When it comes to digital technology, it’s time for governments to rethink waterfall investment models, writes Ben Allard.

Government agencies’ interest in digitalisation has been bubbling for several years, but it took a pandemic to really kick new projects into action.

Analysts expect government IT spend in Australia to hit $15.5 billion this year, an 8.8 per cent year-on-year increase. That follows a 7.6 per cent climb in 2021.

Insiders like Gartner’s Vice President Brian Ferreira say the upward trajectory is forecast to continue for a while yet, driven by key programs to progress the digital economy, strengthen national cyber response, adopt emerging technologies and address gaps in regulation.

Treasurer Josh Frydenberg recently announced another $252.5 million over four years will be committed to build out Australia’s digital economy strategy.

Although technology has certainly whet the appetite of government like never before, the funding models responsible for bringing projects to life haven’t evolved to match the needs of today’s operating models.

Cultural change

It’s a case of contrasts. Operating models have shifted to delivering new digital services and existing capabilities in better and more agile ways to the public sector and the public. However, funding is still subject to ‘waterfall’ processes which are rigid and loaded with red tape; by the time agencies reach deployment phase, the technology solution can often be outdated.

Lesley Seebeck, honorary professor at the Australian National University (ANU) argues, “the nature of these processes and the effort required to complete them make it difficult to meet government, community and industry expectations of a modern, agile public service.”

Overcoming these historic habits requires wholesale cultural change right across government to create alignment between IT departments and their business and finance stakeholders, similar to that which has occurred in the private sector.

Pulling IT departments into the equation

While there have been efforts to centralise policies and standards for purchasing technology, unfortunately CIOs and technologists are still commonly pushed out of the decision-making process.

They have consequently struggled to secure buy-in and backing from the agencies involved even when projects have proved logical, practical and promising. This has not only stunted adoption, but caused budget waste as many great ideas have been scrapped just before being started.

Cultural change won’t happen overnight due to the bounds of changing leadership and policy, but pulling IT departments into the equation elevates their role to more than that of custodians of project deliverables or managing day-to-day outcomes.

Instead, it allows real transformation as technology decisions become directly tied to the outcomes government agency stakeholders need, while demonstrating return on investment (ROI) to finance departments. All parts of the agency gain the opportunity to align to create prioritisation rather than succumbing to ‘whoever yells loudest’, as is often the experience.

Business as usual

There are also significant cost savings to be discovered as a result of this level of cultural change. In synchronising IT departments with agencies’ business and finance stakeholders, departments will be in a position to identify waste in ‘business as usual’ (BAU) spend – the cost of running IT systems day-to-day.

In the private sector, leading enterprises can spend in the vicinity of 50 to 60 per cent of their technology budgets on BAU. In the public sector, that’s can be closer to 70 to 80 per cent. This represents an opportunity to reallocate up to 30 per cent of BAU spend to pursue new innovation, or simply spare the taxpayer wallet.

Facilitating change in how the technology funding works also requires increased frequency and speed in planning and investment. While long-term strategies are crucial, there need to be affordances to allow reevaluation of direction to meet evolving priorities.

Quarterly planning, not five year roadmaps

The ability to revisit five or seven-year roadmaps and change tack or direction enables government agencies to better respond to a changing landscape and priorities. For example, with quarterly planning, stakeholders have a forum to collaborate directly with technologists on how particular challenges have evolved in order to realign funding to support new objectives.

The pace of technology funding has certainly accelerated in the past decade – particularly with the rise of cloud computing – however there is progress yet to be made. While waterfall investment models won’t be eliminated entirely (at least not in the very near future), there is significant opportunity to instil cultural change as a conduit for more agile government operations in the context of technology adoption.

Ben Allard is Vice President and General Manager for Asia-Pacific at Apptio.

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