Better ripped-off than switch to Linux?

This week Capita, UK Schools major supplier of ICT software and services was referred to the OFT. It is alleged that they overcharged schools to the tune of £75 million. Capita deny the allegation.

The trouble is schools are hopeless at buying technology. That's not a criticism, schools are hopeless at medicine or The Law but in these areas instead of getting the Head of Physics to swot up on Gray's anatomy or Chamber's Guide they outsource to the relevant professional service providers.

However it was the Head of Physics who a few years ago mostly did his school's ICT procurement...with inevitable results. Becta and latterly the OGC (Office of Government Commerce ) stepped in with advice and lists of suppliers (who were not actually dog-owning loners) in an attempt to restore order. Even more recently, these bodies also intervened to reduce the excessive profits that were being made by their newly anointed software resellers.

Eventually Becta took mighty Microsoft to the OFT (Office for Fair Trading) over their pricing, lock-ins and forced upgrades... just to help schools survive the advent of Vista and Office 2007.

Buying technology is genuinely difficult to get right. The temptation to lift the burden from the teachers was overwhelming. Typically it first it passed to the 'expertise' of the Local Authority, who then outsourced it to the professionals in the private sector...seems reasonable?

Only there is no 'IT Profession' remotely equivalent to those other service providers Medicine and Law: there are just IT vendors.

Last week I wrote a blog about IT in the public sector where I suggested that the move to Open Source software would be prompted by the demise of a major outsourcing company. Mere speculation you understand, but in turn it was prompted by my own observations of rather tired old ICT to be found in outsourcing institutions.

Below is an observation I made about Capita then:

...This year the first pre-tax half year profits on about £3 biilion in revenue were £83 million. Profits margins were down in 2008 to only 11% and according to analysts are set to shrink further. This is an organisation that certainly does not profiteer at our expense....

I was alluding to how tight a ship Capita run but also it reflects just how hard it is to make profit from a cash strapped public sector. Maybe I got it wrong?

Bromocon's complaint asserts that Capita abused it's dominant market position to overcharge schools for software and services to the tune of 25 plus percent. This translates (they say) to a £75 million pound rip-off. If upheld, this assertion is a bit of a shocker.

Poor schools, who can they trust?

Firms behaving as badly as alleged by Bromocon, do so for two reasons; greed or shortage of funds. If the complaint is upheld, whatever the reason, there will be serious consequences.

Becta and the OGC must be shaking their heads, just how can schools get value for money from ICT procurement? Ironically, it seems, being (potentially) ripped off was seen as the safer option to trying something inherently less risky namely free, open source solutions.

Why less risky? Because the product does not 'belong' to the seller of the services. You can shop around and replace your ICT service providers if they fail to satisfy whilst keeping your systems and software.

Once schools and LAs were prepared to suffer the lock in of proprietary service and software providers in return for the latest shiny things, few questioned the superior wisdom and efficiency of the private sector. They might do soon.


Copyright © 2009 IDG Communications, Inc.

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