Government asserts new approach to IT procurement

The UK government has introduced a new method of IT procurement, under which it will provision IT equipment and services as a single entity, rather than individual departments.

IT services providers Atos Origin and Capgemeni are the first to sign Memoranda of Understanding with the government acknowledging the new approach.

The Cabinet Office, which took over responsibility for IT buying from the Treasury in July, has led discussions with CEOs of major IT providers on how to cut costs. It says that the agreements with Atos Origin and Capgemini will be followed by others.

"Over the next few weeks as the agreements are signed, I expect to see immediate and big savings for taxpayers," said Cabinet Office minister Francis Maude in a statement. "We are not talking about small numbers here, but a total running into hundreds of millions of pounds.”

Vendors that have held talks with the Cabinet Office over the single-client approach but have yet to sign a Memorandum of Understanding on the matter include Hewlett-Packard, IBM and Oracle.

The decision to procure IT as a single entity will enable the public sector to benefit from supplier discounts, says Ovum analyst Sarah Burnett. "[It makes] it easier, leaner, and faster for government departments to procure services and to leverage economies of scale and volume discounts from each vendor," Burnett writes.

However, she believes that these changes could have a negative impact on smaller IT vendors that are not able to match the scale of services provided by their larger counterparts. "[The government] is forcing big suppliers to effectively go for bulk and size with one interface for all of the central government. That could lead to smaller suppliers losing out on opportunities and many being squeezed out."

Peter Done

Peter Done is managing director of Peninsula Business Services, the personnel and employment law consultancy he set up having already built a successful betting shop business.

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