analysis Gershon's recommendations are consistent with those of other jurisdictions that have undertaken similar reviews, and are aimed at giving the ICT centralisation/decentralisation pendulum a shove back towards the centre. This is, however, easier said than done.
Ovum research director
Steve Hodgkinson
(Credit: Ovum)
It is important to focus on two aspects as I feel these carry the most weight:
1. Governance: The main finding is the weak governance of both whole-of-government issues relating to ICT and also of ICT within agencies — particularly in respect of the efficiency of agency ICT operations and their ability to deliver ICT projects.
Ovum believes that the critical determinant of the success of Gershon's plan is leadership. This sounds obvious, and Gershon himself stresses the criticality of leadership and resourcing for the implementation of his recommendations.
The heart of the strategy involves unwinding decades of commitment to an output management regime where secretaries and CEOs had autonomy over inputs such as ICT. The strategy, however, is not about ICT or at least not about ICT in isolation. It is about shifting the grip on the way inputs are managed — from a tactical/expedient agency-by-agency approach to a strategic whole-of-government approach.
The test of the government's commitment to implementing Gershon's recommendations will be the extent to which the ICT governance changes are supported by parallel enabling changes in the core processes of allocating funding, appointing executives, setting their objectives, assessing agency performance and deciding who does, and who does not, get promoted.
Leadership of this strategy needs to move beyond simply expecting those in charge of the ICT agenda to somehow swim magically against the government's organisational tide. AGIMO, even with a strengthened mandate, will not be able to operate if it is "one hand clapping". On the other hand, the business of government, needs to be clapping as well.
2. ICT Procurement: The government's ICT marketplace is neither efficient nor effective.
One of the big barriers to the implementation of the review's recommendations is the existing portfolio of contracts and supplier relationships.
The heart of the strategy involves unwinding decades of commitment to an output management regime where secretaries and CEOs had autonomy over inputs such as ICT.
Ovum's Steve Hodgkinson
Ovum's analysis of the trend in the annual value of contracts for the top 10 IT suppliers, however, reveals that Tanner has been dealt an unexpectedly free hand on procurement.
The revenue earned from contracts with federal government agencies by the top 10 IT suppliers in the 2007/08 financial year was around $1.4 billion. The top 10 are the combined HP/EDS and IBM competing for top spot, Unisys and KAZ competing for third slot. Others in the 10 are Accenture, CSC, Dimension Data, Thales, CA and Mincom.
If no new contracts are entered into, or existing contracts extended, this figure for the top 10 suppliers will fall to $1 billion in the 2008/09 financial year, $700 million in the 2009/10 financial year, $200 million in the 2010/11 financial year ... and only $100 million in the 2011/12 financial year.
Within three years, virtually all the existing portfolio of contracts with the top 10 IT suppliers will have expired — notwithstanding the ATO tenders currently in progress. Only Unisys has a major contract extending beyond 2012/13 — an outsourcing contract for the Department of Defence.
This situation arises due to the combined effects of IT outsourcing contracts coming to the end of their term, the completion of major change programs, and the procurement drought created by the change of government and the Gershon Review.
This set of circumstances plays well into the government's new ICT agenda — giving Minister Tanner an unprecedented opportunity to reshape the ICT procurement landscape and the relationships with its major ICT suppliers. Some of the proposed changes to IT procurement may favour incumbent suppliers.
Cooperative Agency Procurement, or "piggybacking", will be encouraged under the new arrangements, so some existing contracts may be extended without being retendered. Tanner, however, can manage the granting of extensions to existing contracts — and will never have a better opportunity to reshape the portfolio of major ICT contracts and vendor relationships.
Steve Hodgkinson is a research director with analyst firm Ovum, and a former deputy chief information officer of the Victorian State Government.
2%
4%
You could re-name this report - a review of IT in XXX state.
Poor Governance and lack of enforceable mandate are the 2 main reasons taxpayers do not get value out of Government IT spend.
It is politics after all.