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New Zealand: Outsourcing ICT Needs |
| Source: |
scoop.co.nz |
| Source Date: |
Thursday, January 27, 2011 |
| Focus: |
Electronic and Mobile Government, Citizen Engagement, Internet Governance
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| Country: |
New Zealand |
| Created: |
Jan 31, 2011 |
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As the Government looks to reduce debt and increase economic performance as outlined in yesterday’s State-of-the-Nation address by Prime Minister John Key, an excellent first step is its desire to overhaul and outsource its information and communication technology (ICT) systems.
Not only will this save the country millions of dollars per year, but, with a small amount of extra investment, there is a wonderful opportunity to make available a host of other benefits for New Zealand businesses.
However, it will take a reversal of some Government thinking to fully reap these benefits. Offshore regulators are now proving they are both substantial and enduring.
The ICT tender, targeted at reducing today’s cross-Government spend of approximately $2 billion annually, would see the outsourcing of the management of the network and ownership of the servers, a type of cloud computing. In essence the Government ends up paying only for the services it uses and needs.
New Zealand needs to cut Government spending and increase efficiency as evidenced by the fact that Government spending has increased 50% in the last six years and that, as a country, we are having to borrow $300million a week to pay the bills.
Nine strategically significant government agencies are currently committed to the planned ICT upgrade, including Inland Revenue, the Department of Internal Affairs and the Ministry of Economic Development.
To reap all the potential benefits that the planned ICT upgrade will bring, a reversal of last year’s Budget thinking will be needed.
The Government needs to once again start investing in a Standard Business Reporting (SBR) regime.
There is already clear evidence, especially in Australia that investing in SBR makes it easier to do business and hence “deliver the jobs, higher incomes and better living standards New Zealand aspire to and deserve” noted in the John Keys’ opening remarks.
The goal of a SBR programme is simple. It aims to significantly cut compliance costs for business by reducing the need to file the same financial information to multiple agencies, minimising duplicated and unnecessary data, and automating the preparation and filing of statutory returns required to be filed with identified SBR agencies – the Ministry of Economic Development, Inland Revenue, Statistics New Zealand and ACC.
In contrast with Australia, the New Zealand Government’s investment in the SBR programme was halted in last year’s Budget
While the Australian Government has pressed forward into a third year of investing $230 million in SBR to make its interaction with businesses more efficient and effective, New Zealand’s cumulative investment in SBR of approximately $4 million was, last May, put on ice.
Perhaps a thaw should now take place because when local studies were carried out in 2008 the findings indicated that if New Zealand spent between $18 million and $28 million on its SBR programme over a three year period, the estimated annual cost savings to business would be in the order of $55 million to $75 million per year once completed.
To make this happen a very small portion of the Government’s new spending allowance in Budget 2011 (anticipated to be somewhere between $800 and $900 million) would be needed.
That’s an impressive return and one that is being recognised by Governments around the world. The technology that supports SBR is XBRL – extensible business reporting language. Designed specifically by the accounting and IT professions to share both financial and non-financial data efficiently and effectively, it’s the technology that now sits behind the United Kingdom’s corporate tax collection system and the US federal banking system.
In deploying SBR, the Government would also tangibly demonstrate an ongoing commitment to its Single Economic Market initiative with Australia.
Now the Government has this significant ICT tender in place, it would be well advised to once again look at the potential cost savings SBR delivers. If just a small proportion of the planned regulatory compliance cost savings in Australia (anticipated to be in excess of $800 million per year from 2013 onwards) are realised here, New Zealand Government officials should look quickly to breathe new life back into this initiative.
The New Zealand Government should be applauded for considering such a bold step to make us one of the first countries in the world to introduce this type of infrastructure as a service. However, to reap the full benefits from this investment, other initiatives have to be undertaken. An SBR programme is just one of these.
Replacing an ICT system can be compared with looking to replace one’s cell phone with the best available handset on the market. Its functionality to the user is ultimately only as good as the weakest link in the network. So, if the super phone allows for video and internet streaming but the network can only handle voice and data, many of those really cool features that originally made the phone so desirable end up being redundant. That’s why SBR should not be overlooked because if it is we will regret it in due course.
John Key yesterday outlined his twin targets of reduced costs and increased economic efficiency. The ICT upgrade, backed by a solid investment in SBR, will deliver both in spades.
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New Zealand: Outsourcing ICT Needs As the Government looks to reduce debt and increase economic performance as outlined in yesterday’s State-of-the-Nation address by Prime Minister John Key an excellent first step is its desire to overhaul and outsource its information and communication technology ICT systems
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