Big spenders compromising public IT spending?
Friday, February 12, 2010 by Stewart Baines
My Futurity colleague Steve Costello points our that for some public sector CIOs the need for power (i.e. being a big spender) is more important than looking after the public purse. Here’s a post he wrote….
An interesting paradox was reported in the UK IT press recently, when one of the UK government’s Chief Information Officers revealed that if he cut his IT spending by too great a sum, he would be excluded from an informal “club” of top purchasers which has a significant influence on informing cross-departmental policies and procedures.
The concept of a group of the biggest spenders getting together to share best-practice is no bad thing. Those with the biggest budgets will have the greatest experience of a number of diverse technology projects, and sharing what works and what does not could ease the implementation procedures for other departments embarking on separate, but similar projects. But basing this on purely on spending is something of a falsehood, as noted by the executive in question — Phil Pavitt, Chief Information Officer of HM Revenue & Customs: “So here I am, relieved of my ability to influence government’s ability to purchase if I am clever and do my job. It is one of the most perverse things that I have heard”.
Clearly there are benefits that come with scale, especially with regard to negotiations with external suppliers, which can lead to reduced costs for large projects. But at a time when public sector spending is in the spotlight, the idea that a department could be compromised by reducing costs by too large a sum seems ludicrous. While there was no suggestion that departments were artificially ramping costs, there is a question mark over the incentives for delivering significant cost savings.
There is also the potential for ego to come into play among the civil servants involved. If membership of an exclusive “club” is based on the size of your departmental wallet, then there is little or no incentive to surrender part of your budget in the name of improved efficiencies and cost savings. But what is created is a group of senior IT executives who have the potential to exert their influence across government departments and IT activities who also have a common lack of interest in reducing spending.
Silicon.com reported that Pavitt is responsible for the UK government’s largest IT outsourcing deal. Its £9.75bn Aspire project involves some 240 suppliers, which “can cause headaches for the taxman’s IT department”. It was reported that the department had had to undertake some work internally which should have been carried out by external partners, resulting in the department paying twice for specific tasks. Pavitt also said that no outsourcing contract should be larger than £100m, because “£100m is never £100m – in an £100m programme people forget why they started and the people responsible at the outset are rarely there at the end”.
Research firm IDC recently forecast that government IT spending in Western Europe will increase from $56.6bn in 2008 to $68.5bn in 2013. It noted that the UK is the highest spender, followed by Germany, France, Italy and Spain.
Steve Costello.
