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Government attitude to big IT suppliers 'unhelpful' says analyst

Antony Savvas | Feb. 4, 2013
Money spent on ICT products and services should be going to a broader range of suppliers.

The government's new attitude to large public sector software and IT services (SITS) suppliers may prove "counter-productive", according to industry analyst TechMarketView.

TechMarketView has just published its "UK Public Sector SITS Supplier Landscape 2012-13" report for its subscribers, which says the leading suppliers to UK government and the broader public sector are "adjusting to a different operating environment".

The new government ICT strategy dictates that the money spent on ICT products and services should be going to a broader range of suppliers, including SMEs.

But the report says "translating policy to reality is a long journey," highlighting that there is no change to the Top 20 suppliers of SITS to the UK public sector compared to a year ago.

Despite this, report authors Georgina O'Toole and Tola Sargeant said: "It is our opinion that relationships between the top IT suppliers and the Cabinet Office remain strained. In our view the situation needs to be rescued.

"The anti-large agenda is unhelpful when those very companies continue to run the majority of Whitehall ICT infrastructure, under contracts that may be running for many years to come."

The authors said the larger companies were not "whiter than white", and that there was fault on both sides. They said the government needed to go further in admitting "an historic lack of professionalism in procurement".

The report found that the top twenty UK public sector SITS companies derived an average of 45 percent of their UK SITS revenues from the public sector market in their last financial years.

By comparison, the public sector makes only 27 percent of the total UK SITS market.

Though the proportion of revenues that the Top 20 derive from the UK public sector is shrinking - 48 percent when revenues were analysed a year ago, and 65 percent three years ago - the public sector "continues to remain a very important revenue contributor for the top players that have penetrated the market", said TechMarketView.

The government's decision to axe a number of procurement frameworks late last year was seen as a "kick in the teeth for large suppliers", said TechMarketView at the time.

The government said it would be creating fewer frameworks going forward, and that it would be cancelling three major framework agreements in a bid to attract a wider range of suppliers, including SMEs.

The full TechMarketView SITS report runs to 42 pages of analysis of the overall market and on the leading suppliers.


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