Computer Weekly ran a story on how the UK Government was looking to cut IT costs, and as the Government is currently also making a lot of (good!) noises about how they want to get small business supplying their IT solutions as well, I sent the following letter to to Computer Weekly, which was published this week:
I was interested to read your article “How will suppliers cut government IT costs? (Computerweekly.com/241973.htm)” and there are three reasons why Government IT costs will always be higher than those in the private sector.
Firstly, government purchasers always demand systems that have been highly modified to their perceived unique application and security requirements, and are reluctant to compromise by accepting off the shelf commercial systems. Secondly, tendering processes that are designed to purchase expensive solutions will always end up with expensive solutions – the cost of tendering will rule out cheaper vendors that may have had acceptable solutions. Thirdly, the contracting terms for doing business with the government are rigid and more expensive for suppliers, and these costs are passed on.
This is particularly true for cloud applications, where the economy of scale in delivering standardised solutions to 1,000s of users is rapidly reducing the cost of ownership. For example, a private company can make the decision to implement a cloud CRM solution for a nominal monthly fee by simply filling out a web form and entering a credit card. Government users cannot currently benefit from this revolution and in order to take advantage of such innovations, they need to move away from a rigid tendering and vendor evaluation process to more open minded search and selection.