Forum: Productivity drive needs to address ICT duplication

Duplication of non-strategic services must be pared back

Productivity has become the government’s mantra as an answer to the country’s economic woes.

It is exemplified by the appointment of Don Brash to head a task force that will produce a “prescription” by October, to increase productivity and close the income gap with Australia.

New Zealand has experienced productivity growth of just 1 percent a year for the past 10 years.

Modern software tools are sophisticated and have much to contribute. They allow a standard way of operating to be implemented and the measuring of performance, where all the information that people need to do their jobs is contained in one repository.

But decentralisation in the public sector has led to the duplication of non-strategic services and the lack of consistency and standardisation in the delivery of those services.

The guide to state services, published by the State Services Commission, reveals that there are more than 200 entities that collectively make up New Zealand’s wider state sector.

From an ICT perspective, this has resulted in seemingly endless small agency and department cost centres; each with their own management structure, hardware and software infrastructure, as well as operating costs. Yet, they all basically deliver the same services: email, HR, finance, telco, network services, storage services, document management and the like.

But outside of the major government departments, there is often insufficient work and critical mass to justify these costs. Thus, they frequently employ costly third-party systems integrators, whose business models are often predicated on how many people they can sell into an agency or department.

That is contrary to the drive for greater productivity and improved performance.

Demand for skills has been high over the past two decades as decentralisation became common. There has been little motivation for service providers to compete aggressively on relative price and performance.

The government should investigate opportunities for shared professional resources across multiple agencies and departments.

(This might also apply to other areas, such as legal services.)

Offering such services would have two benefits: the charge-out rates could be realistically targeted at the available market, rather than paying the much higher margins that the systems integrators seek; it would also allow the development of a genuine ICT career path within government.

The agencies and departments would retain core strategic services and should outsource non-strategic functions. There would be significant savings in accessing shared professional resources.

Australia commissioned the Gershon report two years ago to review government use of ICT. Among its recommendations were the development of a public service ICT career structure, the reduction of contractors by 50 percent over two years, along with sustained leadership and drive at ministerial and top official level.

New Zealand is using the Gershon report as part of officials reporting to ministers. Communications Minister Steven Joyce has seen and noted the report, a spokesman for him says.

A ministerial advisory group under Finance Minister Bill English is understood to be reviewing the Gershon recommendations, with a governance group reporting to it.

A move to share professional services requires someone at that level here in this country to drive what is an obvious step toward better productivity.

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