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NZ Government sets new ICT directions

NZ Government sets new ICT directions

New Zealand confronts the 'one hand clapping' problem of cross-government ICT by setting clear expectations for Ministers and CEOs.

New Zealand recently announced new cross-government directions and priorities for governing ICT. The new directions are interesting because they include explicit invitations and directives to Ministers and CEOs. Firstly, Ministers are invited to set the expectation that agency CEOs will use ICT to contribute to the collective interest and the system-wide performance improvements the Government is seeking. Secondly, CEOs are directed to use cross-government ICT products and services where they are available unless there is a compelling business reason to opt-out of sharing. This is a significant departure from previous good-will oriented opt-in approaches to shared ICT. The Treasury department, however, has yet to develop funding arrangements to incentivize CEOs to contribute to, and implement such shared ICT initiatives. Without these CEOs will be within their rights to remain suspicious of 'grand cross-government plans' and cautious about what they agree to.

Setting clear expectations

New Zealand recently announced a new cross-government approach to governing ICT across its many departments and crown entities. The Directions and Priorities for Government ICT feature themes common in most governments ('fewer moving parts', 'reuse, before buy, before build' etc.) but are distinguished by also setting clear expectations for Ministers and agency Chief Executive Officers (CEOs).

The five directions are: Implementing clear leadership and direction; Supporting open and transparent government; Improving integrated service delivery; Strengthening cross-government business capability, and; Improving operational IT management.

The Leadership and Direction elements are interesting for observers of government ICT because of the way they seek to balance organisational enthusiasms for devolved accountability with the need to tackle ICT on more of a cross-government basis in order to cut costs and better support citizen-centric policies and service delivery.

New Zealand has a long track record with a highly devolved style of public service, structurally comprising some 40 departments and upwards of 100 crown entities operating with varying degrees of independence. The concept of direct accountability between Ministers and CEOs for specific outputs has been an effective technique for driving performance, and is deeply enshrined throughout the public service. A by-product, however, is the reinforcement of silos and the creation of a culture of CEO autonomy which make it difficult to achieve system-wide outcomes of process integration and sharing across organisational boundaries.

Various policy and strategy initiatives have been tried over the past decade to encourage a more cross-government approach to ICT - most recently as part of the e-government agenda. However they have met with mixed success due to the 'one hand clapping' problem - cross-government ICT thinking was miss-aligned with the priorities of CEOs and the way they made decisions and assessed risks. CEOs were under no obligation to opt-in to cross-government programs, and tended to avoid them in favor of local initiatives that were easier to fund and control.

The new directions are motivated by a sharper sense of financial urgency and reflect some learning from past experiences. They include explicit invitations and directives to Ministers and CEOs to adopt new enabling behaviours.

Firstly, Ministers are invited to set the expectation that CEOs will manage ICT effectively to contribute to the collective interest and the system-wide performance improvements the Government is seeking. This expectation will become part of the CEO's performance review.

Secondly, CEOs are directed to use cross-government ICT products and services where they are available unless there is a compelling business reason to opt-out of sharing. This is a significant departure from previous more good-will oriented opt-in approaches to sharing.

In addition the Government recently formed a Government Business Reform Group to provide system-wide leadership across a broad range of business interests including ICT - with an ICT Strategy Group as a sub-committee.

If they work, these initiatives will go a long way to ensuring that the pursuit of cross-government initiatives is elevated beyond being an 'ICT issue'. A more holistic approach to investing in and managing ICT is not possible without first changing the decision making bias of Ministers and CEOs.

The missing enabler: Funding arrangements

No amount of leadership enthusiasm for collaborative hand holding across agencies, however, will compensate for a lack of money - or rather a lack of clarity about who pays for what, where and when.

One of the biggest barriers to system-wide thinking is the difficulty of funding the establishment and sustainable operation of shared infrastructure and applications. An inevitable reality is that not all agencies will have the capacity to fund the up-front investment cost of developing a shared service. A second reality is that not all agencies will necessarily agree on what a 'fair' charge for the service is.

The funding model remains unfinished business for the New Zealanders. The Treasury department is tasked with the development by March 2011 of funding arrangements to incentivize CEOs to contribute to, and implement cross-government ICT initiatives.

The track record of such funding arrangements in the public sector is not good, with the Australian Federal Government providing a salutary lesson. Half of the funding cut from agency budgets as part of whole-of-government ICT efficiency initiatives under the Gershon Review was allocated to a central pool to provide a reinvestment fund for new shared ICT infrastructure and applications. This was an excellent idea, enthusiastically embraced by agency CIOs ... but raided by the Government within a year to fund election promises. When push comes to shove, decisions tend to be made Minister by Minister, portfolio by portfolio, agency-by-agency.

The approach adopted by the Victorian State Government for the funding of the CenITex ICT shared services agency may provide a better model - though this involved the creation of a separate services agency with dedicated investment/transformation funding.

Cabinet approval of the New Zealand Directions and Priorities for Government ICT is on the basis that they will not impose additional costs on agencies beyond their existing budget baselines. Treasury's challenge, therefore, is to develop funding arrangements that provide a basis for collective investment in a zero-sum game. Some CEOs may see this as 'robbing Peter to pay Paul'.

In addition, the funding model will need to give CEOs the confidence to rely on a service when its management and funding are beyond their ability to control, and to protect. Until these funding arrangements are clearly laid out, CEOs will be within their rights to remain suspicious of 'grand cross-government plans' and cautious about what they agree to in the interests of sometimes ephemeral 'system-wide' benefits.

Dr Steve Hodgkinson leads Ovum’s ANZ public sector advisory services.

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