Logicalis: UK Government Pursues £1 Billion Rapid Return on Investment Package Using ICT Efficiency for Fiscal Stimulus
Logicalis has proposed that a dedicated funding package of £1 billion, centrally-funded but locally delivered, would allow local government, health and education institutions to accelerate cost-cutting ICT initiatives called for under the Gershon report whilst meeting the government's wider economic support measures. Based on proven local examples across the UK, this fund could make a full return on its own investment within three years and eventually triple its payback.
With widespread uncertainty over the success of centrally driven government fiscal stimulus measures, Logicalis believes that a £1 billion central fund to support local IT efficiency projects, which could be introduced as early as the next budget in April, would reduce local ICT operating expenditure, stimulate innovation across sectors, and provide bottom line return on investment within a three-year period (the time period widely considered to be the expected duration of the current economic downturn).
"The UK government is looking to stimulate the economy in bringing forward major capital projects but has so far ignored investment in locally-driven ICT efficiency projects", stated Tom Kelly, Managing Director of Logicalis UK. "At a time when the government needs money to fund economic growth, missing this opportunity to both stimulate and save would be tantamount to negligence. As the new fiscal year approaches, we are calling for the government to set aside appropriate provisions for local investment in ICT efficiency and innovation projects that will really make a difference in reducing public sector expenditure and increasing the quality of services."
The £1 billion would support ICT efficiency projects that can demonstrate a three-year return on investment, with the savings retained locally to fund further service improvements, or part of the savings returned to the treasury. The suggested package of measures would support renewal of existing ICT systems with more efficient systems, fund local ICT co-operation such as shared ICT projects, and fund projects where technology innovation can provide wider organisation efficiency savings such as Data Centre Consolidation.
According to Chris Gabriel, Director of Solutions at Logicalis UK, a central fund for such projects would enable massive savings of up to 3:1 on projects such as Data Centre Consolidation, and even greater savings if used to fund local or regional Shared-Service Data Centres. He explains: "For every pound spent of this £1 billion fund, local government, health or education services would see a return of at least £3 in efficiencies by 2012. By the time we are out of the recession a return of investment could already have been achieved. We are working today with all of the sectors considering these efficiency measures. A government provision of this central fund would without doubt enable investment in updated ICT systems that would produce tangible and measurable savings across the UK public sector that the economy needs."
There are numerous examples of successful projects of this kind from the national executives in Scotland, Wales and Northern Ireland and from the next tier of 468 local authorities across the United Kingdom. Based on extensive experience of delivering rapid RoI ICT projects, Logicalis proposes the following targets for government investment:
- £500 million for Data Centre Virtualisation and Consolidation
- £250 million for Shared Service Data Centre Investments
- £150 million for Local Broadband Unbundling and Communications Network Integration
- £100 million for Self Service Contact Centre Investments
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