The Government Efficiency Review, released this week, heavily criticises the public sector for failing to leverage both its credit rating and its scale when managing its IT assets.
The report was commissioned from Topshop owner and billionaire businessman Sir Philip Green in August. He censures the “inefficiency and waste of Government spending, which is mainly due to very poor data and process”.
The basic message is that the devolvement of purchasing decisions weakens the government’s hand. Because of the size of the contracts that a concerted effort would bring volume discounts that would afford massive savings.
There are many discrepancies that arise from the departmental buying process. The report highlights several examples but two that stand out are printer ink cartridge purchases and laptops.
Sir Philip’s research has shown that a bulk order for one department for ink cartridges came to £398 while another, ordering the same quantity only paid £86, a differential of 78 percent.
The same model of laptop cost £2,000 on one occasion and only £353 on another. The differential being a massive 82 percent. The government’s total of 460,000 desktops and 60,000 laptops are supplied by 13 different IT service providers. Sir Philip made the strong recommendation that computers should all be bought directly from a multinational manufacturer.
He added that if a private company wasted money in this way it would not survive.
Software acquisition and software asset management (SAM) is subject to similar ad hoc arrangements. John Lovelock, chief executive of the Federation Against Software Theft – Investors in Software (FAST IiS) commented, “Software asset management should not be viewed as an optional administrative process but a key mechanism for transforming software from a cost centre to a strategic asset. For the public sector, struggling with budget cuts, it can deliver a number of benefits including controlling costs associated with software assets, improving the performance of those assets as well as the organisation and its employees and compliance with the law.”
Matt Fisher, chairman of the Software Industry Research Board (SIRB), welcomed the report and said, “The Efficiency Review calls for Government to produce accurate spend and consumption figures as well as centralising procurement for common categories to leverage buying power and achieve best practice. Crucial to this will be the need for an effective solution for managing and disposing of software assets. That is why the SIRB has today launched its own Guide to SAM for the Public Sector.”
Cabinet Office minister Francis Maud commented, “The findings clearly demonstrate the scale of inefficiency and waste present in the system today. We welcome the sense of urgency that Sir Philip has brought to this work and we are looking at how we can best take forward key recommendations.”
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Sir Philip Green’s Efficiency Review highlights some of the reasons why the Government conducts business so poorly, citing ‘data is very poor and often inaccurate’, and ‘there is no process for setting and challenging detailed departmental budgets’. When you consider that the public sector looses £25bn a year due to fraud and error in the system (source; National Fraud Authority), it becomes clear that, while budget cuts are required, better information management and, in fact, how data is used will be key to greater efficiencies. The NFA outlines that £6 billion every year could be recouped if the Government changed its processes to focus on predicting and preventing problems, rather than investigating retrospectively. Using its information more strategically would enable it to make better decisions about how to reduce unnecessary costs, tackle the deficit and redirect money towards improving services for citizens that need them most.