Congratulations to the Cabinet office and the Government CIO John Suffolk for establishing a commodity price for a large network of supported PCs.
It has not been easy to achieve. Suffolk has had to ask the same questions of suppliers time and again, to nail down the specific costs of supplying and supporting networked PCs in a standard configuration – allowing for flexibility over security and location – and including support for open office software.
The final price is about £800 to £1000 per PC depending on how many machines are bought. It’s a price that’s available to the public sector through the Cabinet Office’s thin-client “Flex” deal with Fujitsu.
It’s about half Gartner’s total cost of ownership benchmark figure of about £2,000. Quite a number of organisations use the Gartner figure to check – and accept – the prices they are given by suppliers. If an organisation obtained a price slightly below the Gartner price, its board members might have believed they paid a good price.
It’s necessary to point out though that Gartner’s benchmark and the £1,000 figure obtained by Suffolk and the Cabinet Office are not directly comparable because Gartner includes some things not in the Flex deal – and vice versa.
Suffolk achieved the price by starting at zero and questioning suppliers in detail about exactly what they wanted to charge for and why. He accepted little of he was told without questioning it.
In an interview with Gartner, Suffolk said:
“…the [IT] industry needs to mature away from being a practice-based industry to being an engineering-based industry…So when an engineer says, ‘I need to lay a kilometre of road down’, they know what the engineering is to lay a kilometre of road. But they don’t re-invent the engineering for a kilometre of Tarmac each time. They know what the engineering is… We need to do it that way.”
Suffolk and the Cabinet Office have succeeded where the House of Commons’ Public Accounts Committee [PAC] didn’t. In 2003, the PAC tried to establish why it was costing £232m for 11,000 PCs to be installed in magistrates’ courts. Even allowing for a complete technology refresh, and printers, data migration, helpdesk and new cabling in old buildings, the costs worked out at several thousands of pounds per PC. It’s not fair to compare the roll-out of the “Libra” IT infrastructure in magistrates’ courts with the commodity “Flex” deal. But it’s worth looking at Libra because the breakdown of the supplier’s costs was so vague.
When Richard Bacon, a Conservative MP on the PAC, asked the Lord Chancellor’s Department [later the Department for Constitutional Affairs] for a breakdown of the cost of the Libra networked PCs, the Department, surprisingly, was unable to provide one – even though it was paying £232m for the systems.
The Department referred Bacon directly to the supplier. Although ICL [later Fujitsu] gave a breakdown, Bacon and the PAC were not entirely happy. The PAC said in its report “New IT systems for Magistrates’ Courts: the Libra project” dated January 2003:
“The infrastructure element of the project increased in price from £94 million in ICL’s original bid to £232m in the latest contract, which is for a shorter period of service, albeit with some expansion in the scope of the requirement.
“The Department used independent consultants to benchmark the price, which was not tested in competition and appears very expensive for what is being provided. The Department was nevertheless unable to say how ICL’s price for the infrastructure element of the Libra project was constructed and we remain unconvinced that £232m was a fair price to pay. More thorough analysis is needed before departments agree to pay more than twice the tender price.”
It’s rare for such a breakdown of a supplier’s costs – including profit, contingency and £1.2m in an unspecified category “other” – to be revealed. All credit to Richard Bacon for his tenacity in obtaining it.
So this is how £30m for workstations and printers ended up costing, with installation, support and other things, a total of £232m.
A breakdown of the £232m for the “Libra” IT infrastructure for magistrates’ courts including the cost of supplying, installing and supporting around 11,000 PCs for about 385 magistrates’ courts.
(source: Fujitsu Services)
Workstations and Printers £29.6m
Application Development and Support £21.8m
Service Management £13.1m
Install and Data Cabling £12.7m
Enhanced Office Automation Facilities £8.3m
Local Area Networks £7.4m
Mobile Engineering staff £5.9m
Technical Support staff £5.5m
Software Licences £4.4m
Management Fee £2.9m
Datacentre Services £1.1m
Terminal Emulation £1.1m
Wide Area Data Network £23.4m
Application Migration £13.0m
Profit and Interest £34.6m
Total contract value £232.3m
Cabinet Office announcement in 2007 of the “Flex” deal