2010: Another year of “if it ain’t broken….

…. don’t fix it”.

I’ve had the opportunity to talk to a number of software and service suppliers to the UK local authority market over the past few weeks, and with the exceptions of out-sourcers and suppliers into the social services, education and housing sectors, they are broadly pessimistic about the opportunities for new business in 2010.

As I predicted early this year, 2009 has not been too bad a year, with the April re-organisation throwing up some good new contracts and opportunities, whilst some existing customers have had the budget to buy additional functionality and services from existing suppliers. But now supplier orderbooks seem to be depleted, and without significant new business in the offing, many suppliers continue to review their costs and staffing structures to batten down the hatches for a tough 2010.

As 2010 is an election year (both general and local), it will spread uncertainty in many purchasing areas and exacerbate the opportunities for indecision. In normal times suppliers would have expected a poor year, but in today’s troubled financial times, it promises to be even worse.

Not surprisingly, several companies are looking at acquisitions as a way of growing their customer base, and with poor sales forecasts for many smaller suppliers potentially driving down their valuations, I think 2009 will see further consolidation in the application software market. Indeed, a few suppliers are not expecting their competitors to survive the the next couple of years, and I would agree that there are a number of smaller suppliers that will not survive what I believe will be an orders drought through to at least 2012.

As I've said before, existing suppliers will try to maximise revenue from existing customers, both through increased services offerings and new modules & functionality for existing systems. Larger suppliers will attempt to cross-sell between departments within existing customer sites (I think, in 2010, with limited success, although customers may be tempted by the lower cost of procurement).

However, the corollary to all this, particularly for the smaller or bolt-on applications, is that we may see the arrival of new, smaller players with new offerings that are significantly cheaper and potentially technically superior to existing suppliers who have not invested enough in their products.

So 2010 – an even tougher year for the software suppliers.

Agile vs waterfall – the debate continues

It’s been good to see the number of new readers that have found this blog by searching for this topic – and I welcome the many comments that I’ve received on my previous posts.

Over the past year I’ve met with a number of advocates of agile methods, and had the opportunity to review a number of new software products being developed using agile methods. Whilst my view remains that it’s “horses for courses” when deciding on agile vs. waterfall methods for development (see my original post - Agile vs. waterfall methods), I’ve yet to find anyone that is using agile development methods for new application package products effectively.

Yes – I’ve seen some very successful agile developments of bespoke systems for single customers, but agile methods seem unable to cope with the development of package products that need to be designed to meet multiple and differing customer needs. The key appears to be the need to understand the many different customer requirements in advance, so as to be able to decide upfront on the core parameters for the product.

As noted in my post Agile methods for package enhancements?, when there is an existing product, where the majority of core parameters have been defined already, agile methods can be used effectively to develop new modules – always providing that you have the right types of team members and a true agile methodology (rather than a “let’s give the techies control of this development” approach).

However, do any of my readers know of new application software products that have been built successfully using agile methods? If so, please let me know.....

OT - America’s Cup 2010

For those of you that don’t keep up-to-date on sailing, the next meeting of the giants of match-race sailing, the America’s Cup, has been totally changed by the courts following legal battles between Larry Ellison (CEO of Oracle) and the Swiss challengers, Alinghi. Rather than a competition open to all entrants to fight to challenge the holders, next year’s competition will be solely between the holders, Alinghi and BMW Oracle Racing – racing in mighty multi-hulls rather than the normal 12 metre yachts.

We may not yet know for sure where the February competition will be held (my betting is on Valencia), but next year’s America’s Cup racing looks as if it will be more a technology rather than a tactical race. Just look at the competitors....

Visit the BMW Oracle Racing and Alinghi web sites for more information, photos and videos.

I can’t wait to see who wins this competition next year – I just hope that the two boats are relatively evenly matched, otherwise the competition could be as boring as some Formula 1 GPs, where one car can be so dominant as to result in predictable, processional races. I don’t see multi-hulls as the ideal vehicles for close match racing, however, if we get some good breezes, just watching these monsters at speed could prove exciting on its own....


I hope that we will see a return to common sense rather the courts after 2010, with the competition returning to open races in boats built to an agreed specification (ideally 12 metres, but if not, let’s have a tight standard that puts the emphasis back onto the skills of the teams).

After the downturn

Let me draw your attention to a joint paper by CIPFA and SOLACE on the Pre Budget Report – a paper that tries to start the discussion on how Local Authorities will have to start planning for public spending cuts. A bit like the PBR, it neither identifies specific areas for change, nor the levels of cuts, but discusses the strategies that LA’s will have to adopt over the coming years.

The paper focuses on two scenarios, one envisaging a 7.5% cut in real terms over 2011-14, the other 15%. Whilst the 7.5% cut is possible, I believe that the 15% cut scenario is much more likely, and I believe it may even be more than 15% – particularly as I believe the ability for LA’s to increase Council Tax will be substantially reduced over the same period.

I won’t repeat the contents of the paper here, other than to say that I strongly agree with the need to re-think the delivery of services, and the paper’s three options of:

1. redefining the relationship between the state and the individual
2. a significant de-layering of the public sector
3. a major initiative to maximise economies by much more effective collaboration between public bodies

After the ‘ring fencing’ of some key services, I believe that many LA’s will have no choice but to terminate or almost remove some other services (e.g. the library service is one area that could be under threat in some areas). However, de-layering of the public sector, combined with more effective collaboration between public bodies, in my mind, potentially gives the greatest potential for savings.

Perhaps severe cutbacks in funding will force organisations into sharing services, and the government into more ‘vertical integration’ of services (e.g. between national, regional and local bodies). This will inevitably lead to more out-sourcing, but if the public sector was to think more in an out-of-the-box way, perhaps we will see the more innovative use of out-sourcing to commercial operations where true synergy is possible – e.g. local supermarket chains, or even banks (or can some of them be already regarded as part of the public sector?).

Congratulations to CIPFA and Solace on their paper. Hopefully it will encourage the public sector to discuss the major shifts in service delivery that the current crisis in public sector finance demands.

Tories to reduce Government’s commitment to large IT vendors?

The Tory Shadow Minister for Science and Innovation, Adam Afriyie gave a very interesting speech last Thursday, in which he outlined some of the Tories plans for major IT projects if/when they get into power.

Regular readers will know of my confirmed belief in the vital importance of true inter-operability, and it was a pleasure to hear Adam’s views on this....

"By using standard data formats, like XML, government can open up the procurement process to the widest possible base of suppliers. With inter-operability, large projects can be split into manageable, modular chunks. The outcome is a more flexible procurement process where it is easier to change suppliers and resolve problems as they emerge."

Then, as if he had been reading my post on How NHS NPfIT should have been procured, he announced that...

"One option we are considering is the use of multiple proof-of-concept pilot projects. If several suppliers are asked to come up with working solutions, they can then be piloted, and the most successful can be scaled up and rolled out nationally. The use of multiple early-stage pilot projects could reduce reliance on a handful of big vendors and increase the proportion of IT budgets spent with innovative young companies."

I only hope that the Civil Service allows this to happen – I remember that one of the objectives of the LA Pathfinder projects in 2001-02 was to involve smaller companies who were more innovative and faster to react than larger IT companies – unfortunately 24 of the 25 Pathfinder projects went to the major service suppliers – some of whom had no track record of LA application software development at all.

But perhaps, given the spate of government IT disasters over the past few years, these sorts of initiatives will have a chance over the next couple of years.

Adam also gave what was, in my view, a very good summary of the current government’s e-initiatives:

".... some worthy objectives, such as joined-up government and personalised public services. But their approach has been deeply flawed. While the pace of technological change was breath-taking, the response from government was not.

Internet access empowers people. It improves productivity and opens the door to self-improvement. But while the internet was empowering individuals to take control over their lives Labour was attempting to maintain the old bureaucratic machinery.

Ministers were mesmerised by the transformative potential of technology but failed to integrate it seamlessly into everyday use

Perhaps the next few years will see significant changes in the way government procures and develops new IT systems – let’s hope so.....

Capita divests IBS R&B unit to Civica

Over the summer, Civica acquired IBS's revenues & benefits unit from Capita - following the Competition Commission's decision to force Capita through a divestment – see Capita to divest IBS Revenues & Benefits unit.

I was quite surprised that Capita divested the unit to Civica as, with Civica's existing base of R&B back office and Comino workflow/DIP customers, it makes a serious competitor to Capita's own R&B business. But as I understand it, Civica were the only credible bidder with the cash to complete the deal.

In practice, I believe that Civica has done well and bought the unit at an apparently bargain price. I'm sure that the indecision brought about by the CC investigation has harmed both the IBS business and staff, but now Civica has a complete, competitive R&B offering – and a good upgrade offering to its existing R&B back office customers running Civica's very old, Pick-based, back office software.

However, I still believe that Civica will have an uphill struggle to sell its now Progress-based solution to new customers – particularly the larger users such as the new unitaries. But perhaps they will win a sympathy vote from those customers unhappy with Northgate's decision to switch off support for the old Anite Pericles product (and unwilling to move into Capita's extensive grasp).

Over the past year I've spent some time with external companies looking at the UK local authority market and considering trying to enter the R&B market by developing new back office products from scratch, but all seem put off not just by the development cost, but also by LA prospects' desire to see three live reference sites, the resulting lengthy time to market, and the possibilities of future central government changes in the way revenues are collected and benefits handed out.

Seeing no potential new entrants, we now must live with the three R&B suppliers, each of them with competent solutions, but neither of them with clearly the best solution, and each of them with at least one major drawback.......

Back to blogging

As regular readers will have recognised, I’ve not been posting to this blog during the summer, primarily due to pressure of work. But after a very busy summer, including a stint as interim Operations Director of an AIM-listed software company, work has reduced a bit, so I’ll be getting back to posting a few items each week.