Old IT models feel the pinch in public sector squeeze

The focus must now be on finding partners that can change ways of working...

Public sector buyers and suppliers are under pressure, but the spending squeeze must propel them into considering new working models rather than just cost-cutting, says Mark Kobayashi-Hillary.

The dust settled remarkably quickly on the Comprehensive Spending Review. The government managed to leak so much information in advance of the event that when the cuts were announced, we knew about them already and the IT suppliers were barely mentioned.

That doesn't mean that they're all out of the woods: the government has already started a rolling plan of working closer with the IT community led right from the heart of the Cabinet Office.

But the real danger for the suppliers is not what Francis Maude is doing to their contracts - it's the pressure he is applying to the public sector in general. As Whitehall squeezes IT buyers further, many of them are just going to demand that the pain gets passed down the supply chain.

Realities of new austerity programme
John Thornbury is the ICT director for Worcestershire Acute Hospital NHS Trust and has been working extensively on the patient records system produced by Xerox. I recently spoke to Thornbury and Andy Jones, the director of business process outsourcing at Xerox, to see how both organisations are facing up to the new austerity programme of the coalition government.

IT westminister public sector

Cost-cutting is front of mind for public sector CIOs
(Photo credit: Shutterstock)

Thornbury's initial view sounded quite bleak: "I've just sent a letter to all my major suppliers asking them to renegotiate the contracts. I have to save money over the next year - we have to cut costs.

"To make sure my service remains viable, I need to reduce cost and so I expect the firms that I work with to do the same - funnily enough though, many private sector firms are trying to increase their rates. I am trying to reduce cost now by 10 to 15 per cent."

But he also acknowledged that the present focus on cost is likely to bring new firms to the market and new innovations in pricing.

"There is a strong willingness to explore new models and that's very good - this austerity drive has made people more ready to change and look at new suppliers and new types of service delivery. People are ready to buy into change because of the burning deck," he said.

Change of focus for suppliers
Xerox's Jones was naturally more positive. He sees the environment as challenging, but one in which innovative suppliers are going to succeed: "It's how can we do things in a different way that reduces the cost and drives up output. The country needs to save money and we know the government is creating new goals and spending targets.

"We are focused on doing more for less rather than just...