March 23rd, 2010 Author: Howard Inns
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The Government ICT Strategy – smarter vs. cheaper?

Every organisation needs an ICT strategy. In the private sector ICT and innovation is so critical and so closely linked to winning business and improving profitability that these plans are generally treated as closely guarded secrets. H M Government has just published, for all to see, the strategy for the whole of Public Sector for the next 10 years http://www.cabinetoffice.gov.uk/cio/ict.aspx .

Obviously it is difficult to compare this to the plan of a private enterprise, especially when the strategy relates to every part of public sector. Nevertheless ICT is just as critical to the efficient and effective running of a publically funded organisation as it is to an organisation motivated by profit. In fact, solutions like the on-line road-fund licence renewal system with real-time, super fast database interrogation are pretty remarkable feats of integration that even the largest commercial organisations would seek to emulate.

What’s in the document?

In its 65 pages the Government ICT Strategy doesn’t mandate, it sets the direction of travel through 14 ‘strands of delivery’. Some of these are visionary initiatives that are still in their infancy (or even younger).  These include:

  • The Public Services Network – a vision of a single joined up network infrastructure provided by a number of interlinked and collaborative carrier networks.
  • The Government Cloud – a similar multi-supplier infrastructure the government can use to pluck the cheapest computing service out of the ether.
  • Government Applications Store to provide a rich array of pre-developed applications they can use for their own mash-ups to avoid the cost of bespoke developments.

Other members of the 14 strands are old favourites born out of the original 2005 strategy ‘Transformational Government’ such as shared services, a simple concept of ‘don’t buy one of your own – share ours’ which challenges many public sector bodies with politically sensitive decisions about who is in charge and who offers a service level to whom (and are they capable of delivering it?)

Amongst some of the challenging and visionary there are some good, solid strands such as a Data Centre Strategy to consolidate and rationalise these expensive resources, Information Security and Assurance, and sustainability under the banner of Greening Government ICT Strategy.

What does it mean to suppliers to Government?

The report and its visionary approach are impressive and clearly state the need for the public sector and its suppliers to work in partnership. But the middle word in the strap-line to the report  – Smarter, cheaper, greener – may strike fear into the hearts of many suppliers – cheaper – not ’best value’, or ‘most sustainable price’  but cheaper.  It seems also that this focus on saving money has taken over from the number one imperative of Transformational Government which was put the citizen and their experience at the heart of the ICT strategy.

Yes, the Operational Efficiency Programme (which this report heavily references) has to deliver savings, and big ones at that, but is ‘cheap’ the best way to do it?

Smarter or Cheaper – is there a choice?

The challenge all ICT Managers (and Procurement Managers) face is establishing the subtle balance between what something costs and the savings that it enables. Total cost of ownership or lifetime cost models can help, but it can still be a tough job to make up front costs more palatable. The supplier community has to bear some of the responsibility, for example by presenting financial models for fee-based managed services in order to spread the cost of up front infrastructure investments.  Solutions supplied on a ‘pay per transaction’ basis can also help, for example automated contact centre solutions, which actually deliver a service by processing an application, can save extraordinary amounts of money. In this example, suppliers who are prepared to put their money where their mouth is and base charges only on successfully completed tranaactions can deliver smarter and cheaper (and greener in this example as no additional travel or transport is involved). More importantly, solutions like this can also play to the key philosophy of Transformational Government – putting the citizen at the heart of technological solution – because, done properly, most people actually quite like simple, quick, automated services.

However there is a risk that, in the automated contact centre example described above, the ‘call cost’ – i.e. the cost of a completed transaction could be compared unfavourably with the raw ‘call cost’ of delivering a telephone call to a contact centre agent. So whilst our conclusion is that smarter and cheaper can be achieved, it does require a broadminded approach, a change of thinking, on both sides. The key question is whether this change of thinking is sufficient to change the way solutions are scrutinised or will simplistic decisions based on the lowest up-front cost just result in cheaper but certainly not smarter solutions?

Let me know your views on whether smarter and cheaper can both be achieved together and I’ll pick up this thread again soon.

The Government ICT Strategy - smarter vs. cheaper?4.051

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