Two views on public sector IT: the traditional one of over-ambitious projects disastrously and regularly failing, causing embarrassment to both customer and supplier; and the new model, all about the Blairite vision of “joined-up” and “e-government”, the UK leading the world in terms of the delivery of service to its online citizens.
Bored and repelled by the former, unconvinced by the latter? Then try another dichotomy for size: on the one hand a crumbling private sector and on the other a healthy and resilient public sector eager for the very same web-based solutions and projects the corporations aren’t returning your calls about any more. For, perversely enough perhaps, as the public sector attempts to cross the River Styx of public IT disasters it needs more help than ever from both technology suppliers and consultants.
Peter Tucker, business development manager for Northern Irish business processing and IT outsourcing company Sx3, is only one of many adamant that the public sector is the sweet spot in the market. “At the moment this is a very exciting market as other sectors rein back as a result of the recession. The public sector is very buoyant in the UK,” he says.
“This market is being driven by Tony Blair and the public sector is up for doing more business and there are projects and more initiatives as a result,” says Mike Greig, vice president for public sector business Development in Scotland for Cap Gemini Ernst & Young, which last month announced a major seven-year contract from the Scottish Executive to provide an e-procurement service across the country. “There are large projects around and many of them are more complex than before, but this is a market for everyone.” And, as Phil Barnett, general manager for e-business at Birmingham-based outsourcer ITNet puts it: “This market is the only area in which we see growth in the pipeline. The commercial sector is very, very slow by contrast.”
Analysts agree that right now the civil servant and his local government officer equivalent are your best new friends. Peter Foster is principal analyst with Ovum Holway, the software and services arm of the London-based research group. “While everything else has dipped significantly, the public sector has held up very well. There are two factors behind this. Government expenditure is not directly related to the state of the economy at any particular time and so tends to hold up well in the short term, and also UK Government has made a lot of promises concerning e-government and developments in health and education electronic delivery, and made them very publicly.”
Holway is about to publish a report on the public sector, and, given its numbers, no wonder. According to Foster’s research, the public sector IT services market will hit £3.4bn in 2001 and is growing at 2.5 times the growth rate of the rest of the UK IT services market. “Adding in software, the public sector software and IT services market is predicted to be larger than the equivalent financial services sector by 2004. Ignore it at your peril!” says the study (The UK public sector; opportunities for IT services).
At the same time IDC sees healthy prospects in Europe for IT public sector consulting: “European governments and government institutions will be spending considerable resources over the coming years on bringing their services to citizens and businesses over the Internet in order to comply with e-Europe deadlines set by the European Commission,” said the research group last month.
The analyst company believes “this opens up large opportunities for IT services providers as the public sector looks for advice and help in implementing new e-government initiatives”. IDC estimates that European public sector spending on e-government represented around 6%, $1.3bn, of the total IT services spending last year. By 2005, that figure will have doubled to 12% of total IT services spending, $4bn, representing a 26% compound annual growth rate over the five-year period.
UK public sector analysis firm Kable also says there’s more money in the pot. Local government has identified that it needs to spend an additional #122.8m on change management and £38m on project management over the next three years (2001-2004) on reaching its e-targets, according to one of Kable’s directors, Karen Swinden. “This is over and above what it normally spends on IT,” she adds.
Not that what this sector already spends on IT is negligible. Kable estimates that the current UK spend on IT consultancy spend is £373m annually, split into £14.4m for criminal justice, £120.6m for the NHS, £39.1m for defence, #101.5m for central government, £43m for local government and £54.8m for education.
If those figures are set to grow, it’s easy to see whom to thank. “The two drivers behind this are the search for best value, where local government customers are looking to reduce central spend, and also the central government modernising agenda and the delivery of electronic service initiatives,” says ITNet’s Barnett.
The second driver, especially, is beckoning new entrants. For example, Ian Cheewah, vice president in charge of public sector for US-based consultancy Sapient, says his firm is making a push into this market through being drawn in by what he describes as Prime Minister Blair’s 2005 “thought piece” on joined up delivery.
But, he says, “This is an extension and an opportunity not a haven for us from the commercial sector. Government needs things done and done quickly, and this is a ground breaking opportunity to show a company like ours can deliver things in a short burst.”
Ah, now there’s the rub, of course. Put “public sector” and “IT” together in the same sentence and all too often the words “disaster” or “failure” come swiftly on. Will the men from the Ministry or the lasses from the Town Hall be any better at avoiding the e-government equivalent of the Passport or Pathway cock-ups that have been the joy of many a journalist and Parliamentary Select Committee these past 20 years?
John Thornton, managing consultant at CMG Admiral, previously worked in the public sector and says that broadly speaking things are looking more promising this time. “With large-scale projects you end up with a lot of requirement creep, which leads to endless projects. Government has started to get out of this loop especially since the McCartney report on the need for better IT project management. And I don’t think you see so much of technology looking for somewhere to land,” he says.
Guy Smith is commercial director of market support services company Prolog, with significant experience in the public sector, especially helping government departments sell or distribute publications. “In terms of public sector IT, in the past I think projects were over-ambitious. Now customers are taking a far closer look at what they actually need to deliver in the short term.”
The new emphasis is definitely on the more manageable, bite-sized project.
“There is a much clearer picture this time about what the Government wants to achieve, with straightforward objectives in terms of things like delivering procurement online, which isn’t the same as outsourcing some major legacy system or creating some very big ambitious new application,” comments CGE&Y’s Greig.
However, by the same token, some critics warn that while more modest is good, it could lead to a fudging of the question of whether those lofty Blair targets will be met. One hundred percent delivery of services electronically may end up meaning not quite what was first envisaged.
“Yes, the 2005 targets are fairly generic in terms of delivering 100% of services electronically; there are probably myriad ways of making this achievable, and some people will just slap on a web front-end. But fundamentally this is all about improving the service on offer to the citizen, which means a lot of back-end integration and end-to-end processes, and these applications need to be compelling and well thought through,” notes Rob Banathy, government sector manager at Parity Solutions.
There may also prove to be big differences in various parts of the public sector in meeting the 2005 targets. “There is an enormous difference between central government and local government. Central government is paying lip service to the targets, local government is doing its best to try and achieve them,” says Kable’s Swinden.
Still, the verdict is clear: this is a good time to be able to talk “e” with the state. We’ll close with some good advice from ITNet’s Bennett: “Adjust the terminology into things the public sector customer can understand.
In the private sector you can talk about marketing being key and ‘customer intimacy’. Say those words to the public sector guy, and he has no idea what you’re on about. But phrase the same message as ‘citizen consultation’ and you’ve got him. That’s what it’s about.”
The NHS hasn’t received as much negative publicity as other parts of the public sector in terms of poorly-handled IT projects, but had its fair share of problems in the ’90s, according to Ian Curr, online services manager at Stockport NHS Trust.
But projects like Stockport’s Mail Storm electronic document management system are certainly signs of progress. Like central and local government the health service has its own e-target initiative, the Information For Health 2005 targets. As part of that initiative, Stockport has built a system for getting clinical documents and patient records direct to bedside, saving time and medical secretary overheads, says Curr.
Mail Storm was recently upgraded with help from consultancy Attachmate.
“We look for evidence of where they’ve done something before so we know what they’re saying is achievable,” Curr says of working with consultants.
“Cost is a significant factor in the NHS, as it must be judged against direct patient spend, but you must always balance cost against productivity gains.”
Given recent government interest in better collaboration between industry and the public sector, an example of how the IT consultant and the public service can come together well is offered by RSI, an IT services company formed as a joint venture between CMG and the Radiocommunications Agency, an executive government agency set up to administer and manage the radio communications spectrum. RSI developed the 3G auction process, for example.
Mike Hailstone is the head of fixed terrestrial and satellite links at the agency. “We saw that working with an on-board preferred supplier would result in a much closer working relationship than having new suppliers for each project. This way we ended with a much closer relationship. We treat each other like colleagues and concentrate on getting the job done.
And on this basis we cover running costs and any extra income earned goes straight back to the Treasury,” he says.
“The agency was very clear it did not want a traditional outsourced arrangement, and banned the use of the word,” jokes Peter Topp, RSI’s international business director. “We also realised we weren’t big enough to recruit the talent we needed. We can offer the IT support the agency needs now instead of what the customer thought it wanted when it wrote the spec five years ago.”
EPSOM & EWELL/ITNet
Steve Davies is director of operations at Epsom and Ewell Borough Council in Surrey. He says the council appreciated three-quarters of citizens contacting it were doing so by phone, and “as a small authority, there was a danger the expert in a particular area might not be available at a particular time”. As a result in May it opened a customer contact centre to develop a better service and pulled in ITNet to help.
The project was put out to tender and ITNet won, not because it was an incumbent (it wasn’t), but because it had relevant expertise and experience in both local government culture and CRM.
“The customer contact centre is just a stepping stone to walk where we need to be,” says Davies. “We are looking to work with people who really understand our particular business and are not merely seeking refuge in tough times. Large projects are significant investments for organisations like us and each stage must justify itself in terms of ROI.”
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