Delivery of the ICT Strategy for Government will require the right procurement approaches to be available to the public sector and for public sector organisations to follow a common procurement approach. This is assured through the implementation of the ICT Procurement Strategy for Government which has been developed through the Office of Government Commerce (OGC).
An analysis of the public sector ICT market place, its size, planned growth and supply and demand profile tells us that there is considerable scope for efficiency and improved delivery of services. The buying arrangements of Government and subsequent delivery models have historically been too fragmented, requiring further improvements and rationalisation.
The ICT Collaborative Procurement Strategy is a key enabler to transforming ICT procurement in the UK public sector. In the future, common infrastructure should be bought under a single and well understood set of arrangements, with the Crown as the purchasing authority wherever possible, allowing reuse across the public sector. Evidence from public sector initiatives, including the Public Sector Network and desktop services model supports the view that ICT savings of a least £1.6bn are achievable, whilst delivering on other important policy objectives including sustainability, enterprise and innovation.
The fundamentals of the Strategy implementation plans involves transforming Government buying arrangements and leveraging total Government spend by:
- Driving increased use of the best framework and ‘champion’ contracts whilst rationalising the number of successor agreements. A roadmap of major, strategic ‘champion’ contracts (i.e. frameworks and contracts which establish, in turn, the new benchmark for Government) will be established to underpin cross Government collaboration
- Increased competition, reuse, and wider adoption of collaborative, shared and integrated service delivery solutions across the public sector, supported by new commercial arrangements
- Adopting a greater level of standardisation of supply, particularly for infrastructure, using industry standards developed by the CIO Council and drawing on industry best practice as the basis for future procurement reform
- Developing “major” supplier strategies and market leverage opportunities
- Supporting Transformational initiatives such as the Public Sector Network to underpin delivery of CIO Council strategy
- Applying “Lean” principles to create a faster and more agile supply chain
- Providing strong leadership in developing the capability of the commercial community across Government
- Embedding key policy objectives into procurement including sustainability, equality, and innovation and enacting policy for Small to Medium Sized Enterprises (SMEs)
In November 2008, the SSB initiated a study into ICT (off-shoring). The SSB is examining a number of initiatives to improve ICT process efficiencies and effectiveness and has identified off-shoring as an area for further examination to assess its feasibility and suitability for application across the UK government sector. The Study’s objective is to identify and analyse the risks and opportunities associated with potentially off-shoring ICT services within the public sector.
Government will only achieve efficient and effective ICT by working with the supply base to address the complexities and issues that arise from delivering multiple services in local environments. Our service providers can provide clear examples of good practice and prevent bad practice. They can share best practice from other market sectors and countries and embed Government policy into the services they deliver. The Supply Management strategy is a key enabler of the £1.6bn saving identified by OEP from collaborative procurement. The overall benefits of the ICT strategy and individual elements cannot be delivered without our supply partners, at all levels of the supply chain.
The Public Sector represents over 50% of the UK IT market and 80% of the expenditure goes to a small number of large players. For the sake of the vitality of an important area of the economy with significant growth potential, government must recognise its responsibility as a dominant customer and procure in a way that is good for the public purse and the vitality of the IT industry in the UK.
The policy of demand aggregation pursued by OGC over the last decade has created more and more barriers to entry to the public sector markets for SMEs for the gain of questionable savings. This policy must be reversed rather than accelerated as proposed in this paper, so that innovative SMEs are fostered by having level playing field access to public IT expenditure without recourse to innovation funds like NESTA and TSB, which create market distortions of their own.
In summary, government will only achieve efficient and effective ICT by managing the supply base to ensure viable competition at all levels with minimum barriers to entry to the market. In this environment UK intellectual capital can be built to the benefit of the UK economy as a whole without having to create synthetic structures whose job is to foster innovation with debatable efficacy.
The current position on procurement is at the core of so many failures.
Facts
Innovation from SMEs for IT contracts has been denied with no mechanisms in place to adopt cost saving innovative technologies.
There is no central resource that understands or tracks application building innovations which we all know rarely if ever come from the large vendors. It is up to every government department unit to independently be aware of technology developments?
There is a reliance on the prime contractors that they will use technologies they deem best value for the taxpayer! Oh yes it’s true the CIO office actually believes that!
In effect since the closure of the research unit at OGC this government have been the dumb buyer and action needs taken to fix this core issue.
Solution – Government must get smarter and understand both what they are buying and what is new that could improve outputs. This means either OGC needs to set up a research unit or it is put into hands of external specialists that do understand. This is to first all make sure the underlying technologies are the best available and that the project thus prime contractor is closely monitored and held to account if things start to go wrong and not wait until it is too late. In the construction industry you have the architect. IT needs a new breed of independent consultants who are not prime contractors or as I have said OGC takes on that role.
Accountability needs to be both transparent and meaningful. Where projects fail then blame needs to be allocated. Likewise where projects deliver praise should be heard. Those that deliver stay on the approved list those that fail are removed to allow new players in. It’s how markets become efficient – something IT has to learn and quickly!
This report is full of vision and topical sound bites but unless the core underlying problems as I have laid out are addressed we are doomed to continuing complexity and resultant chaos on which the IT industry has thrived……?
I’m not English and yet I feel I should assist with a little translation:
“Increased competition, reuse, and wider adoption of collaborative, shared and integrated service delivery solutions across the public sector, supported by new commercial arrangements”
READ: “yada, yada, buy from the same ol’ closed-source major players.”
“Adopting a greater level of standardisation of supply, particularly for infrastructure, using industry standards developed by the CIO Council and drawing on industry best practice as the basis for future procurement reform”
READ: “yada, yada, buy from the same ol’ closed-source major players.”
“Our service providers can provide clear examples of good practice and prevent bad practice. They can share best practice from other market sectors and countries and embed Government policy into the services they deliver”
READ: “yada, yada, let the major players make their case, and than buy from the same ol’ closed-source major players.”
I have seen this in so many government and business IT projects, it is no longer funny. Getting out of the “wasting money on IT” spiral could be a lot simpler: stop asking the tailor whether you really need those new pants.
prediction: The Conservative Party can bash their opponents all they want. In the end they will listen to and then buy from exactly “the same ol’ closed-source major players.”
This section intrigued me the most in the report and I have to say I agree with most of the comments made about the use of frameworks. Small, agile, low cost innovative SME’s quite simply are unable to gain work via these frameworks. End of Story. So the big SI firms can continue to charge seriously OTT day rates for junior staff and there is absolutely nothing that the talented, cost conscious SME can do about it. This strategy if and when it comes to fruition will maintain the tired old status quo of a few major players ie Fujitsu, IBM, Deloittes, EY, Atos, etc taking 80% of the revenue and the British taxpayer help to fund the six figure salaries of those involved
Centralisation leads to waste, overprovision, a complex monopoly of a small group of suppliers. The LSE report (Dunleavy) a few years ago talked to this. Pointed to a the Canadian and Dutch governments as models of how to do with without massive quangos in the middle provide a large attack surface for vendor capture.