In March, we reported (in Fujitsu’s UK Government business: beyond the doom and gloom) that Fujitsu had taken forward one of its ‘Maude Moment’ innovation ideas and had developed (with partner Experian) a fraud detection solution “which paid for itself in two weeks”. At that time, Fujitsu told us that the system had stopped £11 million of erroneous payments since its implementation in September 2010. According to an article in The Times at the end of last week, that figure has risen to £400 million saved through the identification of fraudulent or mistaken payments over the last six months. The suggestion is that, used more widely across UK Government, it has the potential to save £10 billion by the end of Parliament.
This is exciting stuff for the IT community servicing the UK public sector. It goes to show that, even during tough times, innovative suppliers can make money from Government by focusing on issues that are a top priority for their client. Fujitsu had no track record in this area. It started looking at the issue of ‘fraud & error” in Feb/March 2010 when it decided it would be a focus for the government. Indeed, it is particularly important for DWP and HMRC, which highlighted a ‘5 point’ fraud & error strategy in October 2010. Estimates indicate that £5.2 billion a year is lost in welfare fraud while £21 billion a year in taxpayers’ funds is lost across all central government departments.
Fujitsu was in the fortunate position of already processing HMRC’s tax credits applications, so knew the process inside out. An initial pilot of its solution showed that 70-90% of fraud and error could be detected and prevented. This must have been a big blow to BAE Systems Detica, which, we understand provides a solution to HMRC ‘detecting and correcting’ fraudulent or mistaken payments. If Fujitsu’s solution is effective it will prevent fraud from happening before it can be detected by Detica’s NetReveal solution.
So confident is Fujitsu of its solution that it is being offered to Government departments on a ‘no win, no fee’ basis i.e. it will take a cut of the savings detected by its software. We understand it is in discussions with the DWP as well as with local authorities looking to tackle housing benefit/housing tenancy fraud.
Unfortunately this is one of the few ‘innovative ideas’ from SITS suppliers that we have seen adopted by UK Government since suppliers signed their 'MoUs'. On the whole, in central government the focus remains on cutting the cost out of ICT, rather than using ICT to cut UK government costs. It would be great to see a few more of these success stories – whether form the major SIs or from SMEs. Clearly both are capable of innovation.