2007/03/19

Controllig Waste in Government I.T. - An Immodest Proposal

The Standish Group has researched and released the CHAOS report since 1994. What's special about Yet Another Expensive Industry Report?

The fact that nobody else does it, they have 50,000 detailed case studies of I.T. projects, and their results are consistent year to year (but they would make it that way, wouldn't they?).

Do we believe their claims the US spends $250Bn/year on IT applications development? That $81Bn of that is on cancelled projects and anothe $59Bn on over-runs? Or that only 16.2% of projects finish on time and within 130% of budget? That "For every 100 projects that start, there are 94 restarts"?

To scale that back to Australia, about one fifteenth the size, there'd be A$21Bn/year on just applications development. Which doesn't gel with estimates from the ABS that the I.T. sector here is about A$20Bn in total. (The ABS only reports accurately the ICT sector - grossly inflated by 'Communications' i.e. phone et al.) If the Australian I.T. sector is 5% of GDP, it would be around $50Bn and employ 500,000 people. Not unbelievable.

Either the US does a lot more AppDev that us, they pay a lot more, the survey is wrong - or the ABS survery figures are out.
To cut through the questions, all that's needed is a 'scale factor' - to convert the numbers from Standish into believable figures for Australia. Taking the ABS survey figure as a lower bound and guessing that half I.T. budgets go on AppsDev, or $10Bn, then that's a scale factor of 25:1.

So the Waste in Australia on cancelled AppDev projects is at least $3.25Bn/yr. The ABS also state that 40% of I.T. expenditure is by Government - half by the Federal Govt. The Government is wasting $1.5Bn - $3Bn of public monies yearly.

The only reliable figure for 'waste' is cancelled projects. Standish do say 52.7% of projects will cost 189% of their original estimates. But that could just be deliberate low estimates, optimisum or ineptitude of the IT areas - which after 50+ years of commercial I.T. you'd have thought management might have recognised and addressed.

It's over 10 years since Standish started their CHAOS reports - so why hasn't any section of the Australian Government looked at the problem here? Some possibilities:
  • There is no problem here. [Nope, glorious failures like ADCNET abound]

  • We don't have figures, so nothing could be wrong.

  • It's too trivial a figure

  • Nobody here knows the Standish work. [That's either negligence or incompetence.]

  • It's nobody's job? How about:

    • Australian Audit Office?

    • Senate Estimates Committee and Expenditure Review Board?

    • AGIMO, NOIE, GOI, ...

    • FMA Act & Finance - "Efficient, Effective, Ethical expenditure of public monies"

    • Department Heads [see FMAA]

    • I.T. Heads



There is a tried, proven model for controlling 'waste' - and the government knows it well:
Aviation.

Two independent bodies are needed: An investigator and an enforcement/compliance agency.
In Aviation, they are "BASI (Bureau of Air Safety Investigation)" and "CASA (Civil Aviation Safety Authority)".
CASA creates real 'consequences' for people and organisations - negligence and incompetence are cause for temporary or permanent disbarment from the industry.

BASI looks to find the causes of 'incidents', how to avoid them in future and promulgates the information to everyone that should know.

For about $30M/year, roughly the budget of the ANAO, the Federal Government could start to define and address the problem of I.T. waste. This is an area where the Government can lead the Private Sector - the same companies and people contract for the public and private sector. The Government can be seen to be impartial and transparent, and their is no legal impediment for a government "right to practice" list.

Spending $30M to save $3,250M - that sound like a good deal to me. Why not to the Government?

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