Defence budget audit supports ICT revamp

Defence releases audit report received in April that outlines support of a revamp of the agency's use of ICT

The Department of Defence has released the findings of audit into its budget that supports a revamp of the agency's use of ICT after receiving a freedom of information request.

In the report titled, 2008 Audit of the Defence Budget, the authors from McKinsey & Company, said deep reform is needed to provide "much greater transparency in the $22 million annual budget for Australia's Defence."

Specifically on the use of ICT, the report says "Defence's ICT asset base is largely depreciated and in need of refresh. Hence, once a consolidated future state architecture has been defined, a significant portion of these savings will need to be reinvested in infrastructure replacement."

The auditors contend Defence must undergo a "comprehensive transformation of the ICT function".

"Where the scope of an ICT transformation is holistic, the opportunity for improvement is typically even greater – with the potential to improve technology efficiency as high as 40 per cent with a concurrent increase in quality (for example, a 25 per cent reduction in outages). Therefore, we suggest setting high aspirations for ICT efficiency savings, which can be used to offset the significant anticipated refresh costs."

The audit report also recommended among other things:

  • Having one authority across ICT
  • Ensuring the program is owned and driven Defence-wide
  • Establishing a three- to five-year vision
  • Establishing end-to-end management, rather than a piecemeal approach

The auditors also noted the importance of an improved sourcing strategy.

"We recommend Defence moves rapidly to a model with much greater transparency on ICT spending, and alignment on what elements of decision making, reporting and tracking should be centralised, coordinated and controlled at the corporate level versus in Group/Services. This will be critical to enabling a deep reform program."

In responding to the report's recommendations Minister for Defence, Senator John Faulkner said the government accepted the "vast majority".

“We agreed to an alternative funding model which provides funding certainty for planning and real funding growth to meet the growing cost of the military equipment we will need in an increasingly demanding world," he said in a statement. "This model is similar to that recommended in the Audit and, we believe, more appropriate given current fiscal circumstances.”

The release of the report, which is dated as being submitted to the minister in April, follows the announcement of Defence's new ICT strategy last week.

As part of its ICT strategy report, titled, Defence Information and Communications Technology Strategy 2009, Defence reconfirmed its commitment to building a new Defence Information Environment (DIE) by 2012 and claimed it would bring savings of $1.9 billion over 10 years with continuing savings of $250 million per annum.

The full audit can be read on the Defence website.

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