CGI President slams government reforms – warns investment will be taken abroad

CGI President slams government reforms – warns investment will be taken abroad

Tim Gregory has taken the helm of CGI’s UK operations after the Logica acquisition

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Tim Gregory, the man put in charge of CGI’s UK operations after the £1.7 billion acquisition of Logica, has slammed the UK government for implementing reforms that have made it difficult for big suppliers to do business with the public sector.

He warned that if it continues, and the pendulum swings too far towards giving work to SMEs, larger companies will look to invest their money elsewhere.

The UK government has undertaken a number of reforms in recent months to push out the traditional suppliers of IT services to government, following a number of high profile failures that have cost the taxpayer billions of pounds.

The Government Digital Service (GDS) and key technology players within the Cabinet Office want to introduce more agile SMEs to working with the public sector, which will work to help overhaul legacy systems with new online, digital products that could save £1.7 billion a year after 2015.

Gregory believes that the government may be pushing its reforms too far.

“You’ll be aware that the government is making life difficult for IT vendors. I find this adversarial approach quite unhealthy,” he told Computerworld UK.

“I’m not saying that the government shouldn’t be driving value for money, and previous suppliers have taken advantage, but I think the pendulum is in danger of swinging too far the other way.”

“Certain companies will stop investing. It’s as simple as that. If you are being given an opportunity in the UK government that says: you can’t make a profit, you have to give X percent of your business to an SME, you have unlimited liability, there are lots of service credit penalties, it takes you anything up to two years to bid to win the deal - companies will simply take their investment to another country.”

Gregory also warned that although the SMEs that the government is hoping to work with are likely to have excellent technology, they may struggle with governance and working with government departments. 

“The first time one of these SMEs doesn’t deliver, when something goes pear-shaped, there will be no safety net. There’s no point in a government organisation trying to sue them, there’s nothing to sue. It will be gone,” he said.

CGI and Gregory are also concerned that the government’s move towards shorter outsourcing contracts, some as short as three years (with a non-committal option to extend by two further one year periods), are simply unworkable for outsourcing companies.

He said that outsourcers spread their risk over a long period and if the government is looking for three year deals, it isn’t going to be a worthwhile investment for many suppliers out there.

“If you look at the average outsourcing deals – ours on average are about seven years, and then we have some at ten years and some at twenty years. That’s where we drive out cost for the customer because that’s where we can take a long term view,” said Gregory.

“For a ten year contract we are prepared to make a big investment in the first year, which really helps to drive the cost out, because we will gain it back over the next nine years. However, if it’s contract over three years we can’t do anything with it!”

He added: “Everybody is a loser, because the government won’t get the savings it wants. They really need to find that middle ground.”

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Comments

  • Jack Large suppliers have taken the government for a ride for decades with IT projects that are deliberately strung out over a much longer period than necessary taking advantage of the naivety of non technical government stakeholders and using unqualified staff graduates that are not rewarded but rather punished for doing a job too quickly because its not enough hours on the time sheet Cough Accenture CoughI hope the large IT suppliers do sod off somewhere else and let the smaller companies do the jobs properly at a fraction of the cost and time
  • John Booth How so Seems to me that the playing field has become extremely level insofar that any IT company can now provide services to HMG and not just the big greedy boys via GCloud The IT world has changed and if you cant keep up get out
  • joames No They are saying we can handle the heatCGILogica want an even playing fieldThe UK legislation creates an uneven playing field
  • joames Why does the UK government discriminate They should buy the best product
  • John Jones The article beautifully illustrates the different drivers of a being a businessman and b being a politicianTo be fair to the Tories they gave plenty of notice in their manifesto and up to and including the general election that the days of big contracts and almost by definition the work of big SIs would ercome to an endIn effect this was a case of politicos saying something and doing somethingThe ICT industry and our trade body have been slow to come to terms with the new reality its called austerity and living within our means by the way- carping and squealing from the sidelines is not the solutionTo quote an old irish saying - when youre explaining your losing - Tim put your tax payer hat on use the appropriate channels and become part of the solution - the sidelines are not a proper place for a great company that Logica now CGI once was
  • John Booth methinks that logica arent as agile as they would make us believe cant handle the heat get out of the kitchen then Old business models dont work in the cloud TimYou just have to wipe your mouth as the trough you had your snouts in is now gone
  • Chris Chant Good point Tim lets just go back to the way it was After all it was soo good
  • DavidChassels Oh dear people in glasses houses - Do not know CGI butLogica failed miserably to research tech innovation from SMEs that could have reduced costs significantly 6GL has arrived pioneered in UK and duly ignored why would a big SI crater its own business Well is CGI any better before another stone is thrown Some clues in this dialogue httpsocial-bizorg201306 The 7 domains interesting even relevant but not the way businessthinks or works
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