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Chapter 5: Recommendations

  1. Recommendation 1 – Strengthen pan-government governance
  2. Recommendation 2 – Strengthen Agency Governance
  3. Recommendation 3 – Tighten the management of ICT business as usual funding
  4. Recommendation 4 – Enhance the management of the APS ICT skills base
  5. Recommendation 5 – Data Centres
  6. Recommendation 6 – Improve the efficiency and effectiveness of the ICT marketplace
  7. Recommendation 7 – Sustainability of ICT

5.1 Recommendation 1 – Strengthen pan-government governance

5.1.1 Establish a Ministerial Committee on ICT

5.1.2 Create a Secretaries' ICT Governance Board and provide it with a strong mandate from the Government

To drive forward the ministerial agenda on whole-of-government ICT, I recommend the creation of a Secretaries’ ICT Governance Board (SIGB), which should be given a strong mandate from the Government. The SIGB will replace the existing Secretaries’ Committee on ICT (SCICT).

The SIGB will be a committee of Secretaries representative of central bodies, portfolio departments, delivery agencies and a few top executives from private sector companies which are successful users of ICT.

It will be supported by the Chief Information Officers Committee (CIOC), Business Process Transformation Committee (BPTC), and the Chief Information Officers Forum (CIOF), with stronger terms of reference, and a secretariat function to ensure that only matters and papers appropriate to the SIGB membership go forward for consideration.

The SIGB should be focused on business, not technology or technical, issues and be empowered to set whole-of-government strategies to support the policies and vision determined by Ministers. Its proposed terms of reference are to:

Appendix H sets out candidates for consideration for whole-of-government approaches, subject to opt-out, over the first 2 years of the SIGB’s existence.

It is essential that before approving any proposal for a common approach, that the SIGB seeks assurance from the CIOC, BPTC and CIOF as appropriate, that the proposal is fit for purpose and that implementation aspects (including funding) have been fully considered.

Appendix I sets out proposed criteria against which the benefits of potential whole-of-government approaches and arrangements subject to opt-out should be assessed.

I also propose that the SIGB meet around four to six times a year, with greater frequency of meetings in the first year. They should also report periodically to the Ministerial Committee.

5.1.3 Allow agencies to obtain opt-outs from agreed whole-of-government activities, based on genuine business need. Opt-outs to be approved by the Ministerial Committee, informed by the SIGB

I recommend that the current system of self-approved opt-in by agencies to whole-of-government ICT arrangements is changed to a new system whereby agencies will need to seek approval from the Ministerial Committee to opt-out from agreed arrangements.

Approval of the opt-outs will be informed by the SIGB, particularly during the budget process. Advice to the Ministerial Committee during this process on compliance with agreed whole-of-government arrangements and requests for opt-outs should replace the role for the SCICT in the two-pass process previously agreed by the Government.

To seek an opt-out, an agency will need to prepare a short business case based on a genuine business need, irrespective of how the driver for the opt-out is funded.

The criteria for the assessment of opt-outs will need to be developed and agreed by the SIGB.

Provided the assurance mechanism I have recommended above in Recommendation 5.1.2 for the SIGB works effectively, I envisage the number of potential opt-outs will be low.

Based on the advice that I have received from Finance, I believe that the proposed changes to agency operation can be implemented within the provisions of the current FMA Act, provided the changes set out above are approved as government policy.

5.1.4 Redefine AGIMO's role

In the proposed new model of the Government’s use of ICT, the principal role of the central unit (AGIMO) is to act as a catalyst for change and an agent to assist the formulation and realisation of objectives, policies and strategies agreed by the Ministerial Committee and the SIGB.

It is therefore essential that its overall remit is approved by the SIGB and Ministers, its work plan is reviewed and approved by the SIGB annually, and funding be provided so that the agreed work plan can be implemented.

Appendix J sets out the proposed role for AGIMO.

Once the final remit of the central unit has been agreed, it may be appropriate to give consideration as to whether its name should be changed from AGIMO to reflect more accurately its new role.

In order to optimise the effectiveness of the unit in the new model of operation, I recommend that its resourcing model include a significant number of agency secondees on a rotational basis, as well as some recruitment of private sector expertise.

5.1.5 Establish a program board

I recommend a small board be established with a remit from the SIGB to manage the overall implementation of the agreed recommendations arising from this review. The board should include the General Manager of AGIMO, the General Manager of Finance’s Budget Group and a Deputy Secretary from PM&C. The board should report progress to the Ministerial Committee, SIGB and the Secretary of PM&C.

5.2 Recommendation 2 – Strengthen Agency Governance

5.2.1 Improve agency capability

As a first step, I recommend implementing a common methodology for assessing agency capability based on self-assessment and periodic independent audit. The development of this methodology should utilise and integrate existing ‘off-the-shelf’ methodologies such as COBIT®, CMMI®, ITIL®, AS 8015-2005 Corporate Governance of ICT, P3M3™, the UK Government capability review approach, PRINCE2™, PMBOK®, and the UK Government Office of Government Commerce’s Managing Successful Programmes. It should encompass the entire lifecycle management of ICT, including business domain activities such as requirements definition and benefits realisation. The model will also need to take into account attributes such as the ability to transfer and manage ICT work remotely, and the ability to work successfully with industry as a client both pre contract award and during the life of a contract.

Agency executives will be required to propose a target level of capability based on their agency’s and the Government’s strategic priorities, and for this to be independently validated, particularly before undertaking major ICT projects that are either internally funded or receiving new policy proposal (NPP) funding. The target level of capability needs to be kept under review in the light of changing agency and government priorities and objectives.

Agencies will also be required to develop a capability improvement plan and to commit to and agree actions to address any capability gaps. Furthermore, agencies should incorporate capability improvement, where required, into their risk management framework.

I envisage that a ‘lite’ version of this methodology will also need to be developed for smaller agencies.

5.2.2 Strengthen the link between policy formulation and implementation

Following on from Recommendation 5.2.1, I recommend that agency capability be included as one of the factors considered in the two-pass investment approval process (for both NPP and internally funded agency projects).

The two-pass investment approval process should be extended to include additional stages for projects being undertaken by an agency which needs to enhance its capability to a higher level in order to undertake the project. At each stage, the onus of proof must be with the agency to demonstrate that both the project and its capability improvement plan are on track.

Additionally, in due course, larger agencies should demonstrate in their NPPs, and internally funded projects required to go through the two-pass process, their capability to locate significant portions of the work outside Canberra and their intention to do so.

I also recommend strengthening governance regarding the adoption or modification of COTS/GOTS. AGIMO, in consultation with the BPTC, CIOC and CIOF should also advise the SIGB of the selected areas and applications (for example, back office systems) where proposals to acquire or upgrade bespoke or customised solutions will require approval by the Ministerial Committee, utilising the same process as for opt-outs. In addition to relevant new NPP and internally funded projects, this should also apply to all existing approved NPPs which have not yet concluded procurement. This is essential as the potential liability for each agency and impact of future machinery of government changes does not rest with an individual agency. This issue needs to be open and transparent across government.

All other proposed uses of bespoke or customised software should be decided at agency Executive Board level to help ensure that additional costs are justified by the incremental benefits over a COTS/GOTS approach. This recommendation reflects the best practice already used in some agencies.

I recommend implementing Gate 0 of the Gateway Review process in order to better test policy and implementation options of major projects at an early stage before policies are finalised. The Gateway Review outcome results should also be an input in the NPP process to improve the information available to Ministers when considering NPPs.

Finance should build on its existing training and policy guidance for Senior Responsible Officials to help them discharge their role and responsibilities.

5.2.3 Identify a custodian of best practice in benefits realisation

I recommend that the PM&C Cabinet Implementation Unit, in consultation with AGIMO, identify a lead agency to be the custodian of best practice in benefits realisation practice, with responsibility to promote best practice and assist agencies to improve their benefits realisation capability.

The SIGB could invite the identified agency to undertake this role and review on an annual basis whether it should continue to be the Government’s Centre of Excellence.

5.2.4 The Department of Defence and the Australian Intelligence Community to demonstrate to their relevant committees the measures taken to implement the approved recommendations arising from this review

5.3 Recommendation 3 – Tighten the management of ICT business as usual funding

5.3.1 Target to move from 77:23% split between BAU and creation of new capability in 2007–08 to 70:30% in 2011–12

As initial steps towards this goal, I recommend reducing the business as usual (BAU) ICT budgets of the 28 large agencies30 by 15% on average from 2007–08 actuals (for a list of agencies refer to Appendix F). The introduction of this should be phased, with a 5% average reduction in the first year, the balance in the second year and the aggregate 15% reduction sustained in subsequent years.

To help these agencies achieve or exceed the target reductions without impairing service delivery to citizens and business, I recommend creating ICT Review Teams who will work closely with agencies to validate the agency-specific target for each of these large agencies. The work of the ICT Review Teams will include, but not be limited to, identifying the drivers of agency BAU costs, reviewing the level of server utilisation, and the efficiency of data centre infrastructure, scope for reducing server proliferation and the subsequent impact on data centres, and the plans to reduce contractors (see Recommendation 5.4.2) by using cross-agency and external benchmark comparisons to identify scope for efficiency improvements. I estimate that seven ICT Review Teams will be required to conduct the work, drawing on resources from Finance’s Budget Group, AGIMO, agency secondees and external experts.

To prepare for the work of the ICT Review Teams, Finance will need to lead a small team, including external expertise on ICT efficiency metrics and agency secondees, on the development of a common ICT Chart of Accounts, and develop and agree a set of common efficiency metrics to facilitate on-going cost reduction and benchmarking so that the teams and agencies can work to a common methodology. This activity needs to commence immediately so that the ICT Review Teams can be mobilised in November 2008 to impact the 2009–10 Budget process.

In addition, I recommend targeting agencies with total annual ICT spends between $2 million and $20 million to achieve a 7.5% reduction on average of their BAU from 2007–08 actuals (for a list of agencies refer to Appendix G). The introduction of this reduction should also be phased, with a 2.5% average reduction in the first year, the balance in the second year and aggregate 7.5% reduction sustained in subsequent years.

Both the 15% and 7.5% targets are macro-level targets. Individual agency targets will need to reflect their current ratios of BAU to creation of new capability spend. Those with ratios in excess of the average should have target reductions in excess of the 15% or 7.5% as appropriate.

The 15% and 7.5% reductions in total should save the Government around $140 million in the first year and in excess of $400 million in the second and subsequent years. I also recommend that 50% of the savings generated by these recommendations be transferred to a central fund for reinvestment in projects to improve efficiency and effectiveness of ICT BAU activities, such as replacement of legacy software and hardware with high support and maintenance costs.

My rationale for recommending targets at this level is based on the following:

  1. It is clear from the evidence that BAU ICT spend is not in general subject to robust scrutiny.
  2. The variations in the metrics related to cost per desktop, financial and HR management systems are very wide, reflect the lack of scrutiny and indicate substantial scope for efficiency gains.
  3. It is reasonable to assume that as other common metrics are applied to BAU spend, they will also demonstrate very wide variations and similar substantial scope for efficiency gains.
  4. In my experience, when detailed scrutiny is applied to previously under-scrutinised areas of spend, savings of the order I have proposed are achievable if reinforced by a strong management focus and budgetary constraints.

Agencies should also be required to demonstrate in all future NPPs and internally funded projects requiring approval by the two-pass investment process how they intend to exploit existing data centre capacity, and existing hardware and software assets.

5.3.2 Develop common metrics and conduct benchmarking

To improve the practice and rigour in monitoring the effectiveness of ICT investments, I recommend developing a set of common effectiveness metrics to facilitate better use of ICT and regular benchmarking. These metrics are to be agreed by the BPTC. Annual agency benchmarking analysis based on the common efficiency and effectiveness metrics will also be undertaken by AGIMO, with an aggregate report provided to the SIGB and a detailed report provided to each agency to inform ongoing improvements in efficiency and effectiveness.

5.3.3 Consider shared services carefully

The review received a number of inputs from industry indicating the significant benefit to be obtained from shared services. In respect of back office applications, however, I also considered the mixed experiences reported to us by the CIOs of a number of states and territories, together with the recent experience of the UK Government as described in the May 2008 UK National Audit Office report Shared services in the Department for Transport and its agencies. In light of this, I have concluded that moves towards back office shared services between agencies should only be undertaken on a very carefully selected and controlled basis. In the meantime, as a first step towards a wider adoption of these arrangements, I consider it essential that all agencies quantify both the back office service levels and the associated costs of their current provision arrangements, and that they use this as the basis for determining what improvements can be realised through their own efforts, such as process simplification and a reduction in manual interventions. This will help create a stronger foundation on which to assess the additional benefits that can be obtained from moving to a shared service in the future.

5.4 Recommendation 4 – Enhance the management of the APS ICT skills base

5.4.1 Recognise that there is a national and global competition for talent and the APS needs to recruit, develop and retain key ICT skills

To address the issues around ICT skills shortages, the talent attraction and retention of ICT skills within the APS needs to be improved. I recommend two key measures.

Firstly, there needs to be the creation of a whole-of-government ICT career structure, developed by AGIMO in consultation with the Australian Public Service Commission (APSC) and PM&C. This will include training and development programs for ICT professionals in key skills areas (for example, project management and systems architecture) and should utilise existing taxpayer funded initiatives wherever possible (for example, the Defence Materiel Organisation project management training).

Secondly, a whole-of-government strategic ICT workforce plan needs to be developed and maintained. The plan will be developed and supported by the APSC and AGIMO, and will leverage the work done by other agencies, such as the ATO, on a workforce planning tool. AGIMO should construct the plan annually based on inputs from agencies and recommend to the SIGB options for dealing with identified skills issues, including recruitment, training, and development in areas of skills shortages.

With the combination of a common career structure and a workforce plan, it should become much easier to plan to smooth peaks and troughs of demand for ICT skills in individual agencies.

5.4.2 Reduce the total number of ICT contractors across the APS by 50% over the next 2 years and increase the number of APS ICT staff

To reduce the over-reliance of the Government on ICT contractors, I recommend reducing the total number of ICT contractors across the APS by 50% (from the 2007–08 actuals) over a two-year period, whilst simultaneously increasing the number of APS ICT staff. This should save the Government an estimated $100 million (across both BAU and project-related work). This is based on the replacement of existing ICT contractors with APS staff across a range of APS classifications.

As contractors are used on both BAU and new project-related work, the savings from applying this recommendation to BAU will contribute to savings under Recommendation5.3.1. The balance of the savings will be incremental to the savings arising from the BAU reduction targets.

Individual agency targets will need to take into account the existing level of use of contractors. As a guideline, agencies where contractors form less than 10% of their ICT workforce should not be targeted to achieve a further reduction; agencies with a contractor workforce in excess of 23% should be targeted to achieve more than a 50% reduction.

My reasons for recommending a target of this magnitude are as follows:

  1. The combination of the Canberra-centricity of the ICT workforce and the overall percentage of contractors indicates that controls and scrutiny of the use of contractors are generally too weak, with the exception of agencies that have low (10% or less) contractor use.
  2. This is exacerbated by the lack of a whole-of-government professional career structure for ICT staff and of workforce plans that enable peaks and troughs of demand for ICT skills between agencies to be smoothed.
  3. In my experience, the introduction of tight controls over the use of contractors and better recruitment, development and training of employees makes savings of the magnitude I have proposed entirely feasible if reinforced by a strong management focus and budgetary constraints.

I propose at the macro level that a 20% reduction is achieved within the next 12 months and the balance in the subsequent 12 months.

This recommendation will also help focus attention at both an agency and whole-of-government level on the management actions required to attract, develop and retain the appropriate skills within the APS.

5.4.3 Larger agencies to demonstrate how they will develop/increase their capability to manage ICT work remote from Canberra and develop 5–10 year plans to reduce the Canberra-centricity of existing ICT activities

To reduce the Canberra-centricity of existing agency ICT activities, I recommend that larger agencies in due course be required to demonstrate in NPPs and internally funded projects requiring approval by the two-pass investment process, their capability to locate significant portions of the work outside Canberra, and the intention to do so.

5.4.4 Examine whether current security vetting processes and tools lead to adverse consequences

While the particulars of the security vetting process are beyond the scope of this review, there is a case for a whole-of-government project to critically examine questions around security vetting processes and tools, particularly for high-volume, lower-level classifications, because of the adverse consequences the current clearance processes are having on costs and delivery of ICT projects. As part of this process, any best practices in the transfer of security clearances for ICT staff across agencies should be identified and promulgated. I am therefore recommending that the SIGB establishes a working group from the relevant policy agencies and a cross section of delivery agencies to produce proposals for improving the current situation.

5.4.5 Equip organisational leaders to harness the potential benefits of ICT

To better equip organisational leaders on how to harness the potential benefits of ICT to improve the effectiveness and efficiency of their agency, I recommend that the APSC, in conjunction with AGIMO, arrange appropriate events for organisational leaders. This could include, for example, inviting guest speakers from the private sector and other government agencies that have successfully led major ICT-enabled transformations in their organisation.

5.4.6 Establish a whole-of-government tele-working policy for ICT staff, building on existing AGIMO guidance

To assist the APS in recruiting and retaining ICT skilled professionals in an environment where ‘green’ work policies play an increasingly important role in improving the attractiveness of an employer to current and future employees, I recommend that the Government establish a whole-of-government policy on tele-working, building on existing AGIMO guidance.

5.4.7 Sponsor annual awards to recognise outstanding professionalism in key ICT disciplines

To help raise and recognise the professionalism of ICT, the Government should sponsor annual awards to recognise outstanding professionalism in key ICT disciplines such as project management, systems architecture and software development.

5.5 Recommendation 5 – Data Centres

5.5.1 Develop a whole-of-government approach for future data centre requirements over the next 10–15 years

To address the finding that there is no whole-of government strategic plan for data centres, I recommend developing a whole-of-government approach for data centre requirements over the next 10–15 years that will take into detailed account factors including, but not limited to, the following:

In making this recommendation, I should emphasise that this relates only to the potential consolidation of the physical data centre infrastructure, for example, the buildings, heating, ventilation, air-conditioning and power supply arrangements. The proven practice in existing shared facilities of keeping agencies’ ICT equipment and databases in separately controlled and managed areas should be replicated in any additional new shared data centres.

This work should be led by AGIMO with agency secondees, Finance’s Budget Group representatives, and external specialist expertise. The resulting approach should then be put to the SIGB for consideration.

Pending the conclusion of this work, there should be a freeze on major upgrades to, and replacement of, existing data centres. Exceptions to this freeze should be approved by the SIGB who will need to be satisfied that the proposed project does not compromise a whole-of-government approach.

5.6 Recommendation 6 – Improve the efficiency and effectiveness of the ICT marketplace

5.6.1 Make better use of the Government’s collective buying power

As an initial step towards this goal, I recommend optimising the number of ICT panel arrangements established by agencies across government. This includes the introduction of whole-of-government panel arrangements for ICT commodity-based procurements where true economies of scale are achievable. Panels should also be whole-of-government where appropriate, but may be portfolio-based where they will deliver superior value. Larger agencies can use these panels, but if they get better prices through other procurement channels, then that price should be leveraged as the whole-of-government price.

Next, I recommend improving procurement arrangements for ICT commodity products and services, and volume sourcing arrangements for key items of software. This includes the use of aggregated arrangements and e-auctions, where appropriate. These arrangements should be subject to Ministerial approval, including agency opt-out, in line with the Government’s existing approval arrangements for coordinated procurement.

Third, I recommend implementing the strategic management of key ICT suppliers. The definition of ‘key suppliers’ in this context does not just relate to the dollar value of business but can also relate to the criticality of what is supplied. Strategic management of key suppliers encompasses greater intelligence gathering on industry health to inform proactive government stances for dealing with increases in the dominance of large suppliers, bankruptcies, mergers and acquisitions, etc. To assist in this, the processes and tools developed by the UK Government in this area may help to kick-start this activity.

5.6.2 Work with industry to develop client and supplier codes of conduct with agreed escalations for non-compliance

To help improve the operation of the government ICT marketplace, I recommend developing client and supplier codes of conduct with agreed escalations for non-compliance.

As a starting point, the client code should:

Industry should consider if the Supplier Code of Conduct developed by Intellect in response to concerns of UK Government clients, represents a useful starting point for an Australian code.

I believe there would be merit if Government and industry consulted with each other during the development of their respective codes. 

5.6.3 Determine if the Government’s current policy on IP is a significant barrier to entry and a cost driver

Given that the position taken by agencies on IP is seen as a deterrent by ICT suppliers, I recommend that the Government determine if its current policy, or its implementation by agencies, on IP is a significant barrier to entry and a cost driver. This activity should be led by the Attorney-General’s Department with involvement by other interested policy departments (for example, the Department of Innovation, Industry, Science and Research with its interest in SMEs) and seek input from industry and a cross-section of agencies. Conclusions and recommendations should then be put to the Ministerial Committee for approval after consideration by the SIGB.

5.6.4 Integrate the Government’s ICT and SME policies so that they are mutually reinforcing

To address the issues and concerns highlighted by SMEs, the Government should ensure that its ICT and SME policies are mutually reinforcing. I recommend that the Ministerial Committee commission a study involving the relevant policy agencies, a cross-section of user agencies and representative industry bodies to identify options for mutual reinforcement of these two policies.

5.6.5 Consider if the Australian Government is getting a net benefit from the $80,000 open tender threshold under the FTA

The $80,000 threshold is:

In light of this, I recommend that a review is led by the Department of Foreign Affairs and Trade to establish whether Australia is gaining net benefit from the combination of the domestic and export aspects of the Australia–US Free Trade Agreement and report the outcome to Ministers.

5.7 Recommendation 7 – Sustainability of ICT

5.7.1 Develop a whole-of-government ICT sustainability plan (in conjunction with DEWHA) to manage the carbon footprint of the Government’s ICT activities

To better align the Government’s overall sustainability agenda and its ability to understand its energy costs and the footprint of its ICT estate, I recommend the development of an ICT sustainability plan.

The ICT sustainability plan should:

I also recommend that large agencies (with ICT spends in excess of $20 million) develop an ICT energy efficiency plan that can be either part of a wider agency energy efficiency plan, or freestanding. As a priority, agencies should measure their data centre energy efficiency (which may require the installation of electricity meters in some instances). Agencies should also include in their plan a target energy usage, including the power usage effectiveness32 of their data centres.

Larger agencies will need to undertake a periodic independent ICT energy assessment. Subject to agreement by the Department of the Environment, Water, Heritage and the Arts (DEWHA), agency plans will also be independently assessed by DEWHA, with results of the assessment reported to the Ministers for Finance and Deregulation, and Resources and Energy. Reporting of progress against the plan, should be in a way that is consistent with other reporting requirements such as the National Greenhouse and Energy Reporting Framework.

When procuring new ICT products and services, it is important that agencies consider their impact on the environment. AGIMO, in conjunction with DEWHA, should develop a green ICT procurement kit to support agencies regarding environmental issues in relation to ICT products and services. This should include raw material acquisition, manufacture, distribution, use and disposal.

5.7.2 Identify green ICT quick wins

In the interim, AGIMO should identify a possible list of quick wins in this area, such as software controlled automatic turn-off of PCs, based on the best practices already adopted by some agencies and in the private sector.

Next section: Chapter 6: Implementation


  1. Defence is excluded because it is already undertaking a program to find significant savings which can be reinvested in its front line capability.
  2. The Uptime Institute’s Tier Classification System may be a helpful way for agencies to consider their future requirements over this planning period.
  3. Power usage effectiveness (PUE) is a metric used to determine the energy efficiency of a data centre. PUE is determined by dividing the amount of power entering a data centre by the power used to run the computer infrastructure within it. PUE is therefore expressed as a ratio, with overall efficiency improving as the quotient decreases toward 1. PUE was created by members of the Green Grid, an industry group focused on data centre energy efficiency:

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Last Modified: 6 June, 2013