BIT business case: how to growth in the public sector.

All the words in green are contained in ITIL v3 glossary.
This business case is based on my experience (not only in Belgium) but the Company Belgium Information Technology (BIT) is a fictive Company (do not lose time to Google it).
This post introduce the challenge for BIT to expand its activity in an existing market segment: the public sector.

BIT presentation: the big numbers.
Belgium Information Technology (BIT) has been founded in   1982 by two colleagues and friends. They both uses to work in IBM Belgium: one as a sales representative and the other one as a system engineer of System 32. They are still very active in the management of the Company.
In 2008, this Company registered a turnover of 60 million euro (10% from Public Sector and 90% from Private sector) with 150 employee and an EBT of 7%.

BIT: the three Business units.
The Company is based on three Business Units (B.U).  Each B.U. is responsible to reach the margin target fixed by the Company Strategy.  Each B.U. owns its technical and application management function (including the product management team) and they are managed by a director. They have total autonomy in deciding which technology to adopt to achieve their margin targets but they have then to quantify with the alliance manager the impact of their decision for the main vendor.
– System I solutions.    This B.U. generates about 30% of turnover.  This turnover is composed by the sales of System I hardware and an ERP solution (that is not developed by BIT).
– Infrastructure. This B.U. generates about 50% of turnover. This turnover is composed by the sales of hardware related to Intel Server and client; SAN and NAS Storage; Networking.  It is  also responsible of the sales of Virtualization software (mainly VMware) and other licensed software and maintenance contracts related to the sold hardware.
– Professional Services. This B.U. generates about 20% of turnover. The main activity is the outsourcing of IT professionals (mainly System Engineering).

The Role of BIT in the IT Channel.
As to the classification I introduced in my previous post:
– the System I solution can be considered a System Integrator;
– the Infrastructure B.U., it can be considered a Value Add Reseller;
– the Professional Services B.U. should be considered a service provider.
Procurement is 100% based on distribution (so called II tier model) but BIT has established relationships with key vendors.
The relationship with key vendors is managed at three levels:
– Top management –  at this level strategical topics are discussed;
– Alliance manager –  his main task is agree with the key vendors an annual budget and plan and then coordinate its execution (including the reporting);
– Directors of the three Business units and the Sales director – several operatives topics are discussed (ex. road map of products, Special Bid Prices for specific projects, etc).

BIT: Shared services.
The 3 Business unis receive services from these functions:
HR and Quality.
This unit reports directly to the two owners. The Quality coordinator has also the role of H&S.   The main tasks of this unit are:
– Assure that the activity of the Company is conformed to Belgium Social Legislation;
– Maintain the ISO 9001 QMS.
Operative Marketing.
This unit report to a director. The main tasks of these units are
– Plan and implement the classic/on line communication;
– Plan and manage marketing and rebate programs with key vendors;
– Internal and external reporting.
Operations.
This unit reports to a director. Their main tasks are:
– Manage the asset of the Company (3 branches, one warehouse, one integration centre, company fleet);
IT operations management;
– Sales.
This unit reports to a director. Its  main task is to reach a general margin target.

BIT: The challenge.
Despite that the annual margin target was reached, top management is seriously concerned about general economic forecasts for the next 5 years.
They identified two growth opportunities:
1) increase the importance of the public sector.  It is known that in economic crises the public sector plays an anticyclical role;
2) cloud – Two on three business units, together with the alliance manager, are strongly suggesting investments in this direction.
The Top management wish also to introduce the Balance scorecard method as they think it can be a powerful tool to involve more the different directors in the definition and implementation of the company strategy  and it can support the evolution of the ISO QSM to the new 2008 version.

To know more:
Build a Business Case to enter in the public sector: the help of the SWOT analysis.

Balanced Scorecard: a tool to support BIT strategy.

Analysis of a major type of public tender for IT Infrastructure: the one winner, one catalogue.

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