Industry cautious about Federal ICT centralisation agenda

Industry cautious about Federal ICT centralisation agenda

Federal Government plans to centralise ICT procurement have been met with mixed reviews from industry representatives, who claim the changes could open up opportunities for suppliers but exclude smaller and newer players.

At a press club briefing earlier this month, the minister for finance and deregulation, Lindsay Tanner, announced plans to slash ICT procurement expenditure by introducing centralised buying across agencies. New monitoring and approval processes for major IT projects are also on the cards.

The Federal Government is also reviewing ICT spending allotted for this year and will take a closer look into existing contracts running with some of its high-profile agencies including the Department of Immigration and Citizenship, the Australian Tax Office and Centrelink. Government is one of Australia's largest ICT customers, spending around $6 billion annually. While industry representatives agree greater control on spending will help curb unnecessary expenditure, there are concerns that enforcing centralised procurement could stifle supplier opportunities.

Intermedium head of consulting, Kevin Noonan, suggested one result could be that incumbent suppliers become more entrenched.

He saw the potential for centralisation to improve government efficiency in areas like HR and finance operations, data mining and datacentre capabilities but predicted different policies and legislative requirements would make it difficult to combine ICT procurement in other areas.

"In areas where there are similar systems, there are a small number of incumbents providing those services already. There could be savings for those organizations if they're implementing services across multiple agencies," he said. "But it could also entrench incumbents further and create difficulties for SMEs and new entrants to get into that market.

"The government will need to engage the industry and talk about how these things will be implemented." Data#3 managing director and Australian Information Industry Association (AIIA) chairman, John Grant, agreed the government needed to avoid creating a lopsided playing field in favour of the bigger outsourcers. He said the government's perception of getting better pricing by bulk buying was a misnomer.

"There's a constant refrain from governments and organisations that if they centralise purchasing, they get better deals. But the prices in the market today are extremely sharp - there's not much skin left," Grant said. "Governments and corporates are getting effective pricing."

One way suppliers could benefit from centralization is by having common contract platforms. AIIA CEO, Sheryle Moon, said streamlining the contract and tender process will make it simpler for suppliers to deal with multiple government agencies.

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