Audit: NSW government ICT spending can be cut

Aspects of the NSW government’s ICT procurement criticised

An audit into New South Wales government spending has been released, showing it spent nearly $1 billion in 2009-10, primarily on projects and services.

The NSW commission of audit’s final report on government expenditure aimed to identify opportunities in delivering more efficient and cost effective processes.

The commission was critical of several aspects of the NSW government’s ICT procurement and spending and found several opportunities for cost cutting.

For example, the commission found too much risk was being incorporated into projects where fixed priced contracts were set before design details of the project had been properly addressed. Instead, it recommended IT projects should be properly scoped before a budget had been set and a costing had been made following the design phase.

The commission also found a price discrepancy of more than 30 per cent for the same desktop computer in different agencies, with volume discounts not being utilised.

“A benchmark for desktop costs suggests that there are potential savings of between $96 [million] and $196 million in this area,” the report states.

“Almost all agencies” are also on the wrong capped mobile plans and spend “too much for too little use”, the commission found. It recommended capped mobile plans should be removed and an aggregated purchase approach by government for mobile and fixed broadband services.

The report also highlighted the shift from government owning, buying and managing ICT in-house as a “dated” and inefficient approach.

It also cites a disproportionate balance between back office and front line services spending, stating the aim is to spend 40 per cent on back office and 60 per cent on front line. However, the NSW government is spending 55 per cent on back office and only 45 per cent on front line services.

“This may be indicative of a gap between the front line service delivery areas and the IT providers. This gap is a common problem in IT and leads to technical rather than business solutions,” the report states.

“The IT projects being undertaken are not being aggregated even where possible. This means the knowledge of a particular vendor is not re-used to get gains across agencies.”

The ultimate aim to save money in ICT procurement, according to the commission, is for the NSW government to move to a more commercial model.

“The [NSW government’s] ICT cost base could be further reduced, at acceptable risk, by moving over the next three years or so to more commercial procurement and a more mature environment that offers better services,” the report states.

The NSW government's expenditure for 2009-10 was $993 million, according to the report, with projects and services making up the most of the at $319 million. Telco, which comprised data and internet, fixed voice, mobile and ‘other’, totalled $238 million; end user infrastructure totalled $193 million; software totalled $159 million; and midrange servers totalled $84 million.

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