The completion of the NHS National Project for IT (NPfIT) tendering process will shift focus from contract negotiations to delivering services on time in what promises to be the biggest channel opportunity in the public sector.
The £2.3bn NPfIT has awarded its fifth and final major Local Service Provider (LSP) contract, with The Fujitsu Alliance named as the final LSP, covering the southern region in a 10-year, £896m deal.
With contracts awarded there will be a rush of interest from resellers that already operate in the healthcare sector, bidding to play a role as one of the many specialist sub-contractors.
The NPfIT is one of the biggest and highest-profile government IT projects since the arrival of Labour in 1997 and its modernisation programme.
But it is not only the healthcare sector that is spending. The public sector as a whole has become a huge cash cow for the channel, with billions of pounds going into IT products and services in schools, local councils and the emergency services.
However, the public-sector IT opportunity is also a challenge, with the need for transparency, reverse auctions, consortia models and public and private partnerships, to name but a few new ways of working that resellers must understand.
VARs that have built knowledge and dedicated resources to the sector are doing well, but the high-profile contracts are often going to the large suppliers, with sub-contracts filtering down to the channel.
In a world of big suppliers offering bargain basement prices, there is a light at the end of the tunnel for smaller specialists.
Rod Matthews, director of e-government programmes at Knowsley Metropolitan Borough Council, which has won awards for its achievements in IT, is a leader in local government IT. Matthews supports opening up business to a wider number of smaller partners to ensure "best value".
"There are risks attached to signing long contracts with just one partner for everything because they will not always be the best value and, if you sign a long contract, you are stuck," he said.
But the public sector, especially the NHS, uses a 'reverse auction' bidding process, whereby the contract usually goes to the lowest tender. Matthews admitted that the public sector is always rigorous on price.
"We have to be," he said. "The lowest bid will get the work, unless there is a good reason why it shouldn't."
David Ellis, director of e-security at distributor Unipalm, explained that, although the reverse auction method of choosing a supplier is geared towards price, VARs can win by engaging with public-sector bodies before tenders are put out.
"Tenders are drawn up with some suppliers in mind. But if you can demonstrate what you can offer as a reseller, you could end up bidding for a contract that suits your capabilities," he said. "Resellers should get access to IT managers as well as purchasers to demonstrate value for money."
Ellis suggested that many resellers are winning in the public-sector space, but the greater the focus, the bigger the chance of success.
"The resellers that are the most successful are those that have a lot of focus and take time to learn the ropes," he said.
Only the big suppliers will prosper selling PCs and servers, Ellis added, but specialist IT skills provided by nimble VARs can be packaged to meet the needs of the public sector.
Simon Aron, managing director of operations at Eurodata Systems, a London-based VAR that boasts NHS Trusts as well as about 15 local councils as customers, explained that most of its work is Microsoft consultancy. He claimed that the channel can support the sector's IT bosses.
"Public-sector bodies can put out a tender only when they have a project, and they can get a project only when they have someone to carry out an analysis," he said.
Eurodata holds workshops where it invites public-sector IT heads to discuss their needs with its experts. "But this does not mean you'll win a tender," warned Aron.
He maintained that there has always been money in the public sector for IT, but the challenge faced by organisations is that they have numerous projects on the go and it is a completely different sell to the private sector. "The public sector has money to spend, but it takes a long time," he said.
The lengthy bidding and contractual negotiations are because buyers are more cautious than in the private sector.
John Griffith, an IT consultant who specialises in selling into the public sector, suggested that resellers must show true transparency within their businesses to stand a chance of winning contracts.
"Resellers must provide information about themselves and show they are financially stable through a corporate profile," he said.
Griffith agreed that resellers can make good money in this market, but warned that they should be patient, and should not expect easy gains.
"Resellers must take a long-term view and not expect major bucks overnight," he said. "It takes time to establish yourself in the public sector but, if you stick at it and find your price point and niche, it will pay off."
He advised resellers to dedicate resources to public-sector markets and recruit the skills where necessary.
"The people you deal with are different, the budgets are different and the way of selling is different," he said. "Most noticeable is the formality of bidding and the fact that tenders are more widely published."
Despite the major projects stealing the limelight, the reseller channel is clearly succeeding in the public sector.
The old adage 'get big, get niche, or get out' seems to fit well in the public sector, with vendors and global system integrators providing volume while VARs provide localised specialist skills.
Keith Munt, head of public sector at Morse, said that the corporate reseller set up a public-sector division with 16 dedicated staff about 18 months ago to reduce its reliance on traditional markets.
"We did it because the commercial sector was slowing down," he said. However, Munt added that he is not convinced that there is a major difference between selling into the public and private sectors.
"It is all about value for money through services," he concluded.
Unipalm (01638) 569 600
Morse (020) 8380 8000
Eurodata Systems (020) 7619 1500
Knowsley Metropolitan Borough Council (0151) 489 6000
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