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Gershon programme on track?

By johnboy - 7 July 2009 32

The Australian reports that Government plans to bypass the Canberra IT industry and consolidate on less expensive models are well underway.

    “We’ve moved from 42 separate enterprise agreements on the core desktop parts of our Microsoft spend to having some 88 agencies under one agreement,” he said. “We’re getting a saving of at least $15 million per annum over four years.”

    Two other whole-of-government agreements are under negotiation, for telecommunications and desktop computing infrastructure, and the Finance Department is pursuing a third, for procurement of office equipment such as photocopiers and printers.

    Agencies were also starting to explore suppliers outside Canberra to reduce costs and risk. “The IT market in Canberra can be quite expensive, so we are looking at how agencies can do business with firms in other states,” he said.

    It’s probably going to be some pain for the local “IT sector”, but losing the players who really are providing nothing useful, and with no innovation, could well be a good thing in the long term.

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32 Responses to
Gershon programme on track?
peterh 4:32 pm 07 Jul 09

housebound said :

If only Finance would listen to the wisdom here.

If only Rudd had asked industry and APS alike as to how to reform the ICT sector.

housebound 2:37 pm 07 Jul 09

If only Finance would listen to the wisdom here.

Hells_Bells74 1:46 pm 07 Jul 09

Rort is a great word for it. My first printer was a Lexmark (came in my pc package) and one day in Target I nearly bought a new printer instead of a replacement cartridge because they had them for $67 instead of $75 for my colour replacement one ($45-55 for black). But on careful inspection it just had a half-sized (probably smaller even) cartridge in it, that bear in mind you couldn’t buy that size again even if you wanted to.

I held out anyhow and got one on special elsewhere for $48 soon after.

peterh 1:45 pm 07 Jul 09

caf said :

You know, if a process aimed at saving the Government money in IT doesn’t make the IT industry squeal a little, it’s probably not working… jus’ sayin’…

caf, I work outside of the Fed Govt arena. The Gershon report was a method to re-hash the old PE contracts under a new, shiny department. They failed before, and they will fail again. Or, to put it another way, we will end up with the IBM – Defence Desine Contract. There is no innovation in these models, it stifles innovation for resellers – local companies and interstate alike, and leaves the big companies that are global to move in and take over. The original idea of value for money was supposed to provide the best fit re price, innovation, and new technology adoption. this will disappear. what happens when a product is required by a department that isn’t on the agreement? will the dept be allowed to buy it, if it is out of scope? of course not.

The contract holder currently is an australian company. what happens when a global is able to beat the price offering and provide the software at a significantly discounted rate?

what happens to the resellers who cannot engage with government as they have in the past? The cash cow as gershon puts it will be gone. But the money saved won’t be used in other projects, it will create a surplus, whilst the departments tighten their belts and are told to do more with “less”.

The lexmark rort applies to most printers on the market. from memory, the others did it too. The only printer manufacturer who didn’t was Tektronix. the printers were expensive, but the black ink blocks were totally free. There are still many old tektronix phasers in the wild, they are fixed when needed, but still receive a free black block. The printer companies are always out to make money. Lexmark is prevalent in the canberra environment due to great selling by the resellers. But there are new printers, IBM, Samsung, Oki, Sharp, panasonic that operate the exact same way. They do this to compete with the large digital copiers, and the click charge system. The way forward for printing and cost savings is to rip out all the small printers, and replace them with digital copier stations. the cost per page is far cheaper than any printer on the market.

The original supplier was many resellers on a panel contract. the department chose the printer. Hp was an option at the time. the dept chose lexmark, and the costs were bound to go up to cover the cheap price for the printer. When the panel ended, the option to buy other brands was there, but many departments chose to stick with what they knew, and continued to buy from Lexmark.

VYBerlinaV8_the_one_ 1:28 pm 07 Jul 09

It’s nice and all to suggest finding cheaper suppliers interstate, but how will the smaller players go in meeting the govt procurement and security requirements? These are part of the reason our local offerings are pricey. Does the govt really think that service providers don’t price the cost of unsuccessful bids into their cost models? The cost of serving using only domestic staff? Time spent on security clearances? Etc…?

They’d be far better off having a hard look at their own processes, then streamlining. This could then be used to justify pricing changes from industry.

ant 1:09 pm 07 Jul 09

The Lexmark rort, as others have pointed out, is how Lexmark use the printer itself as a loss leader, load it up with a half-empty toner container, and then charge about the price of the printer for new toner cartridges. The people doing the purchasing evidently look at the ask price of the printers only, and run off and buy the things.

Then the users/owners/leasers of the printers are left with huge on-costs. AND, they don’t mention the other nasty, the drum cartridge. This has to be replaced after X many prints, and eventually the printer won’t print unless it gets one. They’re hard to source, and, surprise surprise, expensive.

Meanwhile the original supplier, if they were on a supply contract, have wandered off into the sunset.

caf 12:29 pm 07 Jul 09

You know, if a process aimed at saving the Government money in IT doesn’t make the IT industry squeal a little, it’s probably not working… jus’ sayin’…

midlife 12:20 pm 07 Jul 09

The microsoft VSA is based on one contract with one reseller. There are differing levels of service in the contract. An Agency may just take only windows all the way up to a full package. Conceptually it has gained savings. 1. This is the first time that all agencies have actually worked out how many licenses they should have. 2. By buying 200,000 licenses for the commonwealth AGIMO has allowed agencies to swap and change license numbers as required. So excess licenses by each agency is hopefully eliminated and the Commonwealth as a model citizen is now fully licensed for its microsoft software.

peterh 10:30 am 07 Jul 09

The problem that is faced by AGIMO is that, whilst there is a Whole of Government agreement in place, many of the smaller agencies still have the ability to purchase adhoc products to suit particular end user needs.

Lotus notes is still prevalent in many departments, primarily for its functionality as a database and email client. (the equivalent Microsoft product is Microsoft office Pro, and the cost difference is substantial)

The “lexmark rort” was due to effective marketing and sales campaigns to the federal government over several years, and a significant channel focus by lexmark. In comparison, at the time, HP was more a split model, the resellers were competing heavily against HP. There are more lexmark printers in govt by far than HP purely by the efforts of the resellers.

The thing that scares me about the gershon implementation is the use of the panel contracts. The last labor government implemented the panel PE & PD Contracts via the Department of Administrative Services, DAS, and it was proven to be a dismal failure. The current panel contracts can have anywhere between 10 & 100 resellers on it, all scrabbling for one piece of business, small or large, the problem is that there is no differentiation between the resellers, no story, just the best price. This is not providing a level playing field for the smaller companies – they will never be able to compete on price. And where is the Federal Government’s commitment to the SME market, if they are reducing their operating arena by exclusion?

This latest panel contract idea isn’t new, and won’t have a good outcome. If the smaller companies cannot compete, and need to shed staff to survive, what happens to the unemployment figures, and the public opinion of the Goverment?

cantanga 10:13 am 07 Jul 09

Gungahlin Al said :

Lexmark rort?

By lexmark rort I assume that ant is talking about how the printers are cheap but ink replacements are expensive. It can be nearly the cost of the printer itself for a single ink cartridge. I could be wrong though, perhaps there is more then one rort.

DawnDrifter 10:11 am 07 Jul 09

so will this govt microsoft agreement force every agency to go Windows desktop+server/Office/Exchange etc.. silly if you ask me as id rather go best of breed rather then a pure microsoft shop.. anyway its whatever saves the pennies these days
the NZ government was going down the same microsoft Whole of gov microsoft path and changed their mind

harley 10:11 am 07 Jul 09

The Microsoft thing is a complete con. Where I work made a modest saving on the cost of MS liceneses, but lost valuable pre-paid support dollars that were prevously thrown in to the licensing. Net saving is a negative number, as now the support dollars come from the division’s budget.

And ant’s on the money, too.. A friend’s company was contracted to put in a solution that required 50Gb of SAN disk. When he was told how much Volante charge per megabyte of disk per year, he nearly died laughing. The 50Gb was more than the SAN was worth.

Gungahlin Al 9:52 am 07 Jul 09

Lexmark rort?

grundy 9:49 am 07 Jul 09

Agree Ant, Lotus notes is pure evil and should be avoided at all costs!

ant 9:33 am 07 Jul 09

I hope Finance have got better at contracting IT than in the middle of this decade. Their computers and phones were looked after by 2 companies and it was not a good arrangement.

And I hope that this new arrangement doesn’t see Lexmarks in every department. It amazes me that people buying equipment still get taken in by the Lexmark rort.

I wonder what they’re going to do for all the agencies who still use Lotus? Gently persuade them to use a real email system?

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