How should government spend on ICT? Australia has decided to implement in full the recommendations of Sir Peter Gershon UK Treasury’s former Chief Executive.
Engaged in April this year, Sir Peter Gershon UK Treasury’s former Chief Executive has performed an independent review of the Australian Government’s management of information and communication technology (ICT). The report Sir Peter submitted to Lindsay Tanner Minister for Finance and Deregulation in August outlined a comprehensive and detailed analysis of issues affecting the government’s use and management of ICT, and also outlines a staged plan for the implementation of his seven recommendations.
It is interesting to note that the Rudd Government has decided to implement Sir Peter’s recommendations in full, even shoring up with the implementation strategy he proposed—the staged roll out of the review’s recommendations will commence immediately.
“This decision represents the most significant change in the use and management of ICT in the Australian Government to date. We will act decisively in applying Sir Peter’s recommendations,” says Tanner.
“The review’s recommendations provide a new model for the effective and efficient use of ICT within the Australian Government. This is a turning point, rebalancing the highly-decentralised ICT administration in government and focusing on efficient and effective ICT expenditure and management.”
The goal of this revamp is to return efficiencies to the budget, and to reduce expenditure on ICT business-as-usual while freeing up money for service delivery capability.
Sir Peter recommends the establishment of a Ministerial Committee on ICT to be responsible for the key whole-of-government ICT policies and the overall strategic vision for how ICT should support the achievement of the government’s outcomes and wider policy agenda. He proposes that the Ministerial Committee meet around three times a year, with greater frequency of meetings in the first year.
The membership of the committee should include ministers who drive change and have an interest in how ICT can contribute to the achievement of key government outcomes and policies, including their deliverability.
Also, he suggests that a Secretaries’ ICT Governance Board (SIGB) be created. This board should have a strong mandate from the government to drive the recommendations from the review, and focus on addressing the key business issues to improve the efficiency and effectiveness of the government’s use of ICT. The SIGB will replace the existing Secretaries’ Committee on ICT (SCICT).
Based on genuine business needs, agencies are to be allowed to opt out of whole-of-government activities. Out-outs are to be approved by the Ministerial Committee who will be informed by SIGB.
Sir Peter believes that the implementation of a common methodology for assessing agency capability based on self-assessment and periodic independent audit will improve an agency’s capability to commission, manage and realise the benefits from ICT-enabled projects.
He asks for each agency’s Chief Executive to propose a target level of capability based on the agency’s and the government’s strategic priorities, and for this proposed level to be independently validated. With the implementation of these recommendations, agencies are to develop a capability improvement plan with commitment and agreed actions to address identified gaps.
ICT business as usual (BAU) budgets of the largest 28 Financial Management and Accountability Act (FMA Act) agencies—excluding defence—with ICT spends in excess of US$13.1 million per annum will be reduced by 15 per cent from 2007-2008 actuals, with a phased introduction over two years; agencies with total annual ICT spends of between US$1.31 million to US$13.1 million must achieve a 7.5 per cent reduction on average of their BAU from 2007-2008 actuals, also with a phased introduction over two years.
This act as an initial step towards shifting the total FMA Act agency ICT spend from an average 77:23 split between ICT BAU activities and creation of new capability in 2007-2008 to 70:30 in 2011-2012. Sir Peter recommends the creation of ICT Review Teams to help these agencies achieve or exceed the target reductions without impairing service delivery to citizens and businesses.
The 15 and 7.5 per cent reductions in total should save the government around US$91.7 million in the first year and in excess of US$262.3 million in the second and subsequent year. Sir Peter recommends that half of these savings be transferred to a central fund for reinvestment in projects to improve efficiency and effectiveness of ICT BAU activities, such as replacement of legacy software and hardware with high support and maintenance costs.
Skills-wise, Sir Peter says that the government needs to recognise that there is a national and global competition for talent and the Australian Public Service (APS) needs to recruit, develop and retain key ICT skills. To do so, he recommends a whole-of-government APS ICT career structure be created—including training and development programmes in key skill areas.
One of the top issues addressed in the review was agencies’ reliance on IT contractors, which Gershon reported cost on average US$122,000 per annum or twice the amount a public sector employee could expect under the Financial Management and Accountability (FMA) Act. Sir Peter’s review found that up to 20 per cent of staff in some agencies had been converted from permanent to contractors, which affected agencies’ skill base but also posed a risk since contractors stood outside the standard performance management system.
Hence, the total number of ICT contractors in use across FMA Act agencies will be reduced by half over a two year period while simultaneously increasing the number of APS ICT staff. This move is projected to save about US$65.6 million for the government (across both BAU and project-related work).
Data centres and sustainable ICT
Last of his recommendations are the development of whole-of-government ICT sustainability plan to manage the energy costs and carbon footprint of the government’s ICT activities, and an approach for future data centre requirements over the next 10-15 years. Without a strategic data centre plan, government will be forced into ad hoc investments which will, in total, cost in the order of US$656 million more than a coordinated approach over a 15-year period.
Despite major reforms being on the pipeline, Sir Peter is confident that “successful implementation is not a foregone conclusion”. Based on his experience in creating sustainable changes in the UK government, Sir Peter says, “there are two critical requirements which will determine the success of the proposed programme: first, sustained leadership and drive at Ministerial and top official levels; second, ensuring the enablers of change are properly resourced not only in funding terms but also skills of the right calibre.”