According to Ovum Holway, the two most lucrative S/ITS markets, the criminal justice and the NHS, will grow by an average of 25 and 20 percent respectively from 2001 to 2006. Both these sectors will benefit from substantial government investment in IT having previously suffered from years of 'under-nourishment'.
The prospects for the UK education S/ITS sector are less appealing. Education experienced a two percent decline in S/ITS spend in 2002 and is not expected to achieve more than a two percent annual average growth through to 2006.
Ovum Holway sees plenty of opportunities for smaller players in this market.
"EDS' perceived 'stranglehold' over the sector is exaggerated," says Georgina O'Toole, an analyst with Ovum Holway and one of the authors of the report. "Although it has won many mega deals in central government, it does not carry out all the work itself. For example, we estimate that as much as two-thirds of the money generated by the Inland Revenue contract of 1994 found its way to sub-contractors." In addition, the public sector is making a concerted effort to attract a broader range of suppliers, favouring bids from consortia for example.
"This allows government to spread its risk across a number of suppliers," says O'Toole. "It also makes it possible to work with companies that are 'best of breed', and to change one under-performing supplier within a consortia rather than having to replace the sole supplier on a contract."
This 'multisourcing' approach favours all types of supplier. The mega players such as BT, EDS or Capita are able to take the lead in the consortium and may offer to undertake the project management role or take the financial lead on the project. Smaller 'best of breed' or niche players with invaluable knowledge of the sector, for example, health, niche technical skills or targeted application software will not be short of offers to join consortia.
Offshore players have also been attracted by the growth in the UK public sector S/ITS market. Partnerships with UK firms will enable them to benefit from this growth. Offshore firms currently face political sensitivities linked to the loss of UK jobs as well as data security issues, but attitudes are softening.
The UK e-government agenda is wildly ambitious and it remains to be seen how successful it will actually be. However, vast sums of money will be spent over the next five years, and it will be spent a lot more freely than in the commercial sector. As such, S/ITS suppliers cannot ignore this sector of the UK market.
O'Toole offers a last word of warning: "For anyone wanting to compete in this market, careful consideration should be given to the risk involved in a project before starting the bidding process," she says. "And once involved in any high profile government initiative, suppliers must also be ready to handle the inevitable press scrutiny."
Quelle: Consultant News
