Tuesday, 25 May 2010

Cometh the axe man.....

Well, with the cuts announced it’s all over bar the shouting...if only that were true! It’s always risky to say too much too early or to do too much too soon in the face of quickly implemented large scale change, although that’s a lesson neither the press nor politicians seem particularly prone to learn.

It is interesting to read some of the press, including the ‘technical’ press, some of whom have been at the forefront of criticising many of the large IT systems that are now about to be ‘scrapped’. In fact I seem to remember some of them have called for this type of action in the past – although not specifically on economic grounds. With Labour still maintaining that spending is the way out of our debt problem and the coalition having reached a negotiated conclusion that immediate and radical savings (cuts) are the only way to start it seems that only time will tell...quite risky, but what can you do?

For most of us (well the non economists) there is something counter intuitive about spending your way out of debt – certainly my credit card provider would not agree with the theory, although the way they still try to push credit on me you’d be forgiven for thinking they have had a change of heart! For those of us who are trying to run commercial organisations at this or any other time we know that the ‘spend’ message is a little more subtle than it first appears. If the spending is the type of spending that creates opportunities and jobs and increased revenue then it has genuine merit. However, if the spending is focussed in areas where nothing new is actually produced then it is never going to dent the debt. From a commercial company perspective the answer would seem to require two seemingly opposite but actually complementary areas of activity. The first is the identification of savings and this may need to be radical and tough but this surely must operate with a parallel policy of investment in areas that are designed to create opportunity and generate income. Even the most basic logic dictates that cuts alone will ultimately fail as a strategy.

Another area in the programme of cuts is that of renegotiating contracts with private sector contractors. Again, hardly a strategy that gives a high confidence factor in terms of its likely success. That is, unless the government(s) acknowledges that significant contributory factors have been very poor government procurement processes (all flavours of government) often combined with programmes that are too large, overly complex and poorly specified.

Anyway, as they are saying, ‘the David will be in the detail’ so I’m sure we all await with interest the parallel investment strategy, the growth plans and the ‘hope factor’. Whilst cuts are hard to live with they are relatively easy for the politicians to target whereas the investment and growth strategy will be far more comfortable to live with but it’s much harder work for the politico’s to develop. Let’s hope they learn very quickly!

Lots of press coverage has used the word ‘draconian’ with regard to the announcements and a real worry with hastily implemented ‘draconian’ measures is the high probability of unintended, but equally ‘draconian’ consequences. The coalition needs to learn from the last crowd who got the implementation of ‘fag packet policy’ down to a fine art, the consequences of which will continue to play out for some while to come.

A final word about where IT fits into all of this. There seems to be a great danger that both baby and bathwater are about to be jettisoned on the basis that because the hoped for efficiencies appear not to have been delivered under the previous administration it is somehow the fault of the technology itself! I believe nothing could be further from the truth. The effective implementation and running of the correct technologies is still the business critical bedrock of any real efficiency, transformation, service delivery improvement and the delivery of key business objectives. Just because the IT industry is saying this (well they would wouldn’t they) doesn’t mean it isn’t true. It is certainly something Socitm wholeheartedly endorses.

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