[LINK] IDC lukewarm on federal outsourcing overhaul

[Chirgwin, Richard]

Defibrillate me someone! "Long time outsourcing barracker lukewarm on
outsourcing overhaul", reported by an associated publication which is also a
long-time outsourcing barracker (as evidenced by ComputerWorld's preference
for "government department fouls up IT project" over "private company fouls
up IT project").

But wait! ... spin-doctoring at work. Knowing full well that the benefits
for which analysts have so long barracked - "outsourcing is cheaper!!!" were
not realised in gov.au, the analyst focuses on the flag-waving bit. Is IDC
lukewarm because the overhaul's a bad idea? Nope. But "it won't help small
companies and it won't hurt big ones".

>Outsourcing was more feasible in the private sector as cost was not the top
priority,

ROTFL. Every single analyst paper I have read in 14 years of reporting on
this industry has said "outsourcing is cheaper", with the SOLE exception of
a minor player called Compass Analysis, which says "the cost of well-managed
IT is roughly the same everywhere".

BTW, there's another sidelight in this debate which got ignored: most of the
analyst "outsourcing is good" models build in a favourable tax impact. Of
course, gov.au pays no tax...but I'll bet the departmental boosters didn't
recast the economic models to reflect this!

>"How much you would save 12 months down the track is hard to measure as IT
costs go up 
>so rapidly."

Oh well. I always knew Moore's law would run out of steam one day. I thought
it would die when we got single-electron chip geometries; but in fact,
Moore's law just died under the hand of an IDC analyst.

RC
-----Original Message-----
From: Bernard Robertson-Dunn [mailto:brd@dynamite.com.au]
Sent: Wednesday, 17 January 2001 8:21
To: Link
Subject: [LINK] IDC lukewarm on federal outsourcing overhaul


IDC lukewarm on federal outsourcing overhaul 
By Helen Han
SYDNEY, 17 January, 2001 
Australian ComputerWorld
http://computerworld.idg.com.au/cwt1997.NSF/cwtoday/5018B05B0A1F8CDC4A2569D6
007BF7B6!OpenDocument

The federal government's policy backflip on the whole of government IT
outsourcing program will not alter the playing field in favour of
small local service providers in the long-term, according to market
analyst IDC.

There was a slim chance smaller IT companies would benefit, and
overall, the local IT market would not be affected, said Kathy
Beckman, IDC senior analyst for IT services Australia and New Zealand.
Commenting on the recommendations in the Humphry Report on federal
government outsourcing to scrap mandatory outsourcing and remove
centralised control of the federal initiative to that of individual
department heads, she said: "The smaller providers might pick up on
the smaller government agencies, like CSIRO - which may not end up
outsourcing."

She said large IT companies on the other hand would not suffer under
the changed regime. "Last year government work accounted for 23 per
cent of the Australian IT market's revenue of $2.9 billion.

Beckman stressed that as the federal program for blanket outsourcing
had been scrapped, the onus was now on all agencies to focus on
weighing up the pros and cons of outsourcing, which she said they
could do comfortably since the de-clustering of the contracting
process under Australian Stock Exchange head Richard Humphry's
counsel.

In the long-term, Beckman expects most agencies to avoid outsourcing
IT operations, only choosing selective agreements with private
companies. "The only difference I see for agencies [now] is that
individual agencies will decide what their business needs are before
entering any agreements."

Overall, she felt the government's program had focused too heavily on
cost savings, neglecting business strategy. Outsourcing was more
feasible in the private sector as cost was not the top priority,
unlike objectives such as competitive advantage and core skills and
competencies, Beckman added. "How much you would save 12 months down
the track is hard to measure as IT costs go up so rapidly."

--
Life is like a sewer.
What you get out of it depends on what you put into it.
-- Tom Lehrer, 1953

Regards
brd

Bernard Robertson-Dunn
Canberra Australia
brd@dynamite.com.au