KPMG says government should create a market for IT suppliers so they take the risk

I had a conversation with two KPMG consultants recently about the government’s ongoing IT strategy in the light of cost cutting.

Adam Stork and Iain Gravestock are both in KPMG’s technology group. Amongst other things they told me that the government should create a market for suppliers that will encourage then to innovate and take risk.

Part of this will require the government to give the suppliers a fair crack of the whip when it comes to bidding for public sector work. Rather than signing a few large enterprise wide agreements with a small number of big suppliers.

KPMG gave me an example of a technology supplier today whose systems are used within the NHS widely. But it could have been so different if the supplier had not taken a huge risk.

The supplier is System C. It makes administration and clinical systems aimed at the healthcare industry.

When the NHS National Project for IT (NPfIT) was introduced it meant that NHS trusts had to buy the systems that were approved.

System C’s systems were not included but the company took the brave step to step up its investment in its technology

Markus Bolton, founding director at the company, said this was a big investment decision to take at the time because there appeared to be no future because System C was not selected.

But the coalition government has since torn up the rules on the NHS IT and allowed NHS Trusts to make there own decisions. System C now has lots of orders in the pipeline.

This is an extreme case of a supplier taking risk because there appeared to be no future for System C serving the NHS but it took a big risk. It probably thought it was worth the risk because a project the size of the NHS NPfIT was prone to changes and even some failures.

The potential work available in the public sector is massive for IT suppliers so they will be prepared to take risks. In the past all the risk has been taken by the government because it has signed contracts with big suppliers before the systems were developed.

Under these IT contracts there have been many failures that have been costly to the government. See here for 105 government IT contracts that went wrong and cost the earth.