The ‘One Defence’ business model envisioned by the First Principles Review (FPR) in 2015 is close to being realised, with the Australian National Audit Office (ANAO) report concluding that Defence has implemented most of the review’s recommendations, including those centred on improving its ICT-related practices.
“Defence has implemented a substantial number of the most important recommendations of the Review,” states the audit, which was released in April 2018.
The audit determined that Defence has established a strong strategic centre to strengthen accountability and top-level decision-making, created a single end-to-end capability function by implementing major organisational changes, and has acted to close all but one of the enabling services recommendations.
Some works are still in progress, however, with the audit finding that “[a]chieving full implementation and the intended results of this agenda will require continued focus across Defence for several more years”.
For instance, while all six FPR recommendations relating to the department’s Information Management work stream have closed, the Defence’s Enterprise Information Management reform will not be fully completed for several years. In particular, the audit report noted some concerns regarding funding commitments for the Enterprise Information Management project, although Defence advised the ANAO that it expects its funding requirements to be clarified as part of the Gate 1 approval process, which is scheduled for September 2018.
Further, the audit identified a need for a more transparent reporting and monitoring mechanism on the results of the implementation.
“Defence is not yet able to demonstrate that the intended outcomes of the recommendations relating to enabling services, workforce and behaviour have been achieved,” states the audit. Also, despite the progress towards improving organisational efficiency, “no quantifiable savings have been identified” by Defence.
More work is also required in the Service Delivery stream, according to the audit, which found that “Defence’s ability to improve enabling functions is limited by the lack of a coordinated, enterprise-wide plan to address the inefficiencies identified by the Review in the Service Delivery work stream.”
It suggests that “Defence’s capacity to manage reform effectively would be improved by Defence having a clear understanding of the efficiency of its activities and operations, including by developing indicators that measure efficiency.”
The First Principles Review
The 2015 First Principles Review was the most recent initiative aimed at reforming Defence’s organisational structure, and follows previous reviews that have “resulted in only incremental change”. The FPR introduced the ‘One Defence’ business model, which requires “organisation-wide structural, system and process changes combined with a requirement for a significant shift in business culture (mindset and behaviours) and discernible shifts in power”.
“Defence must become one end-to-end organisation, not a federation of separate parts, if it is to effectively and efficiently deliver the required outcomes,” stated the review.
Among the institutional problems noted by the FPR, is an organisational culture that is “risk-averse and resistant to change”; reform intent that is “subsumed by box-ticking and process tinkering”; and the tendency to add “veneers of process” that avoid fixing the underlying problems.
The review identified information management as “a critical enabler for One Defence”, and determined that “current practices are materially impeding operational effectiveness and efficiency.”
In response to the FPR, Defence committed to a $400-$500 million Enterprise Information Management Program to enhance decision-making through access to a unified information environment.
As well, Defence undertook the overhaul of legacy ERP systems, previously named ‘Defence INSIGHT’, to reduce the structures, systems and processes used by the department which had resulted in “institutionalised waste” according to the FPR.
SAP was signed on for $86 million to provide the software and named as Technology Partner for the consolidation program, and KPMG and EY were picked as Strategic Partner and Organisational Change Management Partner respectively in October 2017. The two systems integrators for the program are to be selected by mid-2018, according to a Defence spokesperson.
The ERP transformation project will need to integrate with the Defence One project (also known as JP 2080), which involves the delivery of a single payroll and HR system. The system, which will use Oracle PeopleSoft Human Capital Management software, intends to provide both transactional and analytical capabilities.
The transformation agenda was considered “the largest upgrade to Defence secret and restricted networks in more than 10 years.”