NT dumps failed Fujitsu/SAP project



news The Northern Territory Government has decided to dump its broken Asset Management System (AMS) developed by Fujitsu and based on SAP software, after receiving independent advice that it would cost an additional $120 million and five years to fix.

The AMS was first announced in August 2009. At the time, Japanese diversified technology group Fujitsu said the platform was enable the Northern Territory to better manage the state’s assets, including $11 billion in Government resources ranging from houses to highways. The company was to assemble a team based in Darwin to build the asset management system using SAP and ESRI software packages.

However, the project went off the rails over the years since, leading the Territorial Government’s Auditor-General to heavily criticise it in March 2013. NT Deputy Chief Minister and Minister for Corporate and Information Services David Tollner delivered an extraordinary and prolonged angry speech regarding the project in December in Parliament, describing it as a “diabolical mess” and the situation as a “scandal of epic proportions”.

In a statement released today, Tollner said the “former Labor Government’s AMS had been an abject failure”. “The system was originally supposed to cost $7.2 million but will cost the taxpayers of the Northern Territory $70 million. Yet the system is fundamentally broken. It simply does not work,” Tollner said.

Independent asset management systems experts from KPMG were engaged to undertake a review of the failed system and provide government with options for a functioning alternative system. KPMG found that the AMS didn’t meet the Government’s needs and was so fundamentally flawed that remedying the system was simply not feasible. The KPMG review reinforces the earlier findings by the Department of Treasury and Finance, which identified the AMS to be only 11 per cent fit-for-purpose.

Tollner said rectifying the situation using the existing software would require it to be effectively rebuilt from scratch.

“KPMG estimate this would cost taxpayers a further $120 million and take five years to complete. We will not be taking the approach of throwing good money after bad. This fiasco strands as a monument to the former Labor Government’s incompetence. Labor is responsible for squandering $70 million on a system that simply doesn’t work.”

“The $70 million Labor wasted could have been directed to additional teachers, better health facilities or more police. Instead we have a junk system that not only doesn’t work, but can’t even be fixed,” Tollner said.

To replace the catastrophic AMS, the Government will establish a network existing asset systems call ASNET. ASNET will be delivered through updating and re-using a number of component systems that still exist within government because of the failure of the AMS.

The new solution will incorporate three of the following existing systems: The Asset Information System (AIS); The Roads Information Management System (RIMS); and the Building Asset Management System (BAMS). A technical review has found these systems to be robust, reliable and up-to-date, according to Tollner. The ASNET approach will deliver a cost-effective and fit-for-purpose solution by using contemporary software to integrate the various components through a new web- based portal.

Tollner said ASNET also represents to opportunity to engage the local IT sector in the project. “One of the many failings of the AMS was its reliance on high-end software specialists that were not available in the NT. We literally had to fly a technician from interstate every time something went wrong with the AMS,” the Minister said. “With ASNET there will be vastly more opportunities for local suppliers, many of them small ICT businesses.”

The Government has also strengthened its management of ICT projects to ensure the AMS debacle is not repeated, according to the Minister.

“The single most critical thing is to put into place a stronger, more robust governance approach and get the right senior people within Government participating in it. If we get this layer right, other factors such as project scope, resourcing and contract management can be properly addressed through an effective governance process,” Tollner said.

Delimiter will add any statement received by Fujitsu and/or SAP about this matter into this article.

The news comes as major ERP project implementations throughout Australia’s State Governments continue to suffer extensive issues and failures. The most notable of these has been Queensland Health’s payroll systems upgrade, which has cost about $1.2 billion and resulted in tens of thousands of medical staff in the state going without pay or being overpaid. The system — which was implemented by IBM and the State Government based on SAP software — still does not function correctly. The debacle resulted in IBM being banned from further contracts with the Queensland Government.

Similarly, in November 2011, Victoria’s Ombudsman handed down one of the most damning assessments of public sector IT project governance in Australia’s history, noting total cost over-runs of $1.44 billion, extensive delays and a general failure to actually deliver on stated aims in 10 major IT projects carried out by the state over the preceding half-decade.

The ongoing failure of one of those projects in Victoria Police was last month partially blamed for an 11-year-old boy’s death in Victoria. At the time, Victoria Police said its ailing IT systems failed to provide officers with sufficient information to apprehend an offender in a timely manner.

A failed Australian state government ERP project based on on-premises software from a major enterprise vendor? Say it ain’t so. Seriously, folks, we’ve seen dozens of these failures in Australia over the past half-decade, and I suspect we will see dozens more. If I’ve said it once, I’ve said it a thousand times: The fundamental model of government IT project and service delivery in Australia’s State Governments is broken in a systemic manner. At this point, Australia’s states, and now, it appears, our territories, cannot deliver major IT projects, and cannot deliver IT services well. This is a broken model and drastic action needs to be taken to fix it.

Image credit: Zsuzsanna Kilian, royalty free


  1. Not surprised and no real consequence will come of it. Same as before – it just ain’t their money and there’s an endless pit of more money to draw upon. IS will just go and find another product which will more than likely also fail and noone will face any consequence again. A simple Asset management system – you cant get more basic than that. List of assets with depreciation and maintenance schedules attached. No critical weekly event timed events nor complicated awards like payroll either.

  2. Yes these projects are typically managed by incompetent public servants, but Fujitsu are a joke.

    I can only speak from experiences in Canberra, but most of their staff, including project managers and business line managers have no formal education outside of high school and their only experience comes from other failed projects from IBM or Unisys.

    How you can throw that much money at companies that have such under-qualified staff is beyond me. Get an actual engineering company with qualified software and systems engineers. They cost a bit more but at least they deliver.

    • It does seem strange to blame the client when the outsourcing provider is the actual cause of the failure yet again.

      And you keep proposing *more* outsourcing as the answer Renai. Perhaps it’s time you examined your base position on this?

      • It’s far more complicated than that, Stephen.

        If this task was left up to public servants it would have been exponentially more disastrous. The unfortunate fact of the matter is that the private sector pays far more than public when focusing on the IT industry. The staff that the public sector attracts are far more interested in flex time and job safety than a rewarding career, and their attitude towards work aligns with this.

        Outsourcing doesn’t work if the client insists on managing the entire process. The entire point of outsourcing is utilising the resources of a specialist organisation.

        Outsourcing is the solution for implementations such as this, however, there needs to be far more conditions and contractual obligations placed on companies such as Fujitsu. The way these contracts are written is broken. Too much focus on number of FTE staff and not enough focus on things such as quality assurance and quality milestones.

        • Is it perhaps even more complicated than making snide and untrue remarks about public servants? The kind that come straight out of the Young Liberals handbook?

          I hope so.

          • You aren’t honestly suggesting that public servants alone are capable of completing a project like this are you?

            If you’re going to make a case against what I’ve said at least provide an argument.

          • In what way do you think that public servants are different to people employed by other sectors? Many people in the public sector have also worked for large system integrators, small software houses, large commercial organisations, etc. They went to universities alongside people who are now working in the private sector. I have also met many people who are now in the private sector who previously worked in the public sector. They are not born as public servants. Your comment Simon is from the same stable as racism and and other bigotry. You suggest that people working in the public sector are completely incapable of accomplishing something simply because they are public servants. That’s not much of an argument at all.

            I am sure you would know that there have been just as many failures of IT and other projects in the private sector. Are those failures due to them being in the private sector? Surely you don;t expect greedy commercial twits capable of delivering on their own?

          • Indeed, Governer, indeed.

            Notice that Simon has tried to avoid responsibility for his bigotry, by changing to a strawman argument: “You aren’t honestly suggesting that public servants alone are capable of completing a project like this are you?”

            However, given that his initial comment included pearls like this: “The staff that the public sector attracts are far more interested in flex time and job safety than a rewarding career, and their attitude towards work aligns with this.” then it is no surprise for him to be engaging in logical fallacies.

            For example, the painful false dichotomy he presents – flex time and job security or a rewarding career – as though the two are mutually exclusive. Not only is it a tortured abuse of logic, it also demonstrates an implied (and insulting) value judgement: about what is and isn’t rewarding.

            I have plenty of friends who are or have been public servants, and Simon has casually and condescendingly insulted them all.

            This kind of attitude is enormously unhelpful when it comes to trying to disect why projects fail. It also fails to live up to Delimiter standards, as it combines both unsubstantiated claims with offensive commentary.

          • Let me clarify, as my choice of words has obviously not accurately portrayed my views.

            I was referring to the “public service” rather than “public servants”. My apologies. I have worked in both public and private sectors and yes there are many driven, focused and talented professionals in the public service, and many awful ones in the private sector.

            The point I was trying to make was that there is an unfortunate contrast between the two sectors particularly in regards to quality and professional standards. In my experience, the public service attracts a disproportionate number of professionals who are far more interested in the comfortable “perks” of the public service, and that is evident through their attitude towards work and thus their performance. I think blatantly denying that this exists is ignorance in the extreme. However, as I said earlier, there is a similar issue in the private sector, or more specifically large integrators such as Fujitsu, that stems from poorly constructed contracts from government departments that focus too much on capability (number of FTE) with no focus on staff or product quality.

            Many public servants would be individually capable of contributing to a successful project, but the bureaucracy and lack of enforceable standards in the public service makes government departments being able to successfully and cost-feasibly implement such systems near impossible.

            Simply suggesting that the entire outsourcing model is wrong and that the public service should in-source everything because of one failed project is moronic.

            The issue from the public sector side of the fence is that the projects are too heavily micro-managed by the government departments, and from the integrator side of the fence, they hire too many incompetent staff because so much of their revenue comes from FTE numbers.

            My opinion is that the way contracts are written by government departments is completely broken, and the way in which private integrators recruit and manage projects is heavily affected by this. Let the integrators have more control over the project but shift the contractual focus away from capability (number of FTE) and on to quality assurance and quality milestones.

  3. The real truth is never easy to find, but it would be safe to say that blame is on both sides. If you are not a smart customer, these types of projects will kill you every time. If you are not a smart service provider, the project will blow up more often than not. I can’t vouch for the details, but $7 million wasn’t ever going to do to much, the budget should probably have been $70m from day one. These are difficult projects in very difficult organisations, and it requires a firm hand on the wheel and central leadership, something our version of bureaucracy doesn’t do well.

    • I agree Palmtree IT – well said, until you blamed it on “bureaucracy”. There are plenty of successful IT projects and ongoing maintenance of large and complex systems in the public sector that are being managed every day in this country. We just do not hear about them in the press. But I have seen them, as you may well have too.

      These are difficult projects – especially when they involve multiple organisations all trying to share functionality. You are right $7m was a ridiculous estimate. You will burn through that with a few developers, BAs, testers, change managers, infrastructure people etc in less than a year. Meanwhile the potential savings of having one asset management system across several depts would have been huge. It’s a pity it went wrong and the only people who will know what went wrong are those who worked on it.

  4. A few questions that are not mentioned in any of this press info:
    – Is the SAP asset management system used successfully by other territory or similar scale city administrations?
    – Is ESRI? With SAP?
    – Does Fujitsu have a successful record of implementations?

    I would expect any project of this scale ($7 or $70m – either number is a LOT of money to NT) to have had the normal controls including reference checks of existing sites and customers. Government procurement processes are normally so carefully defined it would be very difficult to avoid these steps.

    So what was different about the NT implementation. I’d suggest (and I am guessing) three different departments each having its own existing system that they clearly kept investing in since the decision was made – otherwise why would they still be up to date?

    How was the mandate for change governed?

    Investigating this would, I might suggest, be closer to the root cause than the suppliers failure to deliver.

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