commentary Australian taxpayers should applaud the Rudd government for adopting in full, all the recommendations of the Gershon Report. As a consequence, IT savings of an estimated $1 billion are planned for realisation over the next 10 years.
IBRS advisor
Robert Mackinnon
(Credit: IBRS)
However, will the government be able to bank all these savings? The answer is probably no. Intentionally or otherwise, what Gershon proposes is nothing more or less than a wide-scale, transformational change program. These unfortunately, rarely meet with complete success.
Organisations tend to resist change with well-developed immune systems. For the Gershon recommendations to have full effect will require agencies to assume a savings-focused ethic and a willingness to share IT acquisitions and facilities with others. To avoid recidivism, these changes will need to be burned into organisational DNA.
Broadly, any organisation wanting to drive down costs long-term needs to realise this entails embarking on a change program. From the outset this requires a structured approach, backed by sufficient resources and committed governance to ensure all saving objectives are met.
This is not the first time IT cost saving reforms have been tried in Canberra. Many will recall the former government's failed attempt at wide-scale IT outsourcing, nominally to deliver large cost savings. Many lessons can be learnt from this failure, not just in applicability to the Gershon agenda, but to any major initiative with an underlying IT thread.
The need for authentic change
To be effective, change must be seen by key stakeholders as an
authentic and valid course of action. The previous government's IT
outsourcing initiative, driven by John Fahey, the then finance
minister, and the Office of Asset Sales and IT Outsourcing (OASITO), was not seen that way by many who were
expected to enact upon it.
Rather, many agency stakeholders saw the program as driven primarily by political dogma (that is, public to private sector transfer) and secondarily, by savings.
Daryl R. Conner is a global advisor to organisations on change and has authored many books, including Managing at the Speed of Change.
He suggests a threefold approach:
- Inform: awakening stakeholders to change, explaining objectives and benefits;
- Educate: working closely with stakeholders to educate them on new ways of going about their work, bringing about any structural changes needed;
- Convert: embedding change into daily activities, fine-tuning to ensure lasting impact.
The Inform stage is foundational. Senior leaders need to provide strong advocacy for the proposed change and to continue proselytising, honestly and transparently, throughout the change cycle. Fahey and OASITO failed at this early stage as stakeholders increasingly became suspicious of the true rationale for outsourcing.
Choose cadres wisely
The term cadre is used advisedly, but
cautiously. Communist regimes use cadres to work within their
communities to promote and enforce the policies and values of the
ruling political party. Cadres play a major role in all Conner's
stages, but especially in stages two (Educate) and three (Convert).
The objective is to effect lasting change, or change that "sticks", as Conner describes it.
To be effective, change must be seen by key stakeholders as an authentic and valid course of action.
Fahey and his cohorts chose the wrong cadres. The most effective cadres would have been the CIOs and other senior staff within the agencies whose unswerving support was necessary for success. Rather, their support was begrudging at best, resistant at worst.
Instead, the cadres were a select group comprised largely of external consultants attached to OASITO. This group of overpaid, over-dressed and over-zealous individuals, drove the government's agenda, alienating many putative supporters along the way. This remains a negative object lesson in change management and a powerful exemplar for Minister Tanner.
A further requirement of cadres is an attuned sensitivity. There is an element of "one size fits all" in the Gershon report and indeed in most top-down cost-savings initiatives where fixed percentage cut-backs are mandated from the top.
This can militate against successful agencies who have achieved efficiencies through their own efforts. Effective cadres can deal sensitively with these situations by firstly recognising efficient managers, avoiding penalising them financially, then fostering their knowledge and skills to improve less efficient operations.
Governance needs commitment and teeth
The second of Gershon's
seven recommendations concerns strengthening governance. Several
new committees are proposed at ministerial, secretarial and CIO
levels. Best practice standards are cited with reference to COBIT,
P3M3 and others. Allusions are also made to governance drawing upon
AS 8015-2005: Corporate Governance of ICT.
However, truly effective governance requires far more than this. Based on broad experience from consulting engagements and research activities, IBRS is of the firm opinion that IT governance will continue to be less than effective until senior business executives fully understand their responsibilities and accountabilities for IT outcomes. In essence, this too is an issue of instilling cultural change through education, audit and enforcement activities, matters that are lightly touched upon in the Gershon report.
Align, monitor and adapt
Managing strategy is a different
discipline than operational management. Indeed, the two may well
conflict. Alignment is needed to ensure that both operational and
strategic targets are achieved. This is not the only requirement.
Managing alignment is but one element of a formal six-stage strategy execution system outlined by Kaplan and Norton in their recent book. Supporting their arguments, they cite their 2006 survey which showed organisations with a formal strategy execution system were two to three times more likely to achieve their targets than those without one.
IT project professionals know that managing implementation and change over long periods, is an exhausting process for all participants. The Gershon review plans to generate savings over a period of 10 years. How can such a program be sustained? Apart from focusing on cultural change and cementing effective governance, two other success factors predominate:
1. Create a strong metric program: use best practice business intelligence techniques to establish dashboards and ancillary techniques to portray achievement against target. Such mechanisms need to be instituted at individual agency level and in aggregation. Output produced should be supported by trend data and relevant narrative details. Work performed in this area needs strong data management input, supported by regular data quality audits, to ensure the integrity of the data reported and to obviate any tendencies to embroider the facts.
2. Be flexible and adaptable: targets have been set that need to be achieved. Peaks and troughs will be experienced along the pathway to success. Use formal monthly reviews to gauge progress. Where applicable, use these as an opportunity for reviewing strategies, altering them as necessary and leveraging any opportunities that may have arisen (for example, favourable exchange rates, early project termination when indications are the majority of benefits will be achieved etc) to continue driving costs down.
Next Steps
In response to the global financial crisis, many
organisations are focused on cost reductions. Whilst developing
strategies for the delivery of savings is relatively easy, strategy
execution is far more challenging.
Organisations embarking on this step are advised to firstly gain an objective and deep understanding of cultural barriers that may obstruct the realisation of planned savings — use the data obtained to embed cultural change into the organisation.
Secondarily, run the execution phase as a project (perhaps the organisation's most important project) with the discipline, relentlessness and gravitas befitting a military campaign.
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