Rebooting Australia: Governments should consider these IT cost-cutting principles

This partner content was supplied by ASG Group.

Like many organisations, government agencies have added IT capabilities and capacity during the COVID-19 pandemic – including remote working systems. Now comes the challenge of cost containment.

The $86 billion hole in the nation’s finances may result in pressure on agencies to dial back spending and focus on long-term cost control.

Some have already begun doing that, says Marcus D’Castro, executive general manager for capability and consulting at digital solutions and services provider ASG Group.

As the sprint to respond to COVID-19 becomes a marathon, D’Castro says that government agencies are moving beyond implementing business continuity measures, to dealing with the flow-on effect of those measures.

Those flow-on effects include IT-related risks and costs. “Firstly, there could be increased risk from some things like use of non-compliant software that was implemented to respond to immediate critical needs; as well as software vendors ramping up client audit activities as an alternative means to achieve their revenue targets,” D’Castro says.

Government agencies are also facing uncertainty and potential changes regarding their budgets due to government spend on COVID-19 issues, D’Castro adds. He predicts this is likely to result in the cancellation of major programs of work.

Conventional cost-cutting measures rely on cutting staff to save money. But with unemployment already surging and skills crucial to navigating COVID-19’s challenges, relying on staff cuts may not be the best approach to cost control.

An opportunity to reduce software costs

Government agencies are increasingly requesting a Software Asset Management (SAM) program from Group 10 Consulting – an arm of ASG that helps businesses reduce costs, mitigate risks and increase the business value of ICT investments.

SAM is a business practise that involves managing and optimising the purchase, deployment, maintenance, utilisation and disposal of software applications.

Done correctly, SAM can be a major cost saver, says Jennifer Nelson, executive general manager of Group 10 Consulting. She says a SAM managed service program has resulted in savings and cost avoidance of $230 million for one Australian government agency since 2013. 

But Nelson says SAM can be harder to carry out during periods of major change. She says there are widely varied software vendor licensing methods “often designed to create confusion”. There are also complexities in determining what is being used in complex IT systems.

Five principles to guide cost reduction

ASG Group tackles these issues by combining end-to-end SAM services with a wider strategy focussed on maximising value from existing IT without losing focus on customer and growth opportunities.

It follows and recommends five principles when reducing costs in government:

1. Make cost reduction a core competency by focusing on continuous, long-term improvement, instead of viewing it as a one-off initiative.
2. Tie cost reduction to citizen centricity by reducing costs in a way that improves quality and relevance of citizen services.
3. Find ways to collaborate and communicate. Approach cost optimisation from a community perspective – for example, opening dialogue with citizens, supply chain partners and other government agencies can reveal new methods of collaboration.
4. Establish a culture of trust. This is crucial to establishing a culture of continuous cost reduction.
5. Change mind-set. Move from a focus on cutting staff and projects, which can harm efforts to establish a continuous improvement culture and close channels from which great ideas often originate. Instead, question everything in a holistic manner, looking at whether decisions align with citizen-centric strategic goals.

These principles can help government organisations find sustainable ways to cut costs while maintaining service levels.