DWP's biggest desktop outsourcing deal is costly long game for Fujitsu

The Department for Work and Pensions (DWP) has signed the UK's biggest desktop and thin client outsourcing deal, a six year contract with Fujistu involving 140,000 desktop devices across 1,000 UK locations - and one which sees the supplier playing a costly, but potentially lucrative long game. 

The DWP expects to see “significant savings” coming from the deal through the adoption of more efficient and flexible thin client solutions to meet the Department’s needs. This will enable the Department to realise significant savings in desk-side support and hardware costs, to benefit from higher availability and productivity, as well as reduced electricity consumption which will bring the Department's carbon footprint down significantly.  The energy savings alone from the thin client model are expected to be many tens of millions of pounds.

“This is the first in a series of competitions to replace our existing IT and telephony services contracts by 2015 and it sets the tone by delivering significant benefits for the Department and as a framework for Government wide IT,” said Joe Harley, DWP IT director general & CIO. “As well as delivering significant savings it will further transform DWP’s desktop estate with the proposed use of ‘thin client’ desktop technology.  This provides a number of benefits, including little or no maintenance required to the kit and reductions in power consumption which supports our sustainability agenda.”

Following a phased transition, Fujitsu will assume responsibility for the service on 1st September 2010.  Fujitsu was selected from an initial 16 bidders to preferred supplier in January 2010. Fujitsu’s team includes EMC, Citrix, Microsoft and Appsense amongst others in delivering its solution.

Fujitstu currently manages desktop estates for a number of key government Departments and leads the shared services work with the Cabinet Office and others as part of the Flex framework.  "As the Government moves forward with its Common IT Platform agenda, change will be driven by innovative approaches to business critical, but everyday, IT such as the desktop platforms in use across the wider public sector,” said  Eithne Wallis CB, managing director UK Government Division, Fujitsu UK and Ireland.

The long game

Fujitsu may well have paid dearly to win this new business, reckons Jessica Hawkins of research house Ovum, but she adds that the firm is playing a long game. “Fujitsu will have its eye on the longer-term gains to be made from the UK government's vision of common standards and infrastructure across the wider public sector,” she suggests. 

“The ultra-competitive climate in the UK public sector may have driven the firm to push its margins to the limit in order to win this contract. While this could be a strain, Fujitsu is no a stranger to the 'win at any cost' approach. Moreover, following last year's integration of Fujitsu Siemens Computers into the company, Fujitsu is in a better position to service this contract at a more competitive rate. Nevertheless, making a profit on this core program could be a real challenge.

“Where Fujitsu will reap the rewards from this contract win is exploiting its experience in shared services. The government's ICT strategy aims to standardise much of the public sector infrastructure by adopting common models, commoditising desktop computing and rolling out a shared services approach. Indeed, by 2015 it aims to have 80% of central government desktops delivered through a shared utility service.

“Consequently, over the longer term the DWP's aim is to extend these services to the wider UK public sector. If Fujitsu can introduce the promised efficiency savings and overall improved service delivery of the desktop for DWP, and couple this with its shared services vision (as we have seen with the Flex framework at the Cabinet Office), then its short-term gamble is likely to pay off in a big way.”