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Continued need for greater professionalization of central government outsourced IT operations

12-01-2015 News UK

The Agency of Digitisation has published its second status report on outsourced IT operations. The report deals with management of IT operations contracts exceeding DKK 5 million and reveals a continued need for professionalisation of central-government outsourced IT operations. The status report monitors how government authorities are working to become better at buying the right IT operations services at the right price, as well as their efforts to achieve continuous savings in this field. According to this half-year report, focus on professionalisation efforts has weakened.

The status report concerns 36 contracts and shows annual savings for the first half of 2014 at DKK 6.6 million. This corresponds to 14.2% of the costs of the six IT operations contracts for which professionalisation measures have been implemented. This is a good result when seen in isolation. However, only four government bodies have focussed on saving money through re-tendering contracts or through optimising costs or deliverables in existing contracts.

Significantly weaker focus

The market prices for IT operations have dropped by 8.3% on average annually over the past 4 years. However, in relation to the total costs of major central-government IT operations contracts, the first half-year 2014 only saw savings at 1.3%. Last year savings were at 14.7%. This is a significant drop, which indicates weaker focus and the need to re-establish a strong focus.  

A number of other challenges

The status report also shows that a number of other challenges exists with regard to how central government manages its outsourced IT operations.
  • IT operations contracts can be standardised in order to make follow-up on outsourced IT operations more effective. 
  • Central government can become better at matching business needs with the service levels for IT operations procured.
  • Central government can become better at managing risks in the operational phase in a structured manner.
The status report demonstrates the necessity of efforts by the Agency of Digitisation in this field and that such efforts still demand strong focus. The conclusions suggest a continued need for consultancy as well as for authorities to share knowledge and good practice about procurement of IT operations and continuous IT operations management. 

Download the executive summary of the report (pdf).