Vic govt cools off large IT projects

The Victorian state government has become “gun shy” on big IT projects, prompting questions about whether overall IT spending is set to decline, according to an analyst firm.

Some $650 million of funding for IT projects over four years was allocated in the 2005-06 budget. It compares with $525 million in 2006-07, $120 million in 2007-08, $460 million in 2008-09 and $400 million in 2009-10.

Steve Hodgkinson, research director at Ovum, said past budgets have accumulated a rolling four-year funding portfolio that peaked with a total of about $500 million in the 2008-09 year for new IT-enabled transformation programs such as public transport ticketing, train and bus systems, Healthsmart, the Ultranet, VicSmart fibre to schools and systems development projects in the Justice and Police departments.

“This year, however, the IT funding tap has been turned down significantly, with only six out of the 250-plus programs in the 2010-11 state budget having a significant IT element,” Hodgkinson said.

The programs range from emergency communication systems upgrades and school computers to advanced computing for biological and farm systems research.

This week Computerworld reported $16.7 million had been allocated for a new Automated Number Plate Recognition Technology system as part of the 2010-11 budget.

An unspecified amount of funding has been budgeted for the enhancement of emergency services Web sites as part of a bushfire preparedness program.

“This adds up to a budget commitment of perhaps $80 to 90 million in new IT projects over four years,” Hodgkinson said. “Further funding commitment to the cross-agency registration and licensing system (RandL) at VicRoads appears to be notably absent from the budget.”

The enthusiastic zeal of the Auditor General for shining a torch on the government’s IT project delivery performance would test the nerve of even the most technologically adventurous ministers and bureaucrats

Hodgkinson concludes the funding slowdown reflects caution about IT project delivery.

“Perhaps a slowdown in the funding of large IT transformation projects is prudent given the number of projects in-flight and the high profile procurement and ongoing delivery dramas of some of the largest – including the myki public transport ticketing project and the redevelopment of the [police’s] LEAP system,” he said.

“The enthusiastic zeal of the Auditor General for shining a torch on the government’s IT project delivery performance would test the nerve of even the most technologically adventurous ministers and bureaucrats in this climate, so caution has become the better part of valour.”

Contracts for IT-related products and services indicate an aggregate IT procurement of about $800 to 850 million in the 2009-10 year. It includes operating budgets and new program funding.

“2009-10 may prove to be a high water mark for the government’s IT spend,” Hodgkinson said.

According to Ovum, the same trend is apparent in Canberra, with the federal government reducing IT spending as a consequence of the Gershon Review in 2007-08 and more reluctance to commission major IT projects.

In Victoria core operational IT activity is being consolidated into the shared services agency CenITex.

“We may be at the end of a major IT project era until the government’s confidence in its ability to successfully deliver large IT enabled transformation projects is restored,” Hodgkinson said.

“Expect to see a wave of smaller government 2.0-style projects in next year’s budget submissions.”