What lies ahead for central government SITS suppliers?

ICT suppliers to UK central government are facing a tough few years. Based on public announcements of contract cancellations and renegotiations alone, we can already see a 6-7% (or £700m) year-on-year decline in UK central government spending in 2010 – and again in 2011. However, those contracts are just the tip of the iceberg: all things considered, we are forecasting a double digit percentage decline in the central government SITS market for two years running.

The leading suppliers to the market, many of whom rely on the public sector for over 50% of their UK SITS revenues, will be eager to find ways to replace substantial lost revenues. With mounting deflationary pressures, such as the increasing acceptance of offshore services and the move to an ‘as a service’ model, that’s going to be difficult.

In addition, UK Government CIO, John Suffolk, is eager to transform UK Government ICT. Though the transition to a new order will take years, established suppliers to central government must act now to transform their businesses in line with UK Government strategy. In a period of austerity, those that can show the Cabinet Office a way to build on previous ICT investment will be well placed to benefit. However, they will be faced with increasing competition from suppliers trying to sell a new, more efficient and more effective approach.

Following TechMarketView’s meeting with John Suffolk, What lies ahead for central government SITS suppliers?’, assesses the likely impact of the changes being instigated by Suffolk’s Cabinet Office team.

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