SPECIAL REPORT
www.comms-dealer.com AXE FALLS ON SPENDING
The coalition Government’s purse strings tightened almost to breaking point on October 20th when the Chancellor of the Exchequer delivered the long awaited spending review. Although the review did not make for pleasant reading, the story for comms resellers operating in the public sector is far from over.
George Osborne, delivered the long awaited comprehensive spending review (CSR) of Government finances to the House of Commons. In an hour long speech he presented plans to save an average of 19 per cent from departmental budgets over the next five years. Although the final figure is lower than many had expected, the scale of the cuts is still savage. Capital budgets have been slashed by 29 per cent and some departments face losing up to a third of their funding. An extra £7 billion will be cut from the welfare bill, already one of the hardest areas hit in the emergency budget. It’s expected that nearly half a million jobs will be lost from the public sector as a result. But for the communications industry there is some hope within the 106 page document that outlines the review.
O
As expected, the Government is pledging support for private enterprise as the driver of growth in the medium term, and has restated its commitment to finding efficiencies through new technology. In particular, the review says that ‘the Government will use digital means, such as online and digital telephony, as the default option to
n October 20th the
Chancellor of the Exchequer,
deliver more of its services’. Elsewhere in the report is a £530 million commitment to improve the broadband network and incentivise the rollout of fibre optic networks into rural areas.
Analysts, however, are hedging their bets on how the review will effect the overall economy. “These cuts will present tough challenges for the private sector,” said Glen Babcock, Advisory Partner at PwC. “Those who will suffer most will be the small businesses that rely on public sector contracts as their key revenue source, but the impacts will be felt by all businesses as they prepare for a tougher climate for public procurement. On the positive side, this review offers opportunities for private sector companies to work with the public sector in new and
innovative ways. This is the chance for the private sector to share its wealth of experience and skills in back office rationalisation and outsourcing to help the public sector achieve savings and improve services.”
Mike Mason, Managing Director at converged IT solutions provider Intrinsic Technology, endorses this viewpoint. “Overwhelmingly, the Government’s greatest assets are its people and its property. We all understand the need
for spending cuts to be made, but the question is how will the cuts translate into the loss of frontline services and a reduction in headcount? We have been transforming the way Government works, driving new ways of working into local authorities, health organisations, educational establishments and the emergency services. Unified communications enable staff to be untethered from their desk or permanent place of work, drive efficiency with people always being available, enable staff to work from any Government building, driving down travel and allowing people to work from home.”
Mason believes that IT can transform the way the Government does its business and in this time of austerity enable organisations to dramatically save costs on buildings, while either retaining all of their staff or driving greater efficiency from fewer people. “Also, by deploying the latest multi-media contact centres and utilising staff working part time from home, Government bodies can both offer extended service hours and multiple means for the general public to contact them, all monitored via a tight SLA,” added Mason. “This reduces the need for people to attend council buildings yet still keeps
customer satisfaction levels high as the body is always contactable, even during unsociable hours.
“With healthcare spending to be increased in the coming years, reform in the delivery of social care, and schools being given greater autonomy as to how they divide their budgets, the CSR presents opportunities for suppliers targeting these sectors with cost-effective, service led solutions that can deliver long-term efficiency savings.”
Tom Maxwell, Dealer Sales Director at Nimans, remains cautiously optimistic. “While there will be many resellers especially in the public sector arena rightly concerned about the savage impact, it’s not all doom and gloom as revenue opportunities still exist. Return on investment is one of the biggest areas to focus on as many companies adopt a ‘spend to save’ strategy.”
Maxwell expects
growth areas to include conferencing as it provides an easy way for companies to cut costs and generate quick tangible returns. Leasing provides dealers with an opportunity to overcome one of the biggest hurdles to a sale – upfront cash investment. And technology such as SIP trunks can help reduce line rentals and provide free site-to-site
calls. Maxwell added: “However gloomy the economic outlook, there will always be opportunities to exploit. Dealers should remain positive, take a step back and adopt their sales strategies accordingly, perhaps moving into areas such as managed services.”
Stand alone green IT projects are at risk of being discontinued as a result of the cost cutting measures, according to Compass Management Consulting. The firm claims that too many first generation green IT projects were poorly defined and lacked meaningful measures of success, which is leading to their worth being questioned as IT costs are reviewed more widely.
On the other hand,
Compass also suggests that the current focus on cost cutting may be good for sustainability in the long- term as it will drive radical transformation in the way IT services are delivered. Steve Tuppen, Consulting Director at Compass Management Consulting, said: “Too many green IT projects have had no dollar values attached in terms of benefits to be delivered. The current economic situation may prove to be the best opportunity to implement real change in the way IT services are consumed and delivered more sustainably.”
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28 COMMS DEALER NOVEMBER 2010
www.comms-dealer.com
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