During my recent three week long visit to Australia, I was not surprised to see that practically every single client meeting was either dominated or making reference to the so-called Gershon Review. This is an independent review of the Australian government’s use of ICT performed in 2008 by Peter Gershon, former UK Treasury’s Chief Executive and author of a similar review a few years ago in the UK.
The Australian government accepted all Gershon’s recommendations, one of which requires agencies that spend more that 20 million AUD in IT to cut operational IT spending by 15% over the next two years and agencies with spending between 2 and 20 million AUD to cur 7.5% over the same timeframe. The intent is to decrease business-as-usual spending from 77% to 70% of the total, hence freeing resources for new projects.
I had discussions with several clients about whether they were considering how to value different operational IT activities to be able to reduce those that were less clearly linked to business value. Not surprisingly most are rather trying to squeeze efficiencies irrespective of value, looking at better license management, use of less expensive human resources, and relatively straightforward consolidation and virtualization activities.
However for those who had already managed their operational spending quite effectively, there are not many low hanging fruits available and they have to take more difficult decisions about reducing service levels in certain areas. Portfolio management would look like the right discipline to prioritize operational activities by the value they deliver to the business. Unfortunately, when it is used, it is usually applied to projects (i.e. discretionary spending) and not to operational spending. This is partly due to the lack of maturity in using portfolio management and – more in general – value management, but also to the inherent difficulty of linking enterprise-wide operational activities to the value they deliver to individual parts of the organization.
However I found this one client who is doing exactly that: using the same template and tools they use to prioritize new projects to connect as many operational activity as possible to the value they bring to different parts of the organization. I thought this was a great way to decide what to curtail… but then a sudden thought occurred to me. Was their intention to just be able to prioritize operational spending to identify what to cut, or were they trying to reposition business-as-usual activities as “projects”, in order to simply present operational spending as new or enhanced capabilities and therefore basically circumvent the cuts? When I alluded to this interpretation, the client did not admit, but smiled.
Isn’t this brilliant?