Managed services high on public sector budget

Public sector organisations are spending more and more of their ICT budget on managed services instead of internal projects,...

Public sector organisations are spending more and more of their ICT budget on managed services instead of internal projects, according to the annual Telewest Business ICT spend survey, conducted by the Economist Intelligence Unit.

By 2006, 21% of public sector respondents said they will be spending 10%-25% of their ICT budget on managed services, and 19% say they will be spending upwards of 50%. This compares with just 10% and 11% respectively in the private sector.

The trend towards managed services is due to both a lack of internal resource and a desire to lower costs and maximise efficiencies, with 88% of respondents citing this as their organisation's strategic priority in 2005.

Christopher Small, director of public sector at Telewest Business, said, “Increased demands on resource for the public sector means that they are increasingly turning to managed services. Organisations are looking to take advantage of areas of ICT where they may not have the skills in-house to implement by looking to outside service providers. As the pressure to find skilled staff grows, this trend will continue in the public sector.”

The public sector compared favourably with commercial companies when it came to integrating senior ICT staff with the rest of the senior management team. Three-quarters of public sector organisations surveyed said that the CIO/IT director was part of the senior management team – just 63% said the same from the private sector.

This does not prevent disagreements over ICT, however. Senior management in the public sector fared badly when it came to ICT knowledge – a third of those surveyed says that their senior management team were not technically savvy. Perhaps because of this, more public sector organisations would appear to want to work in isolation, with 45% of those surveyed saying that the IT function was reluctant to adopt tighter governance of technology projects. This compared with one-third in the private sector.

“Business and technology executives in the public sector are having as much trouble agreeing on how ICT projects are run as the private sector,” Small said. “But it does seem to work - more than three-quarters of those surveyed says that their organisation was successful at meeting the ICT targets it sets itself.”

Other key public sector findings include: customer servicing (29%) and finance and accounting (24%) were the two areas where ICT had the most impact in 2004; software applications (33%), storage (33%) and call centre solutions (31%) were the key areas for ICT investment over the next two years; actual ICT investments will remain static though – 38% said levels would stay at 2004 levels, with 24% and 17% saying a slight increase and decrease respectively; 57% says that a close working relationship between the business and IT management teams is key to a successful ICT project


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