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07 Jul 2009

Back to the future and beyond with Gershon

by Alexandra Wedutenko, Lisa Keeling

Sir Peter Gershon's Review of the Australian Government's use of Information and Communications Technology (ICT) was published in August 2008. The purpose of the Gershon review was to review and report on both the efficiency and effectiveness of the Australian Government's use of ICT to determine whether the Government is realising the greatest return from its investments in ICT, and to examine whether the right institutional arrangements are in place to maximise the return.

The Gershon review concluded that the current model of weak governance of ICT at a whole-of-government level and very high levels of agency autonomy is costly and hinders Government from achieving its aims and objectives.

In this article we'll provide a high level summary of some the key recommendations and what they mean for your agency. Over coming months, we will examine specific recommendations, such as governance, capability and sustainability of ICT, in more detail.

Recommendations

The Gershon review made six broad recommendations, which are summarised generally as follows:

1. Governance - establish a number of specific ICT governance committees to drive the recommendations of the Gershon review, and be responsible for the key whole-of-government ICT policies and the overall strategic vision for how ICT should support the achievement of the Government's outcomes and wider policy agenda.

2. Capability - improve agency capability to commission, manage and realise the benefits from ICT-enabled projects through the implementation of a common methodology for assessing agency capability based on self-assessment and periodic independent audit.

3. ICT spend - target to reduce ICT business as usual expenditure.

4. Skills - including:

(a) creating a whole-of-government Australian Public Service (APS) ICT career structure;

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

(c) reducing the number of ICT contractors in FMA Act agencies by 50% over a 2-year period and increasing the number of APS ICT staff.

5. Data centres - develop a whole-of-government approach for future data centre requirements over the next 10-15 years.

6. Sustainable ICT - develop a whole-of-government ICT sustainability plan to manage the energy costs and carbon footprint of the Government's ICT activities.

The Government has confirmed that it will implement in full the Gershon review recommendations via a package of targeted strategies and actions.

So what does this mean for your agency?

In terms of how the Gershon recommendations will be implemented, the UK experience (following its own Gershon review conducted in 2004) may provide insight. In the UK, the government adopted procedures to simplify procurements by utilising "mega tenders", with an aim being to maximise buying power and reduce tender costs. For commodity products UK agencies are encouraged to acquire products from agreed catalogues and to optimise product usage (ie. where it is appropriate the agencies may substitute lower cost alternatives for particular products to deliver savings).

It seems likely that in Australia a key feature will be the greater use of co-ordinated procurement. Whole of government panel arrangements will be implemented to maximise economies of scale in Government purchasing. Agencies will need to utilise the panels unless they can justify not doing so. Greater thought will need to be given to identifying complex versus commodity procurements and how commodity purchases can be integrated into complex environments.

In the UK it was recognised that agencies may need specialist support on the implementation of procurement efficiency programs and the cultural change needed to implement the new approaches. Accordingly "change agents" were utilised. Change agents were teams of people who had experience in delivering change in the areas relevant to the UK Gershon review.

These change agents were used to:

  • provide expertise to enable departments to realise the full savings potential in their area of focus;
  • deliver incremental savings through identifying cross-departmental collaborative opportunities that would not otherwise be captured; and
  • deliver savings earlier than would be possible merely using departmental resources and skills.

Will this happen in Australia? It is already happening in the scoping study reviews that are occurring as part of the co-ordinated procurement initiative. Cultural change is likely to occur through greater linkages in Commonwealth wide procurements. Agencies will have less independence but will also have benefits from greater access to information resources.

A key initial aspect of implementation of the Gershon recommendations will be for each agency to be able to measure their current business as usual (BAU) costs. To manage BAU costs across the Commonwealth such costs need to be measurable against a common methodology.

This leads from the recommendation that BAU costs should be reduced, and that such reductions should be sustainable. Key elements of this reduction will be for each agency to be able to:

  • identify drivers of their BAU costs; and
  • review the level of server utilisation and the efficiency of data centre infrastructure, scope for reducing server proliferation and the subsequent impact on data centres, and the plans to reduce contractors.

Each agency level will need to self-assess its BAU costs, which will feed into AGIMO's annual agency benchmarking analysis of the efficiency and effectiveness of each agency's use and procurement of ICT.

In summary the implementation of the Gershon recommendations will require agencies to undertake a number of activities, including:

  • involvement in BAU cost measurement and management;
  • developing a common organisational capability methodology;
  • involvement in pan-governmental ICT governance structures;
  • reducing the number of ICT contractors; and
  • developing and ICT sustainability strategy.

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Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this communication. Persons listed may not be admitted in all States and Territories.