There was a time when all government IT contracts were considered as relatively ‘easy money’. The lead times were long, and the requests for information and for proposals required forests of paper to complete, but, once the supplier became the incumbent, the provider company had a secure income. However, that position is certainly changing in the UK, as Accenture and iSoft’s recent setbacks show.
The notion of government IT contracts being ‘easy money’ is changing, as iSoft’s troubles show.
We saw it first with the replacement of EDS at the Inland Revenue (now HMRC), after its tenure of 10 years (admittedly other suppliers had to be paid to bid!). Now the conditions imposed by the contracts of Connecting for Health, the GBP6.2 billion program for modernizing IT in the NHS, are starting to bite those involved.
In May 2005, Accenture, one of the regional local service providers (LSPs), stated it would lose between GBP63 million and GBP86 million on its National Health Service (NHS) contracts. This was followed in January 2006 by iSoft, a sub-contractor for three out of the five LSPs in the provision of hospital systems. It stated its revenues from the NHS for the year would be GBP55 million lower than expected, at GBP30 million.
iSoft has 8,000 customers in 27 countries, principally in Europe and Asia Pacific. It has a major focus on rolling its Lorenzo healthcare information management solution, which is being developed in its Global Product Development Centre in Chennai, India, to a wide audience, including the UK NHS.
The current offering for UK hospitals through LSPs is i.Patient Manager (formerly called PiMS.) While PiMS is a tried and tested solution, there have been many complaints from deploying NHS Trusts that the current functionality is too generic; for example, in not properly addressing the needs of hospitals specializing in mental health care.
There has also been intense discussion on the number of bugs that had to be rectified before it was rolled out as part of the program. In fact, a long-term user of PiMS is reported as stating it [PiMS] is only now at the standard we were told it would be in 2000.
The pressure on iSoft to deliver is now four-fold: from the trusts, from Connecting for Health, from the LSPs, and, of course, from its shareholders.