Gershon Review made public

By 16 October, 2008 30

Mr Rudd’s review into ICT spend has been made public at http://www.finance.gov.au/publications/ict-review/index.html.

Among the excitement are recommendations to:

– Reduce contractors by 50% and increase number of APS ICT staff
– Agencies spending more than $20m on “business-as-usual” tasks to achieve cuts of 15%
– Reduce the “Canberra-centricity” of government ICT.

If you work in ICT I suggest reading it all.

If you own a house in Canberra, I’d suggest reading http://www.finance.gov.au/publications/ict-review/chapter5.html

    5.4.3 Larger agencies to demonstrate how they will develop/increase their capability to manage ICT work remote from Canberra and develop 5–10 year plans to reduce the Canberra-centricity of existing ICT activities

    To reduce the Canberra-centricity of existing agency ICT activities, I recommend that larger agencies in due course be required to demonstrate in NPPs and internally funded projects requiring approval by the two-pass investment process, their capability to locate significant portions of the work outside Canberra, and the intention to do so.

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    30 Responses to Gershon Review made public
    #1
    Deano1:01 am, 17 Oct 08

    And thus the insourcing/outsourcing cycle completes yet another revolution…

    Having read the report, I really don’t understand his dislike of the Canberra-centricity of the ICT workforce – after all isn’t Canberra where the rest of the public servants are located. What, are helpdesks and support staff going to be located in a different city? How are the business analysts going to collect system requirements from user when they are in a different city?

    The report is full of contradictions. One one hand he is suggesting consolidation of data centres and a flexible, mobile ICT workforce but wants it dispersed away from Canberra. He acknowledges the current ICT skills shortage but is proposing to increase the number of ICT staff within two years. He also acknowledges the high overheads imposed by the government’s tendering process but then laments the high cost of contractors.

    Overall I found the report to be very lightweight. It does not provide any breakdown of the roles of ICT staff when suggesting they should be moved out of Canberra. It doesn’t explain how it arrives at the figure of $100m being saved by reducing the number of contractors by 50% – is it based on salary costs; does it take into consideration the cost of training, maintaining a ‘bench’ of staff to cover peaks and troughs, superannuation, office space, HR management. The report was really just a summary of a number of points of view and a few ad-hoc unjustified recommendations. It certainly didn’t provide any vision for the future.

    #2
    deye1:25 am, 17 Oct 08

    Hmmm I know where I work we have to use contractors for certain types of work because the APS pay scale doesn’t pay enough for someone with those skills.

    #3
    realityskin9:02 am, 17 Oct 08

    deye said :

    Hmmm I know where I work we have to use contractors for certain types of work because the APS pay scale doesn’t pay enough for someone with those skills.

    i THINK THE PAYSCALE WILL LOWER ALL ROUND AS A RESULT OF THIS REPORT, AND THE CURRENT WORLD ECONOMY.

    #4
    LlamaFrog9:06 am, 17 Oct 08

    realityskin, please don’t yell.

    I like the idea that each year 15% cut in ict budgets, after the 50% increase to determine where the savings are and a new department to overview the change. Hello yes minister.

    #5
    fffq9:16 am, 17 Oct 08

    I agree with you Deano. we are again back to insourcing / outsourcing. What are the government going to pay the people that they want to attract into their ranks. It will have to be pretty substantial.

    But what about this quote (Charpetr 2.7).

    “There was a general view that industry finds the private sector easier to do business with. Sixteen submissions indicated that costs of tendering to the Government are too high, and 10 indicated that decision making in terms of defining business needs, evaluating technology solutions, procuring a technology and finalising contracts is too slow.”

    There is a marked difference in doing business with a small government agency and a large one. Decisions are made faster and there is no procrastinating over components and legalese that have little or not impact on the whole project.

    To do business with government you still have to tender – if you don’t want the business then don’t tender – but don’t complain about the cost of producing the tender when the project could benefit your comany with millions of dollars in both revenue and profit.

    #6
    captainwhorebags9:21 am, 17 Oct 08

    I know of several government agencies that have a very “anti contractor” culture. They’ve resisted engaging contractors for various reasons such as “lowers morale” “they’re not loyal” “too expensive”.

    These same agencies are also complaining that they’re critically understaffed. They’ve tried everything that they can do within the APS framework – bonuses, broadbanding, career progression. Nothing works, and the seats are unfilled.

    Skilled IT workers (note the skilled bit – not simple reboot monkeys) don’t want to work for APS4/5 money. You can’t make everyone an EL2, when the IT section is headed up by a SES 1 or 2.

    #7
    madocci10:45 am, 17 Oct 08

    I was wondering if it was still going to go ahead. I thought a basic economic principal was that you increase govt spending in an economic downturn, not decrease it.

    Aside from that, these changes affect suppliers of infrastructure more than employment I think. As stated, you still need the management and business analysis work done in canberra even if the build and maintain is done elsewhere…

    Wanting to reduce the percentage of BAU work as opposed to projects (as stated in the report) will also increase demand for contractors.

    I have to agree, I found the report inconsistent and unspecific. After all, Rudd needs someone to implement the outcomes of all the reviews. And really will anyone ever listen to AGIMO for IT governance and strategy advice?!?!

    #8
    harley10:45 am, 17 Oct 08

    Just a couple of things I picked out – average ICT contractor cost $186K which is apparently $94K more than the average ICT APS member.

    That’s an unfair generalisation. I’m a contractor well above that average, but I’m doing architecture, the people making up the average will be helpdesk and level 2 support staff.

    I also like how the contractor cuts should start now, but fixing the “whole of government ICT career structure” isn’t scheduled to START until March next year.

    Good plan… good plan…

    #9
    captainwhorebags12:12 pm, 17 Oct 08

    Yeah, I hope they didn’t pay the good Sir too much for his services.

    Does cutting contractors include cutting the import of aristocrats to give us a report with no real substance?

    #10
    tylersmayhem12:29 pm, 17 Oct 08

    If you own a house in Canberra, I’d suggest reading http://www.finance.gov.au/publications/ict-review/chapter5.html…

    I’m still not sure how this relates to those who own a home here in Canberra?!

    #11
    MadScotty12:33 pm, 17 Oct 08

    Is this guy joking?
    I left the Public service to go contracting because being told APS6 is the most pay I will see without going into management is a joke.
    Any wonder people leave the APS, we can get better money contracting or in Private without all the stupid rules that are imposed on hiring.
    Half the staff where I’m currently working are contractors and they still can’t find enough skilled people (note I said skilled, not helpdesk monkeys).
    Interesting times ahead at any rate.

    #12
    madocci1:13 pm, 17 Oct 08

    At least you can get rid of contractors that are crap… Making 50% permanent will make the workforce so much less efficient. I mean why would you work hard for half the $?!

    Does cutting contractors include cutting the import of aristocrats to give us a report with no real substance?
    He has substance alright! I mean what do you call umpteen phone hook ups with department heads? That is the most thorough research I have seen in a while! Especially for a report that will have such huge reprocussions for the future of IT in the country, let alone the APS.

    At a time when IT innovation is going to dive in private, implementation of these recommentations will add to the problem…

    /rant

    #13
    AG Canberra1:43 pm, 17 Oct 08

    So what’s best – insourced, outsourced or a combination?

    who owns the infrastructure – contractor or the Dept? (because if we go to insourcing then all Dept’s are going to suddenly have to find a S^!t load of capital to buy all that stuff back that we currently lease)

    Does the contractor have a responsibility to “train” the departmental staff?

    And again – how do you award a $3mill contract to an ICT company that goes bust three days later?

    #14
    tylersmayhem1:55 pm, 17 Oct 08

    who owns the infrastructure – contractor or the Dept? (because if we go to insourcing then all Dept’s are going to suddenly have to find a S^!t load of capital to buy all that stuff back that we currently lease)

    I’m happy to be corrected here, but I think you’ll find in most cases that the Dept. will own all of the kit, and hire contractors to run it.

    Does the contractor have a responsibility to “train” the departmental staff?

    Again, correct me if I’m wrong, but in most contracts, this would be an agreement, or part of the disengagement process.

    #15
    Woody Mann-Caruso2:05 pm, 17 Oct 08

    people making up the average will be helpdesk and level 2 support staff

    Help desk monkeys are pulling in $186K? Time to chuck this APS management malarkey and go back to IT. I’d ask people “have you tried turning it on and off again” all day for half that much.

    #16
    S4anta2:10 pm, 17 Oct 08

    One of the better findings I have found so far, and one that will help kick a bit of a spark back to the ICT industry, is that the IP that many departments require to be in their name is underutilised.

    If this is left vested in the organisation creazting the code, the organisation in question has a real chance to act on the commericalisation of their product, something which they were prevented doing in days gone past.

    Plus, increased scrutiny in where funds are going. $23,527 IT spend per public servant for this FY is simply nuts

    #17
    tylersmayhem2:17 pm, 17 Oct 08

    Help desk monkeys are pulling in $186K? Time to chuck this APS management malarkey and go back to IT. I’d ask people “have you tried turning it on and off again” all day for half that much.

    No Woody, I think that when it’s quoted “making up the average”, would mean their low rates would be evening out the presumably high wages of the managers.

    #18
    VYBerlinaV8_the_one_2:21 pm, 17 Oct 08

    Ridiculous. Whe large IT companies are screaming for staff and are willing to pay almost the ‘average’ contractor rate for permanents, the good people will not be staying on as APS6s.

    The reason IT costs a lot in government is not just the cost of the skilled staff, but also the busted-ass process for procuring services. A lot of the service quoting processes, which include getting onto panels, making shortlists, writing detailed proposals and bids and jumping through the numerous contracting processes all takes substantial time, often using skilled and expensive resources. All this time has to be accounted for, and is inevitably added to hourly rates and fixed fee engagements as invisible overhead. Large bids (eg for major outsourcing) can cost hundreds of thousands of dollars to mount. Do not think that this will go unrecovered!

    Simplifying procurement into single processes would go a long way toward reducing costs, both for department time and cost of doing business for the private sector.

    #19
    Kramer2:24 pm, 17 Oct 08

    captainwhorebags said :

    Yeah, I hope they didn’t pay the good Sir too much for his services.

    How about $0. Peter Gershon declined payment for his services, and requested that the government make a significant donation to charity. (Although I’m sure he hasn’t had to spend a cent during his time in Aust)

    #20
    smokey42:37 pm, 17 Oct 08

    Must be why I have gone back to changing water meter down South. I.T. sucks. Departments shift staff from Can. to other states and then leave them out of the loop when it comes to promotion opportunities. ie Spread the fish out into very small ponds and let them eat each other.
    For those not in the real world, ie most of Canberra then get with it. The recession is here (if not a Depression) This will change many peoples lves.

    #21
    Deano3:29 pm, 17 Oct 08

    harley said :

    Just a couple of things I picked out – average ICT contractor cost $186K which is apparently $94K more than the average ICT APS member.

    But this isn’t comparing like with like. The cost of a contractor includes their super, training, indemnity insurance, HR and payroll support, reachback capability, leave entitlements, and not to mention the cost of just doing business with the government. The on-costs for a public servant are typically 1.5 times their salary – so using contractors is actually cheaper in the bigger scheme of things.

    #22
    Woody Mann-Caruso3:47 pm, 17 Oct 08

    low rates

    $100-120K for desktop support isn’t what I’d call low – back in my day we paid bloody APS4s to do that. To think I could be sitting around all day surfing the net, occasionally answering the phone and giving half-ar.ed answers and still pulling in over $100K…oh, wait…

    #23
    Woody Mann-Caruso3:48 pm, 17 Oct 08

    And get off my lawn. I’m playing Hover Bovver.

    #24
    tylersmayhem4:09 pm, 17 Oct 08

    $100-120K for desktop support isn’t what I’d call low

    Where does it state on that link that $100-120k is the rate? I can’ see it there. Even it it actually was that rate, the fact that the job required “secret” clearance could account for a much higher rate as well?!

    #25
    Vic Bitterman10:21 pm, 17 Oct 08

    This alleged gershon “review” is a load of bollocks and will not apply at the coalface.

    Case in point. My project. We’ve got lots of $ available to deliver the business ask.

    We are desperate to secure an IT project manager or two. Farck all available via the PS, despite adverts in the gazette and internally as an EOI.

    So we did a contractor RFT. One of several.

    Wow, should see all the quality talent putting their hats in the ring, albeit at expensive $ cost.

    We picked up a contractor for the next 12 months, and she has the skills to pass on to us too. That’s a good hire. Very expensive, but skilled? You betcha!

    Reviews like gershon mean nothing at the coal face – where we hang out – service delivery.

    gershon = woftom.

    #26
    Aeek10:40 pm, 17 Oct 08

    Our legacy systems are still our core systems. But all the funding is for the outsourcer touted brave new world which is yet to deliver on the promises. I’m amazed our core systems haven’t crashed yet, given how they are being stripped beyond the bone.

    #27
    Deano11:57 am, 20 Oct 08

    From reading the IT section in the Canberra Times today you wouldn’t have known a major review into Commonwealth government IT had just been released – just a couple of minor items repeating some vendor press releases.

    It was however interesting to see three major IT vendors (CSC, Kaz and Unisys) all promoting the benefits of outsourcing in the hope of getting a few of the last remaining outsourcing contracts to tide them over until the cycle changes again.

    #28
    peterh1:17 pm, 20 Oct 08

    speaking as one who mentioned this in a prior thread, and no-one read that one, the gershon report will make the govt more effective re their overall spending trends, but at what cost?

    will the govt cut costs by sacking staff, or entering into global agreements with the big end of town?

    what happens to the SME resellers who have focused on govt for a big chunk of their revenue?

    what will the govt do when the unemployment numbers increase, after the small players go under?

    this review is nice, but the govt needs to prop up the economy now, to allow business to grow and keep employees in jobs, to buy food and other retail items, to allow the retailers to grow, manufacturers to manufacture, and farmers to farm.

    open the gates to the projects now, Mr Tanner! forget about reform, until there is stability.

    #29
    Nurf10:43 am, 25 Oct 08

    VYBerlinaV8_the_one_they_all_copy said :

    The reason IT costs a lot in government is not just the cost of the skilled staff, but also the busted-ass process for procuring services. A lot of the service quoting processes, which include getting onto panels, making shortlists, writing detailed proposals and bids and jumping through the numerous contracting processes all takes substantial time, often using skilled and expensive resources.

    This is absolutely on the money. I run a small IT company, and we can’t get on to the Panels as it just costs too much in time and money. Because of the ridiculous Panel procurement rules, our staff must contract through recruitment agencies who are on the panels and they skim an extra 10%-20% of the income and provide no value at all. They do not cover PAYG, Insurance, Workers Compensation and they are exempt from payroll tax, while my company is covering all of the previous mentioned overheads and must satisfy payroll tax rules and Personal services income test rules.

    If the government wanted to make an immediate saving remove the panel supplier arrangements for all departments, go to open RFQ arrangements like a small number have & and end the parasitic, monopolistic exploitation that these agencies indulge in.

    #30
    guy_fawkes1:04 pm, 20 Nov 08

    Window dressing.

    What we in Canberra forget is that the rest of Australia (yep 99% of it) despise the public service and think that its all a waste of money anyway (pretty close to the truth) so any time any government comes out and claims to reduce costs they can score some political brownie points. The real test will be whether the public servants fall for it. A half smart CIO would double his contractors and then reduce it over two years to look like a legend. The rest (and I would think is probably most) will see this an opportunity to piss off the reviled contractors because they now have something that looks like a government directive.

    As we all know the last government thought that outsourcing was the answer – wrong. Now they think that insourcing is the answer. Yeah – that’ll work, all the top IT people will swarm into the APS to be treated like idiots and be bored out of their brains. Is it any wonder that University intakes for IT courses is at an all time low – be smart, become a plumber – they earn more and put up with far less shit.

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