The fallacy of “national” systems

Arcus Global

Arcus Global
February 3, 2014

Merging Service / creating a “national” Software / Platform for Local Government.There have been suggestions that some councils are just too small. You can see the whole discussion here:

I thought I would pull out some of the points I have made in the discussion, as I thought they were worth sharing:
In terms of merging services, it is a naive and dangerous fallacy to think that “national” systems are more efficient or cost less per organisation, per transaction or per individual.

While this seems logical, this has never (or almost never) happened in reality. There is a reason for it: once all demand is aggregated, there are only one or two suppliers on the planet that can do it, so they just give a very high price. The contract is very long term, so why would they ever improve? (What would be their motivation?), and most importantly, the system would be so complex and cumbersome that daily errors cost millions would simply be marginal and unnoticed.

So the price would probably go from 500k per council to several million.
The idea also fails intellectually: instead of standardising services and processes (so they can be delivered in the same way by many interchangeable, competing providers), you standardise the supplier, to deliver fragmented uneven and complex service. And if you think that this supplier would standardise services for you – why would they ever do this? They make more money without it, you cannot get rid of them, and even if you did, there is no one else in the world able to deliver the service.

This was a terrible mistake to get providers to deliver national programmes before services and processes are made standard. And if they ever become standard, the market will always be a better alternative as competition drives ruthless efficiency and improvement…
But isn’t the Private Sector doing this? Isn’t Santander running the same banking software in all of its branches?
Well, this is very different: for one, scale is the issue. Santander will not be anywhere near the size of Local Government, Nor each branch the size of each council (branches are 20 – 50 people max, sometime less)
They are also working for ONE company, so they are all on the same employment contracts, with the same policy, same pension etc…

Santander’s customers (the public) expect and receive the SAME service across the UK, and their banking needs are similar to one another. They also offer (even the largest private sector organisations) only tens of services (even less in one division of a corporate)

A District Council of 130 people may offer up to 1500 individual services. They have no choice – they have to offer them as legislation demands it.

This matters because it is then possible for private sector to solve it with one process across at least one country. This can never happen in Local Government. The needs of the public are very different. Rural Cumbria, vs central Manchester, vs Kensington and Chelsea will have completely different demographic, spend profile, needs and demands / priorities.

But even IF we ignore all of that, and create one process, forced nationally (being an average, everyone would have it (and it would be hated by everyone, as no one would get what they want).

What would then be the point of Local representation democratically, if the process would be the same, with no or limited ability to change it at a local level. This is true even for things like parking or food safety inspections – do you make a premium service that is fast (and charges the person £1 per use), or a cheap one (free) that is slow? etc…
If the democratic process is pointless and hollow with no power, then why participate – so it leads to erosion of democracy in general at the local level.

So it is not possible to make a national process with such complexity.
But doing so, would be solving the wrong problem. The problem is cost and lack of choice, NOT that the service is different from area to area.

As I said above, we should enforce interoperability and standards on systems – that way a market will emerge. Dis aggregate systems (so do the opposite – make the components smaller, NOT bigger). then the market will grow, it will be compliant to standards, and vibrant, forcing the price down.

Look at the internet for example:

HTML is a standard (an example of), and as long as your website is complaint, it will work, whoever the provider is, whatever it runs on. So the prices drop, choice is abundant, and consumers pay less.