Education the key as Reinecke echoes Gershon


This article is by Mark Toomey, the founder and managing director of IT consultancy Infonomics. For more about Toomey and his book, Waltzing with the Elephant – a comprehensive guide to Corporate Governance of Information Technology, see his bio at the end of this article, or visit his site. This article was part of the regular Infonomics Letter newsletter and is published here with Toomey’s consent.

opinion Just over two years ago, British government efficiency expert Sir Peter Gershon delivered his report on the Australian Government’s use of IT. Gershon’s finding was blunt — that the Australian Government had weak governance of IT. As a direct result of this weak governance, the Australian Government was inefficient in its use of IT, with what he called Business as Usual Expenditure (BAU) being too high and a poor record of success in using IT to transform and improve the machinery of government.

Gershon said that improvement would require a substantial and sustained change in culture, particularly at the top of the Australian Public Service.

While the Australian Government nominally accepted all of Gershon’s recommendations, and went ahead aggressively to begin implementation, it was soon clear to an interested arm’s length observer that the implementation would be focusing not on the full set of seven recommendations, and not on the cultural change, but on the more technically specific measures required to achieve a significant one-off reduction in BAU expenditure.

An opportunity for Infonomics to provide advice on governance to one government agency during late 2009 and early 2010 eliminated the arm’s length restriction and delivered confirmation that there was little, if anything being done to advance either of the first two recommendations delivered by Gershon — to improve pan-government governance and to improve agency level governance of IT.

Subsequently in August 2010, the government announced that the 50 percent of BAU savings intended for reinvestment were now to be used in non-IT initiatives. The grapevine indicated that the calibre of reinvestment proposals was so weak and technology-focused that there was really no point saving the money for IT-enabling purposes.

Gershon recommended an independent review of progress and this task was duly assigned to Dr Ian Reinecke. Reinecke consulted industry and government personnel to form his view of the status of action on the Gershon Report. His report, dated June 2010, but only released during November, essentially says that implementation to date has focused principally on technology and expenditure issues, and has delivered no discernible improvement in the essential issues of top-level governance and leadership.

That’s not a surprise, but it should be a matter of considerable concern. The gap identified by Gershon and now reconfirmed by Reinecke is one of vision, strategy and leadership. Without highly effective governance arrangements at the top to set the vision for the Australian Government’s use of IT (as an enabler to the most effective, efficient and acceptable delivery of government services to the nation), there can be no expectation that either spending cuts are properly targeted and appropriate, or that the most appropriate mix of initiatives and the most appropriately structured IT-enabled capability development initiatives will be undertaken.

It’s not hard to understand how the current situation has arisen. Truly effective pan-government governance of IT, with appropriate leadership at a ministerial level and a diligent translation of vision into strategy at the secretaries’ level requires, as Gershon identified, a significant change in culture. It requires:

  • A major reorientation on responsibility for IT, with significant take-up of responsibility by government business leaders and an equal relinquishing of responsibility by government technical leaders;
  • A new approach to developing vision and strategy which goes beyond paving established paths with new tools, to radically redefine the machinery of government and in doing so change the boundaries of the traditional fiefdoms;
  • A new approach to structuring and conducting IT investment initiatives so that effort is focused on delivering the complete systemic change, rather than just on delivering the technology;
  • A new attitude to performance measurement for government use of IT, focused on achievement of transformational objectives for new use of IT and effective service delivery in the mainstream activity of the machinery of government;
  • A new approach to conformance, elevating the focus from low level detailed policy to higher level principles that guide strategic, tactical and operational decision making, and vastly improved use of standardisation tools such as reference architectures; and
  • Careful management of the change in culture, recognising that the human impact of such change can be significant and requires diverse, tailored support arrangements.

Underlying the change that is required is a clear and unequivocal need for education. Neither Reinecke nor Gershon specifically identified education as a requirement, but the need should be obvious. Education is a key enabler of change and both have identified that there is a considerable need for significant change in governance of IT.

What was confounding in the early wake of the Gershon Report was the absolute disdain for specific education on the ISO 38500 approach to governance of IT by both government and industry.

AGIMO expressed the view that it was already sufficiently familiar with the standard and needed no further insight. When the Australian Computer Society offered a one-day class on ISO 38500, there were zero registrations from Canberra personnel. And while the Australian Information Industry Association created a “governance focus group” as part of its “Gershon Task Force”, the focus group never convened even in a distance-mode.

The lessons from Gershon and Reinecke may be addressed to the Australian Government. But they apply much more widely. Governments and businesses all over the world should recognise the value in directing and controlling their use of IT from the highest levels, ensuring that the strategic opportunity of IT is exploited as and when appropriate, and that inappropriate use of IT is avoided.

In Australia, as the Reinecke Report is digested, it’s time for us to get serious and undertake the significant cultural and behavioural change that Gershon specified, and the first step in any change is education, for all players.

Mark Toomey is a man on a mission: he aspires to change the way the world’s business and government leaders deal with information technology, to greatly increase the economic value and operational reliability of information technology as a key enabler of modern society.

Toomey is recognised internationally as a leading expert in top level governance of information technology and ISO/IEC 38500. He is a past chair of the committee responsible for Australian standards on governance and management of IT, and is Australia’s lead representative to the corresponding international committee.

Mark writes and speaks extensively about how business leaders can govern IT. His publications include The Infonomics Letter (monthly), Waltzing with the Elephant – a comprehensive guide to Corporate Governance of Information Technology and The Director’s IT Compass. Through his company, Infonomics, he helps leaders understand and improve their organisation’s Governance of IT, and expands the skills of consultants who help their clients improve governance of IT.

Image credit: Office of Lindsay Tanner


  1. I would like to point out that I was a co-author of the Australian Standard AS 8015 on which ISO 38500 was based and I served on the relevant Standards Australia committee for several years. Consequently, I think AGIMO’s view regarding its familiarity with the standard may be justified.

  2. I can’t say Gershon is that great – it’s either an impossible dream or common sense but sadly unattainable due to human (not IT) factors.

    Gershon pretty much tanked the local IT industry in the UK – leaving them to the tender mercy of the multinationals. While it rightly pointed out many failed projects – there are numerous other “non-IT” projects which are similar or worse in the way they have been governed. Ultimately many people misunderstand IT projects – they generally do not exist solely to deploy IT infrastructure – they are supposed to be a business requirement. If they fail – typically as the subcontractor or business process specifications have not been managed, they should be correctly labelled as a ‘business project” failure…

    From what I’ve seen in Australia, the “shared services” model has been a failure for state governments – eg QLD health payroll debacle (mismanaged sub contractor and business process not understood). For federal govt it too has been a cost ineffective – recent examples would be the whole of govt Microsoft deal brokered by Defence (who aren’t known to be the most economical show on earth) which cost more than most other federal agencies had already negotiated individually. Another silly example is the whole of govt PC desktop contract which is renegotiated every three months – in case you wanted to change vendor every three months – plus salt in the wounds for fed agencies would be the “commissions” paid to Dept of Finance for “contract management”. Really AGIMO? Really?

  3. I am the First Assistant Secretary at AGIMO responsible for both the Microsoft and desktop hardware procurements. These are not shared services. They are, however, whole of government arrangements providing significant savings to agencies. The Microsoft arrangement has already saved $51m, $21m more than originally forecast. It replaced 42 contracts covering 41 agencies with one contract for more than 80 agencies. These agencies retain the direct savings and the indirect savings from simplified administration. Agencies utilizing the arrangement are simply not paying more for the same capability that they used before the arrangement.

    The desktop hardware panel is not renegotiated every three months. The 12 panellists have signed a three year contract with possible extensions. At least every three months, the government demand for desktop hardware is aggregated and the panellists are requested to provide a best and final offer for the aggregated quantity. Arrangements such as ‘follow on’ orders and ‘just in time delivery’ are in place to assist agencies with their fleet management. Savings from the panel are of the order of up to 30% for the smaller agencies and remain substantial even for larger agencies. Savings are retained by agencies with the exception of a very small administration fee collected by the panelists on each purchase and forwarded to Finance to fund the administration of the panel.

    • Hi John – thanks for showing up on this obscure website.

      Firstly, I think there’s a general perception from the federal govt space (eg Canberra based Procurement or Microsoft user group discussions) that the Microsoft deal stripped a lot of the “extras” that were previously available – eg tech funds. Supposedly these are now externalised from the Microsoft costs and are now “savings”. I’ve been contracted to a few fed agencies who have wound back their Office offering post “whole of govt” Microsoft deal (eg removing MS Project, Visio etc). Can you provide more detailed costs which will answer this?

      Secondly, what you describe is a “shared service” – not that I’d lecture you especially on it, but the Wikipedia pretty much lines up what you describe as a shared service. – interesting reading. Generally the commission is regarded as another efficiency dividend. Can’t really blame them can you?

  4. Hi Thateus,

    I’m not convinced that Renai would be happy with the description of Delimiter as an obscure website but I’ll leave that to him to sort out.

    In negotiating the Microsoft VSA, we most definitely did seek to strip out the ‘steak knives’ included in previous arrangements. Our comprehensive analysis of agency needs indicated that the majority of agencies weren’t getting value for money from these unquantifiable additions.

    Rather, we sought to establish a very solid floor price for the common desktop and very competitve pricing for additional products (such as Project and Visio) based on actual usage not unmonitored additional usage. This approach avoids everyone paying for what turns out to be shelfware for very many users (if not the majority). I’d justify this approach by pointing out the take up by agencies (including those CAC Act agencies for which usage of the VSA is not mandatory).

    I’m happy to agree to disagree on the ‘shared service issue’. It’s largely about semantics.

    Finally, I continue to take issue with the efficiency dividend argument about administration fees. In the VSA, for example, the fee is about $3 per user annually. However, it is also reconciled annually and Finance can’t charge more than is actually used for the VSA’s adminidtration.



  5. “steak knives” is probably flippant (and as much as I deserve!) – obviously you are better off buying in bulk and with bundles (otherwise you guys wouldn’t be doing shared services purchasing agreements).

    Over 15 years I’ve seen the circle go around with government procurement from strategic partnerships to transactional purchasing and back again.

    If you can (as purchaser) can see the value in a bundle (aka in your language a set of steak knives) over having the absolute bare minimum you should take the bundle. With the Microsoft steak knives they were pretty good – ie a fed agency could tee up a deal whereby Microsoft and partners assisted with an Exchange or Windows upgrade. Sure helped that Microsoft had some skin in the game if [when!] it turned pear shape.

    Buying the bare minimum package to “save money” – Microsoft just sends you the URL to their list of partners and you dust off your already depleted wallet…

    • The Core Desktop Licence (the basis of the Microsoft VSA) includes Software Assurance. The VSA covers more than 260k desktops and 230k users and so the Australian Government retains a very close relationship with Microsoft. The VSA isn’t a bare minimum.

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