australian government ict trends report 2014-15

Australian Government ICT Trends Report

2014-15

VERSION 1.0 | MARCH 2016

Australian Government ICT Trends Report 2014-15 | 1

Australian Government ICT Trends Report

2014-15

VERSION 1.0 | MARCH 2016


Contents

Contents 2

1. Executive Summary 6

2. Notes 7

2.1 Cohort definitions 7

2.2 Agency cohort composition 7

2.3 General notes 8

2.4 Applicable qualifications 9

3. Metrics: ICT Spend 10

3.1 Total ICT spend as a proportion of total agency departmental spend 10

3.2 ICT spend as a proportion of total agency operating spend 11

3.3 Business as usual (BAU) ICT spend as a proportion of total ICT spend 12

3.4 ICT operating vs. ICT capital spend 13

3.5 Proportion of ICT spend by service tower 14

3.6 Proportion of ICT spend by cost element 15

4. Metrics: ICT FTE 16

4.1 Total ICT FTE 16

4.2 Non-ICT personnel supported per ICT personnel 17

4.3 Internal ICT FTE 18

4.4 Internal ICT FTE vs. APS employees by pay grade 2014-2015 19

4.5 Internal and external ICT FTE by Business-as-usual (BAU) and Project 20

5. Metrics: Infrastructure 21

5.1 Virtualisation 21

5.2 End user devices – Mix (in percentage terms) of desktop, laptop, thin client and tablet devices 22

5.3 Storage 23

6. Appendix 24

6.1 Glossary 24

6.2 Definitions 24


Copyright

The Department of Finance is licensed to use, reproduce, adapt, modify, distribute and communicate the information contained in this report.

With the exception of the Commonwealth Coat of Arms, and subject to any copyright notices contained in individual documents, all material presented in this report is provided under a Creative Commons Australia Licence (Attribution-NonCommercial 3.0 Unported) (http://creativecommons.org/licenses/by-nc/3.0/).

To the extent that copyright subsists in a third party (such as in the material relating to the definitions of cost elements and service towers at pages 9 to 11), permission will be required from the third party to reuse the material. The document must be attributed: “Australian Government ICT Trends Report 2014–15”.

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Email: [email protected]

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ICT SPEND

END USER DEVICES

ICT FTEs

NON-ICT PERSONNEL SUPPORTED PER ICT PERSONNEL (2014-15)


ICT SPEND BY COST ELEMENT

ICT SPEND BY SERVICE TOWER


1. Executive Summary

The Australian Government introduced the ICT Benchmarking programme to facilitate better practice and rigour in monitoring the efficiency and effectiveness of ICT investments. The Australian Government ICT Trends Report 2014–15 (the Report) informs the general community and industry about Government ICT use and expenditure.

All Non-Corporate Commonwealth agencies participate in the annual ICT benchmarking exercise. Agencies provide data about their ICT costs, personnel and infrastructure. The Department of Finance (Finance) uses the data to assess the whole-of-Australian-Government ICT environment.

The Report provides aggregate figures on:

• total ICT expenditure, breakdowns of expenditure by service tower, and by cost element;

• ICT personnel, including by service tower, whether internal or external, and by level; and

• ICT infrastructure deployed by agencies, including numbers of servers and desktop devices.

Key findings of the Report are:

• in 2014-15, the Australian Government had ICT spend of around $5.6 billion;

• compared to 2008-09, the total reported ICT spend has increased by 2.7 per cent (from $5.5 billion to $5.6 billion) while the total agency spend decreased by 10.6 per cent (from $63.9 billion to $57.1 billion). This has resulted in an increase of ICT spend as a proportion of total agency spend from 8.6 per cent to 9.9 per cent;

• compared to 2013-14, the total reported ICT spend has increased by 6.8 per cent (from $5.3 billion to $5.6 billion) while the total agency spend increased by 5.9 per cent (from $53.9 billion to $57.1 billion). The proportion of ICT spend to total agency spend has remained stable (from 9.8 per cent to 9.9 per cent); and

• business-as-usual ICT spend remains within 70 per cent of total ICT spend, indicating a reasonable proportion of funds is directed to building new capability.

Finance, in consultation with agencies, has reviewed the programme. A revised framework is proposed to be phased in over the next two years, to provide increased transparency, analysis, and value to the Government and agencies. This will include changes to this Report.

Finance welcomes questions or feedback on this report via email at [email protected].

mailto:[email protected]


2. Notes

2.1 Cohort definitions In 2014-15, agencies remains in the same cohort as in 2013-14 which were classified based on their ICT spend in the 2012-13 financial year.

• “Large agencies” are defined as those that make up the top 85 per cent of ICT spend (above $42 million in ICT spend);

• “Medium agencies” are defined as those that make up between 85 and 95 per cent (10 per cent) of ICT spend (between $42 million and $15 million in ICT spend);

• “Small agencies” are defined as those that make up between 95 and 99 per cent (4 per cent) of ICT spend (between $15 million and $3 million in ICT spend); and

• “Micro agencies” are defined as those agencies that contribute the bottom 1 per cent of total ICT spend (below $3 million in ICT spend).

2.2 Agency cohort composition The graph below shows the composition of the agency cohort based on ICT spend in 2014-15.


2.3 General notes

The report should be considered in the wider context ICT spend and other metrics should be viewed in conjunction with other efficiency indicators and the Government’s broader agenda.

The data underlying this analysis may change This analysis is based on the data presented to Finance, by agencies, as at 30 November 2015. The findings in this report is subject to the provision of any updated data by agencies after the date of this analysis.

Machinery of Government (MOG), incomplete data, and improvements in the quality of agency reporting makes comparison over time difficult Only agencies that have provided complete and valid data for the calculation of each metric, in all years, have typically been included in the analysis; this is assessed on a metric by metric basis. Data presented in previous iterations of the ICT trends reports may vary to those presented in this report, both as a result of these factors, and as a result of refinements to the data quality. These variations are generally of low significance in the context of whole-of-government reporting.

Agencies have been provided the opportunity to assure the accuracy of their data All data provided have been assessed using a standard statistical methodology; data points that were found to be statistically significant, or shown to have significant variations from data provided in previous years, have been identified to agencies. Agencies were then invited to confirm the accuracy of their data; as such all data included in this analysis are considered to be accurate and, where possible, all available data have been included in the analysis.

Total spend metrics excludes intra-government spending Intra-government spending is excluded from whole-of-government spend analysis to eliminate double-counting of spend.

Most of the data presented relates to Large and Medium cohort agencies Micro and Small Cohort agencies are excluded from some analyses as relevant data is not collected from them.


2.4 Applicable qualifications The following qualifications apply to all the metrics presented in this Report (unless otherwise noted):

• All ICT spend data exclude administered funds and non-reporting agencies.

• All spend data are represented in real terms with the 2014-15 financial year base CPI indexation applied.

• Estimation of non-reporting is quantified by applying a CPI indexation of data from relevant years as reported in the ICT benchmarking survey.

• Data are inclusive of estimated spend for identified areas of non-reporting.

• Data presented are for the Large, Medium, Small, and Micro cohorts and excludes military ICT spend.

• Variations from previously reported figures may occur when agencies provide

updated information (including material adjustments to prior years’ figures) or when material misstatements were identified. Variations may also occur when methodological improvements have been implemented.


3. Metrics: ICT Spend

3.1 Total ICT spend as a proportion of total agency departmental spend

This graph shows total ICT spend as a proportion of total agency spend. Total agency spend are the costs associated with departmental activities only.

Compared to 2008-09, the total reported ICT spend has increased by 2.7 per cent (from $5.5 billion to $5.6 billion in 2014-15) while the total agency spend decreased by 10.6 per cent (from $63.9 billion to $57.1 billion in 2014-15). This has resulted in an increase of ICT spend as a proportion of total agency spend from 8.6 per cent to 9.9 per cent.

Compared to 2013-14, the total reported ICT spend has increased by 6.8 per cent (from $5.3 billion to $5.6 billion) while the total agency spend increased by 5.9 per cent (from $53.9 billion to $57.1 billion in 2014-15). The proportion of ICT spend to total agency spend has remained stable (from 9.8 per cent to 9.9 per cent).


3.2 ICT spend as a proportion of total agency operating spend

This graph created by the Australian Department of Finance based on Gartner research. *International benchmarks source: Gartner IT Key Metrics Data 2016: Key Industry Measures: Government -- National and International Analysis: Multiyear (December 2015).

ICT spend as a proportion of total agency operating spend is another view of ICT investment levels in terms of the role ICT plays in overall spending patterns. Typically, a high proportion of ICT spend to total operating spend indicates that the organisation considers ICT as a strategic enabler.

Australian Government ICT spend as a proportion of total agency operating spend has been trending upward since 2012-13 (from 10.3 per cent to 12.2 per cent). Over the same time period, international governments benchmark has been trending downward (from 9.1 per cent to 8.6 per cent).


3.3 Business as usual (BAU) ICT spend as a proportion of total ICT spend

This metric provides an overview of BAU ICT spend as a proportion of total ICT spend. BAU ICT spend is defined as all ICT related costs outside of projects.

Since 2008-09, ICT investments on BAU remain within the recommended target (70 per cent) set by the Review of the Australian Government’s Use of Information and Communication Technology1.

1 http://www.finance.gov.au/publications/ICT-Review/

http://www.finance.gov.au/publications/ICT-Review/


3.4 ICT operating vs. ICT capital spend

ICT operating and capital spend and their respective proportion of total agency operating and capital spend have fluctuated over the last seven years. However, in 2014-15 they have mainly returned to the levels of 2008-09.

Since 2013-14, ICT operating spend has increased by 10 per cent (from 4.0 billion to 4.3 billion) while total agency operating spend has remained at a similar level (around $46 billion). This has resulted in an increase of ICT operating spend as a proportion of total agency operating spend from 8.6 per cent to 9.4 per cent. Over the same period ICT capital spend has remained stable (around $1.3 billion) while total agency capital spend has increased by 40 per cent (from $7.8 billion to 10.9 billion). This has resulted in a decrease of ICT capital spend as a proportion of total agency capital spend from 17.0 per cent to 11.8 per cent.

Traditionally, capital spend is viewed as initiating a return on investment; whereas operating spend refers to the day-to-day ICT costs. However, if agencies move to outsourcing, a decline in capital spend and an increase in operating spend would be expected. Associated scalability and flexibility provide additional efficiencies. For example, the take-up of external cloud computing means agencies only pay for what they use, and reduce capital costs by investing that money in projects or business as usual.


3.5 Proportion of ICT spend by service tower

This graph shows breakdown of ICT spend by service tower.

Applications is the highest area of ICT spend, being more than three times as high as the second-largest service tower (being End User Infrastructure). Applications, End User Infrastructure, and ICT Management together made up around 60 per cent of total ICT spend in 2014-15.

Since 2008-09, the following service towers have increased their shares of total ICT spend: Applications (from 34 per cent to 37 per cent), ICT Management (from 9 per cent to 11 per cent), Midrange (from 8 per cent to 9 per cent) and Other (consisting of Storage, Gateways, LAN & RAS, Helpdesk, and Facilities) (from 12 per cent to 16 per cent). Meanwhile, the following service towers have decreased their shares of total ICT spend: End User Infrastructure (from 15 per cent to 12 per cent), Mainframe (from 7 per cent to 5 per cent), Voice Services (from 7 per cent to 5 per cent) and WAN (from 9 per cent to 7 per cent).


3.6 Proportion of ICT spend by cost element

This graph shows the breakdown of ICT spend by cost element.

Spend on Internal Personnel and Services Outsourced to External Providers together made up over 51 per cent of total ICT spend in 2014-15.

Since 2008-09, the following cost elements have increased their shares of total ICT spend: Internal Personnel (from 24 per cent to 25 per cent), Services Outsourced to External Providers (from 21 per cent to 26 per cent), and Software (from 16 per cent to 17 per cent). Spend on external personnel remained at the same level (14 per cent), and Hardware and Carriage have decreased their shares of total ICT spend from 13 per cent to 12 per cent and from 8 per cent to 3 per cent, respectively.


4. Metrics: ICT FTE

4.1 Total ICT FTE

This graph shows the aggregation of internal and external ICT FTE. For information on the split, please refer to graph 4.5.

Compared to 2008-09, the number of ICT FTE in 2014-15 increased by 1.1 per cent (or 171 FTE). However, the number of ICT FTE has decreased by 13.5 per cent (or 2,397 FTE) since its peak in 2011-12.

In 2014-15, Government spend on ICT personnel was $2.2 billion or 40 per cent of total government ICT spend.


4.2 Non-ICT personnel supported per ICT personnel

KEY:

ICT to non-ICT staff ratio Australian Government International Government*

Calculations performed by the Australian Department of Finance. *International benchmarks source: Gartner IT Key Metrics Data 2016: Key Industry Measures: Government -- National and International Analysis: Multiyear (December 2015).

Since 2009-10, the Australian Government has consistently maintained higher proportion of ICT personnel compared to non-ICT personnel (each ICT personnel has been supporting between 8 and 9 non-ICT personnel) compared to its international counterparts (each ICT personnel has been supporting between 11 and 15 non-ICT personnel).

2014-15 : 1:9

: 1:12

2013-14 : 1:9

: 1:12

2012-13 : 1:9

: 1:15

2011-12 : 1:8

: 1:11

2010-11 : 1:9

: 1:13

2009-10 : 1:9

: 1:14


4.3 Internal ICT FTE

Note: These may not add to 100 per cent due to rounding.

The graph on the left shows the proportion of internal ICT FTE to total ICT FTE. The graph on the right shows the breakdown of internal ICT FTE by pay grade. Please note that these graphs exclude Small and Micro Cohort agencies as split data is not collected from these agencies.

Compared to 2008-09, there has been a decrease in the proportion of internal ICT FTE from 78 per cent to 76 per cent. The proportion of Executive Level 1 FTE has increased from 30 per cent to 32 per cent, however it has been on a downward trend since its peak at 34 per cent in 2012-13. The proportion of APS 1-3 FTE has decreased from 9 per cent to 4 per cent while the proportion of APS 4 FTE has increased from 9 per cent to 11 per cent. This suggests the increased in skill and experience required in ICT roles.

The change indicates growth in skilled and more experience ICT staff employed internally.


4.4 Internal ICT FTE vs. APS employees2 by pay grade 2014-2015

This graph compares internal ICT FTE with APS employees by pay grade in 2014-15. Please note that this graph excludes Small and Micro Cohort agencies as split data is not collected from these agencies.

In 2014-15, the profile of Executive Level 1 and 2 (EL1 and EL2) and APS6 in ICT differs to that of the APS more broadly, with stronger representation of staff at these levels working in ICT. Conversely, ICT FTE at APS1-5 are disproportionally less represented when compared to the general APS. This may be an indication of the specialised skills required in ICT roles.

2 The whole-of-APS staffing profile is sourced from the 2014-15 State of Service Report published by the Australian Public Service Commission, and covers non-reporting agencies.


4.5 Internal and external ICT FTE by Business-as-usual (BAU) and Project

Internal ICT FTE

This graph shows the number of internal FTE involved in Business-as-usual (BAU) operations and Projects.

Over the reporting period, the total number of internal ICT FTE has decreased by 4 per cent (from 11,634 FTE to 11,169 FTE) which was driven by a decrease of FTE working for ICT Projects by 19 per cent (from 3,893 FTE to 3,155 FTE) and an increase of BAU FTE by 4 per cent (from 7,741 FTE to 8,014 FTE).

External ICT FTE

This graph shows the number of external FTE involved in Business-as-usual (BAU) operations and projects.

Over the reporting period, the total number of external ICT FTE has increased by 7 per cent (from 3,360 FTE to 3,602 FTE) which was driven by an increase of BAU FTE by 22 per cent (from 1,281 FTE to 1,567 FTE) and a decrease of Project FTE by 2 per cent (from 2,079 FTE to 2,036 FTE).

Please note that these graphs exclude Small and Micro Cohort agencies as split data is not collected from these agencies, resulting in a small difference in each year’s total reported ICT FTE from those reported in graph 4.1.


5. Metrics: Infrastructure

5.1 Virtualisation

This graph shows the number of Operating System (OS) instances and physical servers in the Midrange service tower as well as the number of OS instances per physical server. Note: This graph excludes Small and Micro Cohort agencies as split data is not collected from these agencies.

Since 2008-09, the number of OS instances per physical server has been steadily increasing from 1.5 to 5.1 in 2013-14. The increase was mainly due to the steadily decrease in number of physical servers (from 16,583 to 10,904 in 2013-14).

Since 2013-14, the number of OS instances and physical servers have increased by 38 per cent (from 55,337 to 76,364) and by 37 per cent (from 10,904 to 14,907), respectively. As a result, the number of OS instances per physical server remained stable at 5.1.


5.2 End user devices – Mix (in percentage terms) of desktop, laptop, thin client and tablet devices

This graph shows the mix (in percentage terms) of desktop, laptop, thin client and tablet devices. Note: This graph excludes Small and Micro Cohort agencies as split data is not collected from these agencies.

Over the reporting period, desktop computers remained the most common end user devices for APS employees, accounting for 71 per cent in 2014-15. However, there has been a rapid increase in the usage of thin client devices (from 2 per cent in 2008-09 to 10 per cent in 2014-15) and tablet devices (from 1 per cent in 2011-12 to 4 per cent in 2014-15).


5.3 Storage

This graph shows the total installed storage in Petabytes3 (PB) and the unit cost of installed storage per Terabyte (TB). Please note that this graph excludes Small and Micro Cohort agencies as split data is not collected from these agencies.

Over the reporting period, there has been a steady increase in the demand for storage of approximately 41 PB per annum (from 46 PB in 2008-09 to 291 PB in 2014-15). At the same time, the cost per unit of storage has decreased by a factor of 5 (from $3,927 per TB to $788 per TB).

3 1 Petabyte = 1,000 Terabytes


6. Appendix

6.1 Glossary

Short form Long form

APS Australian Public Service

BAU Business As Usual

Capex Capital Spend

FTE Full Time Equivalent

ICT Information and Communication Technology

LAN Local Area Network

MOG Machinery of Government

Non-BAU Non Business As Usual (usually projects)

Opex Operational Spend

OS Operating System

RAS Remote Access Services

TB Terabyte(s)

WAN Wide Area Network

6.2 Definitions

Cost elements

Carriage The costs of providing digital or analogue electronic impulses (including data, voice or video) over a distance.

External personnel spend

External full time equivalent (FTE) personnel are staff who provide services on a time and materials basis (e.g. "body shopping"). These staff are generally contractors, but may also be described by agencies as consultants.

Hardware spend Spend on purchasing, leases, maintenance and repair for all physical ICT equipment, such as servers, PCs, terminals, printers, peripherals, printing equipment, networking and telecommunications equipment, materials/accessories and disaster recovery hardware.


Internal personnel spend

For all internal FTE (e.g. Australian Public Service staff) involved in ICT activities, includes all wages and salaries, provisions for staff entitlements and staff on-costs.

Other spend Spend on occupancy, facilities, utilities and other ICT spend not captured in other cost element categories.

Services outsourced to external provider

Spend on services provided under a non-government third-party’s responsibility.

Services outsourced to FMA Act agencies

Spend on services provided under the responsibility of agencies subject to the FMA Act.

Software spend Spend on licences, as well as repair and maintenance for external and standard software, systems software, and standard office productivity applications as they apply to each service tower and the total agency level.

Service towers

Applications Programs and other software (including the supporting documentation, media, on-line help facilities and tutorials) that perform user or business related information processing functions.

End user infrastructure

Services, hardware, software, personnel, functions, activities and responsibilities that are provided directly to end-users in an agency. Hardware includes desktop and laptop computers, thin clients, personal digital assistant, and support of these activities, software (including standard operating environment and client software), distributed file, email and print servers, and peripherals such as printers and scanners.

Facilities Physical facilities, including raised floor space, power supply, air conditioning, and associated utilities, as well as security and facilities monitoring and maintenance services, personnel, activities, hardware and software.

Gateway Services, hardware, software, functions, personnel, activities and responsibilities that securely connect and provide an interface between two different data networks (typically internal networks and external networks).

Helpdesk Buildings, infrastructure, associated technologies and fully trained staff who respond to Level 1 helpdesk calls from end users, co-ordinate incident management, problem management and request management activities, and act as a single point of contact for agency end-users in regard to all service towers.

ICT management Services, equipment, activities, personnel, functions and responsibilities providing cross-service tower governance, controlling, security, architecture, finance and human resources services to the ICT organisation.


LAN and RAS Local area networks (LANs) comprise all network elements (LAN hardware, software, transport systems, interconnect devices, wiring and cabling) inside buildings and campuses that are used to transmit data within or among LAN segments, as well as services, software, functions, personnel, activities and responsibilities to support operation of these. Remote access services (RAS) comprise all dial-in and virtual private network (VPN) infrastructure services, hardware, software, functions, personnel, activities and responsibilities provided to remote users in the business (e.g., telecommuters and field staff).

Mainframe Services, hardware, software, functions, personnel, activities and responsibilities involved in providing enormous input/output processing capacity and running a typical mainframe operating system (OS). These are typically housed centrally in data centres.

Midrange Services, hardware, software, functions, personnel, activities and responsibilities involved in running server applications with typically high input/output processing capacity, which are typically housed centrally in data centres, but not mainframes.

Storage Services, hardware, software, functions, personnel, activities and responsibilities involved in providing data storage services to the business.

Voice services All carrier and telecommunications services, carriage, hardware, software, activities, personnel, functions and responsibilities involved in providing voice services and non-internet protocol (IP) videoconferencing services to the business, including Voice over IP services.

WAN Services, hardware, software, functions, personnel, activities and responsibilities provided to the business to achieve data connectivity across a long-haul, high speed backbone wide area transmission network.

australian government ict trends report 2014-15

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