Sign this contract here: its all free…Or is it?

February 23, 2010
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In previous years, Federal Government agencies have been given riding instructions to get the cheapest, “all you can eat” licensing bundles that provide economies of scale and cheap costs per unit. The world has changed, however. Where once the salesman who asked you if you wanted to buy a watch and get some free steak-knives was a friend, he is now steering you away from success.

The Gershon Review into IT in Australian Federal Government illustrated the need to demonstrate and measure efficiency and effectiveness in IT BAU and projects. Gershon also left the book open for Government to write the next chapter: identify efficiency savings and re-invest 50% into new capability building projects. Important to this process is being able to itemise costs, drill-down into just how many and how much of something is needed or can be reduced and demonstrate just enough to do the job efficiently...

In previous years, Federal Government agencies have been given riding instructions to get the cheapest, “all you can eat” licensing bundles that provide economies of scale and cheap costs per unit. The world has changed, however. Where once the salesman who asked you if you wanted to buy a watch and get some free steak-knives was a friend, he is now steering you away from success.

The Gershon Review into IT in Australian Federal Government illustrated the need to demonstrate and measure efficiency and effectiveness in IT BAU and projects. Gershon also left the book open for Government to write the next chapter: identify efficiency savings and re-invest 50% into new capability building projects. Important to this process is being able to itemise costs, drill-down into just how many and how much of something is needed or can be reduced and demonstrate just enough to do the job efficiently and effectively. The identified savings are the key to being entrusted with new public monies to build capability. If this is not done, restructures, diminishing funding bases and a dissolved role for branches and divisions will ensue.

In the new wave of transparent Western Democracy, the transparent, lean and mean IT Divisions will be entrusted with public monies to enrich society and provide ROI to the taxpayer. These successful groups will be, more than ever before, reliant on contracts to help them achieve this result.

Returning to the proposition of the “all you can eat” contract, this model most likely cannot achieve Gershon’s vision. Buying enterprise infrastructure and software licenses where there are lists of products, services and infrastructure without associated costs will be the biggest impediment to organisations achieving measured savings.

The acid test for an organisation is if they can switch off a server, data mart, license or service to result in real, immediate and measured savings. If an agency cannot do this, their model needs to change to respond to the new environment. Teradata offers a range of services to help organisations realise efficiencies, including a data mart consolidation service. Agencies can work with industry partners like Teradata to find and harvest savings from inefficient and ineffective data management strategies. Again, these services can only help organisations if the product or service being trimmed-down can be measured.

When negotiating large, enterprise agreements, agencies will have to demand granular costs, down to the unit, hour or fixed price for service level. There may be a trade-off in moving from a veiled cost model which suits large vendors and reductions in service levels, licenses and quantities. This, however, is the world of “just what you need”, and being able to measure and demonstrate that “not all you can eat”.

David Bremstaller

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