The ICT Industry needs to pay careful attention to the potential implications of the NSW Government’s Better Services and Value Taskforce, advised the expert panel at an Intermedium briefing last Friday morning. The process however, is not new and previous experience can provide reliable guidance about potential implications.
The Intermedium panel comprised:
- Former NSW Auditor General and Treasury Deputy Secretary, Bob Sendt;
- Melody Vandyke, a former NSW Treasury officer; and
- Judy Hurditch, Kevin Noonan and Tim Conway from Intermedium.
The Better Services and Value Taskforce was announced by Treasurer Eric Roozendaal in his budget statement in early June. ICT will be one of the first areas of government administration to come under the spotlight.
A key component of the ICT review will be benchmarking of IT infrastructure and services, using the benchmarking methodology employed by Sir Peter Gershon in his review of Federal Government ICT.
The panel observed that there is nothing new about in the imposition of efficiency dividends, and it is reasonable to expect this to be part of the armoury of this Taskforce. Efficiency dividends were introduced into NSW government by the Greiner Government in the late 1980s, so NSW agencies have more than two decades of experience with them. There have been years when no dividend was imposed and other years where a dividend greater than 1% was in place.
The key point about past imposition of such dividends is their implementation is typically crafted in a way as to avoid degrading the services to the community that agencies are expected to provide. This will be equally true with the current approach.
Nor is cost benchmarking new: the Carr Government, facing significant budget difficulties when it came to office, looked to find corporate services savings. It introduced an ongoing review process known as ‘the Council on the Cost of Government’ (CoCG) in October 1995, chaired by Professor Bob Walker. This Council, which continued until 2002, sought to find savings in excess of 1.5% and looked predominantly at functions such as payroll, human resource management and other internally provided services and back-office programs. There was no focus on ICT as a cost centre by the CoCG and ICT figured as a consideration only as part of the wider cost of providing these functions. The specific focus on ICT as a cost under the Better Services and Values Taskforce is therefore a new emphasis.
The panel agreed that despite the proliferation of technology, information technology projects are not well understood by senior management in government. It is therefore incumbent on all stakeholders –agency CIOs and ICT staff as well as ICT suppliers to clearly link proposed ICT project or expenditure to the delivery of services to the community.
In the context of the current ICT review, ICT vendors can assist by identifying activities or costs which are well out of phase relative to benchmarks that can be identified.
Key factors for success in this Review of ICT costs will be for Treasury to:
- Set clear expectations and targets for agencies to meet. These would not just be expressed as dollar or percentage targets, but would need to clearly outline what government expects the agencies to deliver;
- Identify champions or exemplars in agencies which are successfully meeting the expectations of the Better Services and Value Taskforce;
- Sensibly apply the 80/20 rule in the review. The effort of finding savings in the smaller agencies may not be cost effective. So even though the creation of the 13 super departments is intended to find efficiencies in the back office, the value of such efficiencies will not be as high as those that might be identified in the larger agencies that are now part of the super departments.