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Who are the winners and losers in the Govt’s $9B IT spending spree?

Who are the winners and losers in the Govt’s $9B IT spending spree?

The Federal Government is spending more than ever on IT, but how much of it ends up in the pockets of small to mid-size providers?

In the financial year ending 2016, the Australian Government spent $9 billion on IT. This represents a 50 per cent increase on the IT spend for the previous year, which came to around $6 billion.

In December, the government revealed that IT, broadcasting and telecommunications contractors accounted for $3.85 billion worth of public contracts, or 6.8 per cent of Australia’s total government procurement spend, in the financial year ending 2016.

While much of the government’s enormous IT investment goes to IT suppliers, it doesn’t always end up being evenly distributed among external partners.

Government is an industry vertical that, in many cases, handles extremely large, monolithic IT projects. As such, it often needs to partner up with IT service providers that have the resources needed to undertake such far-reaching, broad projects.

This is why so many big, multinational systems integrators appear on the contract notice lists, both at a federal level, as well as the state and territory level.

At the same time, global technology vendors are frequently engaged directly for agency or department-wide technology rollouts, maintenance or ongoing licencing arrangements.

As a result, multinational tech companies such as IBM, Dell EMC, Hewlett Packard Enterprise (HPE), Deloitte, Accenture, Cisco, Oracle and many others pick up millions upon millions of dollars’ worth of IT work each year.

In the past six months alone, IBM has been awarded more than $40 million in contracts from Federal Government entities – despite the company being the project lead for the Australian Bureau of Statistics’ (ABS) 2016 Census portal, which failed spectacularly after being hit by a series of distributed denial of service (DDoS) attacks on Census night last year.

Likewise, Dell Australia has received well over $8 million in Commonwealth IT contracts since November last year, while EMC has been granted over $8 million in Federal Government IT contracts this year alone.

Konica Minolta Business Solutions recently won a single contract with the Department of Defence worth almost $80 million.

Needless to say, a lot of large, lucrative contracts are dished out to some of the local market’s largest incumbents.

Yet the government has flagged plans to change the status quo when it comes to the way it procures IT services from external suppliers.

Angus Taylor - Minister assisting the Prime Minister for cities and digital transformation
Angus Taylor - Minister assisting the Prime Minister for cities and digital transformation

As reported by ARN, Assistant Minister for Cities and Digital Transformation, Angus Taylor, has flagged that, through the Federal Government's Digital Marketplace platform, he wants break up its traditional IT tenders into smaller projects to give smaller organisations a better chance at winning contracts.

“I would like to see 10 percentage points more going to SMEs,” Taylor said on 19 March, when asked how much of the total IT spend the government wanted to direct toward smaller partner organisations.

He said he would like to see this done as soon “as is reasonably achievable”, but stopped short of offering a time frame within which to achieve this.

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Tags ABSDell EMCIBMATOcensusPaul ShetlergovernmentHPEKonica Minolta Business Solutions

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