Optima goes private after DET setback
- 24 November, 2004 12:20
Optima is overhauling its education business and redirecting efforts to privately funded institutions. The decision stems from disappointment over its share of a $544 million NSW Department of Education and Training (DET) state schools PC rollout.
Optima executive chairman and managing director, Cornel Ung, said the local PC manufacturer had cut operations staff in the wake of the DET announcement.
"We lost some operations people because of our rollout share being down," he said.
"We were waiting for eight months [on this contract]. We had to let go of some people."
Proclaimed as the largest school computer rollout in Australia, the new DET Technology for Learning plan will see 100,000 new PCs delivered to state-run schools over the next four years. DET will also purchase 75,000 PCs that had previously been allotted to schools under leasing schemes and recruit 129 permanent IT support staff.
Following a lengthy request for tender process, DET awarded the rollout to four suppliers: IBM, ASI, Optima and Apple.
Between 25,000 and 35,000 of the 100,000 PCs will be rolled out to state schools next year.
Although a specific breakdown has not been released, ARN has learned IBM is expected to provide nearly two-thirds of these units. DET confirmed Australian manufacturers will provide 33 per cent.
Suppliers involved said the structure of the new contract is different to previous tenders released by DET. One key change has been the decision to stop leasing equipment in favour of outright purchasing - a move reflected across the NSW government.
But the most significant change will see the department managing which schools receive what equipment.
In recent years, a panel of vendors chosen by DET were asked to submit systems within a certain price range for various contracts, ASI Solutions communications manager, Craig Quinn, explained. The resulting proposals were then handed over to schools for selection.
"This new deal moves away from that to a more centrally driven model," he said.
It is this change which national education manager, Julie Rush, said had upset Optima.
"The DET has had a complete change of tack," she said. "The way we did business was by dealing directly with the schools. We have done a lot of work from our point of view in providing greater support to local schools.
"This is why Optima gained a large portion of NSW DET contracts - we would assist schools in their decision and provide the best option for them.
"We are disappointed we didn't get a greater share than we had in the past."
Ung echoed this, and said the new procurement path did not allow schools to decide which vendor to buy from.
"The decision could create issues if schools are looking for services rather than just the hardware itself," he said. "They don't have a choice in the company they can work with."
The DET has so far given manufacturers a rough estimate of how many PCs they will provide during the next 12 months.
Rush said the re-evaluation of suppliers on the whole-of-government ITS2000 list in October next year had prevented DET from issuing finite numbers. There were still opportunities for the local builders to grow their share of the four-year contract, Ung said, although the new system favoured the approach taken by global manufacturers.
"Multinationals are more cost-effective and department requirement focused," he said.
"They met the department's requests for value-added services and gave a better offer in the tender process."
Commenting on the win, IBM NSW state account manager for education, Alison Dekleuver, said tailored offerings had clinched the deal.
As an example, she said it had bundled resource software, including portable library, onto the hard drive. IBM will fulfill the contract direct.
Its personal systems group general manager, Alan Munro, said the win was an exciting one.
"IBM is putting a lot of investment in education and we will have a continued focus on the sector," he said.
Ung said NSW had represented the biggest portion of Optima's education business in terms of volume and share in all government rollouts. It also holds contracts in Queensland and the Northern Territory.
Overall, education represents 70 per cent of the PC manufacturer's government business, which in turn, accounts for 65 per cent of its total revenue.
As a result of the shift in its NSW state-based education business, Rush said Optima would now have to look at ways of meeting the shortfall by driving up sales into other independent education institutions, such as tertiary institutions and catholic schools.
"We would have concentrated our staffing resources on state schools in the past, as well as our training, marketing or attending related conferences," she said.
"This will now be channelled into other areas."