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Opinion: Commission of Audit recommendations generate far more IT winners than losers

by Judy Hurditch •
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For the suppliers in the Federal Government ICT market, the recommendations of the National Commission of Audit (the Audit) relating to ‘improving government through markets and technology’ and ‘rationalising and streamlining government bodies’ brim with opportunities. 

For ICT professionals working in government agencies, the recommendations imply career changes and uncertainties but even here, the changes to be wrought will create more challenging and interesting work.  Above all, the technology recommendations, if adopted, will be exciting, progressive and hugely beneficial to Australian citizens.

What remains is to find out which of the Audit’s recommendations will be adopted, in what degree and in what timeframe.

Come Budget night, 13 May, the Audit’s recommendations for managing government expenditure will have centre stage, as they have had in the Press, since the Audit Report was released on 1 May 2014. 

It is possible that both the biggest technology and the biggest streamlining recommendation will be addressed in the Budget, simply because of the citizen visibility and timing impacts of both, but it is less likely that the other technology and streamlining recommendations will get mentioned.

If we do not learn the fate of these recommendations in the Budget, it is likely that some other mechanism will be employed to determine if, when and how the other recommendations are implemented.  Following the Howard Commission of Audit in 1996, an Office of Asset Sales and Information Technology Outsourcing was established in the Department of Finance.  It is quite possible the Government would take similar steps this time and establish a Unit to advise it on adopting and implementing the Audit recommendations.

The most likely technology recommendation to be addressed in the Budget is the one pertaining to DHS and the possible outsourcing of its payments system, currently the Income Security Information System (ISIS). 

ISIS is almost 30 years old and in the last Labor Budget, DHS was given $16.2million in business case funding to commence the process of considering its replacement.  The Audit Report confirms Intermedium’s prior estimates that the ISIS replacement is expected to cost between $1.2 billion and $1.5 billion.

Of note is that the Audit recommends that a ‘highly credentialed business technology expert to oversee the new system design’.  This is more likely to be a business advisory firm, rather than an individual, based on the precedent of the Australian Taxation Office’s engagement of Accenture to implement its Change Program, which commenced in 2002 with community consultation and was declared finished in 2010 at an eventual cost of $756 million. 

The most likely streamlining recommendation to be addressed in the Budget is the recommendation to create a new border protection ‘super department’ – which the Audit suggested should be called ‘Border Control Australia’ - out of the Department of Immigration and Border Protection, The Australian Customs and Border Protection Service and the biosecurity operations of the Department of Agriculture. 

The Audit estimates these three agencies currently have 17,000 staff and cost around $7.8 billion to run.

This recommendation in effect cements the Coalition government’s current direction with the border protection function. Should this recommendation be accepted, the IT services implications will be significant, generating immediate opportunities arising from staff relocation requirements, communications, security and access and networking requirements.  In the longer term, it is likely to also generate significant system integration opportunities, and greater data analytics requirements. With this number of staff, and the IT support required to support its functions, the new agency will also firmly cement its position as a Tier 1 agency from an ICT expenditure perspective, and the IT functions and hierarchy of the three impacted agencies will have to be consolidated into one.  Such changes may well result in an elevation of the CIO function once again to Deputy Secretary level.

Beyond DHS and the new border protection super-department, the Audit technology recommendations present many opportunities for ICT suppliers who have been hard hit by the belt tightening and lack of decision making that has occurred in Canberra over the last 3 years.   Labor’s 2011-12 budget started to put the brakes on IT spending.

Leaving aside the recommendations on the use of cloud technologies, a reading of the various technology recommendations suggests that providers of the following will be sought in the market:

  • Cloud-based infrastructure, platform or software services,
  • Content management systems,
  • Document automation systems,
  • Workflow / case management systems,
  • Storage solutions, as well as
  • Data analytics (software, hardware and integration) solutions.

System Integrators and Application Developers will find that the need to support the ‘Digital by Design’ agenda the Audit recommends will drive requirements to migrate off, remediate or enhance legacy systems.

Digital by Design is likely to also create a greater demand for security solutions – at a minimum a more comprehensive use of Single Sign On technology and possibly more widespread use of two factor security.

Given the decision making and budgetary context, some of these opportunities may present in 2014-15 provided the recommendations are adopted early enough, but the market for such solutions is likely to ramp up more fully in 2015-16 and beyond.

Finance’s Procurement Division, headed by John Sheridan will have no shortage of policy and other work, and if the relevant recommendation is accepted, there will be a Whole of Government Cloud Panel Multi Use List (or lists – possibly splitting into infrastructure, platform and software providers).  If such a panel is created, it will be the first in Australia.

If the recommendation for a Chief Digital Officer, to sit within the Communications portfolio (and be responsible to technology-savvy Minister, Malcolm Turnbull) is adopted, the survival of the role of Whole of Government Chief Information Officer must be under question.  Similarly, the future of the Australian Government Information Management Office (AGIMO) would also be under review.

However, such a move would be counter to the strength of support that was being voiced in the Coalition’s IT Policy, issued just before the last election, but which has yet to be turned into a revised IT Strategy. It would therefore not be surprising to see AGIMO renamed, and moved to the Communications Department.  Such a development would also explain why the revised strategy has not yet been issued.

Some Losers

Conversely, the technology recommendations do not look so good for the operational support or business-as-usual IT professionals working within agency IT shops, nor for the CIOs who would be directly impacted by the streamlining recommendations.  However, as occurred with the Howard era technology outsourcing, many IT staff in impacted Departments could find themselves employees of the new private sector service providers.

For those that win the newly defined roles, their responsibilities are likely to be completely reframed and finally allow them to address the innovation agenda more fully.

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