Spotlight on procurement
The Desktop Market Will Increase Before It Declines
By Robert Deller
When "technology refresh" became a household phrase it was at a time when installed desktop products could retain their productivity for periods of nine to 12 months, relative to replacement models.
These days, as soon as the latest and greatest product is installed, there is an upgrade available that can outperform it. The government, as a perennial multibillion market for desktop products, increasingly faces problems of obsolete technologies within months of installation. Should the government continue this expensive outfitting exercise?
One of the military services may be taking a different approach - outsourcing desktop services. This doesn't mean desks and chairs; it means computers and the commercial, off-the-shelf applications running on them.
Imagine having all computers on a local area network running the same newly released version of word processing, spreadsheets, multimedia or application development packages with virtually no RAM or hard disk storage limitations. There are environments in which different versions of the same operating systems coexist. This happens when technology refresh occurs at rapid rates and organizations cannot afford to upgrade every component of their configuration at the same time. Sound familiar?
So, what about outsourcing all this technology?
A good idea? Perhaps. Agency managers - from the administration through the Office of Management and Budget - have real capital budgets to pursue IT product acquisition. A logical result of desktop services outsourcing is that the need for capital budgets for IT diminishes.
In an outsourced desktop services environment, vendors would install the products, assure full functionality of the products, applying the latest systems upgrades to assure desired performance levels and at the same time maintain marketplace compatibility. This is an extension of the popular government reinvention theme in which industry partners take on more program responsibility as the federal workforce diminishes.
But while one military service is seriously considering outsourcing its desktop services, the government as a whole doesn't seem prepared to move rapidly in this direction.
In fact, Global Systems & Strategies Inc. spending forecasts for fiscal years 1997 and 1998 show increases in capital spending governmentwide for all desktop platform sizes.
A large segment of the desktop services market is commercial software. These are the commercial, off-the-shelf products that agencies procure with site licenses or in shrink-wrapped sets to accomplish work in the desktop environment.
Even this market is growing slightly to $1.4 billion for the current operating year, although much of it will operate on minicomputer and larger scale platforms - beyond the scope of outsourcing desktop services.
Could the government sell back its equipment to industry? One of the best ways to reconcile a surplus of desktop systems is for President Bill Clinton to consider distributing them to public schools instead of spending the $14.3 million grants set aside for the Education Department's Technology Literacy Challenge Fund.
Truth is, not many local governments would be interested in receiving equipment as dated as some installed in federal government offices - some of which are already 2 to 3 years old.
What may be a sticking point for industry in an outsourced desktop services environment is the tremendous financial risk it would bear in having constantly to replace or upgrade the equipment it distributes and maintain itself.
Leasing was an option that the government turned its back on several years ago. Outsourcing desktop services moves the market closer to a technology leasing environment. At least one state government - Connecticut - is trying it, but there are not yet any results since it has not been completed.
Robert Deller is an industry analyst with Global Systems & Strategies Inc., Vienna, Va. He can be reached at bdeller@
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