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The move to Super Departments in NSW Part 2

by Staff Writers •
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Part 2: How and where ICT opportunities to support the changes are likely to present

As outlined last week, the Machinery of Government (MoG) changes to create 13 Super Departments announced by Premier Rees as part of the 2009-10 Budget create the most administratively complex government arrangement yet seen in Australia.

Opportunities exist in both the short and long term for the ICT industry to assist agencies with solutions that will help manage the changes efficiently and effectively.

The Change Agenda – Initial situation (June to August 2009)

Since the announcement the top 200 bureaucrats across the new agencies have been busy managing the viability of their careers and generally managing upward rather than downward.

The crucial issue is to drive down costs as quickly as possible. The bulk of any agency’s budget is taken up in staff costs so if jobs are secure (as is the case in this restructure) it will be very difficult to make initial savings. (Note however, that there are rumours that there are significant ‘voluntary’ redundancies occurring.)

Because the obvious source of costs cannot easily be touched, there will be a lot of ‘scurrying about’ to ascertain where funds can be found in the new Super Departments. In many instances, there will be no co-ordinated way of finding this out easily. Suppliers who can assist with solutions that can readily and swiftly assist in this governance area may well find receptive ears.

The Medium Term (September 2009 to March 2010)

In the worst case scenario, if savings cannot swiftly be identified, the agency may well have a freeze on expenditure imposed, so that the ‘spare’ funds are not spent before they can be identified. If a freeze were to occur, it paralyses administration dramatically and will have an impact on even the most pedestrian purchases. If a freeze doesn’t occur, agencies will continue to make purchases for routine ICT items off existing contracts.

Contacts in agencies are likely to welcome suggestions on what they can do with hardware and software dilemmas that are identified. Any outline of options for savings is also likely to be extremely favourably received.

Over-riding the medium term issues is the fact that a Treasury-driven review of ICT costs across NSW government is underway.  

Removing back office duplication is a major goal of the restructure, so it can be expected that the shared services initiatives in NSW will be reinforced and potentially develop further.

Agencies and suppliers who understand that achieving back office savings is not so much about harmonizing ICT systems, but is instead dependent on standardising back office processes by creating generic processes across government. Then harmonizing systems will benefit faster and generate far higher savings than those who put in place short term solutions.

Agency decision makers will be desperately busy – no time for unprepared suppliers.

Due to the impending March 2011 election, the 2010-11 budget which is starting to be framed now, will inevitably have a raft of new programs / projects designed to appeal to the electorate. In providing input to this budget process, agencies should be looking for innovative suggestions for greater effectiveness or efficiency and are likely to welcome supplier input. But there will be no funding available for any large scale solutions until after the 2010-11 budget unless they were already funded as part of the 2009-10 budget, or unless funds can be reprioritised.

Longer Term (March 2010 onwards)

There will be significant demand by government for the sought after efficiencies to be delivered off the back of the budget 2010-11 budget. Government will also be looking for public acknowledgement of heightened effectiveness brought about by improved service delivery.

The super departments have all ‘bulked up’ due to the addition of the smaller agencies. A number of them will now start to behave for the first time as ‘Tier One’ agencies. The supplier ‘pipeline’ that existed prior to the agency restructure will have fundamentally altered by this point.

Suppliers should bear in mind that business transformation opportunities may well start to emerge and that such transformation will  not simply be a synonym for application redevelopment. Agencies will have an appetite for a transition to their new ‘business as usual’ paradigm and are likely to welcome vendor suggestions for best practice.

Only two things are likely to get in the way of some of these broader long term predictions – this is the NSW that we are describing, and it is only 18 months or so to the next election.

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