Inside Outsourcing

I went to visit IT supplier Atos at the Technical Operations Centre (TOC) for the London Olympics this summer. This was an opportunity to get an update and be reminded about how complicated and pressurised the IT environment supporting the Olympics is.

There will be 900 servers, 1,000 network and security devices and more than 10,000 computers deployed to support London 2012. There will have been over 200,000 hours of testing of systems before the first athlete begins their pursuit of gold. You get the picture? Pretty pressurised, but I have to say meticulously planned.

I live not far from the TOC in Canary Wharf and have to use London Underground's Jubilee line to get there. The same line that thousands and thousands of spectators will be using to get to Olympic venues in Stratford. If my journey that morning was anything to go by there could be real problems.

I had to let seven trains pass me before I could find room to squeeze into one. And this is on the average day with workers flocking to Canary Wharf. Now imaging the small matter of the Olympic Games thrown into the mix.

I asked the chief integrator at the Olympics, Atos' Michele Hyron, what would happen if the TOC staff, which monitor IT 24:7 get stuck on the train? Her answer was simple: "If the worker in the next shift does not arrive, you do not leave your desk."

So the IT will not be impacted by the failures of the Jubilee Line and the athletes won't because they will be staying near venues in the Olympic Village. I am sure VIPs will have the roads cleared for their cars.

So that just leaves the likes of us, the rank and file, to suffer the consequences of the dreaded Jubilee Line. Well that's if I had any tickets.

We get used to reading articles about deals being won by big systems integrators. These companies either provide all the services in a deal or sub contract to a smaller firm, which hardly gets a mention.

It is these smaller companies which are interesting because they are highly specialised in niche areas. These agile companies can respond to market demand quickly and change their approaches in response.

I interviewed tier two Indian supplier MindTree a couple of years ago when it was first targeting UK customers. It came to market with the offer of high end consultancy skills combined with low cost delivery. Back then it had 80 UK-based staff. The company has been focussed on the mid-market.

I met the company's UK head Tridip Saha last week and was interested to see how the company is doing.

Last year it grew its revenues in Europe by 50%. It now has 130 UK based staff as well as 1500 dedicated UK support staff in India.

Tridip told me that there has been a big change in the conversations MindTree is having with UK customers has changed from being about offshoring to being about expertise.

When it comes to expertise MindTree says its "cross court backhand" is business intelligence and analysis. The main sectors where it is doing business are retail, financial services and travel and transportation.

Tridip says every big business has a wealth of data which can provide valuable insights about business opportunities.

MindTree's business intelligence (BI) engagements might include the company building a data warehouse or expanding an existing one followed and creating dashboards for the business users so they can use information effectively.

He says 70% of the company's UK customers originally approached it for BI services.
 
MindTree is also involved in the Indian ID project.

The headline might appear underwhelming but claiming that outsourcing is not about cutting cost is a controversial one.

Most people in the outsourcing sector, outside the supplier community, say that lowering cost is always the driver for outsourcing. The rationale: if a company could do it at a lower cost in-house it would not outsource.

Research from the National Outsourcing association (NOA) also reveals that most of the general public (80%) don't think that outsourcing adds any value, while 65% believe it is only done to cut costs.

But KPMG think times are a changing.

Speaking at a conference Claudio Altini, director within KPMG's shared services and outsourcing advisory practice said the desire to reduce costs or shrink headcount is no longer the driving force behind business decisions to outsource key operations.

He also said the continued economic uncertainty has forced the outsourcing industry to mature.

"All the evidence suggests that organisations are expanding the services they outsource, but it is no longer accurate to say that they are turning to third-party suppliers just to reduce costs.   Today's challenge is much more about searching for the next level of value, which means ripping up the traditional outsourcing contract and replacing it with guarantees that assure value for money. 

"Too often, in the past, outsourcing relationships have broken down because of mixed messages around the three Rs - rates, results and responsibilities.  Now, however, businesses are no longer prepared to accept standard terms and conditions for outsourcing their core services.  They want proof that service delivery arrangements are flexible, can move with the strategic needs of an organisation and will meet the targets demanded by stakeholders. 

"Changing attitudes also mean that the old model of 'cheapest deal wins' is unsustainable.  The next level of value will see contracts where performance and price are more intrinsically linked and where governance comes to the fore so that there is no doubt where responsibilities lie.   The key to the future of the outsourcing industry now lies in simplifying agreements and innovation around charging models, not a pricing model where the cheapest deal wins the day."

The industry has its work cut out if you look at the NAO research. Here are some of the findings of a survey of public perceptions towards outsourcing.

-    80% don't think that outsourcing adds any value
-    65% believe it is only done to cut costs.
-    Only 27% recognised "a local computer company providing IT support as outsourcing
-    Only 14% know that using an accountancy firm is outsourcing
-    70% want evidence of how many UK jobs are created by outsourcing
-    69% want proof of how much outsourcing positively contributes to the UK economy
-    55% demand less wasting of taxpayers cash in public sector contracts.

Martyn Hart, chairman at the said: "The NOA is confident that we can prove to the public the value that outsourcing brings to businesses, and the nation as a whole. Outsourcing is not just about offshoring and job losses, although the public currently thinks that it is."

The government launched its first central government mutual today with the kick-off of MYCSP.

My Civil Service Pension (MYCSP), which launched today, has taken the civil service pension administration and split the ownership between the government (35%), the staff (25%) and a business service provider (40%). The private company is pension and HR service provider Equiniti.

The idea is that the private sector partner will make the service as efficient as possible and take away costs from the government, the workers will work much harder because they own it and the government will be able to cut taxes as a result. They call it the John Lewis model because it is based on the retailer's successful use of this type of regime.

As this is something new I am interested in getting people's views on it. Please fill in the questionnaire below if you want to give your views anonymously.

Here are some more articles I wrote about MYCSP:

Government outlines new ways of working with suppliers

Government mutual will be a beacon for IT procurement

UK government is rewriting the outsourcing rule book

Civil service pension mutual expects private bids

I covered a story today about job cuts at CSC. This was related to an announcement on Friday of an unexpected 600+ job cuts on top of the 400+ already announced.

Within the story the union Unite has a real dig at the NOA about its attitude towards CSC's offshoring strategy. In the press release I was sent by Unite it refers to the NOA as the National Offshoring Association rather than the National Outsourcing Association.

It is an easy mistake to make but is it a Freudian slip? Or was it deliberate?

The union is clearly unhappy with the organisation and suggests it is supporting offshore jobs at the expense of UK jobs. Has UK outsourcing become synonymous with offshoring?

This is what it said: "Unite and our members at CSC are disgusted at the National Offshoring Association's (NOA) backing of CSC's redundancy plans as has been reported in some IT and trade magazines. The position it has taken is clearly misinformed.

"The NOA has taken no consideration of the fact that the union plans to allow for voluntary redundancy rather than compulsory redundancies. It also did not take into account, that from day one of the consultation, CSC has guaranteed that all its workers in India have had their jobs guaranteed regardless of expertise or level of skill."

Just got this comment in on a survey I ran on my blog. It asked for people's views on the UK IT skills gap. You can still contribute below.

This from a survey respondent: "We must ensure that the UK is investing in technology and innovation.

"We need bright young students to enter the field of technology in the knowledge that is an exciting, dynamic, and valued part of Britain's future. Innovation in technology has the power to change all aspects of our lives, from our working environment to our leisure time, to our social interaction, on a global basis.

"As it is in Silicon Valley, it should be perceived as an attractive and 'cool' industry to be in, where smart people attract funding and investment and turn ideas in to reality. Ensuring the UK is an innovation leader it needs a large investment in the education system, ongoing support for R&D and creativity, and the right backing to allow innovative ideas to become business reality."

In a detour from my outsourcing coverage I attended a contactless payment innovation announcement from Barclaycard. This was being hailed as a technology that would enable contactless payments to be made by mobile phone.

The rationale is that the mobile phone is never far from your side and is therefore the perfect accessory for making quick low value payments. As a Computer weekly journalist I was expecting some app that had been created to embed technology into a phone.

But to my surprise it was a card, a third of the size of a normal one, that is sticky on one side. The user simply sticks it on their phone and away you go.

Not only is it simple to use, but it works on any phone. For that matter, on any extremity.
This does actually seem a great way to get more people using contactless payments.
My only concern is that someone could easily remove the sticker from your phone and use it with theirs. It would take ages to notice such is the seamless integration with your handset (see pictures for different versions).

Here is the Apple iPhone version:



Here is the Nokia version:



Here is the Blackberry version:



Here is the KarlPhone  version:

I ran a Google survey over the last couple of weeks to ask for peoples' views on the perceived UK IT skills shortage and the contribution to this from outsourcing.

Outsourcing and particularly offshoring is often the beneficiary of the UK skills shortage. But could it be the cause? With thousands of entry level jobs being outsourced and offshored UK IT professionals are struggling to get their feet in the door to begin building the skills that employers want.

The survey has had 106 respondents.

This is how they answered.

Do you think IT outsourcing has contributed to a shortage of UK IT professionals?

Yes - 78%

No - 16%

Don't know - 6%

Many respondents blamed the use of Intra Company Transfers (ICTs), where cheap labour is brought to the UK through a mechanism that allows multinationals with a UK base, including big Indian IT suppliers, to bring offshore staff onshore at a fraction of the cost of UK workers.

For example one respondent said the government should "stop importing inexperienced graduate trainees from India under the ICT scam and start giving UK graduates and experienced staff a chance instead."

When it comes to people's views on the role that apprenticeship schemes can play the results were more mixed.

Do you think apprentice schemes are the answer to the skills gap?

Yes - 47%

No - 36%

Don't know - 17%

"More business focused IT courses and placements in industry are needed," said a respondent.

If you want to contribute the survey is still open below. 

I recently met up with Ruth Ormsby. She is now a senior executive in Accenture's Public Sector operation.

She has moved around a bit in recent years. She ran the NHS's Shared Business Service (NHS SBS) until 2010 before moving to Capgemini as Public sector BPO head. She has since been headhunted by Accenture.

Her focus at the moment at Accenture is around opportunities in the healthcare sector.

A major part of this is helping shape Accenture's contribution to a department of health campaign known as 3 million lives. The campaign is an attempt to improve the lives of three million people through the use of telehealth and telecare.  This will keep people in the comfort of their own home rather than for example having to travel to hospital and possibly stay overnight for tests.

This offers the NHS major savings. A government report said the use of telehealth can deliver; a 15% reduction in Accident and emergency visits, a 20% reduction in emergency admissions, a 14% reduction in elective admissions, as well as a 14% reduction in bed days.

It will also deploy remote medical devices - such as home-based equipment that can send details of the vital statistics of at-risk patients to doctors.

And there are other areas where Accenture sees an opportunity. The company recently published research that revealed that secondary care organisations are way behind those in primary care when it comes to using technology. Ormsby says the better use of things like CRM and business analytics could really improve care.

Service providers will have a part to play.

Here are some of Ruth Ormsby's ideas on areas that could transform the health system and integrate primary and secondary care:

"1 - Developing integrated systems that blend electronic medical records with new methods of communication, remote care and process management to build seamless systems and workflows. There are, for example, new clinician and patient interfaces under development that will make healthcare data and analytical tools easier to access, navigate and put to good use, and natural language processing and voice recognition technologies are being developed that can instantly digitize healthcare consultations and integrate them into EMR systems.
 
2 - Redirecting healthcare interventions away from expensive hospital settings and into people's homes through telemedicine, remote care and mobile health. A whole new range of applications--from handheld devices to facilitate remote diagnosis to touchscreen technologies and "smart" devices (such as "intelligent shirts" that use electrodes and sensors to monitor patients' vital signs, activity sensors and webcams)--will enable remote monitoring and communication.
 
3 -  Transforming the role of patients in managing their own wellbeing through shared decision-making, condition monitoring and chronic disease management. New, independently developed, mobile healthcare apps are giving people the tools to educate themselves on how to eat well and live well, while personal health records (PHRs) and patient portals help them to manage their own care needs.
 
4 -  Exploring the potential of genomics to personalise treatment and wellness plans, present clinicians with a powerful range of analytical and diagnostic tools, and enable managers to coordinate care, target resources and improve public health outcomes. Among other benefits, this will help identify early--even preventative--interventions where patients have a genetic predisposition to certain medical conditions."
 

I blogged yesterday about how quiet things are in the IT outsourcing market at the moment. I asked for peoples' views and have had some interesting feedback.

Robert Morgan, director at sourcing consultancy Burnt-Oak Partners says. It is "too easy to blame the economic recession" for the current lull in outsourcing activity.

Read his full comment here: "Outsourcing has become synonymous with cheap service rather than Business enablement via using third party assets and know-how. It is a huge subject and the below simplifies things possibly too much, but the points below will offer insight as to the root causes of a lack a deal activity.

Blame sits with three entities:

1-Clients who have handed outsourcing service responsibility to junior management and procurement departments who push for lower pricing, plug and play service agreements, short contracts and high overhead multi-sourcing. Management then fail to provide training and governance for the hapless Service Relationship Management (SRM) team;

2-Intermediaries who have prolonged procurement cycles to maximise revenues to the point where doing global deals takes 18 months, or fixating on multi-sourcing which again is to maximise earnings. They carry zero responsibility or skin in the game after completing the assignment. Measurement of success still lives in techno-babble and not business related measures. Resurgent procurement departments where external advice is shunned or un-budgeted for, merely add to the downgrading of workable contracts, insight, risk mitigation and supplier accountability.

3-Service providers whose executive is technically and not business orientated and who fail to understand how to raise outsourcing importance up to client executive level. Suppliers employ technologists to sell services to technologists, rather than business enablement via technology. The Executive command the headlong rush to automate and virtualize everything via cloud etc. This is in turn makes everything transportable - real plug and play - denying the value of relationship and loyalty. Salesmen are overpaid and totally self-centred around how to maximise the commission payable not the best client solution. These days outsource service providers do not want your staff or assets thereby defeating a large-part of the Business Case to externalize.

Add all these aspects together and we collectively have conspired to strip outsourcing of its value and pivotal importance as a strategic tool for the benefit of the business. Hence times are very quiet in outsourcing.

However before you lose all hope; Burnt Oak believes that new shared equity models with real mutual commitment to risk sharing, investment rules, and common directorships for client and supplier, etc offer a real opportunity to reinvent enablement of Business through outsourcing."

Things seem to be really quite in the IT outsourcing sector at the moment. I was expecting the Spring to bring the shoots of recovery if you pardon my optimism and cliché.

It seems that most the news in the IT outsourcing sector at the moment is in the public sector and most of this seems related to a transformation of IT outsourcing rather than an increase.

Could it be that the slowdown is related to a major transformation in the sector? And how much had the growing interest in cloud computing got to do with this?

I am interested in getting the views of readers so if you have any thoughts please feel free to post a comment in this blog.

Last week in a blog post I asked the question: Do you think cloud computing is more beneficial to a business than traditional outsourcing?

This was following an article I wrote about research commissioned by Google. It revealed that 64% said cloud computing is more beneficial than traditional outsourcing.

So far I have had 8 respondents. Half said yes and half said no.

I also asked for people to give a reason for their answer.

The four that said no gave the following reasons:

1 - "Hidden costs and security get you every time"
2 - "It's a different way to achieve a contracted result. The means by which this result is achieved is of little interest, as long as it's supported by sufficient safeguards."
3 - "Data location and ensuring data protection can be a major issue for many businesses."
4 - "Client loses even more control than with outsourcing."

I want to write an analysis about this so would appreciate feedback from readers. Please take time to fill in the questionnaire below.

I wrote an article today about some research commissioned by Google. I revealed a few things including the importance of cloud computing in driving company strategy.

The survey talks about the increasing role of CFOs in the IT decision making process as cloud computing is viewed as a means for companies to succeed rather than just cut costs.

Interestingly 64% of senior finance executives said cloud computing is more beneficial than traditional IT outsourcing. The cloud combines cost cutting with things like being able to take up the latest and greatest technology without having to pay for it up front. But doesn't traditional outsourcing offer that?

I would like your thoughts.

I attended a roundtable event today at Intellect, the IT industry group. It was all about the use of technology to improve education as a whole as well as improving the teaching of what is broadly known as computing and encompasses ICT, Computer science, IT and Digital Literacy.

The part about using technology is an interesting subject, particularly when you have a five year old clamoring for the internet and a 2.5 year old only being kept off the computer by a stronger sibling. But having such a distinguished panel of academics and people from the IT supplies community was a great opportunity to get some views on the debate about how IT offshoring is contributing to a shortage of IT skills in the UK.

One of the panelists described the gap in the IT skills required in the UK and those available. She said there are 100,000 IT posts that need filling but the skills are not there.

So I asked all six panelists to answer the simple question: If there are 100,000 UK IT jobs that need filling why are there about 40,000 unemployed IT professionals in the UK? They all agreed that there is a mismatch between the skills being taught and those needed buy the industry. Not a single one of the six pointed to the offshoring of IT jobs to cut costs as a reason for the high unemployment in the IT profession.

"People are not being taught the most up to date technology skills," said one panellist. She has a point. So is the education system to blame? Many disagree and believe offshoring IT jobs is not only reducing the number of IT jobs in the UK but also adding to future skills shortages as the best graduates steer clear of IT through fear of all the jobs going offshore.

Back in 2010 I wrote a blog titled: Is offshoring making Computer Science graduates the largest unemployed group? This was about figures from the Higher Education Statistics Agency (HESA).  They showed that in 2009 recent Computer Science graduates had the highest rate of unemployment six months after graduating, with 17% out of work.

Add to this the fact that many that were in work might not have been working in a job related to their degree and you have a problem. One exacerbated by the offshoring of IT jobs, according to many.

I have recently returned to the subject and asked for people's views on what the government should do to create more IT professionals that have the skills required by businesses?
 
I asked: Do you think IT outsourcing has contributed to a shortage of UK IT professionals? Out of 67 respondents 58 answered yes. Many of the respondents suggest the government should put a stop to the practice of offshore suppliers bringing workers to the UK on Intra Company Transfers.

Here is the questionnaire if you want to fill in the questionnaire.

I recently ran a survey which asked people to give their views on some of the causes of a UK IT skills gap as well as some of the possible solutions.

One of the things that stood up was the opinion that the offshoring of IT roles to lower cost destinations such as India is damaging the UK's ability to nurture its onshore IT resource.
See some of the comments here. 

IT professionals are calling for the government to stop offshoring IT jobs. But this is clearly not going to happen. Today there is news that the government is outsourcing the IT development for the universal credit welfare programme to India despite promises to keep large data projects in the UK.

About 500 workers in Bangalore and Mumbai are being hired by the outsourcing firms Accenture and IBM to help design and maintain a delivery system for universal credit, according to the Guardian.

I ran a survey a couple of weeks ago asking people for their views on the alleged shortage of business ready IT professionals in the UK.

It focussed on whether outsourcing, more particularly offshoring, is damaging the UK skills base. This followed comments made by John Harris, chairman of IT user group The Corporate IT Forum and chief architect and vice president of global IT strategy at GlaxoSmithKline.

It also asked people for their views on what the government should do to address the problem.

Banning offshoring and closing the Intra Company Transfer (ICT) immigration loophole are examples of comments received.

Here is the questionnaire if you can spare a minute to fill it out and below that are the results so far and some of the comments left.


The results and comments so far:

(49 respondents.)

Do you think IT outsourcing has contributed to a shortage of UK IT professionals?    
45 - yes
3 - No
1 - don't know

Do you think apprentice schemes are the answer to the skills gap?

25 - Yes
22 - No
Don't know - 2 
 
What do you think the government should do to create more IT professionals that have the skills required by businesses?

"Change what is taught in schools."

"Stop the majority of inter-Company transfers so that there are jobs for graduates."

"Crackdown on offshoring and onshoring."

"Encourage firms to develop their own talent."

"Allow training whilst unemployed. Don't make people lose out if they need to retrain."

"Reduce ICTs, provide tax breaks for taking on UK grads, pay towards tuition fees for students studying computer science."

"Limit the number of ICT visas."

"Nothing. The IT industry should produce its own professionals, like other professions."

"Stop importing inexperienced graduate trainees from India under the ICT scam and start giving UK graduates and experienced staff a chance instead."

"Encourage companies to on-shore their IT."

"Train people here, employ unemployed UK IT workers."

"The skills exist - IT people with 10+ tears are sitting at home right now!"

"Ban all offshoring of government contracts, add a tax to all transactions where companies send money offshore to reduce the financial benefit of offshoring work."

"Reverse offshoring."

"Don't let so many of the grounding skills be moved offshore. It is putting people off entering the IT industry."

"Limit immigration."

"No shortage exist. I know many people displaced from IT workers coming from India!"

"Be strong on reciprocal market access for UK firms abroad."

"Clarify rules on independent consultants."

"Ban ICTs."

"Further limits on ICTs."

"Apply resident labour market test to ICT workers working on client contracts in UK."

I have recently been following the ongoing saga that is the troubled £70m IT services deal between Fujitsu and The Highland Council.

I wrote this story today about the meeting. Fujitsu Scotland director Brodie Sheperd was thrown to the wolves at the Highland Council's resources committee to apologise for Fujitsu's failings in the IT services contract and reassure councillors that services firm would get things sorted out.

But better than that, below is the actual meeting via a recorded webcast.

The committee gets to item 10 on the agenda which is in regard to the IT services contract at about the 20 minute mark. It is worth watching especially to hear how disgruntled councillors are and to see a very apologetic Mr Shepherd beaten up by councillors.

If the video doesn't work here is a link to it. http://www.highland.public-i.tv/core/portal/webcast_interactive/75384

A £70m IT services contract, signed by the Highland Council in Scotland with Fujitsu, is causing friction as the sitting council and the opposition unite in protest at the contract's failure to meet targets.

But a termination, although legal at this point, is unlikely, as it would leave the situation worse, said one councillor.

Fujitsu has succeeded in delivering ICT to schools in the region, but it has not fully implemented the council's internal systems. The problems have been dragging on for over a year.

Last year, the Highland Council told Computer Weekly it had taken legal advice on a deal with Fujitsu which had missed service delivery regrets.

The two parties met and Fujitsu was given a second chance.

But the contract is again in doubt and a council meeting will be held tomorrow to discuss the contract.

Councillor Carolyn Wilson, head of the resources committee at the Highland Council, said the contract has now passed the point where the council can withdraw from the deal.

"Since the discussions with Fujitsu last year, things have got better in some areas but in other areas it has still not delivered. It focused on the high-profile parts of the contract, such as delivering new ICT equipment to schools, but the nuts and bolts - such as internal systems - have not yet been delivered."

Wilson said there is cross-party agreement that Fujitsu must do more, but she added that pulling out of the contract would leave the council in a worse situation. "Fujitsu probably realises this, but you think it would do more to protect its reputation."

A Fujitsu spokesman said the schools part of the contract is due to be completed today (20 March 2012) while the corporate part, which includes internal systems, is expected to be completed next month.

But Wilson said there are lots of projects running late. "There are still hundreds of computers to go in at schools, for example."

Fujitsu and the Highland Council are due to meet later today.

Mark Lewis, partner and head of outsourcing at law firm Berwin Leighton Paisner, said the council needs to weigh up the costs associated with exiting the contract against the costs of remaining in.

He says there is an opportunity to get around the table and renegotiate, based on any losses that have been incurred due to delays. He said it is possible for Fujitsu to offer sweeteners.

"But it all comes down to how strong is the council's case against Fujitsu? If it thinks it has a good case, it has the opportunity to renegotiate."

There was an interesting contract announced today between Capgemini and Rolls Royce.
Capgemini has been awarded the job of managing Rolls Royce's new multi-vendor sourcing strategy.

It is 12 years since Rolls Royce signed a deal with EDS, now HP, to provide all its outsourcing needs. So the deal was up for change and Rolls Royce has decided to go multi-sourced with Capgemini at the helm.

HP has lost quite a few big deals that were won by EDS since it acquired the systems integrator in August 2008 for billions of dollars.

But the Rolls Royce deal with Capgemini does not mean that HP has lost everything. It is more of a case of losing the moral high ground but not necessarily the business, says Robert Morgan, director at sourcing broker Burnt-Oak Partners.

But he says it could be the beginning of a gradual reduction in the amount of revenue HP gets from Rolls Royce. He expects perhaps a 30% reduction in HPs revenue with Rolls Royce quite quickly.

He says Capgemini will be tasked with monitoring the performance levels of the suppliers in the multi-vendor environment so HP will lose business where it does not perform.

I find this Capgemini role quite interesting and because HP was the single supplier before there are a lot of contracts that it could lose. This will be interesting to watch.

A major talking point in the IT supplies sector is the issue of the UK government giving more business to SMEs.

This week a businessman involved in advising the government about how to get new suppliers involved in government procurement has resigned as co-chair of the New Suppliers to Government panel. This was over his scepticism around Cabinet Office figures claiming the amount of government business going to SMEs has doubled.

Mark Taylor, CEO at open source company Sirius, quit this week. 

He said: "I do have concerns about the direction of policy and am genuinely sceptical about the figures [which claim SME business has doubled from 6.7% to 13.7%].

"I think I have a right to be, as there are a number of SMEs I've to spoken to that are finding it more difficult to do business with government and that maps with my direct experience."

An oligarchy of large system integrators is said to be one of the reasons the government cannot get a good deal. So the current government set out to end this dominance by a few suppliers, which includes the likes of HP and Fujitsu, and open up business to a wider variety of suppliers. This would include significant supplies coming from SMEs.

The Public Administration Select Committee (PASC) even published a report titled:  "Government and IT - a recipe for rip-offs: time for a new approach."

The top 20 suppliers to government, including all types of products and services, included many IT suppliers. HP, BT, Capgemini, Fujitsu, Capita, IBM, Atos, CSC, Logica, Steria, Oracle, Microsoft and Accenture were all involved. Technology SMEs find it particularly difficult to win government business as buyers revert to the safe option of buying from the big incumbent suppliers.

But public sector bodies are missing out on good deals as a result. According to Computer Weekly a major systems integrator asked for more money to write a report on the options available for a government IT requirement than an SME supplier quoted to provide the actual service that was needed.

The government set itself a target to procure more its total products and services, not just IT, from SMES. And according to the government's chief procurement officer John Collington, speaking at The Crown and suppliers: A new way of working, procurement conference in London in November , it is having some success. He said that in the past, there were not enough SMEs winning business through the usual procurement channels but that things are changing. According to the government's figures in November 44% of government contracts signed in September 2011 were with SMEs. This compared to 5% in January 2011.

The Government's Cloudstore, where public sector organisations can buy cloud services, is another attempt to break away from a few large suppliers having a stranglehold on IT supplier to the public sector.

It also set up a new framework agreement for buying consultancy services worth up to £2bn over the next four years. The Consultancy One deal is designed to cut the levels of spending on consultants across Whitehall and make it easier for small businesses to win consulting contracts.

But is the government exaggerating its success?

Are you an IT SME trying to sell goods and services to the government? If so leave a comment telling us about you experience and whether things are getting better.