Cautious approval for Gershon report reforms

Article appeared in: The Australian
Author: Karen Dearne
Date: 20th October 2008

AS the financial crisis slams on the economic brakes, the information technology industry has been coming to terms with the Gershon report into federal government ICT operations.

Peter Acheson, chief operating officer of IT recruitment firm Peoplebank, said the sudden turnaround in economic conditions had raised some concerns.

“When the review was done (earlier this year), we were in a fairly overheated marketplace,” Mr Acheson said.

“Of course, we’re now looking at quite significant changes.

“As a result, federal government investment in IT projects during 2009 will be very important.”

But Mr Acheson said demand for IT skills remained high, and it was unlikely the Government would be able to reduce its reliance on contractors in the proposed two-year timeframe.

“No doubt agencies will try to moderate their use of outside people, but if there’s pressure they may end up with staff shortages,” he said. “Business competition for skilled resources is likely to continue into 2009.”

Mr Acheson noted that Peter Gershon had recognised an existing shortfall of 1000 skilled people sought by departments.

“Sir Peter also talks about the importance of improving vendor management, and we would strongly support that view,” he said.

“Many IT contracting panels within government currently have up to 60 or 80 suppliers, where typically a large corporation would have four or five preferred suppliers.

“This tighter approach gives you an ability to manage the quality of candidates vendors put forward, and to ensure that they deliver the outcomes you want.”

Kumar Parakala, president of the Australian Computer Society, said savings of $1 billion over 10 years were quite achievable but successful implementation would involve careful consideration.

“You can’t achieve savings by cutting existing budgets willynilly,” Mr Parakala said. “Any cost-cutting measures will need to be looked at in the context of the business of government.”

Mr Parakala said the Government would have ensure there was no reduction of services to the public.

Pip Marlow, public sector director of Microsoft Australia, said the review emphasised the need to improve the Government’s capabilities in commissioning, managing and realising benefits from IT projects. “The proposals will require departments to drive efficiencies and productivity outcomes from their software investments, and reduce the level of customisation in their business-as-usual programs,” Ms Marlow said.

“In our submission, we highlighted a number of areas where significant savings could be made through the optimisation of infrastructure and the adoption of services-oriented initiatives.”

David Webster, president of Australian information management provider EMC, said a drive for cost savings through greater efficiency should not restrict investment in technologies.

“We need to ensure there is a continuing investment in the systems, tools and processes that will enhance local business operations,” Mr Webster said.

“If we achieve that, then I am confident the future remains positive.”

Sir Peter, who earned a knighthood and reputation as a toe-cutter for his reform of the British public sector under Tony Blair, has put federal department agencies under the microscope in a bid to reduce their combined $16 billion spend on hi-tech systems and services.

Kevin Noonan, head of consulting at Canberra-based Intermedium, said Sir Peter had identified a number of deep, underlying issues, including “line of sight” problems.

“I think this will be good news for agency CIOs, even though it may take them a while to get over the initial shock,” Mr Noonan said.

“Department chief executives don’t have a line of sight from a whole-of-government perspective, they don’t have marching orders from their minister to communicate with others — their role is to manage their own agency.

“CIOs are not being consulted at the top of agencies, so there are structural disconnects all the way down, creating the inevitable outcomes Sir Peter has seen.”

Intermedium estimates Sir Peter’s recommendations would cut about $450 million a year from federal government external spending on IT by 2010-11.

But Mr Noonan warns the systemic issues around the blowout in IT contract staff numbers are yet to be addressed.

“I suspect part of it may be related to the lack of a career path for public servants, but most is due to market forces,” he said.

“There may be a flight of contractors back into the public service due to the present market uncertainty, but that may be shortlived.”