Commonwealth looks to shared services future

The Australian government has released a discussion paper to gauge the most effective way to consolidate shared and common service delivery across government, highlighting its interest in private sector collaboration.

The Department of Finance is overseeing the project which forms part of the Australian Public Service (APS) strategy for the Shared and Common Services Programme, which it said aims to create a more responsive, agile, and efficient public sector.

The discussion paper, the Whole-of-Government: Shared and Common Services Programme asks respondents to be innovative in their submissions, which will be used to form a road map that the government said will standardise, consolidate, and automate back-office services.

The total cost of corporate services across the APS has been estimated to fall between AU$3.5 billion and $4.0 billion per year.

"Australia is changing rapidly economically and socially, with the government facing increasing financial challenges," the discussion paper says. "In the face of this rapid change, the APS must become modern and agile so that it can more quickly respond to the expectations of government and the Australian community."

The APS currently has approximately 85 internal service providers across 96 non-corporate agencies that combined have 239 individual relationships with private sector organisations.

Currently, there are also over 200 different enterprise resource planning (ERP) systems.

"A preoccupation with short-term savings has been a contributing factor in the failure of these projects," the paper says.

The project itself has a three-to-five-year implementation timeframe, with the first tranche of the program said to focus on the consolidation of core transactional services which it defines as accounts payable/receivable, credit card management, ledger management, pay and conditions, and payroll administration.

Value-added transactional services such as asset management, learning and development, recruitment, and IT services are pencilled in for the second phase.

Despite payments falling under the first tranche of the whole-of-government transformation, the Department of Human Services (DHS) published a Request for Expressions of Interest (REOI) in September to help with the design and construction of a new welfare payment system to replace the current 30-year-old system Income Security Integrated System (ISIS).

The REOI said the department relies on ISIS to deliver payments to 7.3 million Australians, with Centrelink payments totalling over AU$100 billion annually.

"The start of procurement marks the first milestone for the Welfare Payment Infrastructure Transformation (WPIT) programme,'' the former Minister for Human Services Senator Marise Payne said at the time. "This is one of the largest social welfare business transformations undertaken worldwide; success will depend on establishing strong industry partnerships.''

Last year, the National Commission of Audit said the DHS payment system posed a "significant risk to a core function of government", and called for a simpler payment structure and a redesign that would involve expertise from both the public and private sector.

Whilst outsourcing the assessment of entitlements was not supported by the commission, it suggested that the market be tested for delivering other parts of the payment system.

In 2012, DHS ended its outsourcing arrangements with HP and IBM, with CIO Gary Sterrenberg saying at the time that the move was about "value creation".

In 2013, the then Shadow Communications Minister Malcolm Turnbull said the former government had been neglecting the overall issue of the digital economy, adding that a Liberal government would look to move more Australian government services into the cloud, and would hand responsibility for IT back to some of the larger agencies in return for better reporting.

The delivery of such initiatives went on to form the federal government's wider digital transformation agenda, which is being led by the Digital Transformation Office (DTO) that was formally established in July 2015.

Last year, the Australian Communications and Media Authority (ACMA) said it was exploring the use of shared services for IT and backoffice functions as a result of facing budget cuts; and in early 2014, the Department of Education and Department of Employment established its Shared Services Centre to provide shared desktop, application development, website hosting, network, internet, and other IT services between the two departments and other agencies.

Last month, the Western Australian government said it wanted to cut hundreds of millions of dollars off its IT spend, and suggested the most cost effective way to achieve this is by outsourcing the state's IT infrastructure.

"GovNext-ICT is about paying only for what we use, moving away from owning and operating ICT infrastructure, so we can concentrate on delivering the business of government," Finance Minister Bill Marmion said at the time. "Estimated savings of AU$65 million a year are achievable."

In May, Queensland Innovation Minister Leeanne Enoch pulled the pin on the decision to outsource the state's IT services, announcing that CITEC would remain a Queensland government-owned information and communication technology provider.

The decision to outsource the state's IT services was made by former IT minister Ian Walker in 2013, after an audit conducted by former federal treasurer Peter Costello said the cost to maintain and fix the government's IT systems would amount to AU$4.7 billion.

The Victorian government has had a tumultuous history with its on-again, off-again, state-owned IT service, the Centre for IT Excellence (CenITex).

In July, an efficiency review, commissioned by the Victorian Department of Premier and Cabinet (DPC), said the proposal to outsource CenITex should not proceed and instead revert back to a government IT service, because the business case does not fully account for the amount of work and cost required within departments to achieve the required level of standardisation.

Responses to the discussion paper need to be submitted before February 10 next year, with works on the whole-of-government service delivery slated for June 2016. No certainty that the whole-of-government solution will progress to tender or date for when this would be have been provided.