The future of the mainframe

For many years, mainframes have been typecast as the dinosaurs of the IT industry but the mainframe market is again showing clear signs of growth.

In their rebadged configuration as enterprise servers, mainframes are likely to remain an important consideration for meeting ongoing central computing needs. The battle lines are now drawn with other enterprise server suppliers, for a new round of competition in the central computing market.

Where do you see the mainframe heading?

Invest to save, or save to invest?

This week, the QLD Government became the latest to announce a new state ICT strategic plan, Toward Q2 through ICT.  It is focused towards a ‘one government’ approach to service delivery and some investment will be required to support this more integrated service delivery model.

There’s a sting in the tail, of course: a review process will be developed and implemented with QLD Government agencies to deliver a 15% reduction in “the per unit cost of BAU expenditure”, to be achieved by 2013.

Two contrasting strategies are in play:  the first, initiated by the Gershon Review and followed by at least two states so far, is based on a “save to invest” model, whereby savings achieved in ‘business-as-usual” expenditure will be partly reinvested; the second, illustrated by Defence, is an “invest to save” model – funds are provided up-front for “efficiency projects” to generate larger, more significant savings downstream.

The jury is still out as to which is the right approach.  Certainly, Sir Peter Gershon expressed serious concerns about these key areas, having found that of 193 completed ICT projects he reviewed, only 10 (or 5%) “reported actual measurement of benefits and compared anticipated benefits with the actual benefits realised” (Gershon Report, p18).  He recommended much stronger program and project governance including planning for benefits realisation.

One year on, it would be interesting to hear a progress report on this recommendation.  The silence in respect of this aspect, from QLD with its new strategy, in NSW, where the focus seems to be on costs and Defence as it invests to save, is a serious concern.

Why has the NSW GCIO not been ‘MOGed’?

The Machinery of Government (MoG) changes that created NSW’s 13 Super Departments provided a golden opportunity for the NSW Government Chief Information Office to move to the central agency that is responsible for not only controlling the NSW budget but is taking the magnifying lens to ICT expenditure across NSW government.

But to the puzzlement of many, it didn’t happen.

In Canberra, the equivalent office, the Australian Government Information Management Office (AGIMO) sits in the key policy agency of Finance and Deregulation and was moved there after its predecessor (NOIE) spent some years in the wilderness as part of a less influential Department.  As a result of that move, and a Minister, (Lindsay Tanner) who really ‘gets ICT’, it now has real clout.

The failure to be ‘MOGed’ into Treasury is even more curious in the light of rumours suggesting that the Budget-announced NSW Government ICT Review will be run from Treasury.  Speculation is that this review will have similar objectives to the review conducted by Sir Peter Gershon for the Australian Government (coordinated by AGIMO).

Seems that GCIO has been mugged, not ‘MOG’ed in this instance!  Was the new Department in which the GCIO sits given the name of Services, Technology and Administration as a salve for the GCIO staying on the periphery, rather than in the centre?

And what does it mean, to have ‘Technology’ in the title, anyway?

What is the power of 1?

I’ve always been drawn to try to understand why those good ideas and concepts, the logic of which seems impeccable, never seem to cut it once they are put into practice. By cut it, I mean they never deliver the benefits and outcomes they promise.

It is fair to say that more than a few of these exist in the public sector. They don’t fail as such, but they tend not to deliver the same types, or quantum, of benefits as we see in commercial examples. Key factors, obviously, are the different incentive structure combined with different risk tolerances, the absence of profit and loss as a key metric, and governance that’s ultimately linked to the electoral cycle.

A classic example seems to be shared services. These score well in the private sector as a means of driving down costs. But in the public sector, as set out in the Gershon Report, the results are mixed. Let’s leave them for another day.

Consolidation is a key area where economies of scale can be exploited, and costs lowered by reducing duplication of systems, services, facilities and people. This is one of the areas that seems ripe for action in the Federal sphere, with the two largest DHS agencies – Centrelink and Medicare – the lowest hanging fruit. It’s no secret this is under consideration, with officials within DHS and the two agencies offering varying views of the future and a number of internal studies underway looking at the feasibility of consolidating systems, offices and so-on. Recently, co-location of some offices, housing both Centrelink and Medicare staff, has been announced.

The scale of the two organisations needs to be understood. Centrelink has annual cash operating costs of around $2,700 million; Medicare is substantially smaller, at around $700 million. So, if a consolidation strategy was developed to harvest, say, 10% in cost savings (a not insubstantial $340 million), there are immediate implications in deciding where these are borne. In the current economic environment, when these benefits are realised is also crucial: any approach which entails the Government with a significant upfront cost, with benefits some years away, may be unattractive.

There are also significant differences in productivity and efficiency metrics associated with the two agencies. Using highly aggregated (and thus quite crude) measures, Centrelink employees handled around $2.7 million in benefits per headcount in 2007-08, while Medicare employees handled around $5.6 million; Centrelink’s operating costs per $ of benefit payment are around 0.0038%, while Medicare is lower at 0.0021%.

Nonetheless, there is a strong case for consolidation:

• It would create the best possible base for a single view of citizens, especially in terms of health and welfare needs. This would enable more efficient, targeted programs including specialist case management, resulting in more effective outcomes.
• There is considerable duplication – of facilities, services, and locations – right through to management.
• The consolidation process can be executed step-by-step and is, in reality, probably about as complex as some of the recent bank mergers (Westpac-St George comes to mind). Sometimes this complexity is overstated.
• There is little to justify the continuation of two organisations other than history. And even that, because it is short, is not compelling in the scheme of things

Impeccable logic indeed! But before we get ahead or ourselves (and there are many people who believe that sometimes DHS does get ahead of itself), what are the barriers and issues to be overcome? There are many; most can be overcome with leadership, focus and determination; and none of them are really technical (and please feel free to add more, or comment on those listed):

• Both Centrelink and Medicare are icons. Moreover, they are Labor icons, tangible of a demonstrated commitment to delivery of welfare services that now extends to disaster support and relief, and a universal health insurance system that underwrites access to health services for all Australians. Change Management 101 highlights the risks of tampering with icons, especially where widely perceived as delivering successfully.
• Medicare, in particular, is part of Labor folklore. The original Medibank was the centrepiece of Gough Whitlam’s 1972 “It’s time” campaign and despite some sabre rattling, even successive Liberal/National Party Governments stepped back from dismantling it.
• Medicare offices handle cash; Centrelink offices serve among many other clients, drug addicts. These two “facts” are spoken, never written and the obvious correlation never mentioned. These represent strong perception barriers – even to the extent that the Minister made it clear in the recent co-location announcement that “the new Medicare Australia office will give customers access to a range of non-cash related services…” Surely, in 2009, we can do better than this!
• Both agencies deliver services that are central to the Government’s health and welfare programs. Any change must have a minimal – preferably zero – impact on the receipt of these by citizens. This is probably the biggest challenge facing the Government in any consolidation. In the political game, ‘getting it wrong’, with high profile cases of missed or erroneous benefits payments could easily result in electoral decimation.
• There is a view that two agencies with capability to ‘compete’ for the delivery of government services creates a degree of contention that makes both more efficient than would be the case with a single agency. Data is needed to support this.
• An inevitable outcome of consolidation, if it is implemented successfully, is a reduction in workforce numbers. The Government is unlikely to have much appetite for this – especially since an office rationalisation will affect suburbs and regional centres – during a recession, and around 18 months or less from the next Election

A consolidation of Centrelink and Medicare is hardly a zero sum game, but circumstances could easily make it such.

Who is leading Gershon’s cultural change program?

Unless someone takes the initiative to drive the “major program of both administrative reform of, and cultural change from, a status quo [of agency autonomy]” – and does so quickly – the chance of achieving the $1bn savings in data centres identified are little more than a snowball’s in hell.
At the simplest level, successful transformation is achieved in four steps: making it essential, making it ready, making it happen and making it stick.  Gershon, Tanner and Rudd have made data centre consolidation essential, but we seem to be moving to implementation (making it happen) before we’re ready.

My observation is that most failed transformations (be it an ERP implementation, implementation of a shared services organisation structure, a merger, or “just” the consolidation of data centres) result from doing just this.

Throughout his report, Gershon hammered on about the need for cultural and structural change. The Department of Finance and Deregulation should not even think of starting to plan data centre consolidation unless steps are first taken to create the type of culture that enabled IBM to consolidate its strategic worldwide data centres from 155 to seven (and using 80% less energy).
Who is charged with this?

Those that listen don’t read, and those that read don’t listen

This will be provocative – but then that’s what blogs are for! Nothing like a gross generalisation, unsupported by any facts, to stir debate. So, if you feel so stirred, please comment.

(Oh, and I just realised that if I am right, I am probably missing half the audience I was hoping to attract and – worse still – have alienated the other half!)

So, this is what I reckon, based on a fair few years of observation — I should add that this is aimed at those people who sell, and I guess by corollary, those that buy:

• There are clearly people who listen and respond to what they hear; and
• There are those who gather information by reading, and respond to what is written.

Now, in making this broad statement, I know there is a well known theory of learning styles known as the VAK model that looks at visual, auditory and kinaesthetic (learning by doing or seeing a physical representation), but I don’t want to divert into that debate.

When it comes to selling to the public sector, despite anyone’s learning style, nothing really exists in the mind of a public service manager until it is written. So, while you might have a good meeting with a decision-maker or key influencer about a particular requirement that you are trying to sell against – the mood is friendly, and “the vibe”, positive – it generally means little in the procurement process unless it can be integrated into that process. That means providing some form of documentation in a format that is useful to the process, in describing the specification or other key attributes. A verbal discussion rarely does this, even if the recipient is an avid listener and note-taker.

Perhaps this is why many interstate sales managers ask “why don’t you just have a game of golf and make a deal while walking around the course?” The response of the experienced is usually a rolling of the eyes!

The obverse of this is the importance of understanding – that is, comprehending – the written word. Especially in a tender document. This can be challenging, especially if the recipient is one of those people accustomed to taking in what they hear rather than read, and the tender documentation comprises a complex set of files, many of which may have been cut and pasted from previous examples not directly relevant to the current.

And, while looking at the other hand, government officials often complain that suppliers “don’t listen”. What could that mean? Perhaps those who have mastered the art of speaking may not always be well placed to understand what they hear.

The obvious lesson here is to ensure you have a team of people, with a mix of skills around speaking, listening, reading and writing when working in a complex sales environment, such as the public sector. Equally, we must all recognise our own strengths and corresponding weaknesses in dealing in that environment.

Unfortunately, we all seem to forget this!

Is “whole-of-government” a myth?

There are a large number of reviews, reports, strategy documents, ministerial speeches, consultancy reports… that talk expansively about the importance of, say, the Federal Government taking a “whole-of-government” approach to service delivery, administration, procurement and so-on. Alternative terminology refers to “cross-cutting” initiatives and, most recently in the Gershon Report, “pan-government” activities.

These are among those terms of “managerialese” that sound great – indeed, “appropriate” – until you start thinking about them. What do they really mean? What does a real “whole-of-government” initiative look like? And the big one: how might such an initiative be implemented? In reality, there are significant barriers.

First, there are the structural issues. Government agencies are established quite purposefully as “silos”; they are based upon what are known as “Administrative Arrangements”, which are, to simplify, the responsibilities arising from certain pieces of legislation associated with implementing the policies of the government of the day. These, in turn, are derived from the Constitution. So, for the most part, a government agency exists to do what it is required to do by law, and not to do anything that it is not empowered to do. While this might sound narrow — and possibly even bloody – minded, there is an extensive array of administrative law cases castigating ministers, agencies and officials for doing more that they’re permitted to do. From the perspective of public servants, they are constantly reminded their role is to serve the Minister of the day. This usually always excludes serving the Minister of the day in another portfolio.

Secondly are the funding issues. Appropriations of money are made to support the activities of agencies in implementing the policies of the government of the day. Indeed, it is quite difficult (probably impossible in the bureaucratic scheme of things) to appropriate money to do something that is not directly related to those activities. At the outset, this requires gaining approval in the Budget context – not for the faint-hearted – and subsequently there are the necessary checks and balances such as Parliamentary scrutiny and the Auditor-General to ensure money is spent against the purpose for which it was appropriated.

Thirdly are the incentive issues. It is almost a corollary of the “silos” created of agencies by the Administrative Arrangements that accountability and responsibility of public servants (in serving the Minister of the day) is focused internally on the achievement of the directly associated “key results areas”. There is no effective mechanism to consistently measure (and hence manage) cross-functional or externally-facing activities that are not closely related to the activities of the agency, based on its administrative mandate.

Perhaps the answer is through specific legislation. This has occurred in relation to law enforcement and intelligence agencies, but neither can be cited as exemplars of the process. It seems the experience has been enough to cool the ardour of legislators.

There is the model of empowering a specific agency to take responsibility for a “whole-of-government” activity. Typically, these start with unbounded enthusiasm, which quickly wains once the persistent inertia created by “coalitions of the unwilling” are encountered, wave upon wave. These being, again, those siloed agencies of focused responsibility. Sometimes resistance is overcome by funding incentives, but history shows the inertia is nothing if not resilient.

In the ICT space, the delivery of common shared services is often held out as having impeccable logic, the incentive of savings for each participant, combined with those magic words “efficiency and effectiveness”. Surely, collaboration will deliver a “win-win”? Alas, the reality appears far from the theory. It seems the problem arises just trying to agree on what might be “common”, “shared” and a “service”. When mandated, the outcomes can even be worse that the problem that was set out to be solved.

There has to be a better way. There’s clearly a need to do things better across government agencies and across governments. That means more thought must be put into the “what” and “how”, especially given the substantial barriers to success. But glib exhortations to take a “whole of government” approach must be rejected for what they are: obfuscatory strategies to maintain the status quo!

Perhaps it’s time to think about “civil” Defence again

Update: Well, just look at this!

==============================================
It’s impossible to blog about public affairs, and not think about the issues arising from the tragic Victorian bushfires.

Many thoughts come to mind: Dorothea Mackellar’s “My Country” is our country – beautiful, but cruel; the temptation of the tree change; the beauty and the peace suddenly transposed into a barren, burnt and ugly landscape; the violent treachery of fire; whether to fight or flee; what to save; the desperation and desolation of the dispossessed; the valour of those who fight the flames; the mindless, incomprehensible stupidity of those who start them; the strength of those who volunteer; the generosity of the nation. Thoughts that crowd the mind, but lead us always back to “Why?”

With many people still missing, the death toll will be “more than any of us can bear” – hundreds. Australia’s worst natural disaster. No death is insignificant, but especially not that of the innocent. By comparison, 520 brave Australians lost their lives in the Vietnam war. No fair comparison, perhaps, but relevant to the point.

This year, last year and for all the years in the Forward Estimates, Australia will spend more than $20 Billion on Defence. This is a significant commitment, but one justified by Australia’s position in the world, and current and foreseeable threats. The role played by the Defence forces in responding to natural disasters is also immense. The nation is grateful.

But are we thinking about this role for our Defence forces and, in particular, the technology platforms they possess, as a tool for supporting our civil defence?

In the case of the Victorian bushfires (and other bushfires) the capabilities of the Bureau of Meteorology is improving all the time: we knew – and were told by CBOM – that the week of 2 February would be a period of extreme fire danger in south-east Australia. As individuals, that at least allows us to prepare, although all the preparation in the world would never have been enough. So, we now have warning of the weather. Can we have warning of the fire? This is where we need to rethink the role of some of our Defence platforms.

Each summer, we see the capability of our coastal surveillance technology, with well-covered rescues highlighting the combined strengths of crew, plane and sensor technology. Might it not be appropriate to bring such capability to bear when dangerous fire weather occurs, to identify when and where fires start, to support the fire fight, to track the fire’s path and to enable and encourage more timely evacuation?

Perhaps that is a tall order for that particular platform. But Australians might be entitled to at least that expectation arising from the Boeing 737 Airborne Early Warning and Control aircraft comprising Project Wedgetail. We’ve ordered 6 of these aircraft at a (current) cost of $3.5 Billion. Boeing is now running at least two years late in the delivery of a fully functional aircraft.

No doubt these aircraft have a powerful wartime use. Nonetheless they sound like they could be really useful now, as a fire surveillance platform, when you think about it: 15,000 m altitude; 10 hours’ endurance; mid-air refuelling capable. I have no idea what sensors they have, but surely some form of heat detection, and the ability to ‘see’ through dense smoke is not out of the question. Correct me if I’m wrong, but tell me why not.

Perhaps if these aircraft and the technology they carry were considered in this role, it might instil a sense of urgency into plans for their delivery. After all, we were supposed to have them in service by now, and if they had this capability and were used that way, might the story be different now?

Disinvestment Disgrace

Intermedium’s preliminary analysis of 2008 calendar year ICT contract spending reveals further the extent of government spending cuts since the election of the Rudd Government.

Based on current AusTender data (always subject to revision) – Federal Government ICT spending in 2008 was down $557 million or 16% on calendar  2007.  That doesn’t seem so bad, on the face of it.

But here’s the bad news:  $438 million of the calendar 2008 total of $2,881 million relates to three Defence contracts with just two vendors.  So – but for those three contracts, and but for Defence’s spending – ICT contract expenditure would be down almost 30% on the previous calendar year.  And that’s without the so-called Gershon BAU cuts in place.

Clearly, there has been significant disinvestment in ICT by non-Defence agencies since the Rudd Government was elected. Arguably, around $1,000 million has been cut from spending during that time.

This is causing stress to agencies and suppliers alike, especially as it is unrelated to the Global Financial Crisis.

Now, there may well have been waste and inefficiency, and there were certainly projects of the previous Government that were immediately suspended (the Access Card most notable).  But these neither account for, nor justify the level of disinvestment now evident, especially when there is clearly much to be done in improving the delivery of government services in Australia.  There are many, many areas where well directed ICT investment will vastly improve government service delivery in terms of outcome effectiveness and efficiency.  Where is “the plan” – indeed, any plan – to consider and implement these?

Some examples:
•    the personal income tax system.  Let’s do away with the requirement for most people to lodge a return, and make it exception-based.  There is already a vast amount of income disclosure and information-sharing by employers, financial institutions etc with the Tax Office;

•    the Medicare claims system.  The current paper-based claims system for non-bulk billed or direct claimed items is poor process.  Yes, there needs to be a residual system for the disadvantaged and disconnected, but the only remaining rationale for the current arrangements is to minimise the number of claims due to frustration with the physical process;

•    the voting system.  Bangladesh recently managed to successfully conduct a national election using modern electronic technology.  Surely Australia can;

•    overseas passenger travel embarkation/debarkation.  We’ve seen what is possible. Many of us have “smart” passports. Let’s improve the flow and efficiency of passenger movements, especially arrivals;

•    passenger Customs declarations and clearances.  For the same reasons.

Those are a few where the Federal Government holds responsibility.  Really substantial gains arise in key cross-jurisdictional areas such as health and education.

•    an electronic patient medical record.  This is a scandal.  According to the December 2008 National E-Health Strategy developed for Australian Health Ministers by Deloitte, the Federal and state governments have invested more than $5 billion – yes, $5,000 million – on various electronic  health record information sharing initiatives over the last 10 years, but still have very little capability to share critical patient health information between providers and institutions.  That’s just the “cash cost”; in addition, there have been needless hospital admissions, wasteful duplication of tests and – worst of all – preventable deaths.  In government-speak, these are “poor outcomes”.  This must be fixed.

•    education services.  It is often said that if one could time-shift  a surgeon from 100 years ago, and put that person – someone of considerable expertise – in a modern operating theatre, the time traveller might be gainfully employed only in mopping the modern surgeon’s brow.  But a time travelling teacher from the same era would probably make a decent fist teaching in the schoolroom of 2009.  Leaving aside classroom technology, there are well-known problems around common standards of testing, qualifications, recognition of prior learning between the states.  These baffle everybody, especially parents, teachers, pupils and employers – for whom the overall system is meant to serve.

•    motor vehicle licensing, registration and road user charging.  The dumbest parts of most modern cars are the licence plates and registration stickers, and the cumbersome, disparate processes associated with renewals, infringements, tolls, parking and a host of other vehicle related services.  Here is a wonderful business opportunity to be seized.

•    the various police and other character checks required as part of ‘working with children’ regulations.  Designed to prevent paedophilia and other child abuse, the systems supporting these processes surely require a timely, electronic system.  Yet a significant portion of the lodgement and initial processing is paper based and uses analogue facsimiles, with all the associated risk of transcription error and mishandling.

The area of local government also deserves close scrutiny.  Even a casual review reveals a large number of organisations undertaking essentially the same thing with different systems.  Surely, a text book case study for shared services… but possibly a sacred cow of equivalent stature.

There are many more.  Please share your favourite with us.  These systems (or the absence of them) lie at the heart of the public sector infrastructure, yet investment plans don’t exist, aren’t acted on or are stalled for various reasons.  The availability of technology is rarely an issue.

Cutting spending on ICT in government for the sake of cutting spending is counter-productive.  By all means, eliminate waste and inefficiency.  But governments must concurrently invest in ICT that delivers services better, and there are plenty of opportunities out there.

Altermedium: The ‘other’ Medium

Welcome to Altermedium, Intermedium’s alternative to our newsletter: The Medium. This is the blog where you, as industry participants get to have your say about state and federal government ICT issues.