Posted on 29-03-2010 at 01:00
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A new study of spending on information and communications technology in Scotland has disclosed the annual spend on computer systems and consultancy IT by the public sector has doubled over the last decade, from £800 million in 1998 to a total of £1.6 billion in 2008.
The findings, by 4-Consulting and Verso Economics, are based on analysis of the Scottish Government’s own Input-Output tables, which give a detailed picture of the flows of goods and services in the economy for a given year.
Economist Richard Marsh of Kirkcaldy-based Verso Economics said: “The key issue raised by our report is the [danger of a] big push for innovation in information and computing technologies (ICT)without first pushing through wider organisational and structural change within the public sector.” The analysts found that in the 10-year period, the public sector accounted for two-thirds (66.9%) of the overall increase in the ICT spending in the entire Scottish economy, though they found no evidence of corresponding increases in productivity.
The comparative rate of growth in the Scottish private sector was 11.8%, up from £3.5bn to £3.9bn over 10 years. Ron Hewitt, chief executive of Edinburgh Chamber of Commerce, said that the discrepancy in the rates of increase in the two sectors was “chastening”.
“This bears out the findings of our Time for Renewal campaign, that we are in desperate need of root and branch reform within the public sector,” says Mr Hewitt. “Across a long business life I have lost count of the times we have seen profligate public sector ICT projects, which consistently run two generations behind present computing practice, drowning in a sea of funding, without delivering on their promises. If the Scottish public sector is serious about tailoring its suit according to the available cloth, it would look very hard at commissioning systems that have much more local control and are better fitted to purpose, and leave the behemoths to the fantasies of the consultants.”
The report’s authors ascribe the volume of public spending to a lack of systems co-ordination between different bodies, with agencies, local government and central government all using different systems. Analysts have also pointed to the lack of the kind of spending controls imposed by businesses – which routinely modify and upgrade systems rather than replacing them wholesale, as is common in the public sector.
As the report says: “Businesses have been quicker than the public sector in adopting new technologies, and the slow growth of [private sector] ICT spending reflects businesses reducing ICT costs and replacing rather than supplementing processes and systems. This may explain why consultants have focused heavily on public sector clients in recent years and why spending is under greater scrutiny.”
While Scotland’s use of e-procurement technology has been praised by the European Commission, the share of government spending in Scotland is “much lower”, according to the report, in other advanced e-procurement nations, including Sweden, Norway, the Netherlands and Finland. Only Denmark’s public sector spends a higher share of operating costs on computer systems (12.1%) than Scotland (11.9%).
In the Scottish economy as a whole, ICT spending is 4.5%, meaning, say the report’s authors, that “businesses are clearly more efficient in adopting and diffusing ICT in their operations”.
The report recommends that cost savings could be realised through ICT procurement and agency infrastructure consolidation, and asks “whether it is sensible for the public service providers to own as much infrastructure?”
In January 2009 Audit Scotland conducted a report into government use of consultancy services, using as a case study the use of consultants on the 2007-2009 rollout of the “e-health directorate”, designed to improve patient care. Audit Scotland showed that a project costed at £1.2m in July 2007, had a final outturn cost of £4.3m when completed in November 2008, including a £2.2m addition to the main consultants’ contract. These fees were originally projected at £0.5-£0.75 million.
Audit Scotland slammed the Scottish health authorities for failing to make a “value-for-money assessment” comparing the cost of hiring IT consultants with using in-house expertise.
A Scottish Government spokesman said in response to the new report:
“It is important, especially in the current climate, that public sector spending on ICT demonstrates maximum value for money.
“Through continued collaborative working and wider application of shared services, the public sector’s approach to ICT can deliver improved public services valued by customers as well as greater efficiencies.
“The procurement reform programme is addressing the need for co-ordination of procurement approaches both within particular sectors and nationally.
“We are well aware that appropriate procurement of ICT systems by the public sector can help sustain business and employment in the private sector. Through initiatives such as the Public Contracts Scotland portal, we are doing all we can to ensure public sector contracts are available to SMEs.”
Read original at http://www.heraldscotland.com/business/markets-economy/revealed-how-public-sector-computer-system-spending-doubled-in-10-years-1.1016623
