Review of independent review of Australian Government's use of ICT

The Rudd Government has released Sir Peter Gershon’s report (the Gershon Report) detailing his independent review of the Australian Government's use of information and communication technology (ICT).

Sir Peter Gershon was engaged by the Minister for Finance and Deregulation, the Hon. Lindsay Tanner, to review and report on both the efficiency and effectiveness of the Australian Government’s current use of ICT, to determine whether the Australian Government is realising the greatest return from its investments in ICT, and to examine whether the right institutional arrangements are in place to maximise such return.

Download a copy of the Gershon Report.

Key findings

According to the Gershon Report, the Australian Government’s current approach to the use of ICT has lead to sub-optimal outcomes. The main driver of this negative result is the high level of autonomy exercised by individual Australian Government agencies in regards to ICT.

Sir Peter noted that Australian Government agencies have been acting in a manner akin to independent private sector entities, rather than coordinated agencies of the Australian Government.

In a rather stark illustration of the point, the Gershon Report cites the fact that prices paid by various Australian Government agencies for desktop computers ranged from $1000 to $3500 and that there are 1.6 desktop computers for every Australian Government agency employee.

In this context, the Gershon Report has made seven key findings:

1. there is weak governance of pan-government issues related to ICT;
2. Australian Government agency governance mechanisms are weak in respect of their focus on ICT efficiency and an understanding of organisational capability to commission, manage and realise benefits from ICT-enabled projects;
3. the business as usual (BAU) ICT funding in Australian Government agencies is not subject to sufficient challenge and scrutiny;
4. there is a disconnect between the stated importance of ICT and actions in relation to ICT skills;
5. there is no whole-of-government strategic plan for data centres;
6. the Australian Government ICT marketplace is neither efficient nor effective; and
7. there is a significant disconnect between the Australian Government’s overall sustainability agenda and its ability to understand and manage energy costs and the carbon footprint of its ICT estate.

(Source: Gershon Report)

Key recommendations

In order to address the key findings, Sir Peter has recommended a rebalancing between the autonomy of Australian Government agencies and coordination across all Australian Government agencies in regards to ICT. Sir Peter believes that such rebalancing would deliver savings of $140 million in the first year and $400 million a year in subsequent years.

In order to achieve this rebalancing, the Gershon Report has made seven key recommendations:

1. Strengthen pan-Government governance in regards to ICT, including:

(a) establishing 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 Australian Government’s outcomes and policy agenda;

(b) creating a Secretaries’ ICT Governance Board (SIGB) to drive recommendations arising from the review and focus on addressing the key business issues to improve the efficiency and effectiveness of the Australian Government’s use of ICT; and

(c) allowing Australian Government agencies to obtain opt-outs from agreed whole-of-government activities, based on genuine business need and subject to approval by the Ministerial Committee informed by the SIGB.

2. Strengthen governance by Australian Government agencies, including:

(a) implementing a common methodology for assessing each Australian Government agency’s capability;

(b) requiring each Australian Government agency chief executive officer to propose a target level of capability and for this to be independently validated; and

(c) requiring Australian Government agencies to develop capability improvement plans with commitment to address gaps.

3. Tighten the management of ICT BAU funding, including:

(a) moving 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;

(b) reducing the ICT BAU budgets of the largest 28 Australian Government agencies (not including Defence) with ICT spending in excess of $20 million per annum by 15% from 2007–08 levels, with a phased introduction over two years;

(c) targeting Australian Government agencies with total annual ICT spending between $2 million and $20 million to achieve a 7.5% reduction on average of their BAU from 2007–08 levels, with a phased introduction over two years;

(d) creating ICT Review Teams to help these Australian Government agencies achieve or exceed the target reductions without impairing service delivery to citizens and business; and

(e) reinvesting 50% of the savings generated by these recommendations in a central fund for reinvestment in projects to improve efficiency and effectiveness of ICT BAU activities;

4. Enhance the management of the Australian Public Service ICT skills base, including:

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

(b) developing and maintaining a whole-of-government strategic ICT workforce plan; and

(c) reducing the total number of ICT contractors in use across Australian Government agencies by 50% over a 2-year period and increasing the number of Australian Public Service ICT staff.

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

6. Improve the efficiency and effectiveness of the ICT marketplace, including making better use of the Australian Government’s collective buying power by:

(a) optimising the number of ICT panel arrangements established by agencies across government, including improving procurement arrangements for commodity products and services and volume sourcing arrangements for key items of software;

(b) developing and implementing e-auctions; and

(c) implementing strategic management of key ICT suppliers.

7. Develop a whole-of-government ICT sustainability plan to manage the energy costs and carbon footprint of the Australian Government’s ICT activities.

(Source: Gershon Report)

Next steps

The Gershon Report has been released ahead of formal consideration by Cabinet. The Rudd Government is examining the Gershon Report and, according to Mr Tanner, will respond in the “near future”.

Mr Tanner has commented that “[w]ithout pre-empting Cabinet’s consideration, the report forms an excellent basis for implementing a series of changes for improving the effectiveness and efficiency of government ICT”.

The release of the Gershon Report and news as to the possible implementation of the whole or part of its recommendations has been keenly awaited by Australian Government agencies and ICT industry participants alike. The media has reported that a number of Australian Government agency ITC projects have been on hold in recent months awaiting certainty as to outcomes, with some Australian Government agencies being forced into various temporary and bridging arrangements to cover the gap, and that a fast response from the Rudd Government would certainly assist Australian Government agencies planning upcoming ITC projects for the purposes of the development and release of the next federal budget.

If the Rudd Government proceeds to implement the recommendations of the Gershon Report, Sir Peter has recommended that such implementation be reviewed in the first quarter of 2010 (assuming a start date of November 2008).

All stakeholders now keenly await the Rudd Government’s response.

Andrew Walsh