Sergii Figurnyi - Fotolia
Nils Knutsson started his career helping computerise Swedish municipalities in the 1970s. After 45 years working with public sector IT, focusing on municipal IT, he was elected ”IT person of the year 2015” by KommITS, the Swedish municipalities’ IT users’ society.
“To get this decoration from a user society makes it extra prestigious. It is the first time they have awarded a person from the supplier side,” says Knutsson, now senior advisor for public sector at IT service company Tieto.
Part of the reason was that few people have as deep and broad a knowledge of municipal IT in Sweden as Knutsson. “I guess they base this on the fact that I have made regular analysis of the municipalities’ IT since 1980, and that I have had recurring information meetings with KommITS’s board over the years,” says Knutsson.
In his current role at Tieto, Knutsson is part of the bid team in big public sector procurements, primarily regarding outsourcing. “Some of my tasks are to help in the bid process, interpreting the needs of the customer and formulating bid texts that will give us the highest possible evaluation points, and to improve co-workers’ bid texts. I also do reports and market analysis,” he says.
Sourcing IT in Sweden’s public sector
Recently, Knutsson analysed IT sourcing in the Swedish public sector, primarily looking at the level of competition. “The results showed that a very small part of IT activity is outsourced, on average only 6% to 7%. The Swedish public sector outsources less IT than the business sector – but it does outsource core businesses, like schools and care of old people,” he says.
Knutsson is, not surprisingly, a proponent for increased IT outsourcing in the public sector: “It means you can cut costs by up to 25%. The reason for this is that the outsourcing supplier has economies of scale.
“You can cut costs by up to 25% by outsourcing IT. The reason for this is that the outsourcing supplier has economies of scale”
Nils Knutsson, Tieto
“If we have a number of municipalities with pretty much identical missions – which all of Sweden’s 290 municipalities have since a reform in 1970 – we can handle IT operations and support services cheaper. And when you have bigger volumes, you can also acquire more expensive software, which a smaller municipality might not be able to afford.”
But outsourcing might not always be the best route for a municipality, according to Knutsson. “If the municipality saves 25% of its costs on outsourcing, but loses 12 IT experts, it is not certain that outsourcing is something positive. We should not underestimate the fact that the municipalities want to keep jobs local.”
Some people argue that the cost savings that come with outsourcing also are due to the public sector being run less effectively than the business sector, but Knutsson does not agree: “I think this is a delusion, at least when it comes to IT. They have very strict budgets, and work hard on streamlining.”
The rules of IT procurement
The biggest difference between IT in the public sector and IT in the business sector is how procurement is handled, according to Knutsson.
“In the public sector we have three laws that strictly regulate how tendering is to be done. In the business sector they have been able to do pretty much as they please, even though they seem to have adopted more and more of the rules from the public sector in recent years,” he says.
The most important law regulating procurement in the Swedish public sector is Lag om offentlig upphandling (LOU). “Many people whine about it, and say it is complicated and causes hassle, but I do not agree. I think LOU is a very good law, and it is written in an easily comprehensible way,” says Knutsson. “LOU does not cause hassle – it is how it is used that causes hassle. You can use very complicated assessment models with logarithmic scales, but LOU does not stipulate this.”
LOU came into use in Sweden in 1994, and has since been through a number of revisions. “A new version is due on 1 April 2016, and I think most of the things in it are very good. Before we had LOU, public sector tendering was like the Wild West, and the suppliers could be treated pretty much as the contracting entity liked,” says Knutsson.
For many years, Knutsson was a guest lecturer on university courses for public purchasers. “My task was to give an IT supplier’s view on LOU,” he says. “We often had very honest conversations. I am convinced that this has led to an increase in the use of so-called negotiated procurement, which means purchasers and bidders talk to each other during the tendering. It used to be prohibited, but now more than 80% of outsourcing procurements are negotiated.”
Knutsson also advocates longer contracts. “Now we have terms of agreements that are seven, eight or even 10 years long, compared to the earlier two to three years. The longer the duration of the contract, the better the terms can be,” he says.
Preparing for future IT trends
These are just a few of the changes Knutsson has seen during his 45 years in public sector and municipal IT – the field has gone from non-existent, through a number of big paradigms. “First, the central cabinets got IT support, for handling things like economy and staff. Next in line were the department functions handling schools, home care and so on. The third step was that the managers out in the field got IT.”
Going forward, the further development of e-services will be very important, according to Knutsson, with IT systems automatically gathering the information needed for a decision. “The citizens will not need to fill in that much data,” he says.
Other big trends are increased IT integration between state, county councils and municipalities; increased collaboration on a national and regional level; robotisation; and the departments taking an increased responsibility for IT.
“An analysis done by Tieto in April 2015 showed that about 30% of IT already has moved over to the departments,” says Knutsson.
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