NSW government IT project cost overruns down by 90% in five years

Digital NSW director Rachel Maiden has said the state government managed to reduce cost overruns of IT projects by about 90% in the last five years due to the introduction of its assurance program.

“That’s a remarkable kind of feat, and we do that through working collectively across the New South Wales public sector and having a rigorous focus on outcomes,” said Maiden, whose primary role is to oversee the policy function of the state government’s AU$2.1 billion Digital Restart Fund.

According to Maiden, the assurance program was designed to fix what was previously a broken system. It’s targeted at IT projects with a value of AU$5 million and above.

“We’ve all heard horror stories of overblown overbudget IT projects that actually end up delivering nothing, and New South Wales was no different — we’ve had our fair share of high-profile cases,” she said.

In a bid to better manage the financial aspect of its IT projects, Maiden highlighted that the state government went a step further by moving away from annual budgets requests, which were competing with Treasury funding, and introducing the Digital Restart Fund.

“Every year we’d look at every single department’s priorities … and we look at them from a really strategic point of view: What is the thing that we need to invest in to make the biggest difference in New South Wales in the next 12 months. We do that as a collective decision across the New South Wales public sector,” she said, speaking at the virtual Gartner IT Symposium/Xpo 2021 on Tuesday.

“Of course, we’ve got some criteria about that as well, [such as] what’s going to have the most customer impact, what’s the risk that we need to address — of course, cybersecurity is always present in our kind of decision making.”

The other aspect that made the Digital Restart Fund unique, Maiden claimed, was that the funding has been delivered in tranches.

“Instead of saying here’s a couple of AU$100 million straight up, we’ll see you in three years and see how you go … here’s a portion of your funding and then show us what you have delivered, show us your successes, show us how you’re working, and then we’ll deliver more money,” she said.

But the success Maiden described is a rarity. According to a recent Gartner survey of the 166 government organisations in April-May 2021, only 5% reported they were at the top of the maturity scale and are using digital solutions to underpin all aspects of their organisations.

“There was a real divide between those who were estimating the impacts and those were actually physically measuring it, and those that are measuring it tend to be those ones that were more digitally advanced in our assessment,” said Gartner senior research director Dean Lacheca, speaking at the virtual Gartner IT Symposium/Xpo 2021.

The survey also reported that 55% of digital government programs are failing to scale, with 10% of respondents noting that they are at the early stages of experimenting, exploring, or deploying some citizen-facing digital services.

Lacheca pins part of that slow uptake on the risk mindset that lives in government, as well as the knowledge gap that exists at an executive level about the benefits of investing in technology projects.

“There is a communication challenge between some of the ICT leadership in individual government departments and the ability to have a business acumen to communicate in a way that really resonates with the leaders of those departments,” he told ZDNet.

“Putting a business case up that says we have no choice but to replace this platform or we have no choice but to take on this multi-year, large, highly risky, highly expensive project, there’s pushback from leadership, so there’s no buy-in to the benefit or the journey that they’re going to take.”

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