15 Jul 2009

Co-ordinate! The ICT governance landscape after Gershon

by Alexandra Wedutenko, Diana Navarro

Agencies need to assess their own planning and internal governance arrangements to ensure that they are compatible with the new whole-of-government arrangements.

In August 2008 Sir Peter Gershon reviewed the Australian Government's use of Information and Communications Technology (ICT) to consider whether there were opportunities for the Government to more efficiently and effectively manage its use of ICT.

One element was how the Government could strengthen whole-of-government (WofG) governance arrangements.

Pre-Gershon ICT Governance

Governance arrangements enabled Agencies to have high levels of autonomy about their ICT environment. The Gershon review concluded that this has led to:

  • duplication
  • a lack of standardisation
  • a fragmented approach to security and authentication and identity and access management; and
  • different ICT architecture across Agencies.

Each Agency has direct responsibilities under the Financial Management and Accountability Act 1997 (the FMA Act) for its own administration. Section 44 of the FMA Act requires each Chief Executive to manage the affairs of the Agency in a way that promotes proper use of Commonwealth resources for which that Chief Executive is responsible. Under these requirements Chief Executives have predominantly focused on their Agency's requirements.

Governance à la Gershon

Previous attempts to link ICT governance across government have had varying degrees of success. The new approach, however, seeks to lock in senior Agency leadership to WofG ICT policy and arrangements.

FMA Regulation 9 requires an approver of the expenditure of public money to be satisfied the proposed expenditure is in accordance with the policies of the Commonwealth.

In June 2008, the Department of Finance and Deregulation issued a Finance Circular No.2008/06 dealing with commitments to spend public money and in particular FMA Regulations 7 to 13. This Circular clarified that under section 44(2) of the FMA Act the Agency Chief Executives must promote proper use of resources within the framework of procurement and other government policies.

The upshot of this in the context of ICT governance are that Agencies are required to take account of the new co-ordinated procurement regime and any new government policy designed to implement the Gershon recommendations.

In order to strengthen WofG governance arrangements, the Gershon review recommended that governance arrangements be driven by the establishment of a number of committees. A key aim in establishing these bodies is to provide clear ICT leadership. These committees include a Ministerial Committee on ICT, a Secretaries' ICT Governance Board, and a Program Board, supported by other committees.

The Program Board will manage the overall implementation of the Gershon review recommendations. Members of the Program Board include the General Manager of AGIMO, the General Manager of the Department of Finance's Budget Group and a Deputy Secretary from PM&C.

How will this affect your Agency?

Agencies need to assess their own planning and internal governance arrangements to ensure that they are compatible with the new WofG arrangements. This will be vital as change is already underway with scoping study reviews occurring as part of the co-ordinated procurement initiative and a data centre review being conducted in support of Gershon recommendation. Agencies will be directly affected by these co-ordinated procurement requirements.

The governance committees, if resourced, will provide top-down decision-making and this should enable Agencies to obtain relevant approvals and obtain guidance to inform future decision-making and procurements in a timely manner.

However, a key issue in this respect will be to ensure that the leadership group at your Agency has the time and resources to provide meaningful input to the committees. Ministers and Secretaries are already engaged on a range of pressing matters. While AGIMO and the committees can be expected to be the engine room for maintaining the implementation of the Gershon review, agencies will still need to provide relevant input into and keep abreast of co-ordinated procurement initiatives. Access to relevant expertise by all Agencies to assist in these processes will be important, noting that in some areas expertise is concentrated in a few industry players and in other cases potential participants will have conflicts of interest that will need to be managed.

Another important recommendation of the Gershon review was to restrict opting out of the new WofG arrangements. Agencies that wish to opt out will need to make a business case based on a genuine business need to the Ministerial Committee. While the criteria for opting out are likely to vary depending on the Gershon recommendation being implemented, it is likely to be difficult to make a business case to justify an opt-out of a WofG arrangement as, by definition, such initiatives lead to efficiencies.

Agencies will also need to link into the higher level governance arrangements more regularly in any procurement process. This is likely to involve a variety of approval stage gates. These stage gates will in turn link into other government procurement reviews such as Gateway Reviews. Each of these reviews and the uncertainty about how co-ordinated procurement will work are likely, in the short term at least, to add time to the conduct of ICT procurements.

Governance post-Gershon

Legacy systems will need to be managed and processes will need to be put in place to transition from those systems to the co-ordinated Agency-wide systems. This will not be an easy task and will no doubt involve expenditure and risk. While change agents are likely to be utilised to help Agencies deliver the cultural change needed to implement the new governance arrangements, a key short-term issue will be funding. In the present economic climate it will be interesting to see where Agencies get funds for the new developments. On the other hand, co-ordination of procurement (particularly where one Agency "leads" procurement on behalf of others), offers opportunities for real savings.

To accord with the Gershon governance program, Agencies will need to:

  • assess the scope of their involvement in the top tier of governance envisaged in the Gershon review and the capacity of top executives to be involved in the new arrangements
  • assess their current internal governance arrangements to ensure their adherence to any WofG initiatives
  • work with other Agencies and change agents in scoping reviews that are occurring as part of the current co-ordinated procurement initiative; and
  • manage existing systems while transitioning to new systems, which will pose a range of financial and other challenges for Agencies to address.

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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.