Private sector CIOs appear to be optimistic that the UK government’s comprehensive spending review will not have a knock-on effect in their own patch.
In a snapshot poll, CIO asked IT bosses how they thought the review would affect them. None of the respondents in the commercial sphere believed it would have a direct impact on their own organization, but some had reservations about the affect it would have on government procurement and IT employment prospects for those in the public sector.
Stephen Fowler, CIO at mobile operator O2 is certain that his organisation will not be affected at all by the spending review. He said: “I can’t foresee any impact of the cuts to public spending on the strategy of IT within O2. I similarly don’t see how this will materially impact O2 as part of the private sector in terms of procurement, investment or recruitment. I believe the drivers for this, if they exist will come from the Telecoms market itself.”
Simlarly, Robert Teagle, IT Director Starbucks Coffee EMEA is confident his organisation won’t be affected. “On the whole though, we don’t expect to change our current strategies, activities or headcount as a direct response to the spending cuts. In many ways, our response to the recent recession has strengthened our focus.”
Mike Tonkiss head of IT at franking machines specialist Neopost is one of a number of IT heads who have been expecting a reduction in investment across the board and factored it into next year’s budget. What is in the wind though is the impact on employee attractiveness. He said: “I see it as acting as a suppressor of salary expectations as qualified people become available.”
This is echoed by merchandising company Bezier CIO Chris Airey, who pointed to the obligation the government has in making any public sector IT staff made redundant as attractive as possible to businesses.
He said: “We have seen little information with regard to retraining towards hard and commercial skills for the unlucky 500,000. Everyone will need to focus on helping individuals with their attractiveness to private sector employers.”
Many IT leaders predicted the spending review will put a squeeze on contracts. Matt Ballantine, Head of IT at brand marketer Imagination said: “Much public sector IT spending is actually executed in the private sector, and contracts will undoubtedly be squeezed or cancelled.”
This could have a lasting effect on the way government contracts are negotiated and not always for the worse. One CIO, who asked not to be named, believed the drive to reduce costs will lead to innovation in IT deployment. The CIO cited shared services as an obvious example of using scale to drive down costs, but procurement processes themselves could also be made simpler and more open.
They said: “Government have said that they want to improve efficiency in their procurement processes and to attract more small and medium businesses to bid for contracts with government departments. This is a great aspiration and will be welcomed by the private sector. The challenge will be to see how far and how quickly the procurement process can be revised.”
Much of the fall-out of the review is yet to be seen. Some public sector bodies will have to wait until relevant departments decide exactly how the cuts levied on them will be reached.
Chris Price, head of ICT solutions at the Highways Agency said: “Whilst we’ve had the overall Department settlements, activities will need to be reviewed in light of what we’ve got – as opposed to bid for – and may take a few weeks to filter down to Agency levels.”