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ACS warms to Gershon Report but cautions against rash spending, job cuts

Careful business analysis is required before cutting costs or personnel, otherwise the ICT industry could take a backward step.

Finance Minister Lindsay Tanner with Sir Peter Gershon at the handover of the ICT review.

Finance Minister Lindsay Tanner with Sir Peter Gershon at the handover of the ICT review.

The Australian Computer Society issued a statement today in support of Sir Peter Gershon’s Report that candidly reviewed Australian government’s use and management of ICT, but warned that knee-jerk slashing of budgets or personnel could see the industry take a backward step.

In his review, Gershon criticised the federal government ICT marketplace as “neither efficient nor effective”, identified a lack of scrutiny on funding, and flagged a disconnect between “the stated importance of ICT and actions in relation to ICT skills”. He labeled the government’s current sustainability program deficient, where for example the absence of a whole-of-government strategic plan for data centres could cost taxpayers up to $1 billion over 15 years.

Among his recommendations Gershon called for a 15 percent reduction in budgets of the largest 28 agencies spending over $20m annually on ICT (excluding Defence), and a 7.5 percent reduction for those spending $2-20m. He called for a 50 percent reduction in the number of contractors used by government agencies over a two year period, and an increase in in-house government ICT staff.

ACS chairman Kumar Parakala applauded the report’s emphasis on improving efficiency through a centralised and strategic whole-of-government approach to ICT policies, and the need for ICT to support wider policy agendas.

“This has estimated savings of approximately $140m in the first year, $400m in the second year, and the potential for $1b in savings over 10 years,” Parakala said on the 15 and 7.5 percent budget reduction recommendations.

“The Review recommended that 50 percent of the savings generated by these cost cutting activities are reinvested in projects to improve efficiency and effectiveness of ICT activities. This is a pivotal recommendation which highlights the importance for businesses to continually maintain and reinvest in their ICT budgets and projects,” he said.

While Parakala agreed with Gershon’s advice on minimising ICT spending by focusing on efficiency rather than needless sacrifice of ICT jobs, he cited concern that the current financial crisis could lead to knee-jerk cost-cutting that would mean medium-to-long-term pain for the overall economy.

“We are keen to see Sir Peter Gershon’s recommendations implemented, however we caution the private sector against using this as a signal to reduce their ICT budgets at a time when ICT investment is pivotal to our competitive standing in the global economy,” he said.

“If these recommendations are viewed purely as a cost-cutting mechanism, there is potential for the industry to take a backward step, rather than moving forward and improving the delivery and efficiency of ICT services, products and development of new technologies.”

The ACS welcomed the recommendations but warned that implementation should come with due diligence so that neither tax payers or the ICT industry are disadvantaged by cost-cutting efforts.

“You can’t go and roughly cut your costs by 20 or 30 percent in ICT, you have to carefully look at how the business is using IT and develop better and smarter ways of cost cutting…the last thing you want to do is go backwards on service delivery.”

Parakala said the ACS would also like to see the government establish a more level playing field for procurement between SMEs and multinational ICT suppliers.

Key ACS recommendations included in the Gershon Report include:

  • An increase in in-house government ICT capabilities and reduced reliance on contract ICT labour
  • Improvement and development of a whole-of-government training, retention and development of ICT workers within the public service
  • The need for greater government investment in piloting ICT innovation in SMEs
  • A controlled phase out program for government legacy systems that adequately covers and captures all hardware and software costs

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