DWP Digital make savings on digital transformation with pay as you use model

Introduction

A recently signed Memorandum of Understanding (MoU) between Crown Commercial Service (CCS) and Hewlett Packard Enterprise (HPE) provides public sector organisations with access to a range of commercial discounts and additional social value.

The MoU includes HPE Greenlake, an infrastructure (compute and storage) as a service model which can help organisations in their digital transformation by providing hybrid/private cloud and secure edge to cloud solutions. This consumption model has the financial benefits of being an operating expense (OPEX) model that means you ‘pay for what you use’ to prevent over provisioning, maximising value for money.

DWP Digital, the digital department within the Department for Work and Pensions (DWP) recently progressed their own digital transformation journey, and this case study examines the issues they were facing, how HPE Greenlake helped and the benefits they have achieved.

The challenge

DWP Digital recognised the need to advance their technology maturation by considering alternative cloud models that would provide flexibility and innovation to support their core function of providing state pensions and a range of benefits to over 20 million customers.
They identified 3 priority areas they wanted to tackle:

1. creating greater flexibility and capacity in a time when demands on infrastructure were increasing
2. creating greater financial flexibility and spending the right type of money
3. reducing technical debt

The benefits of moving to pay as you use

DWP modelled their server and storage requirements, comparing the costs associated with a traditional capital expenditure (CAPEX) model or outright ownership to that of a consumption based ‘pay as you use’ model.

Over a 60 month period they identified potential savings of over £7 million or a total of over 40%.

They also found that a ‘pay as you use’ cloud model would:

1. increase flexibility and capability to react quickly to business needs without needing to manage additional equipment or delay vital projects. By not owning physical infrastructure and avoiding paying upfront for capacity which may not be used, costs associated with over provisioning and maintaining hardware could be avoided.
2. enable them to better manage their budgetary challenges by moving to OPEX spend which is more efficient as you only pay for what you consume.
3. reduce technical debt which is particularly important where networking, cloud or IT infrastructure is owned outright and heavy costs are incurred in maintaining, updating software and overall life cycle management which can still result in project delays and capacity constraints. The benefits of reducing technical debt means the hardware is up to date, the latest services and software are available without delays and money is spent efficiently in delivering forward looking capability.

Bryan Nelson, Hybrid Hosting Transformation Lead, DWP Digital said:

Digital is really important to help reduce costs by introducing automation. Underlying hosting platforms like Greenlake are able to spin all of that up quickly and make it evergreen so you don’t end up with technical debt at the operating level, so we are always able to upgrade our software. That is one of the biggest things that this kind of model and technology helps.

A significant focus was around ensuring that services are cost effective. Whilst a service or a consumption model can’t remove everything it has the ability to significantly improve budget efficiency meaning more investment into the right areas to achieve DWP Digital’s core purpose.

A Greenlake type model avoids hardware sitting around, licences or hardware being underused and only what is used is paid for.

Other benefits of this model

In moving from CAPEX to OPEX purchases, VAT is recoverable under accounting guidelines ISFR 16 – an international Financial Reporting Standard for leasing. This offers a further 20% saving which would not be possible for purchases made outright and under capital expenditure.

This is because a cloud consumption service, like Greenlake, where the whole service from consumption, installation and break fix is also managed by HPE, is COS14 compliant meaning the VAT based on this guidance can be recovered. COS14 is an accounting guideline provided by HMRC, standing for Contracted Out Services, heading 14. For more information head to VAT Government and Public Bodies.

Long term benefits for the general public

The biggest single benefit DWP Digital described is reducing technical debt from both a user perspective and a citizen perspective. This allows them to do more with digital technology without the restrictions associated with traditional public cloud or traditional infrastructure deployment.

Bryan Nelson, Hybrid Hosting Transformation Lead, DWP Digital said:

For DWP Digital, this means when we need to do things digitally to help our citizens, we are not held back by technical debt, unplanned capital expenditure or capacity or capability constraints, meaning we can continue to help some of the most vulnerable people in society.

With the latest software development and applications they all use the latest technology and they offer many new business features. Some of those features are restricted or will not work if your underlying platform is not up to date.

The other benefit is capacity. DWP Digital is able to do things quicker, faster and at the right level because DWP Digital strategy is a consumption model. This will save the taxpayer money. DWP Digital only pays for what is used.

Support from HPE

HPE worked closely with DWP Digital to build up a deeper understanding of the requirements and the potential savings that could be attributed from moving from a traditional model to a consumption model.

Chris Burnett, Sales Leader for Central Government, Defence and National Security, HPE said:

HPE worked closely with the customer to understand how much of their existing environment was used so that we could “right size” a proposed Greenlake platform, ensuring the customer avoided procuring a solution that was over-provisioned. In addition, HPE worked with the customer to understand the forecasted future use of the environment so that DWP Digital has a minimal physical hardware footprint, and only pays for what they use.

HPE can support other public sector organisations in similar ways. HPE offers the Customer Asset Programme (CAP) which details all physical assets on an organisation’s network and includes all brands and technologies. This provides customers with accurate asset management and the ability to verify their own asset report, identify vulnerabilities from aged technology or unsupported hardware, right size enterprise agreements and identify items for circular economy processing.

Additionally, through the MoU HPE have offered a limited number of half day sustainability workshops which provides impartial advice on customer work loads, where over provisioning and other inefficiencies exist.

Tap into our expertise and support

If you are interested in finding out more about the HPE MoU and how you can benefit visit our web page. You can also read more about the MoU in our news area.

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