Last week’s comprehensive spending review (CSR) was anticipated with dread by many in the public sector - and with good cause: some government departments have borne the brunt of the cuts. But if you’re in IT, there’s a silver lining.
Following job cuts, the civil service may need investment in IT to increase operational effectiveness. Research from the Gartner Group also indicates that annual cost reductions below 10% can be achieved with incremental IT process improvements, renegotiation of IT contracts, and standardisation of hardware and software configurations.
Other agencies will be pushed to make more radical choices, such as shared IT services or the adoption of cloud computing, which will require a fresh input of IT skills.
CWJobs asked a panel of experts for advice on how to survive the CSR and where to look for growth opportunities.
1. Negotiate with IT suppliers
The budgets of some local authorities will shrink by 7% per annum, which will require a renegotiation with suppliers. The greatest obstacle will be where big chunks of functionality have been outsourced on which councils are heavily reliant and give less leverage to negotiate.
So negotiation skills will be premium, since suppliers are already feeling the squeeze. However, the majority are hungry for business and contracts and will want to keep the revenue streams coming in.
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2. End the IT silo
New techniques for tackling organised crime, cyber security, benefits fraud and tax evasion are gradually converging. The traditional silo approach would limit the effectiveness of key investment areas for the government.
A new joint IT approach will be taken across large departments such as the HMRC and the DWP; those who can take a holistic view of IT will flourish in the new environment.
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3. Embrace innovation
Innovative shared services like virtualisation and cloud computing really do bring about cost-savings.
The NHS is one example where in excess of 130 primary care trusts use a common set of finance, accounting and payroll services that are fully automated; relinquishing daily operations and maintenance overheads has enabled each trust to realise significant cost reductions and offer a better quality of service.
Organisations need to carry out a thorough analysis of the current systems and establish procedures, such as intelligent automation, to deliver maximum benefit and mitigate any risks.
4. Get more bang for your buck
Capacity management is a hot skill in the City where there is still a strong theme of sweating IT assets to get maximum performance. Professionals working in performance management, whether they work for suppliers of capacity management tools or in IT departments, are in demand.
This is likely to spread to the public services where draconian cuts will ensure a stronger focus on getting more out of boxes and servers.
The psychological block of different departments or businesses wanting to own their piece of hardware, or real estate, has prevented more companies embracing cloud computing and hosted services more warmly. This will be cast aside in search of the bigger savings yielded by hosted platforms.
5. Exploit R&D funding and tax breaks
The CSR saw the launch of funding for an elite network of research and development intensive technology and innovation centres.
Major public technology companies in the UK expended approximately £1.8bnlast year on research and development.
In Deloitte’s recent M&A technology survey, over a third of chief financial officers said they would welcome favourable tax breaks and investment grants to make the UK a technology hub for international companies. But over half preferred tax incentives for individuals and companies to invest in growing technology companies, which would perhaps be a more effective and cost efficient method of stimulating the sector.
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6. Small is beautiful – think SMB
The small business community will play a vital role in driving the recovery from deficit-related cuts but it has to feel financially secure before it starts to hire. Technology-based SMBs will benefit from the £530m put in place for superfast broadband pilots, and investment into adult apprenticeships could unlock a new workforce that could support the economy.
The major downsides for SMBs are the CSR cuts, which affect them as suppliers, and the rise in VAT in the new year. The latter is a cost that many SMBs selling directly to consumers will struggle to absorb. Overrun on projects can be halted in the public sector by taking large problems and stripping them down in to smaller and more manageable chunks.
The role of SMBs in delivering smaller scale, cost-effective, specialist solutions for the public sector will also be increasingly critical.
7. Improve your supply chain
One lesson learned about how businesses survived the recent recession is that improving supply-chain efficiency helped manufacturers survive, according to systems integrator CSC. To reduce costs, business leaders went directly to their supply chains, working with key suppliers to reduce cycle times and increase revenues with their best customers.
Global Survey of Supply Chain Progress found that an efficient supply chain maintained prices on goods and services and also generated new revenues. Almost 80% of respondents said they had sharpened their focus on supply chain management in the last 12 to 24 months. Some 38% said their market share had gone up, while 23% said it went down.
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With thanks to David Tidey, Head of IT and Business Communications,
Wandsworth Council
; Brad Barton, supply chain practice leader, CSC; Dominic Monkhouse, UK MD
PEER 1
; Alastair Luff, Managing Director at
ABM
; James Nunn-Price, information and technology risk practice,
Deloitte
; Craig Beddis, senior vice president,
UC4
; Peter O’Donoghue,
Deloitte
technology partner.
