Government IT Freeze Benefits Cloud And Shared Services

The Government’s plans to save on computer services in the public sector, will force public bodies to move to shared resources and the cloud, according to commentators responding today’s budget.

Last month George Osborne promised to cut £95 million from the IT budgets of public sector bodies, while making other cuts to reduce the UK’s budget deficit. The Cabinet’s chief enforcer, Francis Maude, has told civil servants to re-evaluate all IT contracts in order to meet this target, and all contracts worth £1 million or more have been frozen until they can be re-assessed.

Shared services and the move to the cloud

“In the search for savings there can be few sacred cows other than essential front line services, and IT spend won’t be an instinctive priority in the current climate,” said Ewen Anderson, managing director of independent consultancy Centralis. “But those essential front line services won’t be effective without up to date IT systems.”

The Conservative / Liberal Democrat governmentis lambasting “wasteful” failures by the Labour government, and it seems that IT will be hit hard by budget cuts. However, Anderson believes that organisations still need up-to-date IT, or services to users will suffer. Total government IT spendwas around £17 billion in 2008/9 according to public sector IT analysts Kable.

Anderson predicts that authorities will move to shared frameworks, which allow multiple authorities to shoulder the cost of IT upgrades, and the development of resources and best practice. “If the need for each organisation to maintain all its own specific systems and infrastructure can be removed then real savings, without compromising service levels, is a realistic expectation.”

“IT remains a critical vehicle for the efficient delivery of services to the public,” agreed Andy Burton, chairman of cloud-rpomoting body, the Cloud Industry Forum, who is also chief executive of cloud provider Fasthosts. “What we are seeing with the immediate reduction announced in May and the subsequent squeeze in the Budget has been to dramatically transform the IT procurement landscape in the public sector.”

Not surprisingly, Burton’s answer is cloud computing. “We are confident that the advance of cloud computing will be a tremendous enabler to ensure that required IT solutions can still be implemented but without the significant capital costs associated with the more traditional supply models.  Local and central government have more technical options available to them today than in years gone by, and the thoughtful application of cloud based services offer a credible and affordable way to save costs and scrutinise the ways in which IT is procured and delivered.”

IT procurement has shifted form the Treasury to the Cabinet Office, and is being overseen by business leaders including Tate & Lyle chairman Sir Peter Gershon, Tesco executive director Lucy Neville-Rolfe and Dr Martin Read, a non-executive director for insurer Lloyd’s.

“We want a slim but strong centre that can drive down the cost of government, so protecting as best we can the crucial front line services on which our citizens depend,” said Cabinet Office minister Francis Maude MP in a statement. “By taking this really tough stance on inefficiency and waste, we can tackle Britain’s massive budget deficit and bring order back to the country’s finances, whilst protecting vital frontline services.”

Analyst IDC reckons that Cloud IT services are currently worth £10.7bn globally and estimates they will grow to around £27 bn by 2013 (compare this to Gartner figures which say cloud services are now worth £46 billion and due to grow to £100 billion by 2014).

Gartner predicts that the UK will become the second largest user of cloud services, driven in part by the shift in public sector IT that has now begun.

The Cloud Computing World Forum is taking place in London’s Olympia on 29 June to 1 July. It features talks from CIOs at companies including The Telegraph, Rentokil (a big Google Apps user), British Airways and the House of Commons.