Public sector resellers might feel the pinch after a government report recommended that IT contracts should be restricted to a maximum of seven years.
The Government Commercial Function (GCF), part of the Civil Service and the Cabinet Office, is a cross-government network that procures, or supports the procurement, of goods and services for the government.
It has produced a report, Exiting Major IT Contracts: Guidance for Departments, which has taken aim at the duration of IT contracts.
"In past years many government organisations entered into large outsourcing contracts, which were often single-vendor arrangements lasting five to 10 years," said the report.
"Independent analysis has highlighted a number of concerns and issues relating to these contracts, noting that they no longer represent value for money and that their structures constrain the relevant organisations from modernising technical environments."
The report continued that current government policy is to move away from large, single-vendor IT outsourcing contracts to multi-vendor, disaggregated environments, combined with in-sourcing where appropriate, and adopting a cloud-first principle.
"The term of any contract for services should be for the shortest appropriate duration, bearing in mind factors such as vendor investment, ability to take advantage of reducing costs of technology, attractiveness to the market, organisational costs and ability to manage frequent change, to enable flexibility on exit and to allow transfer to alternative providers and avoid vendor lock-in," the report recommended.
"For contracts for commodity IT this will be up to two years and between three and seven for service agreements depending on level of supplier investment required, size of contract and market dynamics."
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