CIO tips on how to survive losing your budget

Handling redundancies, contracts and other tough money-saving choices...

Balancing the books at a time of deep cuts can be more problematic for authorities that have outsourced much of their IT infrastructurePhoto: Anssi Koskinen

With local authorities losing almost one-third of central government funding, public sector CIOs are taking unprecedented steps to make savings.

While business transformation programmes can save councils money in the long run, government CIOs say every potential economy is being considered to help the IT department break even.

Costly clauses are being removed from contracts with IT suppliers, tech investments are being delayed and staff are being let go - nothing is off the table.

Dylan Roberts, chief officer for ICT at Leeds City Council, said: "Priority number one is to keep the basic IT services running to the same service level with 30 per cent less resource."

At Leeds, Roberts said the IT department has reduced its headcount and wage bill through a mixture of natural turnover, voluntary severance deals and retirement.

"We are having to let people go. It puts a massive focus on morale. We've got a big focus on the fact we are all in this together," he said.

Roberts added that when staff choose to leave the IT department, the council is saving money by not replacing some of them or filling certain posts with trainees.

Difficult decisions are also having to be made about the amount of risk that is acceptable when running public sector IT, Roberts said.

"For instance, if you have a support contract on a core router that said it had to be fixed in four hours, maybe they fix it in eight hours instead," he said.

Hampshire County Council's head of IT, Jos Creese, said in the current climate there are "at least a dozen" ways public sector CIOs can reduce IT spend that "you probably wouldn't have entertained in the past".

"It inevitably means you go back to suppliers and say, 'We can't afford to do things in the way that we were. We want you to cut some of your operating costs and give some of that value back'," he said.

For example, Creese said CIOs could drop poorly used modules from IT contracts.

Negotiations with suppliers are causing difficulties for some CIOs, with authorities that have outsourced most IT services struggling to reduce spend, Roberts said.

"Public sector CIOs with outsourced services are knackered because...

...there is nowhere they can go to cut their costs," he said, adding that the cost of contracts with suppliers are going up because they are linked to the Retail Prices Index.

"The budgets of many local authority CIOs are having to go up because they are locked into contracts, and are now forced into renegotiating those contracts."

When it comes to longer term IT efficiencies, with many organisations having already virtualised their datacentres and minimised their server footprint, Creese said the "bigger wins" lie in business process automation and simplification.

"If you can make your programme office more efficient, reduce the number of calls to the helpdesk, simplify the link between what you do and what your private sector partner does, there are genuine savings in overheads, administration and management that you can harvest," he said.

Reforming the back office

Given that many public bodies perform the same roles - from back-office functions such as HR, finance and procurement to front-line services such as social care and trading standards - there is great scope for sharing the cost of delivering those services.

Creese said local government had only "scratched the surface" of what was possible to achieve with shared services, saying there is room for greater collaboration between the 450 local authorities in the UK, in addition to the central government, fire, health, police and other publicly funded organisations that operate locally.

Shared services operations can work, Creese said, where authorities have common demographic, geographic and political needs, but added it "isn't as easy as slapping some teams together".

And it's not just savings. Authorities can generate...

Cloud computing promises savings but compliance issues are blocking its uptake by the public sectorPhoto: Shutterstock

...new sources of revenue by selling services to other authorities through shared services centres, Creese said.

Glyn Evans, Birmingham City Council's corporate director of business change, said developing shared standards for IT kit across the public sector could also allow authorities to come up with a common specification for computing hardware and save money through bulk purchasing.

"One struggles to justify why every IT unit in every local authority in the country comes up with their own specification for a desktop," he said.

Cloud computing

Given that cloud computing - the practice of accessing remote computing infrastructure and applications on demand - can cut both operating and capital spend, it might seem to be a perfect fit for the stricken public sector.

Public sector CIOs are more cautious. Evans expects public sector organisations to increase the number of everyday applications, such as email, that they access from the public cloud but expects large business-critical applications to stay inhouse.

Hampshire's Creese sees more possibility for cloud computing in the public sector, believing organisations will increasingly rely on a mix of both public and private cloud to deliver IT services.

"Public and private cloud are very valuable indeed. The idea of being able to pool and share stuff in a cloud, and the idea that you have a pay-as-you-go model that allows you to scale up and scale down painlessly is very powerful," he said.

However, Evans believes the uncertainty of moving from a fixed to variable IT cost and the dearth of cloud services that comply with tougher public sector regulations on issues, such as data security, could make some authorities think twice about moving to the cloud.

Outsourcing and the future of inhouse IT

Private sector suppliers run large amounts of public sector tech but faced with the need to cut bills, public sector CIOs are questioning whether these outsourcing deals are value for money, and whether certain tasks could be carried out better inhouse.

Creese expressed doubts about traditional outsourcing. "I think the old-fashioned outsourcing that the public sector has done has been ill-suited to the complexity and diversity of the environment, and has delivered relatively poor value in many areas," he said.

"People have seen IT as a utility, as a bundle of support stuff that we will put out to the marketplace and the world will be a better place."

Creese believes a "more grown-up relationship" will exist between the public and private sector in future, where both parties share risk and reward and more equally match services to each other's strengths.

But Evans predicts that local chief executives will be examining whether they could save money by outsourcing more IT services, even going as far as farming out the bulk of the IT department.

"If the private sector proves they can deliver the same quality of service for less cost, then what's the justification for them not doing that?" Evans said.

With IT expected to play a key role in reforming public services while absorbing punishing budget cuts, it seems tomorrow's public sector IT department will have to be an altogether leaner and meaner beast.

"We need to recognise that IT can be a major contributor to the savings that the whole public sector has to make," said Evans.