Outsourcers and managed services providers could see their bottom lines hit should the newly released Gershon review into the Federal Government’s ICT procurement go ahead, according to one industry expert.
Released last week, the review slams the Australian Government’s use and management of ICT as weak. According to report author, Sir Peter Gershon, who also undertook a similar review of the UK Government’s procurement strategy, government ICT procurement was “neither efficient nor effective”.
“The current model of very high levels of agency autonomy, including the ability to self-approve opt-ins to whole-of-government approaches in the ICT domain, leads to sub-optimal outcomes in the context of prevailing external trends, financial returns, and the aims and objectives of the current Government,” he wrote.
One of his main recommendations is to slash the budgets of the largest 28 agencies (Defence excluded) with ICT spending in excess of $20 million per annum by 15 per cent, and those with a spend between $2-20 million by 7.5 per cent.
Gershon recommended savings from day-to-day procurement, estimated at $140 million in the first year and in excess of $400 million in the second and subsequent years, be put back into a central fund for re-investment into strategic project work.
Head of consulting for analyst firm Intermedium, Kevin Noonan, applauded the report’s broader findings, but said outsourcers and managed services providers delivering “business as usual” services to agencies could lose out as a result of spending cuts.
“Outsourcers will need to reposition themselves for new work, rather than just business as usual services, to provide their income,” he said. “The proposed cap on datacentre development will also impact services people.”
However, Noonan saw systems integrators and developers picking up new work around strategic projects.
With improved governance and more co-ordinated tendering, the cost and risk of dealing with government agencies could also improve, he said.
Australian Information Industry Association (AIIA) chairman, John Grant, said the government needed to improve efficiencies around procuring basic ICT, and called on the government to put together better frameworks and tendering processes for industry to respond to. He also applauded Gershon’s recommendations around governance, sustainability and better skills management.