Wednesday, May 2nd, 2012
OVUM COMMENT: Steve Hodgkinson, Research Director

Yesterday’s Victorian State Budget held a little more cheer for the ICT industry than was expected. The Baillieu Government’s first budget last year was an IT shocker, with the funding tap for new IT investment turned firmly off in favour of an extensive program of election commitments. The crisis of confidence in IT engendered by the Ombudsman’s report and seeming inability of any of the major IT projects to ‘come good’ didn’t bode well for IT investment prospects.

As it turns out, the tap has been opened cautiously again. Around $258M in new investment is now set to flow into targeted portfolios over the next four years – primarily health, emergency services and water management. The largest investment is $100M over 4 years allocated to a Victorian Innovation, E-Health and Communications Technology Fund to support Public Health Services ICT projects, including system and software upgrades and installations. Funding of $16.6M is also allocated for Victoria’s ongoing contribution to the funding of the National eHealth Transition Authority for the next 2 years.

The Department of Sustainability & Environment received $27M for making fire risk mapping data available free of charge and for a range of water modelling and management systems. The Emergency Services Telecommunications Authority received a further $21.9M to enhance its computer aided dispatch system. In Transport, further asset funding of $32.5M is allocated to completion of the Metropolitan Train Safety Communications System … and, in the gift that keeps on giving; a further $50M has been allocated to continuation of the Metcard ticketing system in parallel with Myki (gasp!).

While perhaps better than expected, the Budget nonetheless provides slim pickings for the IT industry in terms of substantial new projects. Overall, the Government has spread $4.1B of investment across hundreds of new policy and service delivery initiatives … some of which will no doubt pull through some IT projects … but this is in exchange for savings expectations of $1B to be achieved by cuts to other programs and productivity improvements. The IT investment agenda for the next few years will thus very much be driven by the need to extend the life of existing assets and systems while finding ways to fund productivity boosting IT investments from within existing department and agency appropriations.

Agencies will need to “think outside their boxes” this year to find ways to drive innovation and productivity improvements without the need for the usual heavy lifting expensive, long winded, and risky ICT projects. Some useful proof points for the value of cloud computing services as an alternative to traditional IT are now emerging from the agency woodwork, so we expect to see more active consideration of cloud services as the word gets out that they actual can be better, faster and less expensive … as well as less risky.


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