Features: September 2nd, 2011

Andrew Carr looks at the severity of the cuts in the public sector and suggests that IT is the catalyst for bringing about the transformational change that the cuts demand.

As encapsulated in its Comprehensive Spending Review, the government is in the process of implementing one of the toughest programmes of public sector spending cuts on record.

The Institute for Fiscal Studies (IFS) claims that the government’s six-year plan to reduce borrowing will see public spending brought down from its peak of 47.4% of national income in 2009–10 to 39.3% by 2015–16. The institute’s findings indicate that the period from April 2011 is set to be the tightest five-year stretch for public spending since at least the Second World War. Out of 29 leading industrial countries, the International Monetary Fund (IMF) forecasts that only Ireland and Iceland will deliver sharper falls in spending as a share of national income than the UK between 2010 and 2015.

The Government cuts have already started to take their toll on organisations across the sector that are increasingly feeling the impact not just of the cuts themselves, but also of a scaling of Government-driven services and reduced consumer spending.

These issues have increasingly drawn the attention of the public sector to the need to maximise back office and IT efficiency opportunities – but what are the wider implications?

Catalyst for Change

I believe that IT is the single, common factor to enabling an organisation (in both the public and private sectors) to deliver service transformation. Furthermore, IT managed services and outsourcing might become a necessity for the public sector if efficiency targets are to be met sustainably. The benefits to be derived from outsourcing IT are far greater than cost alone and must act as a catalyst for change within an organisation.

Taken on its own and dependent on the relative maturity of current services, this is not especially revolutionary as IT is historically a popular function to outsource. However, it is important to recognise that IT underpins the majority of business processes across the public sector

In other words, IT changes must be supported by parallel developments across other areas of the organisation and transformation must be organisation-wide.

Drive to Managed Services

At Bull, we are already experiencing customers that are willing to out-task more of their operational functions and applications because they recognise that they can make services more efficient if they focus on the core of their business.

However, the changes in the nature of managed services and outsourcing contracts together with the changing mood of public sector customers means that this approach is becoming less of a daunting prospect to first-time customers. It is actually becoming widely accepted as the norm. Suppliers are now increasingly willing to offer a broader range of commercial frameworks to reflect the need of organisations to make near-term savings while maintaining high levels of service quality.

Taking a Strong Lead

IT runs through all parts of a business, from finance to HR and from the front office to the back, and so one of the most important ingredients for service transformation is senior management buy-in. Organisations need strong leadership and an experienced partner that can act as more than simply a contractor to help drive change.

I think that the purpose of IT in public sector organisations is to facilitate different and more efficient ways of working and at times this can mean acting as the catalyst for change. For example, to reduce the cost of having staff based permanently in the office requires an infrastructure that is location independent and provides a platform to allow for working behaviours to change.

As an example, Bull TCL, the joint venture between Bull Information Systems and Barnsley Metropolitan Borough Council (BMBC), has provided a platform to the council’s thriving data centre that enables business customers to achieve consolidation, automation and transformation of services without loss of flexibility and control.

Business Agility

The IT function within a public sector organisation will have to provide solutions which enable employees to access the organisational network remotely and at any time to maximise the benefits of having ‘agile’ or ‘mobile’ workers. IT underpins all of the required outcomes in that situation. However, IT can also support company-wide initiatives to more generally drive down cost, for example, reducing service demand, standardisation and introducing consumption-based services.

In order to fit into the organisation’s need for change, IT must be tailored to support the direction that the organisation needs to move in. An IT partner, or more realistically business partner, needs to be ready to move with not only the customer, but also with ever shifting market requirements. Customers today are typically more technology aware and want to ensure value for money when procuring services which often means they want to pay for a service based upon consumption or usage.

This means that an organisation’s partners need to be mature enough to understand and appreciate that a proven delivery model today may not necessarily be the optimal approach to take throughout the term of the relationship. Therefore, a key requirement for partners these days is to be flexible enough to develop solutions that are fit for purpose and deliver known, quantified and real outcomes.

Broader Business Transformation

The critical question, however, is how the chosen IT strategy supports wider business transformation across the public sector? I believe that today’s suppliers must reposition themselves as more than just contractors. They must be partners and customised IT solutions must underpin and support the transformation process.

It is certainly true that by making its IT more efficient, an organisation can indeed save money and home in on its core functions but in truth, genuine organisational transformation requires more. The test of the maturity of a business partner is the ability to provide expertise across the board and most importantly, deliver dynamic solutions that meet the organisation’s business outcomes and strategy.

Andrew Carr is sales and marketing director, Bull UK and Ireland.