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REPORT

Report of the Board of Scrutiny on CAPSA

The BOARD OF SCRUTINY begs leave to report to the University on CAPSA and its implementation as follows:

The Board of Scrutiny, together with the Audit Committee, recommended that the University commission Professors Shattock and Finkelstein's enquiry, the report of which was published on 2 November 2001. In its Notice of 7 November, the Board published its initial response to their reports and said that it would publish a further response later in the academical year. This is that further response.1

The purpose of CAPSA

1. Although the University has had computerized accounting in various forms since 1966, the Board accepts that, by the late 1990s, it needed (and still needs) a modern and effective computerized accounting system, capable of doing what CAPSA was originally meant to do.

2. The original aims of the CAPSA project were publicly set out by the University in 1999 in an official statement which is still to be found on the University's website.

The CAPSA Project will implement an integrated University Accounting Management Information System that will assist the University of Cambridge to maintain the quality of its teaching and research into the new millennium. UFS will deliver to you consistent, up to date information that will be easily accessible from a system, which will be simple to operate for all authorized members of staff. It will incorporate on-line policy, procedures, and instructions for users to follow. The University staff have been fully involved in every stage of the design of the system, and the selection of contractors. The system will be designed to be flexible and powerful enough to meet the expressed needs of every Faculty and Department in the University. The benefits UFS will bring include:

Commitment accounting - actual expenditure plus the value of unfilled orders (sales and purchases).

Greater control over research grants and departmental expenditure.

A much greater range of information readily available.

Clearer (customized) presentation of data allowing much improved monitoring.

Integration of all forms of data - financial, stock, student registrations, etc., allowing powerful analysis, management reporting, what-if calculations, and more.

Minimization of paperwork.

Minimization of multiple entering of data.

Internal transfers fully electronic.

Data on supplier prices visible to all staff thus reducing costs to even the smallest departments.

Does CAPSA's performance measure up to its promise?

3. Despite the expenditure of much time, money, care, and effort, twenty-one months after go live and six months after the reports were published, CUFS (as we are now told to call CAPSA) still fails to deliver much of what this statement promised. A general criticism is the quality of the reports that it produces, which are hard to read, and sometimes almost unintelligible. The experiences of a number of the departmental and Faculty users whom the Board recently consulted are summed up in the words of one experienced departmental accountant who told us that, as compared with the earlier system, CUFS is still 'clumsy, time-consuming, intellectually challenging, glitch-ridden, and convoluted'. On the positive side, CUFS does make usefully available information that was previously unavailable; but as against this, some users suspect the quality of the information it furnishes because the complexities of using the system cause errors to be made in the feeding in of data.

4. Nor has the system made 'commitment accounting' a reality. Commitment accounting means running accounts in a way that makes it possible to see how much of a fund has been committed, as well as how much of it has actually been spent. This is possible only to the extent that the system is used to place orders as well as to pay bills. Because placing orders through the system is as time-consuming and complicated as paying bills, it is a widespread (and wholly understandable) practice in the University to bypass CUFS when placing orders.

5. It is the 'research grant module', the part of the system that supposedly handles research grants, that is still particularly unsatisfactory, and potentially undermines the integrity of the University's financial and management information systems. Its data structure is different from, and incompatible with, the data structure of the other modules, and to make matters worse, the software is faulty. In consequence, some information that ought to be processed automatically and accurately has to be handled manually, which wastes time and causes errors. With regard to commitment accounting, CUFS does not deal with commitments in the form of future salaries, which on a typical research project are the biggest element.

6. Finally, CUFS is still unreliable. Since the start of the current academical year it has already suffered two breakdowns that were both serious and prolonged. Meanwhile, under the terms of the contract on which the University bought the system, for many months CUFS has been 'unsupported', which means that the suppliers (ORACLE) have not been legally obliged to maintain it (although in fact they have been doing so); see also paragraph 8.

7. If CUFS is now working, and it is certainly working much better than it was, it would still be an exaggeration to say that it is working well.

8. Meanwhile the new system has been very costly. In their reports, Professors Shattock and Finkelstein describe how the cost rose from the originally estimated £4.3m to £9.1m. Since the reports were published the costs are still continuing to rise. The Board understands that, in order to overcome a number of the most pressing problems, e.g., the lack of formal support, the University will shortly have to spend £300,000 on an immediate 'upgrade', and in the longer term it may have to spend a further £2m on a bigger upgrade in order to solve other problems, e.g., the problems with the research grant module. The figures so far mentioned, it should be stressed, represent no more than the bare cost to the University of buying the system, installing it, and persuading it to work. They do not include the expenditure that has been generated by having it - for example, the time spent by staff on learning the new system and then operating it, or the cost of employing and training the extra staff made necessary by the parts that are unexpectedly labour-intensive. Neither can these figures measure the human cost in frustration and the breakdown of trust. When considering this use of resources, there are two further and related matters that the Board finds particularly worrying. One is that the system that 'went live' in August 2000 was already so dated that, by July 2001 it was no longer supported (see paragraph 6 above). The other is that at no point does anyone seem to have thought it necessary adequately to estimate how long the new system once installed would last.

9. The system that the University acquired may have been cheaper than the available alternative, but from this it does not follow that the University has had good value for its money. If the decision to buy an ORACLE product was in principle sound, as Professor Finkelstein assures it was, it is inconceivable that the University would have bought this particular combination of model, options, and maintenance package if it had properly understood what it was getting.

10. Yet, as Professor Finkelstein convincingly explains, it is now impossible to go back: the University has no practical alternative but to spend even more time and money on the system in order to make it fulfil the promises that were originally made for it, a process which is continuing, and which Professor Finkelstein warns us could take until late 2003 to complete. Given progress to date, this would seem to be an underestimate.

Governance in action

11. The Board of Scrutiny believes that it is not now its job to dig further into the details of what went wrong, or why, or how CUFS is now performing. It believes its proper task is now to consider the reaction of the Council to the two reports, and the steps that have been taken to restore the confidence of the University in its administration.

12. Professors Shattock and Finkelstein identify serious failures of both management and governance as the underlying causes of the CAPSA fiasco. The Board of Scrutiny has already made plain its belief that the failures of management included a number of serious errors and omissions by the University's senior officers. In its interim statement of 21 November, the Board detailed a number of them, and said that it believed that the Council owed a duty to the University to seek explanations of these matters from the principal officers concerned, with a view to satisfying itself that they were competent to do the jobs they hold. This enquiry, the Board felt, was the minimum necessary in order to restore the confidence of the University in its administration.

13. Yet far from conducting such a detailed enquiry, the Council took what was virtually the first opportunity that presented itself to announce that it in-tended to absolve them, and it did so even before the Regent House had had the opportunity to express its views on the reports at the Discussion on 27 November. This Discussion opened with a pronouncement from the Council which said that there should be no 'personal recriminations' against the principal officers and expressed its confidence in them. In the course of the Discussion the Treasurer and the Registrary apologized for their mistakes, but explanations for a number of the matters that the Board of Scrutiny had raised were not forthcoming. Then, in its response to the Discussion on 6 February, the Council, after debate, but again without offering further explanations, again expressed 'their confidence in the principal officers in their commitment to taking matters forward.' In the view of the Board of Scrutiny, the Council was failing in its duty to the University when it rushed to judgment and acquittal. The Board observes that, of the Council that so acted, half the senior members were already members at the time the CAPSA fiasco occurred, and hence in some sense responsible for it themselves. It agrees with Professor Shattock when in paragraph 10.4 of his report he says 'the University needs to find a way to retain its all important tradition of academic self government while at the same time preventing it from lapsing into cosiness and injecting into its governance a set of more rigorous and self-critical attitudes.'

14. The Board of Scrutiny recommends that the University thinks carefully about whether its current arrangements for reviewing the performance of its principal officers are satisfactory. Our administration increasingly depends on professional managers on whose judgement we rely. Yet in the world of CAPSA decisions just happen, major changes are initiated surreptitiously (see paragraph 16 below), and no one is accountable. It would be better to provide an effective system of checks and balances in which principal officers can be held accountable for their mistakes.

15. In a more positive spirit, the Board is pleased to note that, in a number of other ways, the reaction to Professor Shattock's and Professor Finkelstein's reports has been serious and measured. It applauds the fact that both reports were published, complete and promptly, in the Reporter; that the Vice-Chancellor called a Discussion, and took the chair himself; that the Vice-Chancellor and the principal officers have been willing to discuss the reports and their implications freely with members of the Board. It also notes that in planning the new system of computerized student records, some of the lessons from the CAPSA affair seem to have been learnt and applied. The Board also notes that the Council has accepted most of the concrete recommendations that Professors Shattock and Finkelstein made at the end of their reports, and that it is moving quickly to implement them.

Doing things differently

16. A distressing aspect of the CAPSA affair which both Professors Shattock and Finkelstein remark upon is the lack of trust and confidence between the central administration and the Faculties and Departments, which probably contributed to the CAPSA affair, and which the affair has certainly worsened. Part of this problem is that the new system forced upon Faculties and Departments changes in responsibilities and working-practices which they had not expected and for which they were not prepared. 'It is clear that rather than face up to the arguments that would have had to take place before various and individual (and sometimes idiosyncratic) department practices were changed those responsible believed that change could be driven by the implementation of the new system' (Professor Shattock, paragraph 2.10). Such dysfunctional behaviour suggests the need for well-thought-out and clear proposals for the ways in which we organize ourselves; otherwise our academics will have the administration that they deserve.

17. The Board believes that there is another dimension to the issue of trust and confidence, and this is a breakdown of relations between the lower levels of the University administration and the top. A striking feature of the CAPSA fiasco is that many of the people in the lower ranks of the administration who would have to operate the new system foresaw what would happen, tried to warn against it, and were unable to make their voices heard. In the light of such warnings, the Board still finds it incredible that the decision to go live was taken when it was, and go-live was not postponed. The Board feels that the CAPSA affair suggests the need for a more receptive style of management.

18. Returning to the subject of governance and democratic control, the Board of Scrutiny wishes at this point to draw the attention of the University to two important points which were not expressly addressed in Professor Shattock's and Professor Finkelstein's reports (although one was raised in the resulting Discussion).

19. The first is that, if the University is to maintain its tradition of academic self-governance (which Professor Shattock himself describes as 'all-important' in paragraph 10.4 of his report), it is vital to attract responsible academics to serve on the various central University bodies - and this means predominantly academics who are still actively engaged in teaching, in research, and in the administration of the Faculties and Departments. Such people, if they are any good at their jobs, are already by definition busy. The Board believes that the University needs to find incentives to persuade a sufficient number of them to serve on the central committees. (One possible suggestion is to grant academics who have served on such committees extra study leave when their period of service is over - but there may be others.)

20. The second is that, if the academics who give up their time to serve on these bodies are to exercise proper supervision and control, they need better support from the higher levels of the University civil service. The point was well made in the Discussion. Ms D. Lowther, who is a member of the Finance Committee, observed that this body

has an important job to do, but its papers largely consist of an unmanageable quantity of the undigested minutes of other committees' meetings. The Finance Committee would be considerably more effective, and certainly more efficient, if the Finance Division had enough staff in place to produce a clear analysis of the matters about which decisions need to be taken, and reduce the number of papers which need to be read before the meeting to a realistic level.

A similar point was later made Dr M. D. Macleod, who is a member of the Council.

21. The Board of Scrutiny has considered the recent Consultation Paper on reforming the governance of the University which Council published on 6 February. It notes that a number of the recommendations it puts forward are presented as a response to the fiasco over CAPSA. For the Board, a crucial question is whether any of these proposed reforms would have prevented the CAPSA fiasco from happening, or would have improved the way in which the consequences were handled. Regrettably, it is unable at present to see how these changes would have substantially affected the outcome. Except, that is, for the proposal to raise the number of signatures necessary to call for a Discussion from 10 to 50, which would have made it rather harder to have called the initial Discussion in October 2000, in which the Vice-Chancellor, the principal officers, and the Council were publicly confronted with the mess for which they were responsible.

9 May 2002 SUSAN LINTOTT (Chairman) ROBIN LACHMAN JENNIFER RIGBY
  DAVID CHIVERS TIMOTHY MILNER JOHN SPENCER
  STEPHEN COWLEY OLIVER RACKHAM HELEN THOMPSON
  VEDIA IZZETT    

1 Note: This Report incorporates the Board's reactions to the reports by Professors Shattock and Finkelstein, to the Discussion, and to the steps taken by the Council. It is written in the light of the meeting that the Board and the Audit Committee jointly held with Professors Shattock and Finkelstein on 21 January 2002. It also reflects helpful discussions that the Board has held with the Director of Finance, and information provided by a number of people who use CUFS in the course of their daily work.

We would like to record our thanks to Professors Shattock and Finkelstein for their reports, which we consider to be excellent. They give an authoritative account of what happened, with a clear analysis of what went wrong, and why. Insofar as we felt the reports contained contradictions or left matters open, we were able to explore most of them when we met in January.

It should go without saying that it is deeply unsatisfactory that all of this happened. Accepting that it did, however, the Board takes some comfort in the fact that those now responsible for CUFS are working very hard to improve it, that the system is indeed improving, and that there is room for hope that the technical problems will eventually be overcome.


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Cambridge University Reporter, 22 May 2002
Copyright © 2002 The Chancellor, Masters and Scholars of the University of Cambridge.