Spending review: the CIO outlook

As organisations digest government plans to drastically reduce the structural budget, IT chiefs share their reactions to the announcements

As organisations digest government plans to drastically reduce the structural budget, IT chiefs share their reactions to the announcements

Despite the uncertainty sparked by chancellor George Osborne's £81bn plan to cut UK public spending outlined in Wednesday's Comprehensive Spending Review (CSR), IT leaders maintain that the current climate presents opportunities to do things differently.

Private sector lessons

To Christine Ashton, formerly strategy and technology director at Transport for London and now chief information officer at gas and oil giant BG Group, the government must "get into a style of activity and outcome-based budgeting again", which is common practice in commercial organisations.

"The real thing missing for me here is innovation: many IT suppliers have got complacent and advocated solutions that maximised their ability to sell their skills benches. In my view, this has led to very expensive, over-customised and frankly, lacklustre solutions," she added.

According to Ashton, the tough economic environment provides a "fantastic opportunity" to solve problems differently and challenge the way IT is used across departments, where technology set-ups can be compared to those of large businesses.

"There has been hardly anything written on this, partly because it shakes up the supplier market. However, the commercial world has been actively dealing with situations like this for years - but did anyone in government ever ask, 'What is the total cost of ownership of producing an invoice or a pension quote?'"

For Philip Langsdale, CIO at airport operator BAA, where IT costs were reduced by over 40% in two years, while the range and quality of services was increased - the job of an IT director is to deliver value to all stakeholders, and the same rationale applies to the public sector.

"Government IT needs to see the CSR as a clear opportunity to do [what has been done in the private sector] and deliver better services at lower cost. My fear is that they won't, and instead will reduce costs the easy way by reducing the scope and quality of service."

Belt-tightening continues

There is a widespread belief that the effect of the cuts will not only hit the public sector, but eventually trickle down to private sector organisations.

Even in global businesses, such as car rental firm Avis - where the policy decisions of individual countries do not necessarily have an immediate impact on the group - caution around IT spend still prevails.

"The wider impact of austerity measures proposed around Europe does mean that there will be uncertainty both for individuals and for businesses, which makes forecasting future trends extremely difficult," said the company's chief information officer, Adam Gerrard.

"Our core strategy will remain unchanged, but we will continue to focus on keeping our IT operations effective at the lowest operating cost while looking to innovate and add value wherever we find suitable opportunities," said Gerrard.

It seems that IT has been presented with a "somewhat cruel" opportunity by the chancellor's cost-cutting agenda, said the former CIO at recruitment group Harvey Nash, Alastair Behenna.

"I hope the cold hard realities of the efficiencies to be generated by IT in the short term, will translate into genuine and significant people-based benefits in the UK, not just be founded on a wild ride to offshore and lose even more core tech skills and jobs as we grow out of the financial mess we find ourselves in," he added.

More collaboration ahead

Even with the increased hesitation presented by the CSR, it is business as usual for private sector IT chiefs, as they have been used to incessant cutbacks and getting value for less cost for many years, according to CIO coach and mentor David Henderson.

"For IT leaders in the public sector, it's binary - for those sitting on mega programmes and projects that have been cancelled, it may be time for a new challenge. For those without such an impact, it will be time to ensure their IT cost management achievements match the best in the private sector," he said.

Nevertheless, Henderson added that the government's announcements bring a significant shift in perspective to those leading IT, regardless of the type of organisation.

"The CSR marks a fundamental change in where the lines are drawn between public, private and third sectors, so the best [managers] prepare for a dramatic increase in collaborative activities, working more intimately with partner organisations and with service suppliers."

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