Recently the Efficiency and Reform Group (ERG) are said to have helped the government to make savings of £3bn-£4bn. £800m of this is said to have come from reviewing their existing contracts with major suppliers and getting them to reduce their prices. In order to do this the Cabinet Office has had to agree memoranda of understanding with several of its biggest suppliers.

IT constitutes a considerable amount of government costs and contracts. Companies such as HP, BT and Fujitsu are already said to have had negotiations with government about a temporary reduction in their prices. This work has produced some praiseworthy short term savings but in order to achieve the government’s long term goals of greater savings and efficiency, departments will need to change the way in which they run procurement processes.

Although the government are cutting the amount spent on IT they are also making more use of it. Some local authorities are making enormous savings through collaborative buying, using enterprise resource management software and by using an e-procurement system. One authority have even gone as far as to create their own system which analyses spending, this saves money as they don’t need to buy this service from suppliers. With so much in house IT how hard will the government cuts hit IT firms?