[LINK] Knight of razor to slash government spending

[Bernard Robertson-Dunn]

<brd>
Minister Tanner asks the questions
"We're asking why do we have 800 different federal websites, and why do 
we need 164 different systems for processing grant applications?

I suggest that he and his advisers get and understand the answers to 
those questions before they cut costs, fail to realise the sorts of 
benefits Sir Peter demonstrated to the UK government were possible, and 
actually increase overall Public Sector costs. It is quite possible that 
it is much more cost effective to have them as individual systems. And 
it's a good idea to know if it is before you take a hammer to them and 
beat them into fewer systems of dubious quality.

Talking about grants systems, I once worked on a project for one 
department that tried to reduce the multitude of grants systems that it 
alone has and saw the miserable failure at the requirements stage 
followed by the project cancellation. I'd say that it is highly likely 
that of those 164 grants systems most of them only have about 10% in 
common. There might be a few that do very similar things, but not many. 
Just because a system has a label "grant applications" does not mean it 
does the same thing.

</brd>

Knight of razor to slash government spending
Karen Dearne
April 15, 2008
The Australian IT
http://www.australianit.news.com.au/story/0,24897,23539441-15306,00.html

FINANCE Minister Lindsay Tanner's review of the federal government ICT 
procurement is likely to result in an unprecedented shake-out of the 
government technology spending game, with all options on the table.

Last week, Mr Tanner signalled a shift to "co-ordinated purchasing" as 
part of sweeping reform of the $16 billion federal government 
high-technology market.

British efficiency expert Peter Gershon has been hired to conduct an 
exhaustive audit, agency by agency, and identify ways to slash costs 
while delivering better services.

"This is essentially the second stage of the razor gang," Mr Tanner 
said. "Each project will be dealt with in its own way, but with the 
broad objective of getting savings and better outcomes from agencies."

The nation's top public servants will be forced to reveal their IT 
secrets to Sir Peter, who was knighted for his landmark reform work on 
behalf of the former Blair government.

He was formerly chief executive of Britain's Office of Government 
Commerce and has wide private sector experience.

"There has been a proliferation of individual contract arrangements, and 
it's really wasteful," Mr Tanner said. "We're asking why do we have 800 
different federal websites, and why do we need 164 different systems for 
processing grant applications? We want to work out ways of agencies 
sharing or connecting that will save money and deliver better services."

Mr Tanner said he was not seeking to "centralise" procurement, "because 
I regard excessive centralisation as just as bad as excessive 
decentralisation. I'm aiming to achieve the right balance, with a fair 
degree of central co-ordination, a framework with expertise at the 
centre, to maximise government buying power while allowing as much 
agency autonomy and flexibility as possible," he said. "One of the 
critical elements of Sir Peter's work is to provide advice as to the 
best model for putting those two requirements together."

The minister plans to "set things in motion" soon after the review is 
completed in late August.

Sir Peter will begin consulting with major ICT suppliers and trade 
associations as soon as possible "to try and get a better understanding 
of what's happening at the moment, and hear people's ideas about where 
there may be scope for improvement".

He will be sending out invitations to stakeholders seeking written 
submissions within the next week or so. "My experience in both sectors 
has taught me that it's not about private good, public bad," Sir Peter 
said. "There are some very bad examples of the use of IT in the private 
sector, and there are some astounding examples of very good use of IT in 
the public sector. I don't rely on those simple characterisations. We 
have to look at the interaction between technology, management and 
organisation, and work out whether there is a more optimal balance than 
exists today."

On paper, major federal government suppliers such as EDS and CSC would 
have the upper hand during the review, as both companies' British 
subsidiaries experienced Sir Peter's work in Britain.

Sir Peter said he could not comment on Mr Tanner's proposed co-ordinated 
purchasing model, because "I'm not going prejudge the outcome. I need to 
understand the current arrangements and see which models work well in 
the local environment," he said. "I wouldn't be seeking input from 
suppliers and trade associations if I didn't feel that they would make 
some very valid contributions."

In Britain, the "appropriate aggregation of demand" had generated 
economies of scale that "resulted in being able to secure better 
commercial arrangements" with some suppliers.

"It's not centralised purchasing in the traditional sense, rather it's 
what I would call more intelligent purchasing," Sir Peter said. "The 
model in Britain is not that the centre knows best, but it is in a 
position to see where savings are possible.

"In some cases it might put deals in place that agencies can use to 
their advantage, in others it may instead determine which is the right 
lead agency to do those negotiations on behalf of public sector 
organisations."

Sir Peter will also consider policies and technologies that would 
provide more agile systems. "It's clear that the more modern 
environments and application architectures provide more flexibility, and 
the ability to introduce changes faster and at lower cost than some of 
the historic legacy systems," he said.

Kevin Noonan, head of consulting at Canberra-based Intermedium, said ICT 
vendors would welcome the chance to "present new ideas, rather than 
being the recipient of requirements. Both Mr Tanner and Human Services 
Minister Joe Ludwig have been clear about what they see as project 
failures in Immigration, Customs and the Access Card," he said. "Simply 
having fewer IT failures will improve efficiencies in service delivery, 
because they are expensive in costs and lost opportunities."

In Britain, Sir Peter had focused on removing stovepipes, Mr Noonan said.

"He's likely to look at shared services, better management of 
information and leveraging scale in contracting. He negotiated a very 
good deal with Microsoft for the British civil service," Mr Noonan said. 
"I think he'll take a pragmatic view of getting the best deal, which 
could well mean accepting a small, manageable number of standards so the 
government has some flexibility in testing the market."

The finance minister's approach indicated that "IT spin" was definitely 
out of favour, Mr Noonan said.

Frost and Sullivan senior industry analyst Simon Hayes said the outcome 
of this government review "is pretty much already laid out", as it often is.

"Mr Tanner argues that the Howard government's ICT budget was 
decentralised and haphazard, and he clearly wants a document advising 
that federal government IT spending should be more centrally 
co-ordinated," he said. "The irony of this approach is that Labor spent 
years in opposition criticising the former government's $5 billion IT 
outsourcing program."

Mr Hayes said there were also costs associated with centralisation, such 
as reduced flexibility and responsiveness. Vendors would welcome lower 
costs and less complexity in bidding for contracts, he said.

"If the government reduces the number of deals but increases their 
value, that would be a pretty competitive proposition for the large 
vendors." Jeff Kennett, former Victorian premier and chairman of 
contract management software vendor Open Windows, said the review was 
"an important opportunity to have an outsider look at the present 
arrangements".

"I've always been concerned about the enormous waste of public money in 
the administration of government," Mr Kennett said. "Too often, 
governments enter into IT contracts with big operators, which are 
international in flavour. Often those awarding contracts overlook 
Australian firms, which can produce very good IT solutions at a fraction 
of the price, and with a better backup service.

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Regards
brd

Bernard Robertson-Dunn
Sydney Australia
brd at iimetro.com.au