New Zealand’s government is centralising its IT governance in a reform billed as the most extensive in decades. Backed by $13 billion in digital investments, the overhaul is projected to reduce costs by 15% to 30%, saving as much as $3.6 billion over coming years.
The reform, led by Digitising Government Minister Judith Collins, places procurement decisions under Government Chief Digital Officer Paul James, with Collins and Finance Minister Nicola Willis holding veto powers on large investments.
“Big bang, multi-year projects that can cost more than $1b will be eschewed in favour of incremental, iterative delivery,” Collins wrote in her Cabinet paper.
According to Treasury, 59% of government IT projects are behind schedule, and 85% are considered high-risk — prompting the Government to tighten control and “rationalise what has become an unaffordable pipeline.”
A senior Wellington IT executive, speaking anonymously, said the new direction is already “creating major short-term pain” and “deep revenue cuts for local firms.”
“We’ve already seen multinationals squeeze out smaller firms that can’t compete at that scale,” he said, warning that local businesses risk being sidelined as global tech giants secure more government work.
Don Christie, co-founder of Catalyst IT, argues that smaller, modular projects will reduce risk and foster competition.
“Every time I see the word ‘transformation’ in a government or corporate strategy and project, I think, ‘well, that’s going to fail,’” he said.
Christie believes open-source software could deliver even greater savings than Collins’ estimates:
“That yells the open-source approach and open standards from the rooftop.”
“The tension will be between overly bureaucratic centralisation and the need to allow organisations to achieve their purpose,” Christie said.