IT drives hike in NSW govt consultant spend

NSW government spending on consultants has ballooned by 58 percent over the last five years, propelled largely by its digital transformation efforts, the state’s audit office has found.

An audit of agencies' consultancy habits [pdf] released on Tuesday found much of the government’s $1.4 billion spend on business advisory services during the period was sheeted back to “investment in ICT system implementation”.

“The annual spend on the top 20 advisory suppliers increased by 58 percent between 2012–13 and 2016–17 driven by NSW Government's investment in ICT system implementation and infrastructure programs,” the audit states.

And the spend is showing no signs of abating, with the government’s use of consultants increasing “in four of the last five years”.

The bill could be bigger than disclosed too. More than half of the dozen agencies examined were also found by the Auditor to have “under-reported consultant fees in their annual reports”.

While the audit did not break out specific IT spending, the big four consultancy firms - all of which have huge stakes in state and federal IT consulting - and Accenture, Boston Consulting Group and McKinsey & Company all easily made the top 20 supplier list.

Deloitte took line honours for raking in the cash, booking up $342 million, followed by Accenture on $256 million and PwC on $242 million.

Ernst & Young also made the list on $183 million, while KPMG extracted $153 million. Boston Consulting Group made the cut at a comparatively modest $33 million.

The audit also singled out the Department of Education for having “the highest spend on a single supplier in a reporting year”, dropping $96 million to Accenture.

“The majority of its spend related to the build process of the software platform for the Learning Management and Business Reform program,” the report stated.

The jump in consulting spending broadly aligns with the government’s latest annual round of IT benchmarking, which reveals IT spending climbed by 40 percent over the last five years to exceed $3 billion for the first time.

The government has put this down to its aggressive digital transformation efforts, which will see 70 percent of government transactions available to citizens through digital channels by 2019.

The benchmarking also indicated that two-thirds of the state’s 1,020 full-time equivalent program and program management roles were “being undertaken by external contractors”.

It said this was a “recognition that many ICT transformative projects, need specific skill sets, often for just a short period of time”.