It is very rare for a week to go by without a report of yet another IT disaster that has occurred or is about to occur. Cost and time overruns, not delivering any benefits or creating new bureaucracy instead of removing it - I could go on and on and on.... Of course this occurs in both the public and private sectors; the only difference being is that the latter has to own up whereas the former buries the information in Appendix Z of the Annual Report!!
However, there is one thing that does appear to differentiate the sectors, namely costs paid to contractors. An increasing number of IT companies rely on public sector sales to maintain their profit margins, indeed, in 2006, Dell went as far as indicating that their poor performance in one quarter was down to the lower UKpublic sector spending, as "usually the UK public sector is very profitable for us". As an aside the UK public sector usually accounts for about 10% of Dell's EMEA turnover.
So why is it that the UK public sector appears to be paying IT companies more than their private sector counterparts? The reasons are quite varied and are covered in part in the paper that I co-wrote with Alex Ranson in 2006Leveraging IT Expenditure which you can down load here. However, I think much of it is increasingly to do with market conditioning and the need to have new technology rather than exploit what is already there. IT is increasingly becoming like a fashion accessory where people must have the latest features, market leaders and brands.
Perhaps it is summarised by a meeting that I was involved in over ten years ago in a very small public sector organisation. The IT Director was lamenting the fact that SAP had not applied to bid for his new finance system (10 users) proudly advertised in the EU on Tenders Electronic Daily (TED). He seemed most put out when I told him that all he needed was a networked version of Sage Accounting which he could easily acquire from PC World!!