Thursday, 18 September 2008

Capita/IBS referral – continued.....

Thanks for the many comments I received on yesterday’s post on the topic of Capita’s acquisition of IBS being referred to the Office of Fair Trading (OFT). Please keep sending me your comments, but if you want to make comments to the OFT then contact OFT’s case officer, Tim Geer on 020 7211 8339 or by e-mail at (the deadline for comment is 29 September 2008). The comments I received fall broadly into the following three areas:

IBS’s Housing systems. In this area, I agree that acquisition of IBS’s customer base would greatly increase Capita’s market share, but would not I believe, make Capita the dominant supplier. Even if IBS joined Capita there would be several suppliers of housing management systems, including Northgate (possibly with Anite), Civica/Comino, and Orchard, giving plenty of choice for potential customers. So, in my opinion – not a reason for a referral.

Is Pericles really uncompetitive? I remember being on the fringes of the birth of the Pericles product in ICL back in, I think it was 1997, with a stated ambition to have the product completed within a three years. At the time it was being built with bleeding edge technology, and was breaking new ground – including offering a browser-based user interface.

When the ICL unit was acquired by Anite back in 2001, it was thought to be near completion, but it would appear that Anite has been forced to put in a great deal of development effort to get it anywhere near stable this year, over 10 years since the development started, at a time when browser-based systems are now almost the norm. But I believe that for Anite this has been a damage-limitation exercise, and has been focussed on meeting contractual commitments, and retaining customers rather than winning new business over the past couple of years (if there have been any new name customers over the past few years, other than ICL VME conversions, please let me know).

Yes, a new owner could try to win new business with Pericles, but I believe that the Pericles name is irreversibly tarnished, and it would be very difficult to convince any new customer to commit. Also, with a current lack of central government funding for new Revenue & Benefits systems (such funding initiatives finished around 2006), there aren’t many local authorities that can afford to buy a new system unless they are being re-organised, or their current systems are not up to the job. Unfortunately, I believe that the only customers sufficiently dissatisfied with their current systems to want to look at replacements are the ******* customers - and possibly *******’s customers......

Aren’t all R&B suppliers providing poor quality? I once heard the procurement process for a new R&B system as being “selection of the best of a bad bunch”. But I have considerable sympathy with all R&B suppliers – having to cope with regular, complex legislative changes made most years, poorly specified by Central Government, and always too late to allow most suppliers to provide proper, quality-assured systems.

I’d argue that most suppliers have invested lots of money in speculative re-development of their R&B products, all at high risk, and mostly, in the end, successful (and with rich rewards). Those that get it wrong – like ICL/Anite with Pericles – can lose vast sums of money. Each R&B supplier has made mistakes on the way, but generally they’ve overcome them and delivered much improved systems to their customers, allowing them to manage their R&B organisations more efficiently and effectively – all done in a challenging environment.

I believe that their main failing, like many of the ERP suppliers, has been to be highly protective of their customers and not entering the era of interoperable systems willingly, unlike most suppliers of other application systems to Local Authorities......

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