IT megadeals 'can damage innovation'

The NHS IT upgrade and major outsourcing deals may involve huge amounts of money, but does that mean they're good news for the tech sector?

Massive technology contracts can often act as a brake on innovation throughout the sector, experts warned on Monday.

Appearing on a panel discussion at the UK Technology Innovation & Growth Forum, Jeremy Bentley, chief executive of APR Smartlogik, a supplier of search and profiling software, claimed that IT outsourcers typically failed to offer their customers technology that is genuinely new and exciting.

In particular, they are unlikely to involve smaller firms, which can often be the source of the most innovative new products, Bentley said.

"Most of the large outsourcing companies haven't had a new idea since the 1920s," said Bentley. "Their motivation is to get as much profit out of the deal as possible. They've probably been screwed to the floor by service level agreements, and if something wasn't developed in their house then they're going to be very reluctant to use it."

The government is spending billions of pounds to modernise the National Health Service. If successful, the project should allow people to book their own appointments and enable doctors to consult electronic patient records.

But Jon Keating, chief executive of Formic, a data capture company, argues that the NHS IT project, which could cost up to £20bn, probably won't benefit the UK's technology sector.

"A large part of the NHS has been carved out for a few large companies. That makes it very hard for smaller firms to get a piece, and in the long term I don't think that's good for the NHS either," said Keating, who also appeared on the panel.

The UK Technology Innovation & Growth Forum is running in London on 20 and 21 February, and is being organised by the European Technology Forum, a sister company to ZDNet UK.