Big government gets tough at last

Sometimes the biggest and strongest are the hardest to get riled. While little tough guys may shout, kick and fight at the drop of a hat, the ones with the strength to really make a difference are often reluctant to get drawn into conflict.

Maybe that is just as well. But it does mean that when the eight-hundred-pound gorilla finally decides to weigh in, we all need to look out…

About a year ago the coalition government published an ICT strategy paper focusing on government IT spend and what they were going to do about its apparently uncontrolled rise.

Not before time, we personal and commercial taxpayers were probably thinking. The lack of cost control on government IT spend in previous years was, and is, legendary.

The wreckage is still all around us, as ongoing discussions between CSC and the NHS over the NPfIT attest.

The promised announcement of IT savings achieved so far has been delayed by a couple of months, but the first fruits of the planned cost clampdown are already apparent.

Several years after the commercial sector applied its own, recession-driven, cost clampdown by force, our government gorilla has finally hit out.

In the last few weeks several major announcements can be directly attributed to this new ICT strategy.

In mid-March the Cabinet Office announced that one of the UK’s biggest IT services suppliers, Capgemini, will help lead savings over £200m by 2017.

The savings come in the form of an Aspire contract which provides IT services including computers and tax and credit systems like online VAT filing.

The Cabinet Office also claims more transparency of pricing and freedom to control who it uses for what in the IT area of its requirements.

Two weeks later another announcement outlined savings of at least £75m on new contracts signed with Oracle – a company which reaches into just about every part of government with its ERP products.

The new deal has nailed down a single pricing strategy for Oracle products across the board, using an agreed discount scheme, licence sharing across government rather than the inefficiencies of licences bought at departmental level, and the power of bulk buying.

Oracle is also setting up a single ‘Centre of Excellence’ to provide skills and knowledge across all departments.

And in early April, the government introduced a cap, setting the lifetime cost of any IT project at a maximum £100m. This is to encourage more chunking up of IT projects and reducing the risk that huge public sector IT projects seem to have presented in the past.

Most CIOs can only dream of an upper limit of £100m for a single project, of course, but the savings already being made on major contracts shows that government is not like most other IT procurement.

In the light of this, it seems inevitable that big-ticket ERP vendors like Oracle and SAP are going to have to pitch and cost their offerings in entirely new ways.

All these developments point in the right direction.

The G-Cloud and the pilot CloudStore are examples of where government wants to end up with its IT procurement: in a world of smaller, shorter contracts, of greater and more continuous competition and of more government departmental choice and less reliance on a small number of large vendors.

These are just the kinds of negotiations commercial CIOs have already put in place. But any taxpayer will agree its good to see the same approach finally being taken by government as well.

There is more to be done. We reported recently on the rumblings about Oracle support costs and the interest in Rimini Street as a possible alternative supplier.

It is one thing to redefine the way you plan and negotiate your contracts and support into the future, but it is quite another to address the complexities of renegotiating the contracts already on your plate.

Will the big gorilla have the appetite for that fight as well?