Chapter 3: Summary of survey findings
3.1 Survey approach
As part of the review, a survey of agencies' ICT spending was undertaken to understand the total ICT spend of the Australian Government (the Government) and to examine agency ICT costs across a range of areas including desktops, websites, financial management information systems, human resource management information systems, grants management systems, telecommunications, and ICT energy usage.
The survey was based on the 2002–03 ABS Government Technology Survey (GTS). The ABS survey was used to enable comparative analysis of expenditure over time, as it was the most recent comprehensive survey of the Government's ICT expenditure. Appendix C contains an outline of the review’s survey methodology.
Eighty-six responses28 were received covering 91 of the 100 FMA Act agencies that existed at the time the review survey was issued. The responses varied in terms of completion and quality, highlighting the absence of a consistent approach by agencies to the classification of some of their ICT costs. Nonetheless, the survey provided significant insights into agencies’ management of their ICT costs.
For the purposes of analysis of the survey agencies were grouped into the following size categories:
- Large: agencies (including Defence) with over $20 million of ICT spend in 2007–08 (29in total)
- Medium: agencies with between $2 million and $20 million of ICT spend in 2007–08 (26 in total)
- Small: agencies with less than $2 million of ICT spend in 2007–08 (29 in total).
3.2 Survey Results
3.2.1 Total government spend on ICT
The Government has not had conclusive data on the value of its annual ICT spend since the ABS 2002–03 GTS estimated the Federal Government ICT spend (including spending by Commonwealth Authorities and Companies Act 1997 agencies and 38 universities) at $4.2billion. Prior to the survey undertaken by the review, best estimates had put the Government's current ICT spend at around $6 billion per annum. The review’s survey identified that FMA Act agencies spent $4.3 billion on ICT in 2007–08. Based on this result, total government ICT spend across the General Government Sector for 2007–08 is estimated at $5.3 billion per annum (excluding universities), using the multiplier derived from the ABS survey.
Similarly, the Government has not had conclusive data on the size of its ICT workforce since the ABS 2002–03 survey, and that survey only addressed the APS workforce and did not capture ICT contractor numbers. The review survey identified that the ICT workforce of FMA Act agencies at 30 June 2008 was 13,379 (including 3,135 ICT contractors). Based on this result, the total government ICT workforce across the General Government Sector at 30June2008 is estimated at 15,751, using the multiplier derived from the ABS survey.
Tables 3.1 and 3.2 summarise the aggregate data collected from FMA Act agencies in the survey.
2002–03 $m |
2006–07 $m |
2007–08 $m |
|
|---|---|---|---|
Employee costs |
668.4 |
819.7 |
946.3 |
Other operating expenses |
1,448.7 |
2,138.6 |
2,309.7 |
Total operating expenses |
2,117.1 |
2,958.3 |
3,256.1 |
Capital expenses |
677.3 |
862.2 |
1,034.7 |
Total ICT spend (operating and capital expenses) |
2,794.3 |
3,820.5 |
4,290.7 |
Percentage change in total FMA Act agencies’ ICT spend |
36.7% |
12.3% |
|
Total FMA Act agencies’ operating expenses |
45,846.2 |
61,575.4 |
66,792.9 |
Percentage change in total FMA Act agencies’ operating expenses |
34.3% |
8.5% |
|
ICT spend as a percentage of total operating expenses |
6.1% |
6.2% |
6.4% |
Note: Operating expenses exclude depreciation expenses.
|
2002–03 |
2006–07 |
2007–08 |
|---|---|---|---|
ICT staff |
8,142 |
9,730 |
10,244 |
ICT contractors(a) |
|
3,138 |
3,135 |
Total ICT workforce |
8,142 |
12,868 |
13,379 |
Total FMA Act agency staff |
211,692 |
218,727 |
222,311 |
ICT staff and contractors as a percentage of total employees |
3.8% |
5.9% |
6.0% |
ICT spend per employee |
$15,906 |
$21,048 |
$23,257 |
(a) Note: ICT contractor numbers were not collected in the ABS 2002–03 GTS.
FMA Act agency ICT spend
Analysis of the survey pointed to a significant amount of ICT spend occurring within large agencies. The 29 large agencies accounted for 94% of the total ICT spend of all FMA Act agencies in 2007–08. The next 26 agencies account for 5% of total ICT spend, while 29 small agencies account for just 1% of ICT spend (see Figure 3.1).
Figure 3.1 – Break-down of total ICT spend 2007–08
Analysis of the survey indicated a wide variety of ICT spend by agencies as a proportion of their total operating expenses. Agency ICT spending as a proportion of their total operating expenses vary from 4% to 54%. This large variance in agency responses reflects both the variety of agency business operations that are reliant on ICT and the extent of project-related activity being undertaken by individual agencies.
Analysis also indicated that agencies are spending a significant part of their ICT spend on business as usual (BAU) activities. Agencies reported spending an average of around 77% of their total ICT spend on BAU activities and 23% on project activities to create new capability in 2007–08 (see Figure 3.2). This could indicate that agencies are trapped by the heavy burden of maintaining legacy hardware and software. There is a wide range of spend on BAU and project activity across agencies. Some large agencies have significant project-related work and are only spending 45% on BAU activities while others are spending up to 95% of their total ICT spend on BAU.
Figure 3.2 – Average BAU:Project split
Text description of Figure 3.2 Average BAU:Project split image.
FMA Act agency ICT staffing
Analysis of the survey data indicated that workforce costs represent, on average, 47% of agencies’ total ICT operating costs. It also indicated that agencies rely heavily on the ACT labour market to supply their ICT workforce, with 79% of total ICT staff located in the ACT.
The survey data also pointed to a continued and significant reliance on ICT contractors to supplement their ICT staff. The data indicated that 23% of agencies’ ICT workforce was made up of ICT contractors in 2007–08, a slight fall from 24% in 2006–07 (see Figure 3.3). The data also indicated that, on average, ICT contractors cost around $186,000 per annum, which is $94,000 per annum more than the average loaded cost of FMA Act agency ICT staff. Analysis of the survey data also indicated that agencies that have significantly outsourced their ICT environments rely more on ICT contractors than agencies with predominantly insourced ICT arrangements. It also indicated that there is a wide range of reliance on ICT contractors, with some large agencies operating with up to 63% contractors, while others use only 8% contractors in their ICT workforce.
Figure 3.3 – Total FMA Act agency ICT in-house and contractor workforce
Text description of Figure 3.3 Total FMA Act agency ICT in-house and contractor workforce image.
Analysis of the survey data highlighted that there was a shortage of around 1,000 ICT skilled workers (or 7% of the total ICT workforce) across FMA Act agencies at 30 June 2008. Three large agencies represented around 86% of the shortfall. The skills that were most in demand included software engineers (212), business analysts (157), analyst programmers (80), support technicians (92), project managers (74) and hardware technicians (36).
Desktops
FMA Act agencies’ spend on desktops represented around 10% of their total ICT spend. Total desktop spend across FMA Act agencies increased by 4%, from $445.4 million in 2006–07 to $461.5 million in 2007–08. The total number of desktops increased by 1%, from 343,510 in 2006–07 to 347,783 in 2007–08.
The data provided by agencies showed significant variations in spend per desktop between agencies. Desktop costs vary from around $1,000 to around $3,500 per desktop. This indicates that there is potential for many agencies to drive efficiencies in this area.
Analysis of agency survey responses also indicated that there may be substantial under-utilisation of their desktop fleet, with agencies reporting significantly more desktop devices than there are employees. The data showed that there are approximately 1.6 desktop devices (including laptops) for every APS employee across FMA Act agencies.
Websites
Analysis of the review survey indicated that agencies spent around $80 million across 611 websites in 2007–08, excluding Defence. These costs represent around a reported 2% of total ICT spend. Agencies reported a wide variety website costs, ranging from around $10,000 per website to around $1.5 million per website.
Financial management information systems
Analysis of agency responses indicated that SAP and Technology One are the predominant suppliers in the Australian Government market for financial management information systems (FMIS). SAP is used by 29 agencies, particularly in large agencies. Technology One’s Finance One system is used by 18 agencies, particularly in medium sized agencies. The remaining market is shared by a small number of other providers, as indicated in Figure 3.4.
Figure 3.4 – Number of agencies using FMIS
Text description of Figure 3.4 Number of agencies using FMIS image.
Analysis of the survey data pointed to wide variations in agencies costs of operating their FMIS. In particular, analysis indicated that there was some correlation between the very low cost per transaction of around 10 cents to 30 cents and a high volume of transactions but not complete correlation. For agencies with a lower transaction volume, the cost per transaction of their FMIS ranged widely from around 10 cents to over $30. This also indicates scope for considerable efficiency improvements.
Analysis of the data also revealed wide variations in the extent of customisation of agencies FMIS. Sixty-nine agencies reported using systems with no or minimal customisation, while analysis of the data from the remaining 17 agencies indicated an exponentially increasing amount of customisation.
Human resource management information systems
Analysis of the data indicated that Aurion and SAP are the predominant players in the Australian Government market for human resource management information systems (HRMIS). Aurion is used by 37 agencies, while SAP HR is used by 17 agencies (see Figure 3.5).
Figure 3.5 – Number of agencies using HRMIS
Text description of Figure 3.5 Number of agencies using HRMIS image.
Agencies reported wide variations in the cost of supporting their HRMIS with the cost per employee ranging from $10 to $500, again indicating the scope for significant efficiency improvements.There were also wide variations in the extent of customisation of agencies HRMIS. Seventy-one agencies reported using systems with no or minimal customisation, while analysis of data from the remaining 15 agencies indicated an exponentially increasing amount of customisation.
Grants management systems
The number of grants management systems (GMS) used by FMA Act agencies has declined from 150 to 124 since 2006. Some of this decline could be accounted for by agencies rationalising the number of systems they use. The overwhelming majority of systems are still paper-based, Excel or custom-developed and manage discrete, stand-alone grant programs.
The survey data showed that the number of commercial off-the-shelf products has increased. However, operating expenditure on grants systems is relatively concentrated. Only three agencies reported GMS spend exceeding $1 million per year, with the largest spend being $10.6 million per year. Given the overall limited spend on GMS (0.7% of total ICT spend in 2007–08) there does not appear to be any substantial opportunities for whole-of-government action in regard to GMS that would have a significant impact on overall ICT spend.
Telecommunications
Agency responses indicated that their ICT spend on telecommunications was
$267.7 million in 2006–07, increasing to $335.9 million in 2007–08. This represents 7% of total ICT expenditure for 2006–07 and 7.8% for 2007–08.
The data highlighted significant duplication of telecommunications point-to-point links domestically, and in the number of links to international locations across government, a result of agencies individually implementing their telecommunications arrangements. In 2007–08 there were 225 domestic agency links over 10 routes and 37 links between Sydney and Canberra alone; internationally, there were five links from four different agencies into Jakarta and five links from three different agencies into London.
Tables 3.3 and 3.4 below indicate the number of links between Canberra and Australian state capital cities and international links from Australia, and the total cost of those links.
Number |
Total cost 2006–07 |
Total cost 2007–08 |
|
|---|---|---|---|
Canberra – Sydney |
37 |
2.7 |
2.8 |
Canberra – Melbourne |
28 |
0.8 |
0.7 |
Canberra – Adelaide |
21 |
0.6 |
0.6 |
Canberra – Brisbane |
20 |
0.7 |
0.7 |
Canberra – Perth |
19 |
0.5 |
0.5 |
Number |
Total cost 2007–08 |
|
|---|---|---|
Jakarta |
5 |
2.2 |
London |
5 |
1.2 |
Honiara |
4 |
0.3 |
Port Moresby |
3 |
0.3 |
Bangkok |
3 |
0.5 |
Analysis of agency survey responses also identified 69 network gateways with vendors providing similar services across multiple agencies without any aggregation of contractual arrangements. Table 3.5 indicates the number of network gateways provided by a range of vendors.
Organisation |
Number of gateways |
|---|---|
Verizon |
27 |
Macquarie Telecom |
10 |
Cybertrust |
9 |
Telstra |
9 |
EDS |
4 |
Other |
10 |
Energy
Seventy-two agencies responded to the survey questions on energy usage and the cost of their ICT estate (agencies with less than 50 staff were not required to respond to this question). There was generally a poor response, with many agencies unable to provide meaningful or consistent data on their ICT energy usage.
Thirty agencies provided data on energ11 February, 2009 did not provide any data regarding their energy consumption or cost, and a further seven provided inconsistent data.
Where agencies provided responses to ICT energy consumption and cost the responses indicated that ICT energy consumption increased by 3%, from 162.4 gigawatts in 2006–07 to 167.6 gigawatts in 2007–08. However, over this period agencies reported that ICT energy costs increased by 16%, from $18.1 million in 2006–07 to $21.0 million in 2007–08, indicating significant growth in energy cost.
Twenty-three agencies indicated that they had an energy plan, while 49 agencies advised that they did not. Of the 23 agencies that reported having an energy plan in place, 13indicated that their energy plan included an ICT energy component; however, only six of those agencies were able to provide meaningful data in relation to the questions asked in the survey.
Ten agencies indicated that their ICT energy consumption was not monitored or reported.
Next section: Chapter 4: Key findings
Footnotes:
- Two agencies that responded have recently been incorporated into another agency. They have been treated as one agency for the purposes of analysis of total ICT spend (bringing the sample size to 84 agencies); however, they have been treated as separate agencies in the analysis of financial and human resource information management systems and energy usage.
Contact for information on this page: ICTReview@finance.gov.au