Digital transformation in the public sector is being hindered by “lingering” legacy technologies and technical debt, with agencies unable to make progress due to a funding shortfall and backward budget processes, according to the government’s long-awaited Digital Review.
The 164-page review reiterated long-held views about digital and ICT skills and capabilities in the public sector, which it said suffer from “insufficient investment”, resulting in a “heavy reliance” on costly outside contractors.
Quietly released by the Digital Transformation Agency last month, the digital review audited whole-of-government digital and ICT maturity, capability needs and risks to form a “baseline measurement of digital capability”.
When it was commissioned in response to the Thodey review of the public service in December 2019, the then government said the audit was “urgent” and would help to develop a longer-term ICT blueprint, but it ultimately took the DTA two years to complete.
Former Employment minister Stuart Robert announced the Coalition government was considering the findings of the review in December 2021, but chose not to publicly release the report before the election in May.
The review assessed the government’s overall digital maturity as 62 per cent, ahead of the international government benchmark (51 per cent), but well short of current digital government leaders including Singapore (79 per cent) and Estonia (87 per cent).
Anonymised results cited in the report show agency maturity rankings ranging from as high as 77 per cent to 44 per cent, with all the agencies that took part in the DTA’s 2018 Digital Maturity Assessment making progress.
But despite the glowing assessment, only one of 20 agencies surveyed – which together account for over 80 per cent of government expenditure – “agreed that funding was sufficient to implement major change programs, decommission or transform legacy systems”.
“Baseline agency funding is inadequate to support development, adoption and deployment of new digital and ICT products and services,” the review said, adding this was particularly pronounced at smaller agencies that dedicate a “larger percentage of their… funding to BAU spend”.
The review also found funding is “regularly reduced, and often deprioritised in planning new capability”, meaning “agencies do not have the certainty to plan for the future of platforms and systems”.
Without sufficient funding, agencies reported that “legacy technologies and technical debt-constraining transformation” is having a “substantial burden” and exposing them to cyber security risks.
More than 350 critical systems, 75 critical datasets and 65 shared platforms and services were charted across government.
“Combined with technical debt, they slow delivery and reduce the ability of agencies to adopt innovative technology, integrated with external capabilities, adapt their practices and ways of working, and ensure positive stakeholder experiences,” the review said.
“If legacy technologies are maintained, there is significant risk that digital leadership will be unachievable.”
Agencies also reported “current budgetary processes are not supportive of ‘fail fast’ implementation and delivery approaches”, which limits “experimentation, agile delivery, and continuous, iterative improvement” across the APS.
“Some agencies indicated their internal budget processes are incompatible with modern funding approaches for digital investments, including releasing funding in faster, more frequent cycles,” the review said.
“Agencies indicated additional complexity in determining an appropriate split of capital and operating funding, particularly given the introduction of cloud and as-a-service infrastructure solutions with operating cost bases.”
It has recommended that agencies be able to “release smaller allocations of funding more quickly, encouraging faster and more iterative development of digital solutions and services”, given the trend towards as-as-service models.
Agencies also reported that current approaches to funding and delivering digital and ICT capabilities “do not sufficiently support and incentivise agencies to prioritise meeting whole of government needs”.
There is similarly no whole of government digital and ICT investment plan to work off, meaning agencies are “unable to coordinate and align their activities accordingly”.
Talent also continues to be a concern for the public sector, with “insufficient investment into deepening digital and ICT skills and capabilities, as well as structural staffing constraints and a lack of workforce understanding” translating to a “heavy reliance on contractors”.
Only half of agencies reported mapping digital and ICT capabilities to roles, while “only a quarter of agencies support their staff with learning and development programs to innovate and lead transformational change”.
Other areas of concern included inconsistent benefits realisation tracking for investments, inadequate platforms to support cross-agency collaboration, data and information sharing, and gaps in Senior Executive Service leadership knowledge on transformation.
Reported strengths included alliances with vendors and other service providers for smaller ICT contracts (under $50 million each year), strategy development and engagement with senior leadership and efficient management of core functions like service desk management.
The review said that “investment, practical commitment, and a systematic approach to delivering transformation” is needed to address “lingering technology legacy and technical debt” and boost whole-of-government oversight of shared digital and ICT capability, among other concerns.
“A single intervention to deliver change in these areas will be insufficient to bring the Australian Government to global digital leadership,” the review said, pointing to a number of in-flight initiatives including the creation of a whole of government architecture.
“Digital transformation is a continuous process and new funding models are likely to be required to support this – providing secure, ongoing funding to support whole of government digital and ICT delivery, sustainment, continuous improvement and the adoption of whole of government capabilities by agencies.”
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