Government ICT market to tighten in 2011/12

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Government ICT market to tighten in 2011/12
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AGIMO to drive coordinated ICT procurement.

Intermedium managing director Judy Hurditch has predicted the Australian Government would deliver a “tighter budget” for ICT spending in 2011/12.

Speaking at a half year update briefing in Canberra last week,  Hurditch described ICT spending as being “dampened” due to a challenging political climate, with the Government needing to retain the support of the independents and allocate funds to bring the budget back to surplus while also finding funds for disaster relief efforts.

The Federal Government ICT market was expected to reach the $6 billion mark in the current 2010/11 fiscal year, according to Intermedium.

“The market was expected to reach a new record high in 2010-11 with $4.3 billion in contracts already signed by 31 December 2010, the mid-point of the year,” she said.

She identified managed services projects as driving the total contract value reported so far in 2010-11. Examples included new outsourcing arrangements at the Australian Taxation Office and the renewal of a number of other substantial outsourcing deals, creating an enormous spike in the first quarter of the year.

Despite the bearish influence of the Gershon review, Hurditch said that growth was apparent across the market as a whole, not just in the high value outsourcing market.

“There seems to be an underlying growth engine in ICT as more and more ICT enablement is required for public servants to perform their duties and as citizens’ demand improved technology based service delivery” she said.

Federal Government ICT procurement had historically been dominated by eight large agencies, a handful of perennial suppliers, and one large category in IT services, she said.

AGIMO to drive coordinated ICT procurement

Hurditch also discussed the future of coordinated ICT procurement being driven by the Australian Government Information Management Office (AGIMO).

“AGIMO might move to extend its initiatives beyond the panels already in place, those currently under evaluation and those proposed, further impacting the hardware, software and IT services categories of supply," she noted.

However AGIMO’s centralising influence could also face challenges, she told ITNews.

The Government was yet to respond to the recent Reinecke report

Ian Reinecke, a consultant to the Special Minister of State, Garry Gray, recommended that AGIMO should be more closely integrated with the Department of Finance and Deregulation to provide implementation support under the leadership of a new Chief Technology Officer.

Hurditch said AGIMO was privileged in past years to have a powerful champion as the Finance Minister, Lindsay Tanner.

“That counts for a lot in administration when your Minister is interested and has a grasp,” she said.

On the other hand, AGIMO's current Minister Garry Gray, though an able administrator, was still considered a freshman.

“AGIMO are going to have to use all their internal organisational skills because they don’t have the strength of the champion that they had in Tanner", she said.

Hurditch said AGIMO had to negotiate with all levels of agencies, especially Tier 1 agencies, that are high intensity ICT users and experienced procurers of ICT.

“Because they are high intensity as in Centrelink, DHS portfolio, Tax, the nature of the work they do and even the number of people they have, there are quite strong arguments that can be said in a devolved environment where Secretaries do have the ultimate say – they are big enough and experienced enough to source these things for themselves, thanks,” she said.

However the rest of that market – Tier 2, 3 and 4 – those spending less that on average $80 million dollars a year on ICT - were a very uneven group of agencies in terms of the complexity of the technology challenge and volume of ICT procurement.

“Agencies like that can benefit significantly from a whole of government approach. If it was anywhere else or a different jurisdiction those agencies would be a candidate for some sort of shared services managed arrangements.”

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