Review of ICT Infrastructure in the Public Sector in Scotland

13 Savings Opportunities

Earlier in this report it was indicated that overall ICT investment in the public sector during 2008/9 had been assessed to be around £1.4bn.

More than 60% of this expenditure (£875m) was conducted with the industry's suppliers. It is also estimated that the cost to organisations of the 6200 ICT staff referred to earlier was approximately £250m. Finally it is considered that other costs of ICT such as space, data processing facilities, energy including cooling, other equipment and capital financing could have a cost of another £275m. It will have been noted that there are more than 120 data centres and data processing facilities.

Given the " ICT landscape" within which it is being spent it seems obvious that this level of spend could be reduced and savings made, either to free up totally or partially re-invest in progressing ICT.

The public sector's fragmented and inadequate mode of engaging and tendering with suppliers together with the structure of the industry leads to the conclusion that additional savings within the £875m of external spend ¹⁵ could begin in the year 2012/13 and grow progressively over a five-year period.

In addition, if a transition programme including the sharing of ICT staff resources and the ICT capabilities responsible for the other costs is pursued savings in these areas can commence in 2013/14 and again grow progressively.

In the year 4th year (2015/16) the annual savings would be at least £230m per annum and the cumulative savings over a five-year period beginning in 2012/13 would be at least £870m and potentially up to £1bn.

This assessment of potential savings is based on consideration of the impact of proposed actions on existing expenditure levels.

Another angle of approach is to compare existing expenditure levels with an external benchmark or comparator. Clearly different types of organisations will have variable structures and operations and of course in the public sector will provide different services to different groupings within the population. Some will be more " ICT intensive" than others. For example a public body which uses ICT to actually create its services and is able to both market and engage with users through ICT will have higher ICT costs as a proportion of income than another body where there is less scope for that intensity of usage. Where characteristics such as these are common to a group of organisations then there is scope for external comparison and benchmarking. An outstanding example of this comes from the Society of Information Technology Managers ( SOCITM) which is adept at developing and conducting benchmarking exercises within the local authority sector within the UK. These have produced valuable information.

In the context of this type of benchmarking this review has focused on data representing assessed spend level ratios to total income for all public sector bodies in Scotland. There are some apparent and perhaps justifiable variations versus average percentage spend at an individual organisation level but leaving those questions aside this work has also provided the opportunity to assess spend ratios for the separate parts of the public sector within Scotland.

Extracts from this work show that it appears that the health service overall spent 3.5% of income in 2008/9, local authorities 2.9% and universities and colleges 4.4%. The Scottish Government (and its associated bodies such as NDPBs) is estimated to have spent 6.5% of income.

This information does not override the earlier analysis and savings projections based on elements of spend but in its detailed form can be used to calibrate the investment levels of individual bodies and indicate where savings opportunities may specially exist.