Race for change 2014: UK public sector predictions

There are two key ‘events’ that will have the potential to impact the UK public sector SITS market in 2014. The first is the looming General Election in May 2015. And the second is a peak in the retendering of several major long-running ICT contracts across central government (in 2014/15).

The first (commonly referred to as the ‘Purdah’ or ‘pre-election period’ effect) has the potential to slow decision making down pending the possible introduction of a new Government with new policies and a new strategy and direction, particularly towards the end of 2014. The second has the potential to speed up change, as the Cabinet Office, as well as the departments and agencies, take advantage of the end of existing commercial relationships to embark on new approach to ICT procurement, implementation and management. The question is which will win out?

It is our view that, regardless of the outcome of the General Election, any Government will need to remain committed to cutting the deficit. As such we don’t expect a let-up in the determination of the Cabinet Office to radically shakeup the ICT landscape. Indeed recent public sector notices highlight a drive to speed up decision-making and associated procurements in order to build up momentum between now and the end of this Parliament (see More procurements supporting Cabinet Office aims):

A presumption against contract extensions will remain: As we approach the end of Parliament, the Cabinet Office will be even more determined to bring an end to long-running ICT outsourcing agreements as soon as contractually possible. It is true that, in some cases, departments have had to extend contracts due to the lack of departmental readiness to move forward with a new commercial model. However, our view is that we are now seeing earlier intervention by the Cabinet Office; and that will result in extensions being the exception rather than the rule.

‘Traditional’ outsourcing models will become rarer: As ‘old’ contracts are re-tendered in a new form, the SIAM/Tower model continues to be the favoured option for larger departments and agencies. Any contracts signed will be shorter and more flexible. But we are also seeing alternative contracting arrangements gaining popularity, for example, Joint Ventures, ‘Mutuals’ or ‘right-sourcing’ whereby the internal IT department is retained but supported by external partners. Suppliers and clients will continue to seek the right balance when it comes to the sharing of risk and reward. No Government will want to leave the legacy of an ill-thought out mega outsourcing deal.

Increased collaboration and shared services: The drivers, both internal and external, to increased organisational collaboration and sharing of services are increasing. Budgetary pressures mean that all options are being considered. And the Chancellor’s announcement of funds directed towards collaborative projects around health & social care and the ‘Troubled Families’ programme have prompted renewed activity. External factors such as improved network connectivity and data security solutions are removing some barriers.

Changes will drive requirement for modern solutions/SMEs: Much of the change in Government, is, and will continue to be, about taking advantage of advances in technology while continuing to deal with massive legacy systems. It will be impossible to move away from legacy systems overnight but at the same time, the team at the Cabinet Office are keen to modernise to drive down costs and better public services. This will continue to drive the desire to work with SMEs, which are seen as agile and flexible, particularly in ‘new technology’ areas such as data analytics.  It will also drive the adoption of open standards and open source, to allow easier integration of new technologies into the architecture.

Relations will start to thaw between Cabinet Office and the big SIs. This is part hope, part prediction. The ‘race for change’ is clearly visible in UK Government. In our view suppliers big and small will have a part to play; the Cabinet Office is beginning to accept that, and as such, our hope is that 2014 will be the year when the relationship matures to a level Government openly accepts the role that larger players can play, and suppliers become as open and transparent as possible in their dealings with Government clients.

Posted by Georgina O'Toole at '06:00' - Tagged: publicsector   predictions