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Saving Money

Government spends between £16Bn and £21Bn per year on IT (c.f. Martin Read, Treasury Operational Efficiency Review), and there is constant debate about whether this is value for money. There is huge opportunity to reduce the overall cost of public service operations and delivery, and to re-design public services, through better use of information and IT. And there are also ways to reduce the direct costs of IT. Attention to other recommendations, such as those of governance, procurement and architecture, will lead to cost savings as well as better delivery.

Significant savings can be made in a number of areas. These include simple pragmatic steps such as asset-sweating, contract review and restoring market consultancy rates. Government has the ability to drive down supplier costs, particularly in the ‘buyers market’ of a recession. For similar reasons, salaries of senior public sector IT staff and long-term contraactors should be curtailed, bringing them back into line with the private sector. The increases of CIO salaries aimed at making government roles more competitive have gone too far, and do not take into account falls in market rates during the recession, nor that the public sector is about more than paying higher rates than the private sector: the public sector ethos brings its own rewards.

More contentiously, massive overall savings can be made through moving services online. The reason this is contentious is because of those who are unable or unwilling to use online services – for example, because of geographic limitations on the availability of broadband, accessibility issues, lack of basic skills or simple choice. Public services need to work for everyone; while in the private sector a company can choose to ignore an unprofitable market segment, government cannot. However, paper-based transaction costs are enormous, because of manual costs but also the transcription and sense-checking errors.

Key principles

  1. Use IT to reduce overall public service costs: don’t treat it in isolation from the public services it supports
  2. Recognise the market power in the hands of government, and use it effectively and responsibly
  3. Automate interactions, but don’t leave people behind (enabling the majority of citizens and businesses to use improved online services will free up resources that can be used better to support those most in need and less able, or willing, to use online services)

Specific recommendations

Things to do

  1. Bring public sector IT day rates, conrtractor rates and salaries back into line with the private sector (consider making them c. 70-80% of the private sector equivalent)
  2. Get control of CIO/CTO (and related) roles and salaries
  3. Move services online: and use the resulting dividend to improve services for those who remain offline
  4. Make creative and intelligent use of existing IT assets, driving out cost and inefficiencies (hard cash savings)
  5. Demand reductions in existing service contracts and consultancy fees: recognise government’s market power and use it smartly

RSS feed of comments 6 Responses to “Saving Money”

  1. William says:

    Test comment really.

    But also: IT for self-service; quick wins. Brainstorm new ways of doing things with geeks and designers together (Rewired State meets Dott)

  2. Fraser says:

    Key principals [3]

    There is an argument that goes, switch off the other channels to ‘force’ savings.

  3. Fraser says:

    Introduce performance related pay?

  4. Fraser says:

    In LocalGov there is a massive jump between managers and Execs. Pay banding should be more linear

  5. John Rudkin says:

    Worrying number of failed “projects”, but more worryingly the cost of protecting and supporting ICT is easily circumvented by choice of platform. Antiquated OSes don’t need eeking out and better use, they need eradicating. I see XP everywhere, and the imminent support withdrawal/incompatibilities/vulnerabilities all costing. Gov needs to talk to platform developers like Apple, with their record of rock solid OSes, stability, lack of vulnerability, consistency of support and successful delivery of mass IT delivery such as iTunes. Get it righter by looking to success elsewhere……….

  6. andy macleod says:

    William, ‘changing the way that Govt works’ should save money and time -and accelerate the digital literacy required for Govt to be a better buyer of IT services ( which in the future would start to include ‘cloud Services’.More to follow if you are interested .

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