Surfing the Waves of Disruption UK public sector · Surfing the Waves of Disruption UK public sector. 2 SAP Public Sector Event –11 October 2016 ...2.5/5

www.techmarketview.comSAP Public Sector Event – 11 October 20161 © 2016 TechMarketView LLP

Georgina O’TooleDirector, Public Sector

[email protected]

Surfing the Waves of DisruptionUK public sector


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Annual research theme

2013

2014

2015


2016 Theme: grab your wetsuits...


UK public sector SITS market

Central43%

Local19%Education

7%

Health14%

Police3% Defence

14% Application Services

26%

Infrastructure Services

25%

Business Process Services

29%

Software20%

Worth £11.5b in 2015

Down from peak of £12.1b in 2009

Not just one market!

‘Local’ & ‘Central’ make up 2/3 of

market


Wildly different subsectors

-

1,000

2,000

3,000

4,000

5,000

6,000

Central Local Education Health Police Defence

Application Services Infrastructure Services Business Process Services Software

-2.0%-2.5%

-5.2%

6.5%

2.8%

6.0%

-1.3%

0.7% 0.6%

4.6%

7.0%

1.4%

-6%

-4%

-2%

0%

2%

4%

6%

8%

Central Local Education Health Police Defence

2015 (%) CAGR 2015-2019 %

Different characteristics, ICT maturity, growth rates, suppliers…


UK PS SITS: Tough few years

• FOUR years of DECLINE under Coalition Government

• 2014 growth was short-lived

• Drive for ICT efficiency

4.0%

-5.3%

-2.3% -2.0%

-0.3%

2.3%

0.0%

-6.0%

-4.0%

-2.0%

0.0%

2.0%

4.0%

6.0%

2009 2010 2011 2012 2013 2014 2015

Coalition government


UK PS SITS: A disrupted market

EXTERNAL disruptors

TECH: Pace of change

DATA: Mass of dataINTERNAL disruptors

• Budgetary pressures & Efficiency savings targets

• Contract disaggregation & commercial approach

• New PM, new Ministers, & BREXIT uncertainty

DATA: Increasing volumes

PEOPLE: Citizen expectations


UK public sector SITS: forecasts

11,542 11,547 11,523

11,584

11,706

11,8942.3%

0.0%-0.2%

0.5%

1.1%

1.6%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

11,300

11,400

11,500

11,600

11,700

11,800

11,900

12,000

2014 2015 2016 2017 2018 2019

UK public sector SITS market size (£m)

UK public sector SITS market growth (%)

• Internal disruption hampering ICT & digital progress

• Deflationary ICT e.g. cloud will continue to impact

• Improvement as gets to grip with digital ‘art of the possible’


Disruptive technology innovation in PS

Data & Analytics

(supported by Machine

Learning)

•Toes in the water (pilots/PoCs)

•Whitehall: low ambition outside major progs

•Large player propositions

•Huge potential

“The Slow Burning Cloud”

Business Process Automation

•Fear: particularly of ‘Robotics’

•Early examples

•Central government: more open

• Huge potential


-30%

-25%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

The Disrupted & The Disruptors

The disrupted are disrupting too!

IaaS: Turnoverdoubled

G-Cloud sales jumped

Disaggregation beneficiaries

Agile development

Top 10: UK PS SITS revenue growth/decline


Central government: key trends

• Data: heart of the digital journey

• Cultural shift: Non-reversible?

• Contract disaggregation: finding the right model

• The swinging pendulum: supplier ecosystems

• Skills & resources: #1 issue

Still finding its way in terms of digital transformation


Local government trends: The 3Ds

Devolution Data

Digital

Shared servicesPredictive/preventative analytics

Transformational consultancy; Place-shapingMaximising incomeAsset optimisation

Smart cities/IoT

Integration innovationcoordination

CollectionManagementUtilisation

Self-service, digital inclusion, social media, remote working, partners

A ‘perfect storm’ to accelerate progress?


Local government challengers

Digital Transformation

Data & Analytics IoT/SmartCitiesSMEs:

•Concirrus (Smart Cities)

•Tracsis (traffic/transport analytics)

•ThingWorx (data analytics)

•Kainos (digital services)

• IEG4 (digital services)

But suppliers must also evolve & align offerings in other ways:

- Strategic partnerships: to meet widening criteria

- A commercial approach: revenue generation

- Scalability & flexibility: for a changing environment

-


Key takeaways

• Public sector must embrace civil service reform

• It must be supported by modern digital technology

• Progress is being hampered by:

• Tight budgets

• Overstretched resources

• Political and economic uncertainty

• Risk aversion (exacerbated by looming Brexit)

• Major transformation in patches – point solutions/pilots dominate

• Digital complexity is increasing: will require strong ecosystem of suppliers and aligned commercial arrangements

Surfing the Waves of Disruption UK public sector · Surfing the Waves of Disruption UK public sector. 2 SAP Public Sector Event –11 October 2016 ...2.5/5

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