WA’s GovNext-ICT program to fall short on savings, audit finds

GovNext will not deliver the expected savings

The Western Australian government’s GovNext-ICT program will cut IT costs — but not to the extent originally expected when the program was launched, according to a new report from the state’s auditor general.

The previous Liberal-led government in late 2015 first announced details of GovNext, which was then expected to save up to $650 million over 10 years.

At the time the government said that WA’s health, education, corrective services, transport, finance, and attorney-general’s department had all committed to taking part in the program, with WA Police, Main Roads, and the Public Transport Authority also expected to participate.

In September 2016 the government selected Atos, Datacom and NEC for GovNext, which was focused on the transition of government departments and agencies to an ‘as a service’ model of IT.

The auditor general’s report found that the assumptions underpinning the GovNext business case presented a rosy picture when it came to potential savings. In addition, the take-up so far of GovNext services has been low.

“Many agencies we consulted are reluctant to buy services while several barriers to adoption remain unresolved, including advice and assurances around security and service continuity,” the report states.

The report says an additional factor in the low uptake is that agencies do not understand all the potential benefits of GovNext.

“The initial planning and ongoing engagement have focused heavily on cost savings,” it says. “As a result, the potential to deliver other benefits was only partially explored with agencies.”

“The GovNext business case estimated savings of up to $82 million per year; however the assumptions used did not fairly reflect current agency ICT services or pricing, and presented a best case picture of potential savings,” WA auditor general  Caroline Spencer  said.

“We found agencies using GovNext for their cloud services have been quoted, and are paying, prices between 38 per cent and 150 per cent higher than the initial quotations used to generate the estimates.

“None of the agencies we had information for were paying prices as low as those used in the business case.”

Ahead of GovNext’s launch the WA government created an Office of the Government Chief Information Officer (OGCIO), which spearheaded the transformation program.

From 1 July the OGCIO was transferred to the Department of the Premier and Cabinet as the Office of Digital Government. In its response to the auditor general’s report, DPC said it agreed with the recommendations, which included that the savings anticipated from GovNext be recalculated “including confirmation that benefits exceed the costs of migration to this model and adequately supports the sector’s diverse needs”.

“There is now little doubt that the projected $65 million savings over three years, which were claimed in 2016, will not be achieved,” DPC said.

“It is also very clear that the highly transformational nature of GovNEXT ICT has meant that many agencies have had difficulty coming to terms with its potential benefits over the short term and have been reluctant to adopt the program.”

DPC said that the government was committed to addressing the shortcomings of the program, including through implementing the findings of an independent review into GovNext.

The department said that review noted that although the underpinnings of GovNext are sound “and that the benefits of the program are now beginning to be realised”, the “focus of implementation needs to be on resolving agency service delivery concerns and supporting the key personnel who will be responsible for dealing with day-to-day operational concerns.”

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