Government must slash ICT spend, cut contractors, build up permanents: report

Stan Beer
Thursday, 16 October 2008 15:43

IT Policy - Government Tech Policy

The resulting list of recommendations by Gershon pulls no punches and suggests wide ranging changes with respect to Governance, Capability, ICT spend, Skills, Data Centres and Sustainable ICT.

With respect to spending, agencies with annual ICT budgets of more than $20 million have been recommended to slash spending by 15%, with a phased introduction over two years. Agencies with spends of $2 to $20 million would have to cut spending by 7.5%.

Another big impact on the ICT industry if the recommendations of the report are implemented will be in the area of recruiting. Gershon recommends that the number of contractors be cut by 50% over two years, while increasing the number of permanent ICT staff with an associated public service career structure.

The impact of the recommendations related to skills will be felt most by Australia's largest ICT recruiters, whose business models are heavily slanted toward the supply of contractors.

As the Federal Government is easily the biggest customer of ICT products, services and people in Australia, the Gershon report with its recommendations of huge budgetary cuts will not sit easily with industry suppliers.

A list of the key recommendations are below:

Governance

* Establish 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.

* Create a Secretaries' ICT Governance Board (SIGB) with a strong mandate from the Government to drive the agreed recommendations arising from the review and focus on addressing the key business issues to improve the efficiency and effectiveness of the Government’s use of ICT.

* Allow agencies to obtain opt-outs, based on genuine business need, from agreed whole-of-government activities. Opt-outs to be approved by the Ministerial Committee, informed by the SIGB.

Capability

* Improve agency capability to commission, manage and realise the benefits from ICT-enabled projects through the implementation of a common methodology for assessing agency capability based on self-assessment and periodic independent audit. Each agency Chief Executive to propose a target level of capability based on their agency’s and the Government’s strategic priorities, and for this to be independently validated. Agencies to develop a capability improvement plan with commitment, and agreed actions, to address identified gaps.

ICT spend

* Target to move total FMA Act agency ICT spend from an average 77:23% split between ICT BAU activities and creation of new capability in 2007–08 to an average 70:30% in 2011–12.

* As initial steps towards this goal, reduce the ICT BAU budgets of the largest 28 FMA Act agencies (Defence excluded) with ICT spends in excess of $20 million per annum by 15% from 2007–08 actuals (for a list of agencies refer to Appendix F), with a phased introduction over two years.

* Create ICT Review Teams to help these agencies achieve or exceed the target reductions without impairing service delivery to citizens and business.

* Targeting agencies with total annual ICT spends between $2 million and $20 million to achieve a 7.5% reduction on average of their BAU from 2007–08 actuals (for a list of agencies refer to Appendix G) , with a phased introduction over two years.

* The 15% and 7.5% reductions in total should save the Government around $140 million in the first year and in excess of $400 million in the second and subsequent years. 50% of the savings generated by these recommendations 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

* Create a whole-of-government Australian Public Service (APS) ICT career structure, including training and development programs for ICT professionals in key skills areas.

* Develop and maintain a whole-of-government strategic ICT workforce plan.

* Reduce the total number of ICT contractors in use across FMA Act agencies by 50% over a 2-year period and increase the number of APS ICT staff. This should save the Government an estimated $100 million (across both BAU and project-related work).

Data centres

* Develop a whole-of-government approach for future data centre requirements over the next 10–15 years.

Sustainable ICT

* Develop a whole-of-government ICT sustainability plan (in conjunction with the Department of the Environment, Water, Heritage and the Arts) to manage the energy costs and carbon footprint of the Government’s ICT activities.