[LINK] Analysts beg to differ on federal outsourcing overhaul

[Bernard Robertson-Dunn]

<brd>
A similar report to that released yesterday with added coverage of the
ACS position.
</brd>

Analysts beg to differ on federal outsourcing overhaul 
By Helen Han
SYDNEY, 17 January, 2001 
Australian ComputerWorld
http://computerworld.idg.com.au/cwt1997.NSF/cwtoday/CA5AE32AEB2F97544A2569D7000A5B0D!OpenDocument

Market analyst IDC says the 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. However the
Australian Computer Society (ACS) is calling the overhaul a win for
small IT players.

IDC outsourcing analyst Kathy Beckman said there was a slim chance
small IT companies would benefit and, overall, the local IT market
would not be affected. Commenting on the recommendations contained in
the Humphry Report, on the government's IT outsourcing, to scrap
mandatory contracting and remove centralised control of the initiative
to individual department heads, she said: "The smaller providers might
pick up on agencies, like CSIRO - which may not end up outsourcing."

ACS president John Ridge said that local IT companies had not been
getting the opportunities they should have received under the $5
billion program, and that its local industry development component was
purely tokenistic. "I applauded Ipex for winning a Group 8
[contract]."

The ACS had been "distressed" that most of the government's
outsourcing deals had been awarded to multinationals such as IBM, EDS
and CSC.

According to Beckman, large IT companies would not suffer under the
changed regime. "Last year government work accounted for 23 per cent
of the Australian IT market's $2.9 billion revenue."

She stressed that as the federal program for blanket outsourcing had
been dumped, the onus was now on all agencies to focus on weighing up
the pros and cons of outsourcing, which she said they could do since
the de-clustering of the contracting process recommended by the
Humphry report.

In the long term, Beckman expects most government agencies may look at
avoiding outsourcing IT operations. "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. In the private sector cost
is 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."

-- 
The gods cannot help those who don't seize opportunities.
-- Kung Fu-tse (Confucius).

Regards
brd

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