Skills shortage could scuttle Tanner's grand plan

Unwieldy IT procurement has led to widespread duplication, according to the new finance minister, Lindsay Tanner. However questions remain over whether greater centralisation will lead to actual savings on the AU$6 billion the government spends on IT each year.
Written by Liam Tung, Contributing Writer

Finance Minister Lindsay Tanner last week announced plans to centralise the IT procurement framework aiming to improve efficiency and reduce wastage but his proposal is unlikely to result in actual savings, according to experts.

The main problem with the way government agencies have procured technology over the past decade, according to the Minister's office, is that they have had too much autonomy in the process.

In terms of IT purchasing, a spokesperson for the Minister told ZDNet.com.au that this has made it "difficult to achieve the level of interoperability required to support quality service delivery and has resulted in additional calls for taxpayers' funds, which could have been used for other purposes."

However, a more centralised approach to procurement will not automatically result in savings, according to Richard Harris, Gartner's government analyst.

"The real challenge is, particularly at the big agencies in the federal government, such as the ATO, Centrelink and Defence -- which have quite different types of IT needs -- is that it is not feasible to mash together and standardise everything they are using," said Harris.

On the other hand, Harris believes Tanner's call for more coordination between departments when procuring ICT products and services would help manage the demand for the skills across multiple projects.

"If you look at big federal government projects at DIAC (the Department of Immigration and Citizenship) and the ATO, they're all competing for skilled resources to implement their projects," he said.

"Because the market is tight, prices are bid up, particularly for projects with similar timeframes. One thing that could be achieved through centralisation is the ability to smooth out the total demand for resources," he added.

Centrelink's IT refresh program was one such initiative put at risk by the inability to buy IT skills in a tight labour market. A 2007 report by the Australian National Audit Office (ANAO) of Centrelink's AU$400 million IT refresh program, found it was "almost certain" that Centrelink would not find adequate IT skills.

Between 2006 and 2008, DIAC has issued over 50 separate tenders for outsourced skilled IT staff to support its AU$495 million Systems for People program, which resulted in additional recruitment costs of AU$55 million.

Although the ATO's CIO Bill Gibson said delays to the ATO's Change Program were not affected by skills shortages in the same way that DIAC's had, the ATO has been forced to coordinate application development work between Wollongong, Adelaide, Brisbane and Canberra to do work that would, under better circumstances, be done in just one location.

"It's still been complicated and difficult and requires moving people and workloads around," Gibson told ZDNet.com.au.

However, whether the government plans to centralise procurement will achieve lower costs may be less important than each agency's ability to manage vendors, according to John Brand, managing director of analyst firm Hydrasight.

"Often, government departments leave it to vendors to work out how a project will be done themselves rather than taking an active role in managing vendors. Vendors need to be managed very aggressively," Brand told ZDNet.com.au.

"I think we have seen commercial vendors actually pushing government to develop, extend and change the scope of projects, and to increase "value-adds". There's been a tendency for private enterprise to dominate and direct government projects," he added.

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