By Tony Collins
Intellect, the trade association that represents IT suppliers, large and small, has responded to yesterday’s report “Recipe for rip-offs – time for a new approach” from MPs on the Public Administration Select Committee.
The thrust of the committee’s report is that a few large companies dominate government IT, overcharge the taxpayer , suffocate innovation and subjugate SMEs.
Now Sureyya Cansoy at Intellect, in giving her organisation’s response to the report, quotes Alistair Hardie, who is the SME Champion on Intellect’s Board, and MD of an SME.
“On behalf of our SME members I don’t believe SME’s are disadvantaged by large ICT companies in any unfair way at all.
“As we all know, many public sector procurement practices remain SME unfriendly but that is not the fault of large ICT companies.”
On accusations in the PASC report of cartel behaviour, Hardie says: “SME ICT companies don’t see any sign of large companies colluding. Quite the opposite, we see them in fierce competition.”
Sureyya Cansoy describes the committee’s comments as “heavy-handed”.
“I have spent the day looking at the Public Administration Select Committee report on Government and IT, which was published this morning (which was difficult to miss given that it was reported by BBC and the broadsheets).
“My first observation was that it carried unfortunately a very negative title, which seemed to have been designed to grab the headlines. And it did just that! It is, therefore, not surprising that the press coverage of the report has been largely negative of government ICT and the industry.”
She says the positives in the report include recommendations that:
• IT must be fully integrated into policy making
• There is no such thing as an IT project – government must focus on what they want to achieve and not the technology.
• Government must become a more intelligent customer by recruiting people with the skills to procure and manage IT contracts.
• Strong leadership and accountability are required to drive change.
Cansoy also welcomes the committee’s view that the supplier base to government should be widened to offer more opportunities to SMEs.
“However, I should also emphasise that we believe that best results for government can be achieved by a diverse ecosystem of different suppliers, large and small, doing different things.”
One of the biggest barriers for SMEs and new entrants to the market is the cost and length of procurement. By making procurement simpler, faster and cheaper, government can open up the market to many new players, including SMEs, says Cansoy.
Intellect has issued a statement denying an allegation in the committee’s report that big IT suppliers to government may operate a cartel.
“The implication is that leaders of public sector businesses in our industry have been involved in criminal activity. As the trade body for the ICT sector, we want to make it clear that this is not the case and cartels do not exist in our industry.
“On the contrary, this is a highly competitive market. Intellect would cooperate with any investigation into such allegations, but we believe it would be a waste of public money.”
Intellect is also “very concerned” about the suggestion in the committee’s report that Whitehall’s approach to IT had been a recipe for rip-offs”.
It says that “those who know the industry well will know that doing business with government can be costly because of the long procurement processes involved and government customers’ non-standard requirements.
“Pricing therefore inevitably reflects the fact that government over-prescribes its requirements. For this to change, the government needs to make radical changes to the procurement process to avoid the impression of overcharging.”
Intellect’s response to Public Administration Select Committee report.
I find it astonishing that Intellect can say what amounts to ‘It’s the customers fault’ in realtion to costs. In my experience of running an SME – in the NHS we have on many occasions worked with large SIs as a sub contractor – in all cases when they ‘supply’ our solution they have added at least 60% clear margin on top of our quoted price. What does the cusstomer get for this increased charge? In practical terms nothing. We still do all the work, project management, implementation, training and level 2 support (level 1 being provided by the customer’s support team). When we ask what the extra charge is for, it invariably comes down to covering a perceived risk by the SI. This was the main reason why, pre-NPfIT, we gave our customers the option to contract with us directly, dramatically reducing the customers’ costs. The costs are very simple to explain, big SI = big overheads. Add in the requirement of an SI to maintain profits = bigger cost to end customer. The procurement process and entry requirements, take ASCC for example, automatically preclude small companies on the basis of turnover the [minimum] limit being £2,000,000. So if a company has track record for delivery, support, innovation, fit for purpose product, 10+ year trading history but does not turnover £X it is prevented from supply. Turn that on its head with CSC/iSoft £multi-million turnover, long trading history, not so hot on delivery, innovation or fit for purpose but they are allowed to and encouraged to supply. The NHS bends over backwards to buy from these organisations. In the cited example gives them 4 or 5 chances to remedy their contractual breaches for non supply. The fact is the such organisations cannot be treated in the same way SMEs are treated. Forgive me if at time I feel somewhat bullied and put upon. I am sure others in our industry feel the same. This is the main reason we are no longer part of Intellect. From our perspective the name is an oxymoron.