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Agencies rule, OK?

Agencies rule, OK?

While information technology itself advances irreversibly in one direction – faster, smaller, cheaper and better – this cannot be said of the management and application of ICT in the public sector.

I watched a documentary on my iPad a few weeks ago using ABC’s excellent iView catch-up television. ‘Wonders of the Universe’ provided a kind of hyper-long-range-weather-forecast revealing that over the next few trillion years all the suns in the universe will fizzle out and our atoms will simply drift around in the frozen dark wastes of space forever. The problem is the Second law of Thermodynamics. Simply stated, this law explains the tendency of physical systems to progress in the direction of disorder – or increasing entropy. A sandcastle on a beach inevitably reverts to flat sand unless force is applied to keep it in shape.

This phenomenon explains the irreversibility of nature and time. The sandcastle cannot last forever. The arrow of time goes only in one direction, from lower to higher entropy, and ultimately concludes when the entire universe is dispersed and entropy is infinite.

The organisational merry-go-round

While information technology itself also advances irreversibly in one direction – faster, smaller, cheaper and better – this cannot be said of the management and application of ICT in the public sector. We typically have a pendulum – or perhaps a merry-go-round – rather than an arrow.

Nowhere is this phenomenon clearer than in the cycle of centralisation and decentralisation of ICT management and services functions … with CIO functions and shared services arrangements coming and going every five years or so. One moment it is better/faster/cheaper to ‘act global’ and to centralise, the next it is better/faster/cheaper to ‘act local’ and to devolve.

In Western Australia the Economic Regulation Authority (ERC) recently presented a review of the state’s shared corporate finance, HR, payroll and procurement services strategy. The review recommended that seven years of disappointing centralisation work costing over $300M be abandoned … with services devolved back to the agencies.

Similar tragedies have unfolded in other jurisdictions, with Victoria’s CenITex standing as a rare example, so far, of a successful shared ICT infrastructure services agency. What is it about this irrational exuberance for operational centralisation … and what can be done to avoid another baby-out-with-the-bathwater scenario in the future?

Decentralisation is the public sector’s entropy

The outcome of WA’s shared services misadventures reinforces our understanding of the resilience of the devolved organizational model upon which Westminster systems of government are based. Autonomy is one of the most prized possessions of any agency head. It is an essential element of being able to respond to government’s ever changing mix of output and outcome priorities. The preference for autonomy can be overridden, but only when there are compelling policy drivers and only by a conscious and sustained exercise of leadership on the part of agency executives.

Such a conscious and sustained exercise of leadership was lacking in the thousands of meetings conducted over the seven years of the WA government’s shared services program. Numerous cabinets and many hundreds of public sector executives and their staff, advisers and service providers had the opportunity to make decisions that would enable the shared services strategy to succeed. Unfortunately, one decision at a time, they made decisions that undermined and frustrated it. Success was beyond the collective wit of the WA public sector. Why is it so?

The reality is that decentralisation – agency autonomy – is the public sector’s entropy. Whole-of-government strategies and shared services are like sandcastles on a beach. Without the continual application of force in the form of leadership and the injection of energy in the form of the active support of agency executives they tend towards a higher state of entropy … and failure. Most strategies that fail do so because they underestimate the true costs of overcoming this entropy.

Lessons need to be learned

Both the Queensland and NSW state governments have recently announced their intention to reinvigorate whole-of-government ICT strategies – with Queensland in the market for a new CIO. The Queensland and NSW governments should seek leaders with the ability to see beyond the mechanistic view created by the ‘spreadsheet goggles’ of consultant’s spreadsheets. ‘Acting global’ can reduce overall costs and benefit agencies, but not necessarily. Overcoming the entropy of ‘act local’ preferences takes effort … and is risky.

Success with this agenda requires an acknowledgement of the diversity of agency needs and the ability to create practical and evolving mechanisms for sharing that are fit-for-purpose from an agency perspective. ‘Bull-in-a-china-shop’ mandates, and irrational centralisation enthusiasms, come and go with their autocrats … while the need for agencies to deliver outputs and support government’s ever-changing outcomes is unrelenting.

Agency executives are the agents of entropy, and only they can moderate its effects through the choices that they make. It is their individual decisions, made one meeting at a time, that will create the success or failure of whole-of-government ICT strategies and shared services arrangements.

Dr Steve Hodgkinson is IT Research Director for Ovum Asia Pacific

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