GovNext will not deliver planned savings

30/08/2018 - 15:24

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The Barnett government’s ambitious GovNext ICT program was based on flawed assumptions and will not achieve the anticipated savings but still holds potential to deliver significant benefits, a review has found.

GovNext will not deliver planned savings
Caroline Spencer says the government should look beyond cost savings.

The Barnett government’s ambitious GovNext ICT program was based on flawed assumptions and will not achieve the anticipated savings but still holds potential to deliver significant benefits, a review has found.

The review by Auditor General Caroline Spencer comes after the state government has already implemented major changes to its ICT strategy.

“The GovNext business case estimated savings of up to $82 million per year, however the assumptions used did not fairly reflect current agency ICT services or pricing, and presented a best case picture of potential savings,” Ms Spencer said.

“We found agencies using GovNext for their ‘cloud’ services have been quoted, and are paying, prices between 38 per cent and 150 per cent higher than the initial quotations used to generate the estimates.

“None of the agencies we had information for were paying prices as low as those used in the business case.”

While the program’s estimated savings are unlikely to be delivered, the report found agencies are making savings when they adopt GovNext.

Agencies that have purchased ‘network’ services have achieved average annual savings of 22 per cent, against the estimated 37-46 per cent.

Similarly, one surveyed agency is saving about 11 per cent per year on ‘gateway’ services, against an estimate of 27 per cent.

GovNext was one part of the Digital WA strategy, launched in May 2016.

Its goal was to create more agile, scalable and flexible ICT solutions and led to the signing of contracts with NEC Australia, Atos and Datacom as preferred vendors.

At the time, ICT infrastructure cost the state government about $170 million each year.

The GovNext business case estimated annual savings of up to $82 million, with a more conservative estimate of $68.4 million, after obtaining multiple quotes from potential vendors.

The auditor general said the business case used the least expensive quote to estimate costs for cloud services and the majority of network services.

“This created an unrealistic view of potential savings,” today’s report found.

The business case also overestimated what agencies spend on their data centres, specifically their server racks.

The auditor general found take-up of the GovNext program has been low.

Although 31 agencies are purchasing services, by April 2018 there had been a relatively small total spend of $3.9 million

“The take-up of the program so far is low, because agencies do not understand the benefits the program may offer them and some are reluctant to buy services until their concerns have been addressed, including assurances around security and service continuity,” Ms Spencer found.

“Despite this, the program has started to progress the state’s ICT strategic objectives, by reducing the number of agencies that own and maintain ICT infrastructure.”

Ms Spencer said the government should look beyond cost savings in its efforts to promote the program.

“My recommendations are intended to help the Department of the Premier and Cabinet (DPC) rethink its role and what more it can do to help agencies through this substantial change process,” her report stated.

“It may be prudent for DPC to look more broadly than its current focus to also consider non-financial risks and benefits to the state.

“Ultimately, modernising agency ICT must be about providing agencies with approaches that are flexible, secure and cost effective.

The auditor general’s report said potential benefits (beyond cost savings) included improved transparency and agility, increased reliability, greater security, reduced risk and improved information sharing.

One surveyed agency said that while GovNext offered minimal savings, it allowed the agency to increase its information sharing and staff access, particularly after recent Machinery of Government changes.

“Adopting GovNext as a central ICT solution has allowed the agency to easily connect its previously separate entities and made it easier for regional staff to access central systems,” the report found.

In its response to the auditor general’s report, the government said recent changes included transferring the Office of the Government Chief Information Officer (OGCIO) from the Department of Finance to DPC.

Under its new identity, the Office of Digital Government (DGov) has been set up as a responder and resolver of agency concerns.

“This contrasts with previous perceptions of the former OGCIO, which (to a greater or lesser extent) was viewed by agencies as driving a very firm agenda of implementation, without full regard to their day-to-day operational concerns,” the government said.

“This approach has arguably resulted in a culture of resistance to GovNEXT ICT across some parts of government.

“Changing this culture is now a priority for DPC.”

The government said an independent review of GovNext (separate from the Auditor General’s review) concluded its underpinnings are sound and the benefits were now beginning to be realised.

“However, while the GovNext ICT model is consistent with an increasingly contemporary approach to ICT delivery across many public sector jurisdictions (and large corporate entities), the focus of implementation needs to be on resolving agency service delivery concerns and supporting the key personnel who will be responsible for dealing with day-to-day operational concerns,” it added.

“The government is committed to ensuring that these challenges can be met, so that GovNEXT ICT has the potential to realise its full benefits.”

In this regard, the auditor general noted that the Government Service Broker (GSB), which is responsible for delivering the benefits of GovNext, has never been fully resourced.

Levels of resourcing have fallen significantly since December 2017 and by June 2018, less than 40 per cent of positions were filled.

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