The open source level playing field

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The coalition government promised the SMEs that make up the Open Source software companies in the UK that from now on in terms of IT procurement from the Public Sector there would be a ‘level playing field’.

What they omitted to say is that they meant it would be equally bad for all companies that serve the Public Sector. Cuts and moratoria have created an hiatus in IT procurement and service contract renegotiation has eroded existing revenues.

No one knows how long this will go on for but the only game in town right now is survival. The Open Source software suppliers I know well have simply stopped growing and are shedding staff hoping to be there when times improve meanwhile limping along on existing support contracts.

It’s just as bad for the big boys though. RM PLC the biggest reseller of hardware and software to the education sector took a massive hit from the axing of the school building project prompting not only a big dip in their share value but one of those ominous statements to reassure that actually tells you all is not as it should be:

“We have strong relationships at individual school, local government and central government levels,” said Terry Sweeney, chief executive, in a statement. “With our strong position in the academy market, we remain confident that RM is well-placed to adapt to changes in capital spending programmes."

Oops, this is not that reassuring if you know that the academy market referred to was about the previous government led rebooting (at great cost) of failing schools in deprived areas. The word academy now means schools independent of the Local Authority free to make their own ICT procurement decisions.

In other words no more LA wide deals. None of the VLE or Assessment tracking agreements or MIS lockins are guaranteed anymore. It is one thing to accompany BECTA execs to see Bill Gates in Seattle then ‘help’ LAs back home to ‘make choices’ for schools than it is to jolly along thousands of Head Teachers.

If it bodes ill for the likes of RM in education, DELL who is the second biggest hardware supplier in education and also features prominently in the Public Sector generally is feeling chill from the OGC so much that its public sector VP Ferenc Szelenyi was also moved to make a statement a tiny clip of which follows:

‘...the coalition government’s approach to public sector procurement is too one-sided...’

this was after having just not been invited to a big meeting with the Cabinet Office attended by rivals HP, IBM and Fujistu!

However it is worth unpicking his rather unstructured comments and indeed RM’s statements to find out what is going down.

The New definition of ‘Fair’

Essentially it’s the Cabinet Office up to its old tricks again. The likes of RM and Dell feel out in the cold, as do the SME Open Source companies some like Sirius PLC have complained loudly and publicly. Essentially though Szelenyi puts his finger on the problem. Translating liberally it goes thus:

The only way companies can survive wafer-thin profit margins is to be guaranteed market share. The fewer companies involved in sharing the more possible this is. Wafer thin profits quickly become losses when the arcane un-business-like complexities of Public Sector ICT are outsourced. Dell cant afford to do this.

The Government wants it cake and eat it says Szelenyi (no surprise there) it wants low margins for its suppliers but is not going to make it easy/possible for them to streamlline Governmental ICT processes in order to make money. This means that you have to be an IBM or an HP just to survive..a price worth paying during the ‘great hiatus’ if meanwhile your rivals go away for good.

So what kind of a level playing field do we have when you have to be rich simply to survive the bad times?

It means that when the good times come back we will be from an evolutionary standpoint back with the dinosaurs ruling the earth with a few scurrying mammals scooting around barely noticed. A bit like the ‘consolidated’ car manufacture market which has a plethora of micro-businesses and a few mega producers.

Plus ca change. No sign of any reform in the Public Sector IT at all, just more of the same. You wait Cabinet Office, when you depend only on two or three IT suppliers watch them twist your arm off.