Why government IT needs a better approach to budgeting

Defra minister, Mark Spencer was recently asked to give an update to how the Department for Environment, Food and Rural Affairs (Defra) is coping with its plans to renew ageing IT systems. The parliamentary question follows on from a damning report published by the Public Accounts Committee in May last year, which identified major IT challenges in the department, unsupported software and cybersecurity risks due to its reliance on over 1900 applications, many of which are legacy and require replacing or modernising.

The National Audit Office (NAO) also produced a report on the dire state of Defra’s IT in December 2023. In its report, the NAO stated that Defra’s digital team explained that its budget on IT is often reduced to make savings, as competing priorities emerge.

Defra is not alone. What the NAO revealed in its assessment of Defra is that across government, new systems and services are often prioritised above fixing legacy IT. The NAO said that in 2020, the Cabinet Office said that funding provisions for legacy IT are often insufficient and, in some cases, cut during a budget cycle. In its Modernising ageing digital services at Defra report, the NAO said: “We reported in July 2021 that the maintenance of legacy systems is often one of the costs most likely to be cut or delayed and business cases do not always include these maintenance costs.”

Running costs

Planning ahead for on-going IT costs on new systems is  extremely hard to do but total cost of offership is an important consideration in any IT project whether it is small and well-defined digital service or a major business transformation. Maintenance is not just about fixing bugs but should emphasise continual improvement to ensure the system is providing the best service for its users.

Budgeting needs to take into account these on-going IT improvements as well as Moore’s Law: hardware continues to improve. A state-of-the-art datacentre facility today will start showing its age a few years on. No one says the hardware should be upgraded every year or every two years. Companies like Microsoft and Meta keep their datacentre equipment running for five years. Nevertheless, hardware does get replaced regularly. As each IT hardware asset reaches end of life, it is continually replenished. This is again part of on-going maintenance, to ensure the IT system is kept up-to-date and running optimally.

As departments increasingly use cloud hosting, the NAO points out that this introduces new financial and operating models, shifting away from capital to resource expenditure. But IT heads in the public sector should also adopt this approach to internal IT, with sufficient operating expenditure set aside for on-going IT asset management.

Data Center
Data Management