Is the Commonwealth Getting $10 Billion Worth of Value From its IT Procurement Spend?

Commentary by Robert Hudson, President, ITPA

Effective investment by the Commonwealth in IT infrastructure, solutions and people is more important now than ever before. Unfortunately, the Government’s track-record on the way money is spent on IT in this country is not good and in our opinion, should come under greater scrutiny as this budget line item continues to grow.

According to a recent report published by the Government agency charged with co-ordinating and managing Commonwealth IT investment in this country, procurement is an area that should be of great concern to IT professionals and the industry.

We are not doing it well. Agencies are frightened to make decisions because of the lack of framework and lack of skills and knowledge. Suppliers often find it too hard to deal with agencies so steer clear or appear to go out of their way to take advantage of the confusion and pitch overpriced solutions that won't deliver what's required, all with no fear of penalty.

Meanwhile, procurement decision makers feel pressure from the Government to achieve political outcomes and deliver to the 24-hour news cycle whirlwind. Sometimes, it seems that the Government’s attitude to investment in IT really is similar to the farce portrayed by Utopia, that brilliant mockumentary series from the Working Dog TV production group.

Tabled by the Digital Transformation Agency (DTA) in May this year, the Report of the IT Procurement Taskforce highlights a broad range of issues that are impacting the value being received from public IT investment. It also shows that total investment has grown to be in excess of $10 billion annually which puts it on par with the total cost of a significant welfare initiative to the budget - like NewStart, for example.

If the current Government’s attitude to the NBN is any guide, we should all be very afraid about what is happening to that enormous amount of money each year. We should also ask questions about why there is not more consultation with the industry and the people who work in it about how improvements could be sought.

Firstly, let me say that ITPA thinks that the level of investment in IT is not the problem. If Australia is to truly become a smart, innovative nation with a vibrant industry that creates entrepreneurial and career opportunities, then we must continue growing investment in IT.

Our challenge as a nation is to make sure that we get value for money. We need to get predictable investment as opposed to open cheques. We need to utilise local, small-to-medium businesses so that the money stays in the economy and we need to create meaningful career development pathways so that the skills in demand by the industry are being drawn from local personnel.

All indications from the DTA report on procurement would suggest that none of these things are happening.

DTA’s report concluded that there are three significant impediments to improving government ICT procurement; a lack of centralised policies, poor collaboration and industry engagement, and no best practice framework.

When our money is being spent all over the place, without talking to experts and without any structured guidelines, I think we have a problem with what we are getting for our $10 billion a year.

Much like an episode of Utopia, in the creation of DTA there is a platform in place for the Commonwealth to meet its ICT objectives but, in reality, there are still numerous bureaucratic and political hurdles in executing the right strategies.

This procurement report outlines the numbers and demand sources which is staggering; $9 billion worth of procurement signed in FY 2015-16 across 17,000 contracts with the bulk of this undertaken by just a handful of agencies.

Six agencies — Defence, Human Services, Immigration, Foreign Affairs and the ATO — accounted for 76 per cent of the value of Australian government ICT procurement. Another 99 agencies responsible for the remaining 24 per cent.

That’s a lot of taxpayers’ money being spent on some big deals so everyone in Australia deserves complete transparency and evidence of engagement with professionals who know what they are doing in decision making processes.

Overall, it is an interesting report and one that demands action upon the 10 key recommendations it makes. Suggestions which range from adopting a procurement framework, better visibility of contract progress and costs, reining in costs, simplification of processes, setting strategies, co-ordination across agencies and regular reviews.

You will get no argument from ITPA that, as a nation, we need to be investing in ICT. I’d argue that the budget should be larger than it currently is as opposed to being smaller. Governments need to prioritise IT investment but they also need better metrics to ensure that goods and services procured are delivering value under efficiently managed processes as well as being integrated with and aligned to broader ICT strategic direction.

We really need the massive amount of money we spend on IT procurement to be less like an episode of Utopia and more about engaging with the industry and its IT professionals.

It also comes back to making a serious commitment to developing in-house knowledge and expertise in setting strategic direction and administering procurement processes based on core technical skills.

There is too much money being spent on consulting services and not enough on creating career pathways for local IT graduates. There needs to be more focus on sustained training requirements and incentives for tertiary institutions to teach our IT students and graduates the type of skills that are currently in demand from the public and private sectors.

While the formation of the DTA is essentially a good idea, the dissatisfaction of all stakeholders in the current state of play that is highlighted by this report shows that there is a long way to go before we can be confident that we are getting bang for our buck in regards to government IT investment.

Engaging with truly independent organisations such as the ITPA would be a good start. There is a wealth of objective knowledge and healthy cynicism of current processes within our membership of over 16,000 IT professionals.

Feel free to talk to us.

Robert Hudson

President, ITPA