Reporter 21/11/01: CAPSA and its implementation: interim statement by the Board of Scrutiny

CAPSA and its implementation: interim statement by the Board of Scrutiny

The reports by Professors Finkelstein and Shattock on CAPSA and its implementation are addressed to the Audit Committee and the Board of Scrutiny, both of which were involved in commissioning them. The Board of Scrutiny finds their contents deeply worrying.

The reports describe how the University spent more than £9 million on a computerized accounting system (CAPSA) that was unreliable and unsuitable for its needs; how in August 2000 it failed to operate for its first six weeks, to the great disruption of the work of the University and distress of the administrators who were unable to do their jobs; and they describe how the system, though now working, is still unreliable, and still fails to do much of what it was supposed to do, so that 'the broad experience of University staff remains that [CAPSA] is a 'sponge' which soaks up time and effort that are not matched by what it produces'. Although Professor Finkelstein's report suggests that the remaining problems are in principle curable, he warns us that 'the University should look to a period of at least 2 years before all the major outstanding issues are eliminated'. And meanwhile, the University has an accounting system so deficient that Professor Shattock finds 'it hard to imagine how Cambridge can steer itself financially through the year'.

The reports present the CAPSA affair as a failure of both management and governance. With this broad analysis the Board of Scrutiny agrees. As the University's internal watchdog, the Board of Scrutiny seeks assurances that the University (and in particular the Council) identifies the underlying causes of these failures correctly, repairs the situation, and does what is possible to ensure that they are not repeated. With that in mind, the Board proposes later in the academical year to publish a full Report, in which it will comment in greater detail on the findings of Professors Finkelstein and Shattock, and on the steps taken by the Council in response to them.

To address the failures of administration, the reports show that the CAPSA fiasco consists in part of a series of failures which seem (at least at first sight) to derive from errors and omissions by one or more of the University's senior managers. The following appear to be examples. The purchase of a new computer system appears to have been planned without any serious attempt to calculate the cost, or to identify from where the money to pay for it was to come. Consultants seem to have been employed without proper tendering practices being followed, and when engaged were not given written briefs. As far as the Board is able to discover, a contract committing the University to an expenditure of millions of pounds was signed with the suppliers, Oracle, without the University having taken legal advice about its contents. Observers were permitted to go on a 48-hour visit to California in order to see the Oracle system in operation, at a university where it was in fact not yet working. Preparation for the implementation of CAPSA was disrupted when the team working on it was moved into new office space which was not yet properly equipped, and which remained so for five months. Most seriously, by late May 2000, when 'influential and indeed expert voices external to the project were being raised, calling into question the viability of the August 2000 go-live', no administrator who was in a position to do anything about the impending problem seems to have been prepared to investigate or take action. By this stage the project was being jointly run by KPMG, together with the Director of the Management Information Services Division (MISD) and the Director of Finance (both of whom have since resigned). But although the warnings were directed primarily to them, there seems little doubt that some reached the Principal Officers - and in particular, those who were the Director's respective line managers: the Registrary, who was responsible for the Director of MISD, and the Treasurer, who was responsible for the then Director of Finance.

The Board of Scrutiny accepts that there may be explanations for these matters, but it believes that it is now the duty of the University to seek them. The University's senior administrators are responsible to the Council, and we believe the Council now owes it to the University to satisfy itself that they are competent to do the jobs they hold, and to take appropriate action if they are not. It must also ensure that lessons from the mistakes over CAPSA have been learnt, and that, if the failures stemmed from bad practices of long standing, these have been replaced by better ones.

As regards failures of governance, the reports show clearly that a series of fatal mistakes were not picked up by the University's Council, or the structure of Committees that underpin it. The University in general (and the Council in particular) should now ask why at certain key stages in the CAPSA affair the University's internal control mechanism failed to function. For example, in its Fifth Report (June 2000), which was sent to the Principal Officers and through the Registrary to the Council, the Board of Scrutiny warned that the CAPSA project was in trouble, but its warning went unheeded; for this it invites the Council to provide an explanation. More generally, the Board of Scrutiny believes that, in order to address the failure of governance that occurred over CAPSA effectively, it is most important that the University find ways to make its official decision-making bodies more effective. Among other things, it needs to address the difficult question of how the Council and Committees composed of busy academics can be enabled to exercise effective control over weighty and often highly technical matters when, because of their other responsibilities, their members can only give the work of these bodies a limited amount of time.

The Board of Scrutiny notes that a recurrent theme in the reports is that the lines of responsibility for the CAPSA project were muddled, and with this the Board of Scrutiny agrees. At this point it wishes to draw the attention of the University to one particular aspect of the matter, which is that in practice the boundary between duties and responsibilities of the Treasurer and the Registrary have now become unclear. Under Statute D the Treasurer was, and legally still is, 'the Council's principal financial officer and adviser on financial matters' and the person with authority 'to sign contracts and agreements made by the Council or its Finance Committee.' Yet it was, we understand, the Registrary, not the Treasurer, who signed the CAPSA contract with Oracle. Furthermore, whereas the Director of Finance who was in post at the time of the CAPSA fiasco was responsible to the Treasurer, her replacement now reports to the Registrary - which (as Professor Shattock points out) is difficult to reconcile with the words of Statute D. In implementing the policy of a unified administrative service, a gap has clearly been allowed to open up between what the Statutes provide for and the business that is conducted. Although responsibility is being increasingly concentrated in the hands of the Registrary, the Statutes still provide that a number of the functions that the Registrary has taken over are the responsibility of other officers, and people still hold these posts. The Board of Scrutiny believes that, if the University wishes to create an administrative service with the Registrary at its head, it must be prepared to change the Statutes, and to decide what is to become of the existing Treasurer and Secretary General. Meanwhile we look to the Vice-Chancellor to ensure that 'the officers duly perform their duties'.

The reports also suggest that a major cause of the CAPSA fiasco is that the Central Administration is generally under-resourced, and particularly short of people with skills in accountancy. The Board of Scrutiny provisionally endorses this view. Professor Shattock also points out that there is evidence of a serious loss of morale within the administrative service, notably 'a high turnover amongst administrative staff'. He suggests that this is partly a problem of poor relationships, mentioning (among other things) strained relations between the 'Old Schools' and the Departments, and between academics and administrators, which the CAPSA affair have regrettably made worse. The Board of Scrutiny suspects that the under-resourcing mentioned in both reports is another important factor influencing staff morale, because it means that too few staff have too much work to do. The Board regards the question of staff morale as particularly serious, and will be returning to the subject during the current year.

Meanwhile, the Board of Scrutiny thinks it is most important that the University should assure the people in the administrative service whose daily lives have been made more complicated by CAPSA that their loyalty and efforts are appreciated, and that the University is facing up to the problems that CAPSA has caused and is taking effective steps to deal with them.

With that in mind, we are concerned at the statement about CAPSA that the Press Office posted on the 'News and Events' section of the University Website on 5 November. This conveyed the impression that CAPSA was good value for money and is now working well, which regrettably is not the case. Of course, this statement was meant primarily for the outside world, towards which the University must put as good face upon the matter as it can. But in the Board's view, this does not justify disseminating information that is misleading - or which suggests to people in Cambridge who know the true position that the University is unwilling to face the truth.

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