HP: Public sector now about transformation, not cuts

The public sector market is changing. HP's Andy Isherwood and Avnet's Miriam Murphy explain to Hannah Breeze how their mutual partners can take advantage

Three years ago, when the coalition government was getting well and truly into its stride, HP's then UK and Ireland boss Nick Wilson told CRN initial talks between suppliers and Whitehall spending bosses were like a "cudgel round our head" as the latter pursued an aggressive austerity campaign. The coalition's cash-saving measures meant suppliers across the board, not just in IT, were pressured to cut costs in order to hang on to taxpayers' pennies.

But three years on, and as the Conservative government enters its fifth month in power, the mindset of public sector buyers has changed, according to Wilson's successor Andy Isherwood (pictured, above).

"Clearly, the austerity measures are still there and we know what the government has got to do in the next term and we are all acutely aware of it," he told CRN. "There is a greater awareness now that you can get cost savings through some sharpening of the pencil, let's say, but you then have to transform to get the value and the return on investment.

"I think the changes in the Cabinet Office have changed the narrative a little bit to allow us to talk more about transformation, rather than just cost cutting.

"And I think we are right at that pivotal point where people understand you can only ask people to reduce costs for a certain period of time and you have to say 'actually, we have to do things differently'."

This was an important topic of conversation at a recent event hosted by Avnet and HP at the former's Bracknell base. The GovPath event was designed to bring together public sector-focused partners working with both Avnet and HP in order to discuss opportunities in the sector and collaborate. Representatives from government procurement teams were also invited to the event in a bid to represent all sections of the channel from the vendor, right down to the end user. Encouraging partners to address business outcomes with the kit they sell, instead of just flogging products, was a key theme at the gathering.

Isherwood said this is an important element in selling to a government which is now more focused on transformative projects instead of just buying something to satisfy shrinking budgets.

"The procurement guys there from government talked well about that," he said.

"They said 'we have to move on and you have to help us move on'. And that's half the battle. It is about where we can bring value which actually does deliver a proper return on investment instead of a promise of a return on investment in year 10. We all have to wake up and be realistic. Frankly, we are all taxpayers who want the best value for money."

David and Goliath

One way the government has attempted to save taxpayers' cash when it comes to IT procurement is by encouraging sales with SME suppliers, which some claim can be more agile and often provide more niche technology. The government has made some progress on this goal too, and on the G-Cloud framework alone, about half of its sales to date have been with smaller suppliers.

The news that the public sector should be moving away from big-ticket, long-term deals which can often be worth millions or billions of pounds would perhaps not be music to the ears of massive suppliers such as HP. But Isherwood said there is room for everyone in the market, which is something he wanted to stress at the Avnet event.

"Public sector is a large market opportunity - no question - that is absolutely requiring lots of transformation and I think everyone will admit that, from local to central government," he said. "It is about how to bring the best of what big companies do [and] what little companies do.

"We've had very clear messages from government - from the Cabinet Office all the way down - that we have to do a better job of integrating small and medium-sized companies which provide sometimes that agility and sometimes that niche solution into what we are doing, in a bigger and better way. It is echoed in what the Cabinet Office says: they want to do more business with SMEs and that is important, and I think what we see as an opportunity is everything from very large deals down to small deals, all of which require SMEs to be involved."

And it is not just SMEs that want to get on board with the big deals HP can secure with the government, according to Miriam Murphy, Avnet's senior vice president for the north EMEA region. She told CRN that channel partners want a slice too, and this is one of the key issues they raise with Avnet.

"From our perspective, the big concern is that these partners are trying to battle with how they can become and be seen as an expert in the clients' eyes - in this case, the public sector [customers] - and how they can be seen as equals to people who have been legacy suppliers into that environment for a long time," she said. "One of the things holding them back, and what they are looking to Avnet to support them with in that process, is enablement and also a way of leveraging Avnet's support and services so they can broaden the solution they offer."

Friendly rivalry?

HP has won a number of significant deals with the government recently, including a project with Norfolk County Council (NCC) to create a cloud-based information hub.
Isherwood said the channel can sometimes get the wrong end of the stick when his firm announces big-ticket deals such as the one with NCC.

"I did talk about this when I spoke [at the event] - I said you don't know what you don't know," he said. "You make this big assumption. If we have a big contract with the DWP or the MoD [Ministry of Defence] or the MoJ [Ministry of Justice], or Norfolk, or any of those, you assume that because the deal has been written on Hewlett Packard paper, that it is a direct deal, when actually, it couldn't be further from the truth.

"Norfolk is a great example. We probably have 50 SMEs operating in that deal. DWP [Department for Work and Pensions] is the same. People just don't know it. That has been an awakening for me. People just assume it is direct and indirect, but that is not the case. It's actually a blend."