Analysis, Enterprise IT - Written by Renai LeMay on Wednesday, February 13, 2013 13:15 - 16 Comments
Vic Govt ICT strategy analysis: CenITex split,
cloud adoption on the cards
analysis The potential break-up of troubled IT shared services agency CenITex and the opening of the door to government adoption of the new cloud computing paradigm are two of the most important themes written between the lines of the Victorian Government’s major new ICT strategy released yesterday.
Yesterday the Victorian Government published what many will expect to become a landmark document in the long and troubled history of the state’s use of technology to support its operations: Its new whole of government ICT strategy. The document comes with strong credentials; it was put together by former South Australian Government chief information officer Grantly Mailes over much of the past year, and features input from some of the finest public and private sector minds in Victoria. CIOs, vendors executives, analysts, the government itself; all of these threads have been pulled together in this one overarching policy.
Its publication could not have come at a better time.
To put it bluntly, ‘technology’ is virtually a taboo word in the entire Victorian public sector at the moment. A string of audit and ombudsman’s reports published over the past several years have demonstrated starkly that the State Government, frankly, is not able to deliver on almost any major IT project it undertakes without letting those projects run dramatically late and over budget; and a string of controversies surrounding IT shared services agency CenITex have similarly made it clear that the state also has fundamental problems with basic IT service delivery to keep its operations afloat. To put it in words almost everyone can understand: Right now, Victoria is bad at building IT systems; and it is bad at maintaining them and providing associated IT services once they’re built.
Will the delivery of the state’s new ICT Strategy fix those problems? Well, no, not overnight. It will take more than the mere publication of a policy document to do that, no matter how lofty its statements and how detailed its aims. In addition, the ICT Strategy isn’t just concerned with major IT projects and IT service delivery. The policy is actually an umbrella document containing the government’s plans in a huge range of areas; ranging from collation and organisation of government smartphone apps to the release of government data under open licensing; from privacy to procurement, the ICT Strategy goes virtually everywhere. Much of what is contained in the ICT strategy is what I would define as ‘housekeeping’ — stuff that a competent government should be doing anyway, without anyone really needing to tell it do so.
However, there are still several underlying themes in the ICT Strategy which presage fundamental shifts in the way the Victorian Government does IT project work and IT service delivery as a whole, and these should be considered separately.
The first of these is the potential break-up of troubled IT shared services agency CenITex.
If you read the Australian technology media at least sporadically, you should be aware that the agency, formed several years ago from the merger of a number of other IT shared services divisions within the State Government, has its share of problems. A recent Ombudsman’s report damned the agency for serious improper conduct in its procurement processes (the police were also brought in to investigate the situation), CenITex has suffered a number of issues with delivering basic IT services (such as email) to its client agencies, and the group last year went through substantial redundancies. Ultimately the state government sacked CenITex’s board in April last year and is currently considering its future.
What that future might look like was first outlined in an economic statement issued by the Victorian Government just before Christmas (PDF). The document stated that the State Services Authority had conducted a review of CenITex. “Its findings will inform decisions about how to best deliver shared IT services across the public sector,” it noted.
However, it was a set different paragraphs which really set tongues wagging in the technology sector. It stated:
“The Government will scrutinise the efficiency of all government agencies, focusing initially on those providing mandated services to business or regulating the private sector for a fee or charge. The quantitative reasonableness of fees and charges will be examined against enhanced cost recovery principles, aiming to drive down charges through efficiencies. The Government will also examine whether and which (if any) internal services can be more efficiently provided by the private sector or made more contestable. Initial candidates will be CenITex and the Victorian Managed Insurance Authority (VMIA).”
This statement appears to imply that at least some of CenITex’s work — which broadly consists of providing basic IT services to departments and agencies — could be taken away from it and handed off to the private sector. And the economic statement also went further, stating:
“Government will use market mechanisms to drive down unit price and increase information and communications technology (ICT) system and service innovation. Government will favour shorter contract terms and open standards to increase competition and guard against technology lock in or single vendors securing a disproportionate share of government business.”
“At the infrastructure level, Government will progressively withdraw from direct ICT service delivery. The Government will determine the mix of insourced, managed and outsourced service delivery which is most cost effective, most responsive to business needs and which best leverages the expertise and opportunities available in the market.”
This statement is repeated in the ICT strategy released yesterday, and strengthened by other core principles, which outline how competition and market mechanisms will be used to drive efficiency and innovation in ICT systems and services, and how ICT services will “take advantage of industry capabilities”. “Commercial off-the-shelf software or outsourced services will be adopted in most cases,” the strategy states.
When you couple this direction with rumours inside the Victorian Government that CenITex is going to be sold off and the fact that IT shared services agencies right around Australia are not delivering on their initial promises … it’s not hard to join the dots. The Victorian Government is tired of CenITex acting like an odious millstone around its neck. The writing is on the wall for the agency to go through a substantial restructure and re-alignment as a minimum, or for parts of it to be broken off and sold to the private sector in the extreme case.
The second major theme within the ICT Strategy is the potential to adopt cloud computing services to resolve some of the State Government’s ongoing IT project and service delivery problems.
Cloud computing is mentioned right on the first page of the report in its introduction by Victorian Premier Ted Baillieu and Assistant Treasurer and Technology Minister Gordon Rich-Phillips, and it’s only a few pages later that the following paragraph appears: “The uptake of managed ICT services is increasing. The speed, flexibility and economies of scale offered by cloud computing are prompting organisations to rethink what needs to be delivered in-house. It is financially responsible for the Victorian Government to consider these alternative delivery models.”
Cloud computing pops up again in the strategy’s section on ICT procurement — where it states that agencies should, by July this year, “identify opportunities to pursue service-based ICT offerings” and, by December this year “demonstrate use of service-based ICT procurements”. Directly after that section, the report emphasises the message with a case study detailing the Department of Business and Innovation’s successful deployment of Salesforce’s customer relationship management solution, which is used by over 450 staff within the department.
“DBI’s Salesforce implementation is on track to deliver a 40 per cent cost saving over five years compared to the estimated costs of a custom-built option,” the case study concludes. Well. If that isn’t a clear message to department and agency executives and CIOs, I don’t know what is.
In the ICT project delivery section of the strategy, the use of cloud computing technologies is hinted at again, where it notes that Victoria needs to move away from ‘large, complex ICT projects’ that have been heavily customised, and towards adapting business processes to make the best use of existing market offerings. This approach fits in perfectly with the emerging cloud computing paradigm, where it is becoming much more common for customers to standardise their own business processes to fit with a standardised software as a service solution used by many similar organisations, rather than trying to modify the technology itself to fit their non-standard needs; a path fraught with peril.
Some groups within the Victorian Government are already following this lead. For example, the aforementioned Department of Business and Innovation recently went to market for a major Infrastructure as a Service (IaaS) solution, in a move which may make it something of a leader within the Victorian Government.
Taken together, these two major trends hinted at in the Victorian Government’s new ICT Strategy represent the chance for an extremely powerful and positive overall paradigm shift within the state’s public sector. Shifting emphasis away from its ailing internal IT service delivery mechanisms and towards more standardised services from external providers is something that Victoria clearly needs to do; it remains unclear if the state will ever be able to get enough IT talent to keep its IT service delivery on track otherwise; CenITex itself already makes extensive use of external contractors to keep it afloat.
In the long-term, the gradual adoption of cloud computing services represents a chance for the state to standardise its business processes and shift costs and energy away from maintaining its own IT systems and applications and letting others maintain them. Salesforce.com, Microsoft, Amazon, Rackspace, Fujitsu, Oracle, SAP, CSC, Telstra, Optus, Google … all of these companies have cloud computing offerings which they are better at delivering than any Victorian department or agency could do on its own. Adopting these platforms and taking advantage of these economies of scale makes complete sense in the long term and represents a chance for Victoria to break away from its cycle of failure in IT project delivery.
One last item of significant note within the ICT Strategy which it is worth keeping an eye on its the creation of Victoria’s first whole of government ICT role for a few years. This isn’t explicitly a chief information officer role, although it will fulfill some of the same tasks; it’s labelled as ‘Chief Technology Advocate’. Personally I like this term; it represents the fact that whole of government chief information officers around Australia haven’t been able to make much of an impact on fundamental IT project and service delivery, due to the lack of control they have over powerful departmental CIOs.
Victoria’s new CTA will advocate for positive change in the State Government, but they can’t mandate it; they will report on ICT initiatives; but they won’t conduct those initiatives themselves. I like this positive, forward-thinking spin on the whole of government CIO. It will be interesting to see if it can have an impact where Victoria’s previous whole of government CIO failed.
I said it yesterday, and I’ll say it again today: I strongly approve of the Victorian Government’s new ICT Strategy. It hits all the right notes, and has a concrete set of deliverables and timeframes for the state to deliver on. Plus, there is obvious incentive for the political administration to whip the public service into action on this one. Baillieu and Rich-Phillips can only harp on about ‘fixing Labor’s bungles’ for so long before the Victorian electorate will want to see concrete action on the Coalition doing so.
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