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Government agencies can save billions if IT outsourcing is introduced gradually

Björn Danielsson

Dagens Samhälle

29 January 2015

 

To read the full article in Swedish, click here.  

PA sourcing expert, Björn Danielsson, has a byline article published in Dagens Samhälle discussing how Swedish government agencies can become more efficient.

Björn says the potential for efficiency improvements in the areas of IT and outsourcing are great. Drawing on the Swedish National Financial Management Authority´s study of 22 government agencies in October 2014, it appears outsourced IT operations only account for less than a third of total IT business today – with most agencies barely using any outsourcing at all. The article goes on to outline how a more active use of outsourcing on selected parts of their IT operations could improve quality, cost and standardisation            

The piece highlights that t
his change should be approached with caution, as PA’s study, ‘How to succeed with sourcing in public sector’, demonstrated that too drastic an increase in outsourcing IT operations can cause problems. This is down to four basic reasons:

  •  The sourcing strategy is not embedded – a well-established and entrenched sourcing strategy is needed to determine what is appropriate in the short and long term with regard to social responsibility and the authority's own and external competence and ability

  • A lack of retained organisation – agencies should further develop their retained organisations as this lays a better foundation to support a shift towards a greater degree of outsourced IT operations

  • Inadequate analysis on the effects of staff – outsourcing of certain functions and/or processes affect staff. Employees should be reviewed and reeducation and/or training should be provided where appropriate

  • Lack of management support – many authorities lack management support for the strategy and implementation of their outsourcing. Decisions on sourcing strategy must be taken and communicated by management to become successful.

 

The piece highlights that this change should be approached with caution, as PA’s study, ‘How to succeed with sourcing in public sector’, demonstrated that too drastic an increase in outsourcing IT operations can cause problems. This is down to four basic reasons:

Björn concludes: “If the agencies address the above challenges and ultimately succeed in achieving a few percent cost reduction of IT operations, several billion can be released annually to the treasury. This is money which could be reinvested into more innovative projects.
 
Björn Danielsson is a sourcing expert at PA Consulting Group


To read more about our insights on sourcing click here  or contact us.

   
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