Procurement figures show shift to smaller, more focused deals in local government

Written by PublicTechnology on 7 February 2017 in News
News

The average value of local government IT deals fell 25%, while their length dropped an average of six months, according to figures released today.

Pen signing a form

The value and length of deals signed by government have dropped in 2016 compared with the previous year - Photo credit: Flickr, Sebastien Wiertz, CC BY 2.0

The annual Arvato Outsourcing Index, compiled by business process outsourcing provider Arvato and industry analyst NelsonHall, show an overall 75% increase in investment on IT and technology in 2016, reaching £463m.

The latest report – which is based on all outsourcing contracts procured in the local government – also found that local government signed IT contracts worth £814m in 2016, an 8% increase on 2015.


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However, the average value of the agreements fell by 25% compared with the previous year, and the length of the contracts fell by an average of six months. Meanwhile, the number of deals signed by local authorities grew by 45% - from 20 to 29.

Taken together, this suggests a shift from large, multi-process deals to smaller, more focused contracts within local government, a move that is often promoted by both central and local government IT leaders.

The company said that the increased investment in technology and IT showed that tech procurement had “dominated council outsourcing strategies”, adding that there was also more new work coming into the sector.

Some 72% of the contracts being new work, up from 60% in 2015. This included procurement of new data centres, end user computing and network and application management, the report said.

Debra Maxwell, the chief executive of customer relationship management solutions at Arvato UK and Ireland, said: “The sustained growth we’re witnessing across the sector reflects the growing pressures on local authorities to transform their operations, cutting costs while providing better services for citizens.

“While technology is already playing a key role through the digital by default agenda, investments in new innovations, such as automation and cognitive systems, are now set to underpin more fundamental change.”

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