Posted by: peterhact | June 16, 2010

Things that the government did – did they realise what they were doing?

Many years ago, in the time of the rule of the great Hawke, and the lesser but fairly scary Keating, ICT had a direction. It was called the Panel Period contracts, and you had to be on them to sell to government. It was a bit more complicated, you needed to also be a member of a secret society called the ESA, or Endorsed Supplier Agreement. If you had the ESA Tick of approval, you were halfway there to being a seller to government. The ESA program wasn’t just ICT, it was training, recruitment and general products.

The ESA was a pig of an agreement to get onto, and many people spent large amounts of time stuck in their offices after hours getting the submissions finished. They didn’t have the time to work on the submissions during working hours, we were too busy selling computers, printers and servers to the clamouring clients – margins were good, outsourcing wasn’t around much as most clients remembered the dark Desine days and wanted to avoid a repeat at all costs.

ICT technology was innovative, diverse and not commoditised. It was a good time to work in the industry.

R&D was a focus of every vendor, they were injecting heaps of cash into the local economy to gain greater marketshare via new, exciting products designed by locals, and there was a sort of competition between the vendors to see who had the biggest and best R&D budget, facility and announcement. Novell was one of the leaders in the industry, as was Lotus, and adobe was associated with Apple – it didn’t run on pc’s back then…

There was a concept called the Value Proposition, where a small part was the price, but there were other factors for the solution.

The panel contracts eventually ran their course as a suitable method of engagement between government and business, and they disappeared into the ether. The ESA program still remained, so there was some order in the chaos of resellers selling to Government, if you weren’t ESA approved, you sold to other businesses.

Then, we had an election.

The ESA program was shelved, replaced with the ICTMUL program. Grumbling from old ESA participants started almost immediately, as the newcomers didn’t put in submissions, they just filled in a form. What the?

Every reseller, their dog, cat and family could now sell to government, regardless if they had any skills now or not. New companies appeared on the scene, and computers, servers and printers started to become commodity items. This wasn’t the worst of it. Software had always been tax exempt. sales tax was nasty, true, at 22%, for hardware, but smart operators now changed their focus to software, and continued to enjoy a period of plenty. Then, the new government, after promising that it would never, ever, ever possibly consider bringing in a new tax, introduced us to marketing spin, hype and the GST.

The software resellers suddenly found that the price went up. Not the GST 10%, but a bit more, some instances a lot more. The reason that this happened was that the administrative costs associated with the new tax weren’t able to be absorbed by the vendors. The resellers had to pass on the raise in cost, and it snowballed out of control.

Now, panel period contracts are back. and the party in power? again, the ALP have given us the same thing their predecessors did. All on the “Advice” of a person from England, who was either in the dark about last time’s attempts to have a panel period contract, or that the ESA works hand in hand with regulation of the resellers able to participate, or just thought that it is a “new and innovative approach”.

The new landscape of ICT needs interaction between the vendors, the resellers and the clients. we need balances that enable regulation of the engagement between each group, providing a platform that creates innovation and diversity without relying on the cost first. Price should be the last consideration.

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