Operation public sector
With businesses on tight budgets, resellers should make the most of government spending, says Guy Matthews.
Only a couple of years ago resellers which specialised in public sector contracts were the social workers of the industry.
It was work that someone had to do, but the long and tedious sales process involving government bodies, combined with the acute cost sensitivity of clients spending taxpayers' money, made the commercial world the only place for those whose interests were mainly monetary.
It is not pushing New Labour's message too hard to say that things have changed radically.
Gordon Brown may arguably have been more generous with public spending than his Tory predecessors, but the real sea change has been the collapse in confidence of the private sector IT buyer. The public sector has, consequently, never been more tempting for channel players.
Steve Reynolds, head of software licensing at specialist public sector vendor Civica, argued that the real demand for public sector technology has manifested itself at a local level.
In the past, much of the government's technology investment has focused on major capital projects at the national or central level. That, he feels, is changing.
"With an estimated 80 per cent of all citizen transactions with government happening at the local level, there has been a rapid realisation of the need to concentrate on the use of IT by local government across the UK," he said.
"The government perceives that there are vast improvements in efficiency and customer satisfaction at the local level and real cash savings to be made with appropriate investments."
That is why, according to Reynolds, the government is spending large sums on targeted projects to deliver end-user services.
Much central government spend is not going on major bespoke solutions, many of which have imploded in an acrimonious mess, but on rolling out commoditised desktop software across a broad base of users.
"An obvious example of government spending is large-framework contracts for commodity software," explained Reynolds.
"These have saved the taxpayer significant amounts of money over the past few years and have been a great success with users, because keen pricing is offered within a flexible framework for end-users. This success contrasts with the difficulties of bespoke IT projects."
Online ordering
The obvious next phase is a greater uptake of online ordering for such products. "This is starting to happen, but we believe that this will burgeon in the near future, which will save time, trees and money," he said.
Jillian Miles, public sector team leader at reseller TrustMarque Solutions, maintained that her company has benefited from the drive to equip a range of public sector desktops with basic but up-to-date software.
"We certainly saw significant spend in June and July this year, especially on Microsoft products," she said.
Since the summer, spend has not decreased, but has begun to diversify into other areas. "Local and central government are looking to implement products outside their standard desktop configuration, such as security, back-up and filtering software," explained Miles.
"Our customers are opening up their IT vision and starting to focus on their needs rather than their restraints.
"We are seeing a lot more piloting for future projects. Spend has increased, but we envisage further increases when products are selected and pilots and projects are started."
Miles believes, however, that not all is rosy, despite an upsurge in government IT spend. Too many sites are looking at short-term solutions to achieve 2005 objectives instead of looking at a longer-term solution.
"Not enough IT companies servicing the public sector are looking at the whole process of e-government. They are working on separate sections of projects which, in effect, should be transparently one," she said.
"The IT market could perhaps have spent more time partnering earlier on in preparation for demand. The year 2005 may as well be tomorrow for all that is left to accomplish; its directives will not disappear, no matter how deep heads are buried."
What sells outside town halls and government departments? The key market of education, for one, seems to be experiencing a boom.
"A major driver at the moment is the Laptops for Teachers initiative driven by the British Educational and Communications Technology Agency, a government body," explained Reynolds.
"This scheme is helping Civica in particular because we have contracts with many of the authorised hardware suppliers, which enables them to source Microsoft Office licensing at the most advantageous terms and is generating considerable amounts of business."
Schools as SMEs
Now that they are empowered to source much of their own IT, can schools reasonably be regarded as effective small to medium sized enterprises (SMEs)? Only in some respects, according to Miles.
"Schools can be treated as SMEs only if they are guided by their governing bodies. To support their requirement for IT, they have to be empowered to make their own choices within certain guidelines," she said.
"Most schools are restricted by their council or Local Education Authority [LEA] and can only do so much. IT skill sets still tend to be low, and support, purchasing and implementation still lies with the council or LEA."
Mark Davenport, education account manager at 3Com, warned that education is a tricky beast for resellers, in spite of government investment.
"Schools are looking for a full managed service so, if all you sell is a network, you're only part of the solution," he explained.
"You need to be providing everything, from remote management to desktop installation. You might end up looking like a jack-of-all-trades, but that's the risk.
"Education is a buoyant sector which has served us well. But a lot of people have gravitated towards it because they see it as where the money is. You need to have strong branding if you're going to stand out."
The health sector is little better, according to Graham Small, healthcare account manager at 3Com. "IT managers in the health sector are pretty cautious at present," he said. "They've heard a lot about extra money in the Budget but nothing has filtered down to their level yet.
"They're saying to us: 'We'd like to be investing in wireless, Gigabit Ethernet, electronic procurement and tele-medicine, but can't at present.' A general restructure in healthcare means these funds may not be allocated until 2004."
Small explained that many IT managers in health are interested in new technology, but are worried about the impact on their existing infrastructure. "We're working to remove this fear," he said.
He believes that, because public sector buyers still want to get value from every penny, both resellers and vendors need to spend less time poring over broad government statements and more time talking to health trusts and LEAs or getting into the mindsets of IT directors.
Promising opportunities
Reynolds points to specific areas of promise in the public sector. "The development of electronic patient records and tele-medicine in the NHS, the growth of e-government in the local government arena and the modernisation of communication systems in the court services are three examples of where investment in IT will make direct contributions to improvements in public services," he said.
So what attributes do resellers need to succeed in the public sector? They need to realise, for starters, that the old social worker tag still sticks. It can be hard and often not immediately rewarding work.
"Resellers that wish to succeed in this market need to be patient, painstaking, and prepared for a long game. Critical requirements are public sector insight, experience and credentials," said Reynolds.
"Much work is tendered and attention to detail, convincing reference sites and commitment are essential ingredients for success.
"Partnerships and consortia are another emerging feature. The large outsourcers wield significant influence in the public sector, but they can only deliver with the specialist skills that smaller resellers and specialists can provide.
"Working together, large IT services companies and specialist providers can jointly provide the key ingredients here."
Resellers need to be in tune with the day-to-day worries of public sector IT people, according to Miles.
"More and more public sector IT is being outsourced and there seems to be a concern among staff about being 'bought' as part of the deal," she explained.
"Most public sector organisations are happy with the systems they have in place. They do not have the time, money or resources to be leading-edge. They feel that if it isn't broke, why fix it?"
Although it has fewer IT skills than in the corporate market place, the public sector often cannot afford the salaries of people with more skills, so contractors and outsourcers are the only option.
It seems as though the public sector needs the help of the IT reseller just as much as the reseller needs the public sector in the current drought of corporate demand.
But with major outsourcers, consultancies and integrators hanging around the margins, they don't have the market to themselves.
Nor is it certain how long current government spend will be maintained. It is perhaps a market that resellers should make the most of here and now.
SUMMARY:
- With the private sector mired in indecision and reduced budgets, the public sector promises a breath of fresh air.
- The real boom this year has been in the roll-out of basic desktop software, not in major capital projects.
- Education is still a strong market, but has become highly competitive.
- It takes a particular type of reseller to thrive in the public sector.
CASE STUDY: Hammersmith and Fulham Council and Business Systems International
Hammersmith and Fulham Council in London has recently undertaken a number of projects to upgrade its in-house IT systems. It wants to improve communication both internally and externally to help it to serve the local community more efficiently.
One of these upgrade projects has focused on replacing the council's payroll and human resources (HR) systems with a new infrastructure implemented by Sun Microsystems reseller Business Systems International (BSI).
The new system replaced two independent payroll and HR systems with a Sun Fire V880 server and a Sun Fire 280R server, running in a two-tier configuration to deliver both an Oracle database and a combined HR management and payroll application.
"Our old systems were unable to cope with the increasing number of users, and were too slow to enable staff to process vital business functions efficiently," explained council project manager Eleanor Yates.
"Our aim was to replace the two systems with a single solution, and to have one server running one application that was capable of meeting our needs for the next five years.
"We needed a solution that we could scale-up quickly and cost-effectively to accommodate future growth.
"We also wanted to add more functionality easily as well as achieve the highest levels of availability and reliability."
Hammersmith and Fulham Council had already decided to replace its former payroll and HR applications with Trent, a combined package from Midland Software that provides specialised functionality, tailored to the needs of local authorities.
And as the council had been a Sun user for many years, with several Sun servers already on site, it chose to stay on the Sun platform and to engage BSI to implement the solution.
"BSI provided a range of specialist services, including consultancy, project management, system configuration, installation and support," said Yates.
The new solution initially will support 130 users, with about 80 concurrent users, and has the capability to expand to up to 500 users.
As well as offering greater system availability, faster processing times and reduced downtime, there's also the enhanced functionality of the new applications package.
Whereas the previous applications were text-based, the new system takes advantage of a Windows system, making the applications easier to use.
"We held several discussions about where we'll be in three to five years' time, rather than just focusing on short-term needs," said Yates. "With this solution there's a lot of room for growth in many different ways."
CONTACTS
TrustMarque (0870) 121 0321
www.trustmarquesolutions.com
Civica (020) 7731 7200
www.civica.com
3Com (01442) 438 000
www.3com.com
BSI (020) 7352 7007
www.e-business.com
BECTA (024) 7641 6994
www.becta.org.uk
Midland Software (0115) 945 6000
www.midland-software.com