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1/28/2013
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IT Cost Control Measures Pay Off For U.K.

Ambitious plans to reform government technology purchasing are making a positive impact, netting $496 million in savings last year, says government audit.

In an interesting counterpoint to claims last week that the U.K.'s central government is failing to push through the kind of cost-cutting measures it promised in terms of provisioning information and communications technology (ICT), an objective third-party spending watchdog said it's actually making solid progress.

The National Audit Office, an organization set up in the 1980s by Prime Minister Margaret Thatcher to act as an independent auditor of state spending -- and which is supposed to sound warnings about waste and profligacy -- released a study that suggests measures set in place in 2010 are finally starting to bear some fruit.

The study found that the traditionally big-spending, central-government departments are starting to curb their technology expenses. Specifically, it has found evidence that, without guidelines from the Cabinet Office, which acts as a kind of state COO, the U.K. would have paid out at least $496 million (£316 million) more than it did in fiscal 2011-12.

It also said that in the period from April to October 2012, final expenditures for ICT will meet, and may even exceed budget targets set the previous year. In dollar terms, they claim the Cabinet Office had already saved $644 million (£410 million) via its savings schemes in the first half of fiscal year 2012-13, and that it expects to save a further $314 million (£200 million) by the end of the fiscal year on March 31, 2013.

[ Want to know how private industry is cutting tech expenses? See U.K. CIOs Stretch Budgets With Used Equipment. ]

Measures that seem to have paid off, according to the study, include: a slew of external commercial experts hired to help bureaucrats close their pocketbooks; smarter contract work (e.g., renegotiating contracts prior to expiry, which means expensive tendering doesn't have to kick in); negotiating as a single customer to stop vendors from selling similar systems or services multiple times to different parts of the government; and other technical measures. It also notes early efforts to reduce government dependence on big, multi-year, large-scale contracts, as well as progress by the Government Procurement Service to track ICT spending across government ministries. Astonishingly, the U.K. doesn't currently have the latter type of benchmark data.

But, there are some important caveats. The National Audit Office fact-checkers said there are some big gaps in the data compiled by the Cabinet Office. That means it can't be totally sure all the claimed savings are accurate. As a result, the NAO's head, Amyas Morse, said, "The Cabinet Office needs to develop a more comprehensive assessment of the impact and effectiveness of its ICT and procurement reform initiatives." The report also asks sharp questions about the gap between public rhetoric about greater use of smaller companies and IT suppliers and the reality.

That's not all. The challenge, it warned, is that while there's been some success in cutting waste and being a better buyer, real savings lie in fusing technology into new business processes, or what the body calls "achieving [a] digital transformation of the civil service and the public services it provides."

That's also the stated aim of the Cabinet Office, which has a vision of "digital by default," a more paperless civil service and much greater use of technology to deliver information and even actual services to the U.K. population.

To get there, the Cabinet Office might need to work on its relationships with the ICT marketplace. The study said some of the suppliers it consulted claimed to be "frustrated" at the slow pace of change. They were also bothered by a constant focus on cost-cutting to the possible neglect of innovative opportunities to redesign public service and put services online, which is what the government says it wants. (The report also mentioned feedback from government sources on "resistance" by some suppliers to "change.")

In response, a Cabinet Office spokesman said Monday, "because ICT spending was so wasteful in the past, we also know that there is still a long way to go. That's why we are determined to fully open up government ICT to smaller, more innovative companies and to embrace open source technology."

The spokesman also said that the much-vaunted digitization of the first wave of public services will begin in April -- a move it says will save an estimated $1.9 billion (£1.2 billion) in annual operational costs by 2015.

Given its track record so far, at least a few skeptics seem prepared to admit such a dramatic success is potentially achievable.

Mobile applications are the new way to extend government information and services to on-the-go citizens and employees. Also in the new, all-digital Anytime, Anywhere issue of InformationWeek Government: A new initiative aims to shift the 17-member Intelligence Community from agency-specific IT silos to an enterprise environment of shared systems and services. (Free registration required.)

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