficiency in the defence budget, the MOD will make at least £4.3 billion of non frontline savings over the Spending Review period PwC 6
  • How do you operate during Austerity? PwC 7
  • Shift Change • Move from a Policy driven Government to a Value driven Government • Value for Money • More hands-on enforcement – Cabinet Office and HM Treasury • Act collectively as one – Crown Commercial Service • Increase competition – G-Cloud for SMEs • Increase Scrutiny and implement stringent policy • Digital by Default, G-Cloud first • Transparency and Accountability • “improving the transparency of financial information including publication of individual items of spending over £25,000, all new contracts, tenders over £10,000, and the pay of senior civil servants” • Everything is published on PwC 8
  • HM Treasury Green Book • Stricter governance and stringent business case • Multiple stages of scrutiny and independent verification Business case dimensions • The Strategic Case • The Economic Case • The Commercial Case • The Financial Case • The Management Case PwC 9
  • Green Book – Business Case Process Stage Stage 0 Determining the strategic context and preparing the Strategic Outline Programme (SOP) Step 1: ascertaining strategic fit Gate 0: strategic fit Stage 1 Scoping the proposal and preparing the Strategic Outline Case (SOC) Step 2: making the case for change Step 3: exploring the preferred way forward Stage 2 Planning the scheme and preparing the Outline Business Case (OBC) Step 4: determining potential VFM Step 5: preparing for the potential deal Step 6: ascertaining affordability and funding requirement Step 7: planning for successful delivery Gate 1: business justification Gate 2: delivery strategy Stage 3 Procuring the solution and preparing the Full Business Case (FBC) Step 8: procuring the VFM solution Step 9: contracting for the deal Step 10: ensuring successful delivery Gate 3: investment decision Stage 4 Implementation Stage 5 Evaluation PwC Gate 4: ‘Go Live’ Gate 5: benefits realisation 10
  • Green book and Gateway Reviews PwC 11
  • Cabinet Office Efficiency and Reform Group (ERG) ERG’s goal is to eliminate waste and inefficient spending whilst investing in and improving front-line services. Cabinet Office exercise spend controls on behalf of HM Treasury. The focus of ERG is to transform the delivery of public services by: • improving procurement and supplier relationships • enhancing project assurance • consolidating the property estate • increasing digitisation and the use of alternative delivery models PwC 12
  • Government Digital Service - GDS The Government Digital Service is a new team (2012) within the Cabinet Office ERG, tasked with transforming government digital services. GDS works in three core areas: • transforming 25 high volume key exemplars from across government into digital services • building and maintaining the consolidated GOV.UK website – which brings government services together in one place • changing the way government procures IT services PwC 13
  • Examples of GDS work – Provided £0.5b in Savings Bringing together the information and transactions of 24 Ministerial and 20 non-Ministerial Departments with that of over 330 agencies and public sector bodies to one site. PwC 14
  • Examples of GDS work Transactions Explorer Drill down and see cost per transaction and the historical trend and cost PwC 15
  • GDS Benefits Realisation • Government set to save £500m this year (2014) thanks to digital by default • For example, by digitising the paper-based ‘lasting power of attorney’ this has resulted in the cost of the service dropping from £130 to £110. • Making transactions that are carried out by the public every day digital could save the government up to £1.7 billion a year after 2015 • Digitising transactions, such as paying car tax, booking driving tests, completing tax returns, or applying for pensions, could also deliver savings of up to £1.2 billion over the next three years (2014-16). PwC 16
  • G-Cloud • 1000+ SMEs with direct access to Government at all levels • G-Cloud First Policy • 8,000 cloud based services • Ban on large contracts £100m+ (December 2013) PwC 17
  • Realising Value through SIAM SIAM – Service Integration and Management New multi-source supplier model providing flexibility while delivering better service and value for money • • Improve service levels, accountability and security • Increased commercial flexibility • Business agility to adopt and change service • Grant the private sector agency rights to act on governments behalf SIAM • Department sets the policy, the SIAM tower creates the processes and procedures that support the Policy • PwC Integrate end-to-end service Execute element of the contracts in “Towers” 18
  • SIAM Tower Model What is SIAM? • Service integration not system integration • Ensuring a seamless provision of end to end services across a multi supplier model including SMEs • Carve-up service and competitively procure each component as a “Tower” • Appoint SIAM as your agent to manage and be accountable for all Towers • • • • Direct, manage and coordinate delivery Align and integrate all supplier services Manage service performance Drive continual service improvement How? • Maximise value for money by competitively procuring component parts of end-to-end service in Tower model • Standardise, centralise and consolidate • Driving down cost of service delivery individually and within each cluster PwC 19
  • SIAM design and delivery options Contracting Model • The SIAM acts as a ‘Prime’ contract to the client • SIAM subcontract services from Tower A, B, C, n. This option passes risk for supplier management to the SIAM. • The client contracts each Tower (inc. SIAM) separately and put in performance level agreements between the Towers. • PwC A tripartite agreement is signed: • Client and SIAM • SIAM and Towers • Between Towers Finance PMO Service Design and Service Levels Commercial & Legal Exit Transition ...Tower n Tower B Tower A Contracts & Conformance Architecture Retained IT SIAM Suppliers / Bidders Retained IT Function Suppliers / Bidders Governance Procurement Business ...Tower n External SIAM Exit Transition Procurement Commercial & Legal A third-party supplier delivers SIAM, and provides no other Service Tower. Service Design and Service Levels Tower B Exit Transition ...Tower n Tower B External SIAM Tower A Contracts & Conformance Architecture Business Procurement PMO Tower A Service Design and Service Levels Finance Contracts & Conformance PMO 3. Retained SIAM Governance Architecture Finance Business Governance Retained IT Function 2. Supplier-SIAM Suppliers / Bidders Retained IT Function 1. Independent SIAM Commercial & Legal A third-party supplier takes responsibility for delivering SIAM effectively - and also delivers a pre-agreed IT Service Tower. The Retained IT Function takes on the SIAM role Contracting Model Contracting Model • Contracts established between the client and each service tower provider separately. • Suppliers separately sign up to the Master Services Agreement • Contracts established between the client and each service tower provider separately. • Suppliers separately sign up to the Master Services Agreement 20
  • Value from SIAM Tower approach Theme Benefits Supplier Mix • • Greater competition within Towers drives costs down and service quality up. Removes traditional ‘monolithic’ contracts and allows easier breaking/switching throughout contract’s lifecycle. Flexibility • • Scope and size of Towers allows for easier breakage/switching and eventual exit. Tower boundary model can be flexed to move services between retained organisation and different suppliers. • Tower model allows clients to appoint suppliers based on core competencies. This can allow SME participation to increase. SIAM design can allow key skills to be retained/insourced and allocation of service/systems and process integration responsibilities to be allocated appropriately Skills and responsibilities VFM Risk Transfer and Management • • • Removes ‘prime contractor’ overheads, reducing costs. Increases competitive pricing pressure between Towers/suppliers. • • SIAM supplier takes on risk of end to end service delivery, reducing level of risk on client Master Services Agreement can assign shared responsibility for delivery between suppliers, increasing incentive to deliver an effective end to end service. This further transfers risk to the suppliers away from the client. Savings • HM Treasury - £53m in savings over 5 years • Ministry of Justice - £110m in savings per year PwC 21
  • Thank you Gilbert Verdian 02 8266 3058 0414 555 289 © 2014 PricewaterhouseCoopers. All rights reserved. PwC refers to the Australian member firm, and may sometimes refer to the PwC network. Each member firm is a separate legal entity. Please see for further details. Liability limited by a scheme approved under Professional Standards Legislation