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IT industry 'oligarchy' is 'ripping government off', MPs told

The IT industry is an "oligarchy" that is ripping off the government, MPs were told at a select committee meeting on Tuesday.

Martin Rice, chief executive of software development company Erudine, slammed the IT sector for taking advantage of the government's lack of in-house IT expertise.

Speaking at the Public Administration Committee meeting into the efficiency of government IT he said, "As an industry it is ripping the government off. People didn't make a noise about this until the government's moratorium on IT contracts. Each project reinvents the wheel, and as a taxpayer that shouldn't be allowed. There's an oligarchy for which it is not profitable to bring this to light to the government," he said.

However, Rice said the industry was not solely to blame, as the government had acted as a non-intelligent customer, having made the decision to create quick savings by outsourcing its IT.

BCS chief executive David Clarke told MPs that a lack of in-house IT skills was a big factor.

"The government has to have the skills to make sure failures don't happen. There was a whole skills set in government which was outsourced in the 1980s and hasn't been replaced," he said.

But Sureyya Cansoy, director at IT trade association Intellect, said the industry was aware of the mistakes of the past.

"It takes two to tango. We are seeing real opportunities to do things differently, with areas such as open standards and agile. And the industry is working with the government to make these things work - it has to as its sustenance depends on it," she told the committee.

Rice says the solution is for the government to concentrate on smaller IT contracts.

"The real innovation tends to come from small companies. The route to government is through the systems integrators, and many SMEs don't get involved. The simplistic answer is to buy small, not big. There are global companies which deal with hundreds of millions of customers and they don't have the same sort of IT budgets as the government. Just close the chequebook," he said.

Clarke added, "Because the cost gets so great, we get fewer and fewer suppliers. The UK public sector outsources more than any other public sector in Europe."

The costly and bureaucratic public sector purchasing process makes it difficult for small suppliers to compete, Cansoy told the MPs.

"The cost of each procurement to suppliers can sometimes cost a couple of million, that's not an amount an SME can afford," she said.

The government's intention to use an agile approach, which provides flexibility to change projects as they are under way, is a positive move, said Rice. "Don't waste millions of pounds, spend a few tens of thousands experimenting - get clever people to do a very quick system and ask is that is what you want," he said.

Jim Killock, director of digital campaign body The Open Rights Group, says there are positive areas for the government to build on to make its IT more efficient.

"The question of open standards is important as the government doesn't want to be locked into very closed relationships with suppliers," he said.

"Open source has the potential for government to retain control of IP rights and not be charged licence fees many times over for what it has already paid for. Open data allows people to construct a market, but also to criticise and look at what the government is doing."


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