Less bespoke — buy IT off the shelf, agencies told

By David Donaldson

February 19, 2016

Government agencies looking to replace their IT system should “find something as off the shelf as possible” and find ways to share, says Victoria’s Department of Premier and Cabinet.

Buying ready made systems may appear to be an obvious way of minimising cost and risk for the government, but given Victoria’s history with expensive and ineffective IT projects, it’s also a point worth making.

Rather than jumping to procure new systems, DPC acting deputy secretary Ryan Phillips told the Victorian parliamentary Public Accounts and Estimates Committee on Thursday, “where possible the first thing government departments and agencies need to do is see are there existing solutions that are owned by other parts of the sector that they can then move to procure services from the other agency.”

“If there is no such system currently in existence, it will then be a matter of going to market for a new system,” he added.

But rather than each department procuring their own bespoke system, DPC is telling them to “find something as off the shelf as possible and multiple agencies and departments will join together to effectively become a new shared service.”

The government is also looking at purchasing services rather than entire systems, as well as investigating opportunities to procure services from the cloud, “which helps deal with issues such as system obsolescence,” Phillips said. This new system is “being rolled out as we speak”.

Asked about big data and data analytics, DPC secretary Chris Eccles argued that “our distance from direct service delivery in fact provides us with an advantage in that we are able to,” noting that the department has an initiative underway to develop this capability.

Phillips told the committee DPC saw potential for big data to help improve both policy development and service delivery and was working to build its own data analytics capacity centrally, as well as working with other agencies to improve theirs.

Little assurance of public value

Victoria has a troubled history with big IT projects. This week the state’s anti-corruption body heard the Department of Education spent $240 million on Ultranet — four times the original amount budgeted — a system that “never worked”.

A Victorian Auditor General’s Office report in 2014 found that despite spending around $3 billion annually on IT “Victorian agencies and entities are currently not in a position to assure Parliament and the Victorian community that their ICT investments have resulted in sufficient public value to justify the significant expenditure of taxpayers’ money.”

A disappointed auditor general John Doyle lamented that despite a track record of cost blowouts and delays recorded in previous VAGO reports, “there is no strategic central agency leadership or effective oversight across government.”

Following January 2015 machinery of government changes, the Department of Premier and Cabinet assumed responsibility for ICT in government from the former Department of State Development, Business and Innovation.

The Victorian Secretaries Board-endorsed guiding principles for shared services contained in DPC’s Business support services strategic review report states that “departments will leverage existing shared services. For each new business support investment, they should ask ‘why not’ migrate to (or establish) a shared service, acknowledging that it will not always be appropriate.”

The report outlines which services may be appropriate to share, and which may not:

“Business support services are often shared among government agencies and departments to achieve a higher standard of service than they could alone, take advantage of specialist expertise, and reduce overhead costs. Some of these services are easier to share than others.

“Transactional services, the highly repeatable, often highly standardised activities lend themselves well to a shared service, largely delivering economies based on volume and economies of scale. Examples include, payroll processing, accounts payable and accounts receivable. The most basic of the transactional services are common to most businesses, and are offered by a range of specialist private sector providers, creating a commodity market. External providers most efficiently deliver these services as internal Government providers struggle to compete on quality or price.

“Decision support services are higher value, specialised skills that can lend themselves to a shared service, largely delivering aggregate cost savings based on sharing expertise and knowledge. Examples include data or business analytics.

“Strategic services are the highest value services, requiring specialised skills coupled with significant business knowledge and intellectual property. These rarely lend themselves to a shared service. Examples of strategic services include policy advice and strategic planning.”

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