Drago Topalovic On April 24th, Francis Maude, Minister for the UK Cabinet Office, announced that the Office made a deal with Capita public limited company to set up a joint venture business based on the government’s Best Management Practice portfolio of ITIL and PRINCE2.
The portfolio includes ITIL best practices and PRINCE2 project management methodology, widely adopted by private sector companies across the world.
The ownership ratio in this new joint venture for Capita and the Cabinet Office is 51:49. The Cabinet Office will get 10 million GBP in advance, and three additional annual payments of 9.4 million GBP.
Capita PLC is one of the UK’s largest providers of business process management and integrated professional support service solutions. It has 52,500 employees in Europe, South Africa and India.
The leaders of the new company are William Jordan, the exec who was until now responsible for the portfolio in the Cabinet Office, and Duncan Byatt, crown commercial lead in the Cabinet Office. Employees of the new joint venture will receive 5% annual profit share.
The Background
Now, I’m going to discuss this strictly from an ITIL perspective, since PRINCE2, though I am pretty familiar with it, doesn’t concern me at the moment.
As we have seen from an ITIL history post, it has been here with us for some 20 years, with the last 10 of those years seeing a huge adoption rate in the IT industry.
The number of ITIL foundation certificates rose above 250,000 last summer. Certificates are equally divided between Europe, Asia and North America. When I last had a look, there were almost 18,000 ITIL experts in the world – a huge number, concerning the cost of the certificate, whether they bridged from Manager V2 or went through the ranks of the V3 pyramid. ITIL revenue increase is reported to be 20% annually.
ITIL V3 and the 2011 refresh made a significant effort to increase the complexity of the material by at least 50%, and that made the ITIL certification path exponentially more complicated. Having in mind the aforementioned adoption rate, and ITIL becoming a de facto standard in IT Service Professional education, to me as an innocent bystander, the future seemed awfully bright for the owner of ITIL Intellectual property (IP). A golden goose gained a lot of weight. Are we selling the family silverware?
So, why sell?
What made the government turn this revenue generator into the hands of a private business? Mind you, this is the first joint venture business based on government intellectual property in the UK.
There are only a few reasons I can think of:
- Treasury has seen better times. Money is scarce and any move which will fill the budget is welcome.
- Government is known to be a bad entrepreneur. Any revenue it can generate, a private business can do way better.
- Projected savings sound like an excellent political spin: taxpayers like to hear they will save more money and earn even more from this deal.
Presently, the Crown earns 80 million GBP a year in royalty from the portfolio, with equity being close to £100 million. Projected combination of preferred payments and dividends is £300 million to £360 million, together with guaranteed payments from Capita estimates is £500 million in the next 10-year period.
What will be, will be
The drive, the will and the power of the enterprise is probably way out of the state-owned organization’s league. Capita will probably try to squeeze water out of every ITIL and PRINCE2 stone. What Capita is also going to do, is grease up the old product development processes, adding dynamics and internal competition into the equation. They promise to introduce a significant technology shift that will help keep ITIL and PRINCE2 on the cutting edge. They promise to use the existing markets and to expand into new ones.
That’s about using existing materials. What about creating new values? Who is going to write new versions of ITIL and PRINCE2? Will the existing contributors be intimidated by Capita’s 51%? Well, time will tell for sure, but I do not predict large problems here. The usual contributors were not in this story for the money. And for those who were, there will only be more of it. So, no problem there.
What might be a problem is that in the drive to increase revenue, Capita could insist on quantity instead of quality of the material. That’s where the 49% Governments ownership might come in handy.
How is the new Joint Venture going to treat other major ITIL players? There are rumors, and they seem logical, that major competitors bidding for the portfolio were APM, TSO, EXIN and Van Haren. Hard feelings?
How I see it
ITIL and PRINCE2, though copyrighted, over the years presented a kind of public good by themselves or through related methodologies. The question is: How will this change of ownership affect the ITSM community worldwide?
In these complicated times, a state is predestined to be a bad entrepreneur, especially compared to a prosperous enterprise on its way up, as Capita is. If Capita doesn’t fall into a few obvious traps, this could really be a good thing for ITIL. Let’s all follow closely and hope for the best.
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