Value for Money Examination  17:   Integrated Short-Term Schemes System (ISTS)


Background

The Integrated Short-term Schemes (ISTS) system is the name given to the computer system being developed by the Department of Social Welfare (the Department) to provide for the operation and administration of short-term schemes. ISTS is the first system to be developed by the Department on an integrated basis and replaces a number of systems which had been operating independently of one another.

The development of the ISTS system began in July 1992 and the project is expected to be completed in 1997. The total costs incurred by the Department in the development and implementation of the ISTS system amounted to ?25.Om up to 31 December 1996.

Factors which influenced the decision to develop an integrated system included the need to modernise the services provided at Local Offices, the desirability of computerising Supplementary Welfare Allowance schemes and the requirement for improved controls and better management information. In January 1992 the Government decided to tax Unemployment Benefit (UB) and Disability Benefit at source. This decision copper-fastened plans to develop an integrated system, as the Department did not consider it feasible to adapt the existing computer systems to implement this new policy.

Objectives and Scope of the Study

The study set out to examine

  • whether the project was properly planned and managed
  • the use of consultancy assistance
  • the costs incurred and the extent to which the projected benefits were realised
  • the efficiency with which the system was implemented.

Project Planning and Management

The Department did not carry out a formal cost-benefit analysis of the project because of the urgency of meeting the Government imposed deadlines for introducing taxation and because the likely yield from this source would outweigh the costs incurred in developing a new computerised system.

Plans for the individual components of the project, prepared by the Department between July 1992 and February 1993, were inadequate and unrealistic in their estimation of time, costs and resources required. Co-ordination was also lacking as these plans were drawn up independently.

A review of the status of the project by consultants in September 1993 concluded that the project needed to be re-organised and that additional investment would be required which would, however, be justified by reference to the benefits which would accrue from the new system. On this basis the Department decided to proceed with the development of the system. Following the re-organisation and consolidation of the project a comprehensive plan was drawn up in April 1994.

Although much of the administration of short-term schemes is carried out in Local Offices the ISTS system has been developed using a centralised architecture with local terminals connected to a single computer over a network. This was a reasonable approach bearing in mind the time constraints, the skills deficit and the costs associated with developing an alternative system using a client/server architecture. However, there are likely to be significant costs if the ISTS system is required to be re-engineered for a client/server architecture at some time in the future.

A strategic executive committee set up to direct the project met only on two occasions over the course of the project. In addition, the project board had up to 16 members with frequent changes in personnel, which would have hindered efficient decision making. The Department has stated that following the re-organisation of the project clear ownership and responsibilities were established for both the board and the management team and that the project was managed in such a way that it was delivered on time and within the revised budget.

The level of uncertainty in relation to the taxation requirement imposed by Government decisions made it difficult to properly plan and manage the project in the early stages. However, it is recognised that the Department succeeded in convening a number of claim processing and payment systems to a modern integrated system without any disruption of services.

Use of Consultants

Two sets of consultants were used during the project - technical consultants and information systems consultants. The information systems consultants who carried out the review of the status of the project were retained to assist in the development and implementation of the system as the Department did not have the necessary skills and experience to develop a system of this size and complexity. The cost of the consultancies up to 31 December 1996 was ?3 .0m for the technical consultants and ?5.8m for the information systems consultants. The extent of the requirement for this level of assistance and the resulting costs had been significantly under-estimated by the Department.

The approval of  the Government Contracts Committee was not obtained for the award of the consultancy contracts during the project. In addition, EU procurement directives were not adhered to.

Realisation of Benefits

The main benefits identified by the Department, which could be realised through the increased use of technology of which ISTS was the key component, included the introduction of a facility to tax UB payments at source, increased productivity at Local Offices, integration of all short-term schemes and improved services to claimants.

The benefits of ISTS cannot be comprehensively assessed until the system is fully implemented. However, some of the projected benefits may not be realised. The Government decided, in October 1995, to defer indefinitely the direct taxation of short-term benefits with the result that this anticipated source of revenue is not being realised. Moreover, at the time of the examination, there had been little change in work practices in the Local Offices visited.

Implementation of the System in Local Offices

Due to delays in the development of the ISTS system and the requirement to introduce direct taxation of UB from April 1995 the Department decided in July 1994 to set up a centralised UB section in Dublin to facilitate the processing and taxation of UB payments. Following a Government decision in January 1995 to defer the taxation of UB payments at source until April 1996, the Department disbanded the section and brought forward the implementation of Phase 1 of the system in Local Offices. The costs incurred by the Department in establishing the unused centralised UB section amounted to ?1.08m.

Apart from some minor delays because of capacity problems, Phase 1 of the ISTS system was successfully implemented in all Local Offices during 1995 and early 1996. However, the system has not been implemented in Branch Offices, which are operated on an agency basis, as agreement has not been reached with the managers. As a result, 24% of Unemployment Assistance claims are not processed through the ISTS system.