Touch screen kiosks, interactive TV, smart cards and signet ringsblic and he wants to do it electronically. The sceptics say the project will never come to fruition but if it does, the channel should be ready to cash in. Pieter Preston investigates. that can send emails and unlock secure areas - these things might not immediately strike many people as having much to do with the world of the average PC reseller. But if the government gets its way, these are the kinds of technologies that will, sometime soon, become everyday mediums of communication between the civil service and the general public.
After a year's delay, the government has finally launched its Modernising Government white paper and has, for the first time, committed itself to an agenda and a schedule for creating a system of total electronic government.
Under the resolution, the government has set itself the target of delivering 25 per cent of public services through electronic means by 2002 and 100 per cent by 2008. The potential effect this restructuring process will have on IT suppliers, including Vars of all sizes and make up, cannot be underestimated.
Peter Kilfoyle, minister for public services, says: "For the first time, there will be a corporate IT strategy across all central government departments for joined-up government. We will use technology to meet the needs of citizens and business and not trail behind technological developments.
Every government department will have a member of the management board with specific responsibility for effective use of IT. Investment will be increased and there's a clear commitment to IT as the means of modernisation."
The idea of a joined-up government is to deliver seamless services based on common incidents in people's lives. This focus on life episodes - such as leaving school, unemployment and being a single parent - has been devised as a solution to the problem of chronic departmentalism, from which many government service providers have traditionally suffered. For example, while an unemployed individual may have to communicate with two separate departments
to apply for income support and housing benefit, under the government's revised system, one visit to the relevant website or public service kiosk in a bank or supermarket will deal with both benefit applications.
For citizens, the process is faster and easier - they can fill in their application during a visit to the local post office or from a PC at home.
For the government and taxpayer, the cost savings are significant. In fact, if the plan is taken to its logical conclusion, all administrative processes will soon be managed through a range of connected interfaces, each of which will be activated by individually held smart cards.
The most immediate opportunities for the channel comes from the uptake of desktop technology across government departments, which will inevitably accompany these developments. At the moment, less than half of all civil service administrative staff have their own PC. Similarly, according to a recent survey conducted by systems integrator and IT services company Bull Information Systems, only 50 per cent of civil servants dealing directly with members of the public have access to email and the internet. If the government is serious about its plans for the electronic delivery of services, these figures will have to improve.
The Bull survey also reveals that civil servants are divided in their expectations regarding these targets. While many government workers believe the goal is achievable, others see the ultimate objective as totally unrealistic.
This is not surprising considering the responses came from a diverse community representing more than 400,000 employees, with different degrees of working knowledge of IT systems.
Opinions are quite clearly divided along the lines of technological experience.
Civil servants who are already experiencing the benefits of modern technology on service delivery processes remain positive, claiming that the only restriction is likely to be the level of public access to the internet.
But others are more sceptical, saying the government will not be able to meet the targets it has set itself.
In light of these comments, it's clear that the other market in which Vars are set to benefit is training and support. As Peter Rigby, chairman of Specialist Computer Holdings (SCH), said in his reply to government minister Jack Cunningham, at the government computing conference: "There aren't enough people out there to implement current work, let alone the modernising government project. There needs to be some serious thought and work from the public and private sector in partnership to train the right number of people, with the right skills, to address all the problems."
Neil Cox, director of public sector marketing at Computacenter, agrees: "This would match our experience where training has become increasingly important to our customers, especially on big projects. Flexibility is the key here. We have been able to adapt our service to meet customer needs. For example, as part of our global IT infrastructure contract, Firecrest along with the Foreign and Commonwealth Office (FCO) is providing Computacenter training to 6,500 staff at 220 FCO sites around the globe."
According to the Bull survey, more than 40 per cent of respondents feel they are not receiving a sufficient amount of training in both basic PC skills and specific systems operation. Given that this figure doesn't even include those government employees who are not yet equipped with a PC, this is potentially a massive growth market.
In short, the modernising government initiative - if it is to be taken seriously - will mean that every job centre, police station and post office, every council, court, school and hospital will have to revamp and restructure its IT infrastructure and retrain its staff within a specified timeframe.
Mike Stock, electronic government manager at Bull, believes the modernisation drive in central government will have a significant impact on sales opportunities for the channel. "There will be a cascade in demand for upcoming technologies as these organisations begin to join up with each other and with local administrative centres. The market will expand and will provide business for clued-up resellers."
Kable is an independent research company specialising in the analysis of information systems and telecoms markets - particularly with reference to the public sector. Its role is to help IT suppliers become more knowledgeable about the public sector market. It also publishes the monthly magazine, Government Computing. William Heath, managing director of Kable, agrees that the government's revised focus will present sales opportunities to direct and indirect suppliers, but argues that they have been there all along. "The key to success for resellers is to ensure that they play to their strengths. They must convince IT managers that the products and services they supply can add significant value to the sale," says Heath.
"While the e-government initiative is important, the channel should be asking what the public sector opportunities are, regardless of this announcement."
He acknowledges that certain barriers, including complex and costly tendering procedures, do prevent the average reseller from securing the biggest supply and service contracts in this sector. But he says that in relative terms, the largest contracts represent only a fraction of the total market.
Heath urges resellers to conduct a detailed examination of the state of the public sector IT market and trends for the future, saying this is the best way for channel players to compete more effectively.
According to a comprehensive report by Kable - Civil Service IS Market Profile 1999 - the public sector represents nearly 17 per cent of the total UK IT market, and was last year worth about £7.1bn. The only other bigger sector is banking and finance. The report forecasts the market will grow by an estimated 5.4 per cent this year to about £7.5bn. It divides government expenditure calculations for 1998/99 and expenditure forecasts for 1999/2000 into five areas - hardware, software, telecoms, in-house staff and external services.
Perhaps the most important finding the report made was that external services account for the largest slice of total government IT spending and will continue to do so for the foreseeable future. Last year, 30 per cent or £2.2bn of expenditure was taken up by services. Software and hardware sales, accounting for 22 per cent and 14 per cent of expenditure respectively, are governed by cyclical demand and are not expected to grow as quickly during the next few years.
The indications are that resellers targeting the public sector market must concentrate on the service element of the systems they offer. Government departments, related agencies and local administrative centres have already begun restructuring their core operations along corporate lines. Just as those commercial organisations, which have committed to adopting integrated IT systems - such as ERP systems from companies such as SAP and Peoplesoft - must engage in a substantial restructuring of the way in which business is conducted, so too will the public sector. Business Process Re-engineering (BPR) is identified by Kable as the most important focus for IT suppliers looking to take advantage of service opportunities.
It's in this area that resellers may be seen to be lacking. This perception is reflected in PC sales figures. According to Kable, direct vendor Dell is the clear leader with a 29 per cent share of the government market. Compaq is way behind, accounting for only 14 per cent of PC sales to the government. Dell also comes out as the leader for customer satisfaction.
When PCs are bought direct, services and BPR are commonly outsourced to specialists such as Sema, Siemens Business Services and EDS.
But some resellers have got it right. Cox says: "A lot of our growth has been due to the focus on customer service, coupled with an understanding of public sector IT issues. One of things that makes us different from the rest of the channel is our ability to deliver large and complex IT projects."
As a result, Computacenter has, during the past three years, increased the number of contracts it has with the public sector by 10. It now has a dedicated public sector division employing more than180 staff, and services about 600 accounts. As subcontractor to EDS, it operates the service delivery for the government IT catalogue, Gcat, established by the CCTA, which allows government bodies to avoid complex procurement procedures and purchase hardware products and services at preferential prices, electronically and with free delivery.
Cox adds: "Computacenter's e-commerce systems and services are also accelerating due to the government targets for achieving its electronic government plans."
It's not all doom and gloom for the rest of the channel. According to Kable, while service giants such as EDS are perceived as having a stranglehold and virtual monopoly on the government market, in reality this is not the case. In 1989 and 1990, EDS had a 70 per cent share of the central government business process/managed services market - this was mainly due to two large contracts with the DSS and the Inland Revenue. But this represents only 44 per cent of the total central government external services market - 15 per cent of the total public sector services market and less than five per cent of the public sector market as a whole.
But as the Kable report points out: "It has to be remembered that services firms such as EDS have to purchase what is required to satisfy the contract - hardware, software, other external services - from other suppliers.
So opportunities for smaller companies still exist - indeed, avoiding the complicated and costly tendering process by contracting with a computer service firm could make the public sector an even better opportunity."
For example, Bespoke Training, an ISV and systems reseller which specialises in developing and selling customised training packages for the public sector, conducts most of its business through EDS. Hugh Abbott, managing director of Bespoke Training, says that the service vendors are obliged to include training provisions as part of the bid they make for any government contract.
And while EDS, ICL and IBM all have the capability to provide training themselves, often they will outsource this element of the system to a smaller specialist third party which can pay more attention to trainees' needs.
Abbott adds: "Breaking into the public sector market is not easy, especially for a small operation such as Bespoke. But once we proved we could offer effective and economical training packages we were able to build up a valuable working relationship with EDS. This relationship means we are aware of which contracts are open for offers before our competitors gain the same information."
This is an example of the way in which lucrative government contracts can feed many more mouths than might immediately seem to be the case.
On a larger scale, one of the UK's big training companies, QA, secures much of its public sector work through partnership with BT, the main supplier of technology products and services to the public sector (see box below).
Abbott is also certain that the new focus on a joined-up government can only benefit QA's future success. He is launching a customised database training package to the UK's 42 police forces. The database was developed by Securicor, which had to invest considerable money and resources up front - the usual procedure for large public sector contracts.
Abbott points out: "Previously, an individual's arrest record was made up from a diverse range of paper-based documents, made up from a variety of different sources such as custody reports, psychiatric reports and court reports. Now, for the first time, all this information will be collected on one central database which can then be accessed by every police officer throughout the country."
The government's modernisation announcement is nothing less than a promise to entirely restructure the way in which the general public is serviced.
By reshaping central government on a corporate model, and by linking the diverse departmental processes through a single IT infrastructure, Labour is embarking upon an ambitious long-term strategy to revolutionise the way in which central government does business.
Whether Prime Minister Tony Blair's vision for the future can be realised remains to be seen, but what seems certain is that the opportunities for the channel are growing. But what is also clear is that only those players that dedicate the time and effort to research this diverse and complex market will, in the end, profit from its transformation.
JUST HANGING ON THE TELEPHONE
BT, with six per cent of the total market, is the public sector's leading supplier, ahead of even EDS. The Kable report says the strongest growth market will be telecoms, which accounts for about 14 per cent of government IT spend. And as one analyst was quick to point out, the government's delivery targets for 2002 have already been achieved - more than 25 per cent of public services are already being delivered electronically - over the telephone.
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