Public sector holds the key

As the recession eats into commercial IT budgets, public sector business still exists and it could stabilise the UK economy. Sam Trendall reports

Nursten: Competing for public sector business could prove tricky for SMEs

Research from the Society of IT Managers (Socitm) offers good news for public sector-focused resellers. Socitm’s IT Trends 2008/09 report finds that local authorities are set to spend £3.2bn this year on IT, a five per cent increase on last year.

The report advises, however, that the public sector is still prone to seeing technology as a means to an end, rather than an opportunity to drive innovation in the provision of public services.

Socitm claims that data security has become one of the government’s most pressing concerns when it comes to IT investment.

Security VAR Foursys carries out about 70 per cent of its business with the public sector. Managing director Paul Prior claimed his company was increasingly targeting revenue from encryption and data leakage prevention tools.

Good relationships
“Public sector customers are not changing their spending patterns that much and VARs with a good relationship with the public sector will continue to have that,” he said.

“Public sector buyers have always been commercially focused and it can be a struggle to get them to invest. It is still a very competitive market out there.”

Jess Thompson-Hughes, managing director of wireless specialist React Technologies, also felt that government spending patterns remained the same in the current climate. He claimed that much of the UK’s economy was propped up by public sector money.

“Many people in the public sector do not think there is a recession other than what they read in the newspapers and they do not worry about compelling business drivers,” he said.

Thompson-Hughes said investment was driven mainly by regulatory issues and compliance with government edicts, rather than by financial concerns.
“The public sector is being a bit more astute, but the deals are still out there,” he added.

ANS Group is another channel VAR that carries out a significant portion of its business with public sector bodies. Managing director Scott Fletcher claim ed existing and lucrative relationships with IT chiefs could prove crucial in the current economic climate.

“It is not like the commercial sector where they are just focused on price. The public sector is looking for reputation and it needs long-term relationships,” he said. “It is not that easy to get into and it is not something you can do quickly. We are still seeing a reasonable amount of spending. It is not as buoyant as it was, but it is better than the commercial side.”

Local heroes
Integrator Logicalis has called on the government to invest £1bn in funding IT projects deployed and managed locally. The VAR claimed half the money could be spent on datacentre virtualisation and consolidation, and a quarter on shared-service datacentre investments.

Logicalis advised that £150m could be allotted for local broadband unbundling and £100m for self-service contact centre investments. Chris Gabriel, solutions director for the Slough-based reseller, claimed that local government investment would help regenerate the economy.

“If the government has £8bn or £9bn to put into big central IT projects ­ if every college and university was able to put that money in at a local level ­ it would stimulate local economies,” he said.

A year ago, Chancellor of the Exchequer Alistair Darling used his first budget to unveil plans to push 30 per cent of public sector contracts through smaller firms over the next four years. But many SMEs have complained that the tendering process for governmental contracts can be overly complex.

Consultancy offerings
Scott Nursten, managing director of reseller s2s, said he felt competing for public sector business could still be problematic for SMEs.

“The government says it wants to support small businesses, but there are various entry requirements [for public sector tendering] and doors only open once every three to five years,” he said.

Nursten said consultancy work could be a way for smaller VARs to get a foothold in the public sector.

“Once you become a trusted adviser, they know you are a safe pair of hands,” he said. “When projects are put out to tender it stands you in good stead.”

Mobility VAR Handheld PCs focuses on the public sector. Its founder, Pierre Lams, said taking care of the little things may be crucial for the channel in 2009.

“If you can do smaller projects with a clear return on investment, you build the opportunity further down the line,” Lams said.

Software vendor CA has worked in recent years to involve itself and its channel more in public sector IT provision. About two years ago, the company moved from a geographically aligned sales organisation to one based around verticals.

CA’s public sector sales director Cris Duddridge urged resellers not to take government business for granted. “Some that sell into both the private and public sector may think they have to work a lot harder in the private sector,” he said.

“But a lot of public sector business is based on relationships and it is vital to keep those relationships in place and maintain that trust.”

Gabriel said that VARs must ensure they drive operational efficiencies into customer business while providing innovative solutions.

“The big challenge and opportunity for resellers is to deliver as many efficiencies as they can while being mindful that the public sector still needs to innovate,” he said.

He added that the recession is a chance for the channel to reassess how it goes about business and become more deft and economical.

“The right amount of IT is just enough at the right time,” he said.

VAR calls for £1bn IT efficiency pot
>> www.channelweb.co.uk/2233683