Gershon gets Reinecke tick, advice

The review of the Federal Government's implementation of the recommendations of Sir Peter Gershon's report into government technology use has said that substantial progress had been made in the last two years.

The review of the Federal Government's implementation of Sir Peter Gershon's report into recommended government technology use has said that substantial progress has been made in the last two years.

The government commissioned former National E-Health Transition Authority CEO and Sydney Olympics CIO Dr Ian Reinecke in April this year to advise on the effectiveness of the government's implementation and to recommend any corrective action that is required.

Despite receiving the report in July, the government waited until today to reveal the details to the public. In his report (PDF), Reinecke said that the policy structures required by the report were mostly in place that and that "very substantial progress" had been made in the two years since the Gershon report was released. However, Reinecke noted there was room for improvement in the governance of the program and made five recommendations based on his review of the implementation.

Firstly, he recommended that the government establish a dedicated Ministerial ICT Committee, as originally recommended by the Gershon review, in addition to the existing Expenditure Review Committee (ERC) that was previously used by the government.

The additional committee was required to gain an overall vision of where government IT is heading.

"There has not been consideration of a strategic vision for ICT or a strong emphasis on development of whole-of-Government approaches to ICT," Reinecke said. "Rather ERC has provided prudential oversight and authority over decisions made by Secretaries Information Governance Board.

Secondly, the report recommended that two independent qualified members from outside the public service be added to the Secretaries' ICT Governance Board, as recommended by the Gershon report. After concerns were expressed from smaller agencies that the Committee's membership consisted mainly of larger central agencies, the report also suggested that members from the smaller Departments of Broadband Communications and the Digital Economy as well as Innovation Industry Science and Research, be included.

Reinecke also called for Finance to undertake an assessment of the Australian Information Management Office's capabilities to see if its two current major roles, being a catalyst for change and implementing that change in detail, should be functionally separated.

"The expectations placed on AGIMO were unsustainable, and its role and structure need to be reconsidered," Reinecke said.

He then recommended that AGIMO should look at ways to simplify its method of data collection, provide greater assistance to agency heads on benchmarking, which he noted was considered as one of the great advantages of the review as it increased transparency and would provide further guidance on shared services. Reinecke said that proceeding cautiously on shared services, as recommended by Gershon, should not preclude agencies from rationalising infrastructure. Reinecke noted, however, that shared services opportunities were closely examined as part of the Moran review.

In Reinecke's final recommendation, he suggested that AGIMO work closely with Finance under the leadership of a chief technology officer. He also suggested the establishment of a dedicated ICT policy unit and a taskforce of senior public service executives to develop strategies for ICT in government.

One source of controversy about the program, Reinecke noted, was that agencies were dominantly concerned about their ability to meet the Gershon review's $1 billion savings target.

"Undoubtedly some agencies found it diffcult to find these savings, especially after the first round of targets, and there is residual preoccupation in the APS about both the quantum and the effect of the savings," he wrote.

Many found the first round of savings easy to achieve, but the second round was more difficult. There was some "gaming" on what was described by business-as-usual and what was not to reduce savings in this round, he said. Some agencies said they'd found the savings from non-IT sections of their budgets.

Savings were found by reducing contractor numbers, renegotiating ICT contract renewals, pushing down unit prices in supplier negotiations and reducing internal expenditure on ICT functions. Costs were also cut by fine tuning mainframe capacity, rationalising desktops and laptops, consolidating servers and reducing spending on application maintenance.

Agencies felt that the blanket distribution of savings targets was not fair, since those who had just completed a major review of their systems could not make large savings, while, for example, those who were about to make major supplier decisions could well meet the savings. Larger agencies exploited their economies of scale to find savings, while smaller agencies felt more pressure.

The targets made some agencies worried that IT was being milked and not considered for its innovative possibilities.

"There is also a concern, shared with the supplier industry, that the savings targets have had the effect of promoting the perception that ICT budgets should be treated as costs to be contained, rather than as investments leading to greater productivity," the report said.

"The establishment of a Business-as-Usual Reinvestment Fund (BRF) that returns half the budget savings to a fund that agencies can apply to for project funding has not assuaged all the concerns about negative effects of ICT budget cuts," he said.

It was revealed in the course of the 2010 Federal Election campaign that Labor intends to redirect the $460 million in savings already made from the Gershon implementation and IT projects would have to fight with other government projects in order to win the funding back, which could heighten concerns.

For the recommendation of moving contracted ICT workers into the Public Service, Reinecke credited the Global Financial Crisis for "undoubtedly [making] it easier to achieve the conversion from contractor to staff positions in 2008-2009 and into early 2010".

The Special Minister of State responsible for overseeing the implementation of the program, Gary Gray, welcomed the publication of the report today.

"I look forward to working with my ministerial colleagues to further build upon the progress of the past two years. The government will respond to the report in due course," Gray said on the AGIMO blog this morning.