news Several major New South Wales Government agencies have unveiled major and wide-ranging plans to imminently purchase Software as a Service-style IT solutions, in moves which have the potential to re-cast the dynamics of the perceived relationship between Australia’s public sector and the burgeoning class of SaaS-delivered IT packages.

Australia’s public sector has in the past notoriously been averse to purchasing IT solutions which are delivered as a service.

While pure play SaaS vendors such as Salesforce.com, Google, Netsuite and others have experienced a solid level of success in various aspects of Australia’s private sector with their solutions, which are typically delivered through a web browser rather than hosted on a customers’ premises, the fact that most such services have been hosted offshore has prevented such companies from making strong in-roads into Australian governments at any level — federal, state and local. Similarly, companies such as Microsoft, Oracle and SAP which offer both SaaS and on-premises models have continued to see strong public sector demand for their traditional solutions, with only slow uptake of their SaaS options.

However, if the NSW Government has its way, much of this may be about to change. Over the past few months, several major NSW Government agencies have kicked off large IT purchasing initaitives which specifically highlight a preference for SaaS solutions, as opposed to on-premises deployments.

The most recent of these tendering initiatives was kicked off in late April by the NSW Department of Trade and Investment, one of the new super-agencies, or ‘department clusters’ created when the new Coalition NSW Government won power in March 2011. In tender documents released in April, the department revealed that the creation of this new umbrella department brought together a range of “disparate systems, data and shared services provision”. “As a result,” it added, “NSW Trade and Investment is carrying significant operational risk such as effective controls, audit compliance, lack of informed decision-making capability and inadequate reporting.”

Because of this, the department wrote, it wanted to source a new overarching enterprise resource planning system, with a target date for implementation of December 2012. “The purpose of the project is to provide a prerequisite minimum capability and technology platform to integrate people, processes and technology into the new whole of cluster mode of operation,” it said. The rollout will affect some 7,000 total staff.

In the past, such initiatives would generally have been rolled out as on-premises solutions, with companies like Oracle and SAP providing the technology and integrators like IBM, Fujitsu, HP or others doing the leg work. However, in this case the department noted it specifically wanted a SaaS platform. “A SaaS ERP solution has been identified as the preferred model to transition NSW Trade and Investment to a single integrated platform,” the tender documents state.

Across town, another NSW super-agency, Transport for NSW (which was formed from the merger of the NSW RTA, maritime, transport construction authority and Country Rail groups) is also currently talking to the industry about SaaS packages.

The tender documents have now gone offline, but an article by ZDNet.com.au details the fact that in March, the agency went to the market with a proposal to abandon in-house infrastructure and migrate 35,000 email accounts, 25,000 desktop environments and some 2,000 BlackBerry devices to new systems, all labelled “as a service”. ZDNet quoted Transport NSW’s tender documents as follows:

“The group CIO is actively promoting a strategy of ‘as a service’, recognising the potential for leveraging the economies of scale and expertise of the private sector in the delivery of core technology platforms and capabilities to government.”

According to the NSW Government’s tendering site, a large group of IT suppliers have responded to the request. The companies who are interested are: AC3, Capgemini, Citrix, CPW Group, CSC, Data#3, Datacom, Dell, Dimension Data, Ethan Group, Fujitsu, HP, Housley Consulting, IBM, Microsoft, Mnet, NEC, Optus, PolicyPoint, SAP, Satyam, Sybase, Telstra, UXC and VMware.

The ZDNet article doesn’t mention whether on- or off-shore hosting is a key issue for Transport for NSW, but there is no doubt the organisation will consider the location of data hosting during its procurement process. However, if the organisation takes its lead from the NSW Department of Trade and Investment, location may not turn out to be such a headache.

In the tender documents associated with its SaaS ERP procurement effort, the NSW Department of Trade and Investment specifically explores the issue of data hosting. And there is a great deal of good news for vendors with offshore datacentres. The department notes that vendors will need to provide details of their arrangements for data hosting, including the “data storage location”. However, it also mentions that vendors should detail “options for data replication in Australia”.

This is a small, one-line clause in the department’s document, but in the wider debate about Australia’s public sector hosting data offshore, it’s an important clause. It appears to reveal that the NSW Department of Trade and Investment is working under an assumption that data will be stored offshore in an SaaS ERP scenario, with data being replicated in Australia for backup and other purposes.

This approach marks a sharp departure from the general approach taken by Australia’s public sector; which has been characterised in the past by a strong desire for data to be hosted onshore, within Australia’s legal jurisdiction. If the NSW SaaS projects are successfully rolled out over the next year, this may provide the stimulus for agencies in other jurisdictions to deploy similar SaaS projects.

The news comes as the NSW Government a little over a week ago revealed a new wide-ranging ICT strategy, which it said was slated to make it “the leader in ICT” when it came to public sector service delivery and the development of the state’s technology sector as a whole.

The strategy does mention that the state is planning to create dedicated ‘service catalogue’ of corporate IT services which departments and agencies will be able to purchase from in a standardised way, and it also mandates the implementation of virtualisation technology in all government agencies, and the development of a trusted Government private cloud. However, it does not explicitly mention the kind of software as a service solutions which Transport for NSW and the Department of Trade and Investment had already gone to tender for.

opinion/analysis
To say that I am surprised to see these kinds of SaaS-style initiatives and open-minded thinking about offshore hosting coming from within the normally slow-moving and traditionally-minded NSW Government is an understatement. The new Coalition State Government has clearly already had a major impact on how the state is running its IT operations, and this is something to be praised.

There is no doubt that the SaaS initiatives within NSW will be very closely watched by the CIOs and line of business decision-makers of other jurisdictions. The NSW departments concerned have set themselves some pretty sharp timelines for their projects, and in particular I don’t believe the SaaS ERP platform can be delivered in the timeframe which has been set for it. However, if the projects go well, they will be viewed as visionary examples of SaaS solutions being implemented in state government, and probably replicated to a certain extent elsewhere.

Are we beginning to see the cracking of the locked down control attitude which Australia’s public sector has had towards offshore hosting? Well, it’s a little early to call. But it certainly is fascinating to see things being shaken up in this manner. It will be even more fascinating to re-examine the situation 12 months down the track.

The other thing which I think is fascinating about these SaaS deployments do not appear to be about cost. And, although this will also be a benefit if they are successful, they do not appear to be about agility. What these deployments appear to be about is avoiding the disastrous problems which state governments in Queensland and Victoria appear to be suffering when it comes to IT projects. Right now, as I have written many times, Australian state governments do not appear to be capable of successfully managing IT projects, maintaining their IT infrastructure, securing their systems or managing vendors.

What NSW’s SaaS efforts appear to be based on is realising this fact; the departments concerned appear to be recognising that IT is not their core capability and that they want external specialist organisations to take care of the whole kit and caboodle for them. The tendering initiatives detailed in this article go beyond managed services or traditional outsourcing. They represent attempts by government departments to simply hand off whole chunks of their IT platforms to outside vendors.

Now, everyone has their problems with vendors, and these departments will need to establish very strong governance controls over their eventual partners in these areas to make sure they don’t screw everything up. Vendors will be vendors, after all. But overall, given the ridiculously incompetent way in which most Australian state governments appear to be managing their IT platforms at the moment, I can’t help but see what NSW is doing right now as overwhelmingly positive.

Related posts:

1. Oracle adds Telstra notch to SaaS belt
2. SAP’s SuccessFactors deploys Aussie datacentre
3. Amazon CTO hits Australia in cloud push
4. Hey! SaaS! Get off of our cloud! [Sponsored Post]
5. A handful of complex Australian Oracle rollouts

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1. Mark
   Posted 15/05/2012 at 8:06 am | Permalink | Reply

   If this is the trend for NSW Government then I hope the NSW Privacy Commissioner and State Records get there acts together and give us poor suffering information managers some guidelines and advice on how to manage the government’s information in the ‘cloud’!

   • Renai LeMay
     Posted 15/05/2012 at 2:44 pm | Permalink | Reply

     One can only hope ;)

2. Steve Hodgkinson
   Posted 15/05/2012 at 3:41 pm | Permalink | Reply

   Good pick up Renai on these two SaaS RFTs … I’ve been pondering them myself. The NSW government is at least offering a glimmer of hope with regard to being open to some fresh thinking in its ICT strategy.

   I’m preparing a range of case studies of agency use of public cloud services and there is in fact more going on in state and local governments than appears on the surface. Most agencies prefer to stay under the radar on their use of cloud while their whole-of-government ICT strategies remain negative or ambiguous on cloud preferences. The formula for success seems to be to start small and scale up as the services gain acceptance and aclaim from agency executives and as real and perceived privacy and security concerns are addressed.

   One thing is for sure, however. The evidence to date is that public cloud solutions are without a doubt better, faster, less expensive and less risky when all things are considered … as long as the implementation is done by mature adults. Platform and agile is the way to go. Public cloud services are the platform and agile is the behaviour.

   it will be interesting to see how these very public NSW procurements run the gauntlett of the buying process … I wish them well.

   • Renai LeMay
     Posted 15/05/2012 at 4:06 pm | Permalink | Reply

     Thanks for your comment, Steve — this is very insightful.

     I had suspected there was more cloud deployments going on under the radar; it’s good to hear about this. I think the case for cloud computing in government is gradually being made in Australia, and I anticipate your case studies will be an important contribution to that argument.

     Very interesting comment regarding public cloud as well. I suspect this may be because public cloud, by the nature of it, being so large and extensively used across many different organisations, is just very standardised — you know what to expect, whereas ‘private cloud’ is often so nebulous and quite hard to define at the moment. I highly agree with you about agile being the behaviour with respect to this area.

     I think one of the most important things to realise at the moment is that this is a developing field. No matter what eventual result comes from examples such as we’re now seeing in NSW, the fact is that the sector will learn from these examples as a whole — good, or bad. Then others will put those lessons into practice and the whole area will gradually improve. We’re kind of at the stage where many different organisations are dipping their toes into the water, which I think is a fascinating stage of the innovation process.

     • Steve Hodgkinson
       Posted 16/05/2012 at 11:43 am | Permalink | Reply

       Yes … I’m hardening my views that, in practice, in-house private cloud is simply an extension of on-premise IT with some new technology … and hence won’t really solve any problems for government agencies. The underlying governance and funding dysfunctionalities remain unchanged. DIY Gov Cloud will just = failed shared service.

       The whole deal with cloud is the ability buy services that already exist from proven enterprise-grade providers.Agencies just need to get their head around how to manage the sourcing, orchestration and integration of enterprise-grade public cloud services … IMHO.

       Ignoring this reality, or attempting to stonewall it, is simply delaying the inevitable and destroying public value.

3. Nexus789
   Posted 15/05/2012 at 8:06 pm | Permalink | Reply

   Applications not designed for the cloud will be just as hard to mange when placed in the cloud. More so if the application is remote (another country) and you want change a process, etc. Applications designed from the ground up to be cloud resident will be much more flexible.