Australian government achieves cost savings

Microsoft all-of-government deal expected to achieve A$75 million in cost reductions over four years

Australian Federal Government ICT spending reduction measures carried out under the recommendations of the Gershon Report are already delivering tangible cost savings, according to John Sheridan, division manager agency services Division AGIMO.

Sheridan said further cost savings were expected via the Government’s volume sourcing arrangement with Microsoft which was expected to cut spending on Microsoft Software in excess of A$75 million over four years.

“I know $75 million doesn’t buy you a whole lot of things in a whole of government term but it is still a very significant saving,” he said. “We have moved from the situation of having 42 contracts with Microsoft covering 41 agencies to one contract covering over 80 agencies. That is the sort of thing we need to deliver efficient services across government.”

Negototiations between the New Zealand government and Microsoft, to extend a similar deal failed last year.

In November last year, Minister for Finance and Deregulation Lindsay Tanner said the combined cost saving moves would result in savings of more than $1 billion over the next four years.

“The savings have not only been achieved, they have been taken out of agency budgets in an ongoing fashion off their baseline… and will be reflected in agency budgets in 2011,” Sheridan said speaking at the Australian Computer Society 2010 Canberra conference.

“We know exactly what is delivering these savings because agencies have to explain… and demonstrate how they have achieved those savings. Because it’s a baseline reduction in [agency] budgets it can’t creep back in, and secondly, the annual benchmarking provides the kind of information we need to deliver efficient services across government.”

In a statement at the time, Tanner said the second round of the business as usual budget reduction program had been completed with "savings of close to $430 million identified between 2010-11 and 2012-13"

In August it was also announced the changes had created $109 million of savings in the 2009/10 financial year. Half of that figure ($54.6 million) was to be immediately available for reinvestment by Federal agencies.

The Government was also following through with its co-ordinated ICT procurement strategy, Sheridan said, with the announcement earlier this week of both its data centre strategy, and Internet-based networking connections panel.

It was now expecting to create a commodity ICT procurement panel, starting with the imminent release of a tender for mobile phone hardware and carriage, and move to address invoice reconciliation services and desktops, Sheridan said.

“Economies of scale and efficiencies in procurement, in particular for smaller agencies, so that they concentrate not on the mechanics of procurement but on the delivery of IT to their customers,” Sheridan said.

Sheridan also detailed the recently relaunched Australia.gov.au portal which includes access to Centrelink Confirmation eServices and the Myaccount entry point to Australian Government social and health related services.

The service allows the public to access information and services with a range of Human Services agencies such as Centrelink, Medicare Australia and the Child Support Agency. “Over time we will be expanding those services to provide more of these things through the central portal aimed at Citizens,” Sheridan said.

In his report that was made available in October 2008, Gershon slammed the Australian Government’s use and management of ICT as weak while making seven main recommendations:

  • 1. Strengthen pan-government governance
  • 2. Strengthen agency governance
  • 3. Tighten the management of ICT business as usual funding
  • 4. Enhance the management of the public service ICT skills base, including reducing the number of contractors by 50 per cent
  • 5. Develop a whole-of-government data centre strategy
  • 6. Improve the efficiency and effectiveness of the ICT marketplace
  • 7. Improve the sustainability of ICT use

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