The Cost Of Information Technology

"As anyone who has set up their own computer system knows, IT projects can be fraught with difficulties which can result in time delays and additional costs", State Services Minister Simon Upton said today.

"The government does have a process in place to monitor this area, and it is continuing to improve the process". Mr Upton was responding on behalf of Maurice Williamson, the Minister responsible, to accusations of spending over-runs in Information Technology in the Public Sector.

He said "we'll be doing a detailed analysis of Labour's figures. The IT Stocktake was our best assessment of the costs at the time. Labour has used a different accounting approach to that utilised by the Stocktake."

He continued, "in reality few IT projects are completed as originally planned. United States statistics suggest that only 31% of all IT projects in the public and private sector are completed on time and within budget; 31% are cancelled before completion and of those completed 53% cost, on average, 189% of their original estimates. The Information Technology stocktake, completed last year by the State Services Commission, shows that 14% of projects had come in over budget, and that only 1.7% of projects went over budget by 20% or more.

Information Technology is a rapidly developing and changing area which does expose the Government to considerable expense and risk. In April 1997, as the result of the failure of the National Library's NDIS IT project the Cabinet agreed that monitoring of IT projects should be strengthened. This was confirmed in July 1997 when Cabinet agreed to a process for a strengthened monitoring regime. This process consists of an ad hoc officials committee and regular IT monitoring by both the State Services Commission and the Treasury.

The State Services Commission and the Treasury jointly monitor major IT projects on an ongoing basis through the development of close business relationships with the department.

In July the Government also commissioned a stocktake of all current Information Technology projects in order to be provided with information about projects underway in the Public Service at that time. The stocktake was provided to Ministers and released in December 1997.

As a further recognition of the importance of IT in the public sector the Prime Minister, Rt Hon Jenny Shipley, appointed Hon Maurice Williamson as Associate Minister of State Services on 26 May 1998 with specific responsibility for monitoring IT projects. Mr Williamson is taking a very close interest in the appropriate management of IT projects.