IT industry questions sense of Chancellor’s technology cuts

Prominent figures in the IT industry have strongly criticised government plans, announced today, to slash billions of pounds worth of IT projects.

The key to saving money, they said, was using advanced IT to deliver more efficient services. They saw cutting technology as a short-sighted view.

Chancellor George Osborne today said £1.7 billion will be directly cut from “IT programmes, suppliers and property”, alongside £1.15 billion from discretionary spending, including consultancy, with “immediate” renegotiation to take place with suppliers.

Additionally, up to £1.8 billion of IT spending commitments made by Labour in the lead-up to the election is likely to be reviewed. Future IT projects will be capped at £1 million, and £95 million will be removed from ongoing operational technology costs.

David Clarke, chief executive at the BCS-Chartered Institute for IT, said it was misguided of Westminster to target ‘IT projects’, because technology “underpins and enables the implementation of all government policies and programmes.” He added that “more effective use of IT is the only way the government has of reducing overall programme costs and improving efficiency”.

“It would be disappointing to see the critical role that IT, and IT professionals, play in enabling the implementation of government efficiency savings and in developing the information society, to slip down the government's agenda by the scrapping of some government ‘IT projects’. "

Sureyya Cansoy, associate director at Intellect, which represents software and services companies, agreed that the government was taking the wrong route to cutting costs.

Even though there was an “upfront cost” to change programmes and technology, she said, “they can deliver significant long term savings and efficiencies that could make an appreciable difference to the UK government’s structural deficit over medium to long term”.

She added: “Freeing front line staff from administrative burdens using technology can mean resources are used more efficiently without harming the quality of the service.”

Cansoy encouraged government departments to enter discussions with their providers on simplifying requirements, if quick savings were needed, rather than cutting entire projects. The industry would also be able to advise on sharing services and reusing assets for significant savings.

Socitm, the body for local government IT managers, has long opposed cuts to IT spending. In February, it wrote in a policy briefing that "much higher savings are achievable through better ICT deployment", because it would improve the efficiency of public services.

It called for a focus on better local shared services and more local control, with an emphasis on data handling, as well as clear plans for "disruptive" technology that could help operations – including Lean systems, Agile implementation, shared front and back office technology, and systems supporting flexible working.

Analysts have also stated that it will not be easy for the government to undo its contracts, as many contain terms and conditions making cancellation costly. TechMarketView notes that the government spends £11 billion a year with its top IT services and software providers.

But the cuts may still go ahead, according Geogina O'Toole, research director at the company. "Suppliers such as HP, CSC, BT, Fujitsu and IBM will have all fingers crossed that the axe won’t fall on their contracts," she said. "However it appears that their coming through this period completely unscathed is highly unlikely."

Copyright © 2010 IDG Communications, Inc.

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