Getting into Government

Getting into Government

Given that it accounts for more than 40 per cent of the Australian ICT market, tendering for government contracts can be both lucrative and challenging for resellers and vendors alike. ARN takes an expansive look at how the different levels of government go about selecting ICT goods and services and finds out how resellers can get a piece of the action.

There are three huge and hugely influential organisations that vie for top spot on the IT procurement scale every year. No, they don't dig up coal, or manage funds, produce widgets or ship wheat. Their contribution to the Australian economy is vast, but difficult to measure, and with over 600,000 screens and 14,000 servers spread across the eastern half of the country, they are far and away Australia's most important buyers of ICT.

Any ideas? Australia's largest single consumer of ICT is the Queensland Department of Education Training and the Arts, followed a close second by the NSW Department of Education and Training, with the Victorian Department of Education and Training coming in third.

In fact, of the top 10 ICT consumers in Australia, five are government departments, with the Federal Department of Defence coming in fourth and the WA Department of Education and Training sneaking into 10th place.

While government departments are often looked on as the poor cousins of the corporate world, their purchasing power packs significant punch.

Federal Government's ICT spend comes to about $16 billion, and is roughly matched by combined state government spend, while annual local government comes in at somewhere between $1 billion and $2 billion.

Taken together, government contracts represented around 40 per cent of the $85 billion Australian ICT sector in 2007.

Naturally risk-averse, and regularly scrutinised by a raft of governing bodies including the voting public, government can be a challenging customer for all levels of ICT suppliers. From a reseller perspective, this level of scrutiny often translates into a complex and expensive procurement process, which often works against smaller companies.

And if the latest Australian Computer Society report into the ICT Industry is anything to go by, it's companies of 20 employees or less that dominate the sector in Australia. Such outfits represent 95 per cent of individual companies in the sector and employ 30 per cent of the ICT workforce.

At the other end of the scale are the mid-size ICT companies with 20-100 employees and large companies with more than 100 employees. Combined, these represent five per cent of companies in the sector, employ 70 per cent of ICT workers, and tend to feature prominently on government ICT procurement panels around the country.

The road to procurement

As it turns out, government procurement is a bit of a rail-gauge issue in the Australian political landscape. Not only have states adopted different approaches to appointing ICT supplier panels, and managing tenders, but each process has been subject to the political whims of different governments. The result is a poorly coordinated mixture of approaches, which sacrifices overall efficiency, to the specific demands of different departments, agencies and governments.

Nonetheless, navigating the different approaches is possible so long as you have the resources to manage what can often be protracted tendering and bidding processes.

Hardware and peripheral vendor, Acer, is a case in point. According to general manager for education, corporate and government sales, Michael Cefai, Acer is successful in the Australian government market due to its willingness to operate within the confines of different procurement processes.

"We're happy with the way procurement is carried out throughout the country and we'll work with whatever systems are in place," he said. "In most cases it's a long and expensive process, and there's always a very high level of scrutiny of the technology and your capacity to supply, but that's what I would expect given they are spending taxpayers' money."

However, the ebbs and flows of politically driven procurement practices have left others jaded regarding the process of procurement and the level of professionalism within government ranks.

Having been involved in supplying ICT to government since 1982, managing director of Canberra-based reseller Datafl ex, Brian Evans, was one of the few survivors of the previous Federal Government's outsourcing experiment, which saw dozens of local suppliers lose work to large multinational contractors.

"What we had initially was a level playing field where a panel of government endorsed suppliers was selected and renewed every couple of years," Evans said. "Then when the Howard Government came in, and implemented outsourcing for purely ideological reasons, a lot of the local companies simply went out of business."

Evans' key concern is that government agencies lack the internal skills to identify value in the procurement of ICT goods and services, and often default to a large multinational following the mistaken logic that buying from vendors or large companies is the safer, better value for money option. According to Evans, agencies left to procure goods and services direct from the market in the past were sometimes hoodwinked by low set-up costs, and ended up with machines that had no warranty, and sometimes no monitors.

"The best approach would be a centralised purchasing model that used a rigorous process to identify a number of vendors, and enabled delivery through their channel partners," Evans said. "This would ensure that the market remains competitive, and that the work is spread across the food chain so more jobs are created and skills are shared throughout the economy."

He's not alone. Through the Australian Information Industry Association (AIIA), the ICT industry has been working with government to restructure and standardise governmental approaches to ICT procurement at both state and federal level.

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