Government is getting tired of being held to ransom on large technology procurements and programs that have failed to deliver, according to David Heacock, Spokesperson and Coordinator at the Australian Digital Delivery Alliance.

Heacock, who is representing small consultancies that banded together to form the alliance, tells ADAPT that core changes to procurement practices are a big lever that can improve the way government buys IT.

In his new paper, ‘Recoding Australia, A playbook for better digital delivery’, Heacock addresses decades of poor government IT spending.

He identifies several root causes for government project failures, including the illusion of control that creates a false sense of security, prioritising process over outcomes, waterfall budgeting and complex monolithic architectures.

These root causes, he says, have created two popular but problematic procurement models – the ‘big vendor model’ and the ‘contractor tent city model.’

He argues that governments in Australia understand that they have significant problems around IT procurement that need to be solved with big solutions, which “automatically translates to big vendors.”

“That’s deeply enmeshed with the idea of the illusion of control. [That is] we need a big vendor so that we can keep everything wrapped up, everything co-ordinated – and all the moving parts [are] working effectively together. We know exactly what we are going to get, when we are going to get it and how much it is going to cost,” he says.

The problem with ‘land and expand’

Many tech consultants have a ‘land and expand’ mindset with customers. They gain a beach head and “keep throwing troops” at problems. Some are good at identifying but not helping customers prioritise risk, he says.

“So, we end up with the appearance of risk blowing out massively and these project management offices (PMOs) going from a very small group to a very large group, therefore slowing everything down.”

Furthermore, having too many independent pieces across an IT program adds complexity that comes with a productivity tax. This becomes exponential as more pieces are connected and coordinated across a big tech program, he says.

Meanwhile, under the tent city model, the government department will play a systems integrator role and hire contractors to help it control costs and people. Contractors, on the other hand, have different motivations; they want their contracts to be extended and have a ‘land and extend’ mentality, he says.

Both models are unproductive, but there is a spot in the middle that is starting to emerge, one that is not popular with government procurement officers: the small project mentality.

This is a discrete piece of work that can be carved off from the ‘main mothership’ of the program. A smaller vendor can complete the work, treat it as a product and keep evolving that piece of work, he says.

“That’s where we are focusing, trying to open up that space, getting more pieces of work flowing from government that small vendors can attack,” he says.

Moving from ‘projects to products’

Another solution that Heacock put forward to solve government IT procurement issues is taking a product-based approach to program funding rather than traditional waterfall-based project delivery.

ADAPT’s Market Trend Report, ‘Transform your digital delivery by shifting from a project to product approach’ provides real world examples of how this model works for several Australian organisations where they develop and iterate products based on feedback from staff and customers. This model prioritises long-term value creation and customer satisfaction.

Heacock says this approach will go a long way towards fixing the funding and procurement issue, but it will be difficult.

“This is one of the core problems that government has – the difficulty is that software is seen as a capital expense rather than an operating expense. Once we apply CapEx funding to a software product, we see it as a thing we are buying off the shelf, it’s an asset,” he says.

“If it’s an asset, can I resell it, does it depreciate? Can I do something else with it? Generally, the answer is no. It’s a tool for helping your staff and customers achieve a goal,” he says.

The difficulty with CapEx funding is that it forces customers to define a project’s beginning, middle and end and it’s “very spiky” in its application, he says.

“We get these huge spikes of CapEx funding and then, nothing.”

That curve can be flattened with a product-based approach, he says.

“So, somewhere there needs to be a translation between CapEx funding…to be able to mix the funding sources within government to protect a team to work as a product team.”

He says this will be a difficult journey that will require a lot of engagement from government ministers, senators, the Department of Finance, the Digital Transformation Agency and similar organisations to begin experimenting with the model.

“I’ve seen it done well before not just in Australia but around the world. Persistent product teams dramatically outperform the status quo of project-based funding.”