Blog Posts

ICT Benchmarking NZ

Blog: Dave Thinking Aloud - David French

The Administrative & Support Services Benchmarking Report for the Financial Year 2010/11 is probably not going to make it into the best seller list and if you have to download it from the treasury web site you may experience for yourself what the prime minister  was describing when he was quoted as “shocked” by the state of many government IT systems, which he says will need to be upgraded to improve public sector efficiency.
However, it is hard to see whether we should be appalled , content, or apathetic about the current spend of $980 million on ICT which represents nearly 57% of total government administration and support services costs.
We might expect a benchmark report to indicate some standard to be achieved but I searched in vain. $980m seems low when compared with the total expenditure of the NZ Government. The NZ Govt Treasury Web Site was down as I wrote this so I am relying on the 2011 budget forecast figure of $78,944.4 million. Actual spend was 70,450 million. So the ICT spend is about 1.3% of total spend. You can compare that with the profligate Brits who reported that the “average for the percentage of total revenue expenditure spent on ICT in central government departments is at least 5%”. They were not very happy about that but did note in a report of Public Administration Select Committee that “It is widely accepted that 3% is a benchmark of good practice in the private sector service industries for ICT spend as a percentage of total revenue expenditure. Socitm benchmarking in recent years has demonstrated that local government organisations spend consistently less than 3%”. The US federal govt spends about 2% of its 3.8 trillion expenditure on ICT.
So in benchmark terms are we spending too much or too little?
The emphasis on ICT being 57% of total government administration and support raises the same question. With pressure to cut public service numbers (the other main component of administration and support) we should be looking at increasing the proportion of the A&S cost that is taken up by ICT. But really is it a sensible benchmark factor?



Added actual NZ govt expenditure 9:24pm

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