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Following the US’s sanctions against Huawei, the UK Government have decided to drop Huawei from the 5G infrastructure project, indeed the sanctions mean Huawei will no longer have the means necessary to financially support such a capital intensive and nationwide project. We talked about this in the previous article but now turn our attention to the impact on the wider supplier base and draw comparisons with the National Programme for IT (NPFIT) over a decade ago now. It is now more important than ever for those involved to learn lessons and avoid waste of state resources and funding. This is particularly brought into focus during the COVID-19 crisis and pressure that the state will under to try to recoup, divert, reduce and reprioritise spending.
Throughout the process of removing Huawei from the UK supply chains, at both macro and micro levels, there will be various impacts felt across the sector:
Consequentially, UK companies will need to reconfigure their supply chains and conduct an effective change management strategy to ensure access to technologies which they rely on. This will be difficult as the UK has not yet found an alternative vendor that offers the same package as Huawei and this, coupled with the economic impacts of the COVID-19 pandemic, may hinder the abilities of the technology and telecommunications sector to move quickly to adapt.
Not using Huawei will cause delays to the UK’s digitalisation ambitions. Huawei technologies are embedded in Three, BT, EE, Vodaphone and Openreach networks. All these companies will suffer huge costs in their obligation to reduce exposure to Huawei under new legislations and guidelines that exclaim they are ‘high risk’ vendors until they sever ties with Huawei.
The Chartered Institute of Procurement and Supply (CIPS) stated that the removal will cost over £2bn. By phasing out Huawei, the UK has seriously hampered its technology supply chains and requiring operators to remove Huawei equipment alone will add hundreds of millions of pounds to the costs of the 5G project.
Will the UK government be in danger of repeating history and walking into a programme of change that is doomed from the beginning? By interfering with the supply chain and market forces, albeit for apparent reasons of state security, will there be a revolving door of exiting suppliers and Government left carrying the can?
The National Programme for IT in the NHS was the largest public sector program ever attempted in the UK at the time with the purpose of bringing the NHS’s use of IT into the 21st century. With original budgets estimated to be £6billion with various large contracts being awarded to some of the UK’s biggest technology organisations at the time including Accenture, CSC, Atos Origin, Fujitsu and BT.
However, the project was dismantled by subsequent governments as it became clear the majority of services contracted for were not being delivered and the government was continuing to incur significant costs for the programme. The project became a mess and transition and exit costs totalled to more than £10billion.
The Culture Secretary Oliver Dowden has exclaimed that the UK’s decision to phase out Huawei will delay the project by two to three years with added costs of up to £2billion (as predicted also by CIPS). This situation will have also threatened to move Britain into a digital slow lane, push up bills and deepen the digital divide. Under pressure from the ongoing demands of the 5G project whilst also navigating and funding exit from Europe and the hoped economic recovery from the pandemic, it may be very difficult for the Government to juggle all these balls at once.
Is the government unwittingly walking into another NPFIT disaster, at the risk of incurring billions of unnecessary costs just at the time we need to tighten the purse strings and try to claw back the emergency funding spent to try to mitigate the COVID-19 impact?
Or, will alternative suppliers step up and provide a suitable alternative, capable of pushing the UK into the next digital generation?
