Govt facing ICT challenge

Three major reviews have called for a big shake-up of the state government’s information and communication technology (ICT) strategy.

Efforts by the Department of Health to finalise a $408 million contract for its nine-year HealthNext project serve as a reminder of the ICT procurement challenges facing the McGowan government.

The department’s plan is to transition ICT services by November, from current supplier Fujitsu to one (or more) of three contractors appointed under the former government’s GovNext program.

However, the department says it has been unable to determine the full scope of its ICT contract, because the ability of GovNext contractors to provide the required services is unclear.

“It is yet to commence transition planning and acknowledges that the timeframes will be challenging,” according to the final report of the Langoulant review, which was handed down by former under-treasurer and Chamber of Commerce and Industry of WA boss, John Langoulant last month.

To mitigate risk, the department is concurrently scoping and planning another tender for managed services.

“The Department of Health (WA Health) estimates that approximately 50 per cent of the managed services that it requires will not be covered by the GovNext ICT common-use arrangement,” the review found.

The move to HealthNext comes after huge blowouts on the department’s eight-year contract with Fujitsu, which is expected to cost close to double the original estimate.

The uncertainty surrounding WA Health’s ICT plans is matched by uncertainty over the future of GovNext itself.

GovNext is a cloud-based as-a-service business model, under which government agencies will buy ICT infrastructure services (and associated managed services) from three consortia, led by Atos, Datacom and NEC Australia, instead of purchasing their own hardware and building their own systems.

It has triggered resistance by some government agencies, which have questioned the expected benefits, and a competitive response by current suppliers, which are reportedly slashing prices to try and retain work.

The Office of the Government Chief Information Officer (OGCIO), a small agency with just 19 staff, has led the move towards GovNext, which underpinned its broader Digital WA strategy.

The McGowan government’s service priority review, released late last year, included strong criticism of the Digital WA strategy.

“Stakeholders have raised concerns about the strategy, including a lack of clarity in and cohesiveness between the strategic goals it proposes, and minimal accountability for their delivery across the sector,” the service priority review stated.

“The strategy does not contain reference to any cost-benefit analysis of the initiatives it proposes.

“More generally, stakeholders have suggested that the lack of a formal requirement for agencies to participate in Digital WA initiatives presents a significant risk to realisation of the state’s digital transformation agenda.”

The review also noted a lack of cross-government ICT leadership.

“The OGCIO’s role and mandate is widely regarded as limited and ICT priorities are accordingly subservient to competing expenditure decisions at agency level,” the report stated.

The service priority review recommended ICT procurement should lie within the Department of Finance, while policy functions associated with digital transformation, cyber security and data sharing; i.e. the work undertaken by the OGCIO, should be located within the Department of the Premier and Cabinet.

The Langoulant review heard strong criticism of GovNext.

It noted that, when GovNext was launched, the estimated savings were $650 million over 10 years, out of total spending of $3 billion.

The OGCIO’s latest estimate was savings of $65 million over three years.

However, the success of GovNext rests with the largest government agencies transitioning, as this will boost the volume of services and drive cost reductions.

Several big agencies were highly critical.

The Department of Education said GovNext was financially unviable and would be detrimental to schools, while the WA Police Force said it would need an $11 million capital injection and an extra $6 million in annual funding to transition to GovNext, with the overall financial impact being break-even at best.

More generally, agencies transitioning to GovNext told the review they had concerns regarding delayed confirmation of services, and lack of money and expertise to support the transition.

On balance, the Langoulant review concluded there was merit in the GovNext program developing a cost-effective ICT system across government, but noted the program lacked a coherent whole-of-government implementation plan.

“A lack of coordination among the large agencies may impact the viability of the GovNext purchasing arrangements and the vendors’ ability to cope with fluctuating and unpredictable demand and may undermine the realisation of financial benefits,” the review said.

It said the government would need to reaffirm its commitment to the program and provide additional resources for agency transition and program management.

The government’s Sustainable Health Review, which reported last month, also found major shortcomings in the state’s ICT strategy.

It noted that technology was often seen as a way to save money, and improve efficiency and patient outcomes, but added it was also one of the largest drivers of cost in the health sector.

“The need to improve ICT systems across the WA health system is clear,” the review concluded.

“The challenge is to mobilise and manage the upfront investment in ICT in such a way that it does not compromise the provision of other initiatives.”

The review noted the establishment of Health Support Services as a separate statutory authority in July 2016 to provide critical ICT, procurement, payroll and financial services to the WA health system.

“While a number of recent changes have been made to improve the delivery of support services, we have heard consistently that there is significant scope to transform the delivery of these services and support more innovative and cost-effective approaches across the WA health system,” the review found.

Innovation and ICT Minister Dave Kelly is currently weighing up this flurry of advice.

Mr Kelly told Business News the recent reviews had highlighted the importance of ICT to the future of the WA public sector.

He also noted the McGowan government had extended funding for the OGCIO by 12 months, to June 2019.

“This will allow us to determine the best approach to delivering meaningful functional leadership for ICT in the public sector,” Mr Kelly said.

“This will be considered holistically within the context of our public sector reform agenda.”

Mr Kelly also noted the Langoulant review’s finding that GovNext had considerable merit, but improvements needed to be made to the way the project was implemented.

“We are currently working through this,” he said.