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11. Rationalisation of costs

As anticipated in Chapter 1 “Triennial Plan for IT in Public Administration”, one of the objectives of the three-year Plan is to guide the rationalisation of Public Administration ICT spending and its reorientation at national level as defined, in the first instance, by the Stability Law of 2016.

In fact, the law establishes certain principles for the containment of expenditure, where there is no conflict with the strategic objectives of the digital Agenda and in particular:

  • a savings target for the three-year period 2016-2018, set at 50% of the average annual expenditure for 2013-2015 for the current management of the entire IT sector, net of charges for connectivity services;
  • the principle that the savings generated will be used primarily by administrations for investment in technological innovation;
  • the principle that the savings target is made exclusive of spending effectuated through Consip and other commissions;
  • the principle that the costs of some entities are excluded: INPS, INAIL, Sogei and Consip (relative to the services and services provided to their contracting authorities); the Department of Administration of Justice (in relation to the investment costs necessary to complete the computerisation process of civil and criminal prosecution in the judicial offices).

In general terms, the savings target is here referred to as a steady reduction in spending over the three-year period. This means that at the end of the three-year period, the annual national expenditure (“exit rate”) will be 50% lower than the average annual expenditure of the previous three years.

However, the goal to be reached depends to a large extent on the degree of use of the commissioning centres. In fact, in theory and for the sole purpose of further expediting the mechanism put in place with the Stability Law, if during the three-year period 2013-2015 all expenditure was to be passed through the central commissioning centres, the savings target requested for the national system would have been zero.

The law therefore is intended to encourage:

  • a path of requalification of spending by encouraging connectivity where there it is still lacking and in investments in innovation, releasing resources today devoted to financing current spending;
  • a path of optimisation and control of spending by having all the possible needs pass through the commissioning centres.

11.1. PA and ICT spending

Starting from the most recent analyses (cf. Annex 3, “Synoptic Framework of ICT Expenditure in the CPA”), including that carried out by AgID on the data provided by the Central Public Administrations, the following situation was summarised.

The average ICT spending of the PA in the three-year period 2013-2015 was equal to approximately € 5.6 billion. The expenses exclude from the savings targets, as indicated in the Stability Law of 2016, are quantifiable as:

  • ICT spending carried out by Sogei, INAIL and INPS, amounting to approximately € 1.1 billion;
  • investment expenditure of public administrations, amounting to approximately € 1.2 billion;
  • current spending through Consip and other aggregating entities, amounting to approximately € 1.4 billion;
  • connectivity costs, equal to about € 0.15 billion.

As a result, the current “aggravating” expenditure for spending review purposes amounts to approximately € 1.7 billion.

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Fig. 11.1 Figure 9 - AgID Processing based on internal surveys and 3rd Assinform Observatory data on ICT in Public Administration

Based on these elements, the starting point for defining the savings target to be achieved at the end of the three-year period 2016-2018 is therefore as represented in Figure 9, and is quantifiable at about € 0.8 billion, corresponding to 50% of current spending. This objective is to be understood as an overall objective and does not refer to each administration (or its relative in-house instrumental company). The identified savings will be achieved mainly through the reclassification of spending as a result of the set of actions provided by law.

11.2. The savings goals deriving from the implementation of the Triennial Plan

Already in 2016, the administrations received indications coherent with the provisions of the new focalisation on expenditure under the law. In particular, the actions launched following the publication of the 2016 Stability Law concern:

  • the involvement of the PAs in sharing the approach and the main contents of the Strategic Model for an initial recognition on mappable activities, particularly as regards national platform adhesion plans, an important source of savings because they standardise solutions and technologies and prevent each administration from developing its own solutions;
  • the issuance of Circular AgID 2/2016 which has temporarily anticipated the provisions related to the implementation of the three-year Plan, especially as regards the costs for setting up new Data centres and for the adaptation of applications relating to intangible infrastructures;
  • initiation of the processing and publishing of the technical rules as foreseen in the CAD.

From an analysis of ICT spending trends for 2016 over the three-year period 2013-2015, conducted by AgID on 21 central administrations, some elements emerge which show the process of focusing of spending on the objectives of the 2016 Stability Law is starting, and in particular:

  • compared with a 7% increase in overall spending, a 2% reduction in the current spending share and a 16% increase in investment spending are recorded;
  • there was an increase in the use of Consip’s purchasing instruments, whose percentage contribution in 2016 ranges from 54% to 65% of the total (230 million).

In this context, it is now necessary to strengthen the process in the direction indicated by the principles outlined above, focusing the action on the following guidelines:

  1. with regard to current expenditure:
  • blocking new spending on data centres, unless properly justified in terms of the cloud and/or the construction of national Hubs, as described in paragraph 3.1;
  • full adhesion to the enabling Platforms described in section 4.2 and Switch Off of local solutions:
  • ANPR: progressive deployment of the national solution as described in section 4.2;
  • SPID: Disclosure of Local Authentication Systems and use of SPID according to the plan presented by individual administrations, which requires the adherence of all administrations within the times indicated in section 4.2;
  • PagoPA: adhesion and full use of PagoPA, with the abandonment of local solutions, within the times indicated in section 4.2;
  • NoiPA: decommissioning of personnel management systems and adherence to NoiPA services, without charges for state administrations and unit cost maintenance for the others.

B. with regard to the means of purchasing through Consip and other aggregators:

  • software licenses, based on the data collected by AgID so far, evidence emerges of possible savings in this area, firstly through IT asset management interventions [89] for the optimisation of purchasing and management processes such as:
  • software purchasing in Software as a Service mode;
  • rationalisation and standardisation of applications;
  • use of open source software;
  • extensive use of existing Consip tools and of other aggregators, as set out in Annex 2 “Tools and Resources for the Implementation of the Plan”.

In confirming and verifying this approach, it was possible to estimate, on a precautionary basis, savings at the end of 2018 generated by the adherence to the licensing platforms described in paragraph 4.2, and licensing optimisation, amounting to approximately 480 million as evidenced in Table 2 - Saving goals deliverable at the end of 2018.

Lines of action

Cost base [90] 2016

(Values in €/Mln)

Savings

(Values ​​in €/Mln)

National platforms 600 400
Licences 380 80
TOTAL 980 480

Table 2 - Saving goals deliverable at the end of 2018

It is therefore possible to assume that the combined effect of containment and transformation of current spending on ICT can generate the following situation by the end of 2018 (with the same scope of intervention considered for the initial definition of the savings target):

  • a total spending contraction of around 480 million;
  • an increase in the share of investment spending in line with the trend recorded in 2016 for approximately 200 mln (+15%);
  • an increase in spending through Consip and other aggregators of approximately 1,000 mln, assuming that the conventions and contracts recently stipulated by Consip for the next five years provide spending limits of over 6,000 mln.
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Fig. 11.2 Figure 10 - AgID projection on internal data and 3rd Assinform Observatory data on ICT in Public Administration

The above set of assumptions and findings will be verified in the next Recognition of Expenditure Data, which will track the progress of the Plan (cf. Chapter 10, “Managing Change”). In this way, in the event that non-converging trends are highlighted, any corrective measures can be identified to safeguard the transformation/savings objective planned.

Notes

[89]

Source Gartner *http://www.gartner.com/binaries/content/assets/events/keywords/symposium/esc28/esc28_costoptimization.pdf*

This document highlights 10 considerations/suggestions to use in order to optimise costs. In particular, the points represent rationalisation of purchasing operations to potentially achieve savings.

[90]It is noted that for the purpose of identifying the cost base on which the savings were calculated, a projection of the CPA sample data involved in the total amount of public administration expenditure compiled by the Assinform Observatory was performed.