The Department of Defence’s peak technology strategy arm has started running the ruler over its cohort of technology suppliers as it considers establishing a new procurement panel for applications and systems integration services.

“The Chief Information Office Group (CIOG) is currently reviewing its strategy for sourcing ICT applications and systems integration services, including the potential to establish a Panel for these services, which would create deeper relationships with industry to rapidly support upcoming demand,” a statement posted on the Federal Government’s tendering system said today.

Defence has invited Australia’s technology sector to respond to a discussion paper it has produced on the subject, and has directly contacted a number of its contractors on the matter.

“The information obtained from this market research will assist CIOG in defining its requirements and determining its approach for sourcing ICT applications and systems integration services,” Defence wrote.

Like other large government departments such as the Australian Taxation Office, Defence more or less constantly has some large purchasing or technology refresh project under way.

For example, on the software front Defence revealed in May that it had given existing partner Red Rock the go ahead to upgrade its ailing human resources platform PMKeyS, in a project that will also involve the integration of another HR system, the Central Reserve Pay System.

On the desktop front, Defence in April kicked off a long-awaited mammoth project to overhaul the way it provides desktop services to around 115,000 users, issuing a landmark request for tender document on the matter to suppliers.

In July it was Defence’s browser on the radar — with the department confirming plans to upgrade its 90,000 desktop PCs from version 6 to version 7 of Microsoft’s Internet Explorer web browser.

And this is all while other purchasing initiatives have been under way. For example, in May Defence confirmed that it had awarded a core IT services contract to Fujitsu — the existing supplier, courtesy of its acquisition of former Telstra subsidiary KAZ.

Finally, in July Defence revealed it had inked a new ten-year lease agreement with datacentre specialist Global Switch.

It’s not clear which of those initiatives — and others — are included in the review which Defence’s CIO Group under chief information officer Greg Farr has kicked off. However one thing is clear — Defence is not showing all of its cards just yet.

“CIO Group is not under any obligation to consider, use, or incorporate any feedback, comments or information provided through this market research,” the department wrote on the procurement site. “This market research should not be considered as an invitation to register interest or a request for tender.”

Image credit: Jorge Vicente, royalty free

Australian IT services company SMS Managament & Technology today said it was in due diligence with two potential acquisition targets as it looked to continue to bolt on other companies to its already growing base.

“In each case, they’re specialists in an area which expands our capabilities and market footprint,” said the company’s chief executive Tom Stianos in an interview this morning after the group’s annual financial results disclosure.

If the acquisitions do proceed, they will do even more to cement SMS’s growing reputation as a serial acquirer in the enterprise IT services space in Australia. Earlier this year the company picked up Oracle consultancy Bright Blue Solutions, for example, and last year it bought two other companies, Aipex (which provides services around the Tibco technology line) and Pelion, which focuses on data management.

Stianos said SMS still had a good cash reserve for future acquisitions.

Rival IT services group UXC had put itself on the market, but Stianos would not be drawn on whether SMS had taken a look at the company specifically. “We’ve looked at all the big players,” he said. “But we’ve found that it’s more value-accretive for us to acquire a small capability — a specialist in an area — and use that to acquire organic growth.”

There was no win for shareholders in “doubling numbers without doubling profit”, Stianos said.

Australia’s IT services market is currently characterised by a plethora of mid-sized players like SMS, Oakton, CSG, DWS, UXC, ASG and more that are increasingly putting the pressure on bigger multinationals like IBM, HP, CSC and Fujitsu.

Stianos said there were some arguments that consolidation should proceed in the sector, but he would never let “ego” drive strategic decisions for SMS. “We’ll do what’s right for the company and for shareholders,” he said.

The results
The second half of the 2010 financial year was a better period for SMS than the first half. The company today revealed that for the year ended 30 June, it had increased revenue by 7 percent, reaching $247.6 million, with EBITDA up 15 percent to $38.1 million and net profit after tax up 15 percent to $27.9 million.

But Stianos said most of the revenue growth came from the second half of the year — with revenue for that half up 19 percent on the previous corresponding period, compared with only a 7 percent rise for the first half.

SMS’s staff numbers have jumped upwards since June 2009 as well, with the company taking on an additional 204 staff in the period — mostly in the second half — including 162 permanent consultants and 32 contractors.

SMS went through a staff chop in late 2008 as the global financial crisis hit the company hard. However, Stianos said he thought the up and down rollercoaster of staff numbers had not affected the company’s culture.

“I think our culture’s quite vigorous and strong,” he said. “If you’re adding 20 percent, that means that 80 percent of the people are already there and well-inducted.” He added he thought that it was the behaviour and values of the leadership team that made a company what it was.

In terms of future growth, the executive said he was seeing demand from most sectors, and that some would open up further shortly — for example, with the resolution of the government business “hiatus” created by the Federal Election.

And the SMS chief said while there was still a debate about the potential benefits to be gained from the National Broadband Network project — which the Coalition will cancel if it wins office — he was a believer. “People underestimate the innovation from the digital economy — really, it’s going to spur off a whole new wave of applications,” he said, noting he was confident other CEOs of technology companies had a similar view.

“SMS is not going to be involved in rolling out the cables,” he said. “We’re not about the tracks — but we are about the locomotives.”

Image credit: SMS Management & Technology

Perth-based IT services group ASG today said it had inked a 5-year shared services contract renewal with the Western Australian Department of Treasury and Finance, although it is unclear how the deal relates to a previous ten-year arrangement inked in 2006.

In January 2006 ASG and sub-contracted partner CSC won a $87.8 million, 10-year contract with the WA State Government to provide services relating to its whole of government shared corporate services arrangement. The company is led by chief executive Geoff Lewis (pictured).

Since that time — and after a damning auditor report on the project — the State Government has reworked the project and brought it under the Department of Treasury and Finance. ASG group chief officer of Sales and Strategic Operations, Murray Rosa, today did not immediately return a call asking for background on how the two deals related.

However, in a statement today, ASG said the new deal was worth at least $16 million a year over five years, with scope for an additional $20 million in added project services to be bolted on the top.

The company noted the contract covered “a comprehensive range of IT services”, as well as additional services including application services, technology renew and extended professional consulting services.

In his company’s statement, Rosa emphasised ASG had achieved a strong momentum in securing contracts in the new financial year. “We remain well-positioned to deliver strong earnings growth in financial year 2011 and beyond,” he said, driven by strong contract wins, three recent acquisitions and a solid pipeline of contract opportunities.

In 2010, ASG has won contracts with the Department of Prime Minister and Cabinet ($41m), Western Power ($35m), the WA Department of Education ($23m), Vodafone Hutchison Australia (unknown) and the Department of Broadband, Communications and the Digital Economy ($13m), according to the company’s statement — and it has an “opportunity pipeline” in excess of $626 million.

ASG’s share price sank 2c to hit $1.35 at the close of trading today — 20c off its 52-week high of $1.55 but substantially above its 52-week low of 81c.

Image credit: ASG

The Australian Taxation Office has awarded Lockheed Martin – a US technology giant more known for its strengths in the construction of fighter jets and missiles than in enterprise IT services – preferred tenderer status for a contract estimated at $60 million a year for the provision of desktop PC and other end-user computing services.

In a statement issued late Friday, the ATO said it had determined that Lockheed’s bid for its end user computing services contract offered “the best value for money outcome” for the agency.

Lockheed beat out a number of traditional enterprise IT services firms to win the deal, including big names such as CSC – which was a finalist – incumbent HP Enterprise Services (formerly EDS), KAZ (now part of Fujitsu) and Unisys.

Lockheed is not known to have won other large desktop support deals in Australia in recent times, although it does have an IT services arm that operates internationally.

The contract encompasses the provision of support to desktop PCs and equipment, offices machines such as faxes and printers and associated back-end infrastructure. A service management centre – including a single point of contact service desk for IT and service management issues – will be provided to the ATO.

The ATO said that it would now enter into negotiations with Lockheed to finalise the contract, with the outcome expected to be announced in August this year.

Although tasty for Lockheed, the deal is just one part of the ATO’s technology sandwich. In late 2007 the agency revealed it would break its mammoth IT outsourcing arrangement with EDS into chunks. Today’s announcement brings the end user computing chunk closer to being finalised.

Optus beat Dimension Data to win the managed network services portion of the ATO’s pie in May 2009 – with that deal also being worth around $60 million a year, while HP Enterprise Services and IBM are still fighting it out to win the ATO’s centralized computing contract.

“The Request for Tender (RFT) for the third services bundle, Centralised Computing Services is currently under evaluation with two short-listed organisations announced in June 2010,” the ATO said today.

Image credit: Kenn Kiser, royalty free

The Australian Taxation Office appears to have re-negotiated its arrangement with Accenture to carry out work on its troubled Change Program, ending its current contract with the IT services giant and beginning a new one.

“We have also — and the commissioner has announced this internally — drawn a close to the Change Program contract with Accenture, and that finishes on 30 June this year,” said ATO second commissioner David Butler under sustained questioning about the project in a Senate Estimates Committee hearing last week. The transcript is online.

“We are saying that we have negotiated with Accenture a completion to the current contract, and any further work we do with Accenture will be on the basis of the new contract,” he added.

The ATO has previously stated that it had spent $435 million on its contract with Accenture since the Change Program was commenced back in 2004, in a fixed price arrangement. However, the AustralianIT has reported additional contracts between the pair ranging into the millions.

Last week Butler said the total Change Program cost to 30 June would be $820 million. Neither the ATO nor Accenture have yet replied to requests for comment on the matter of a new contract with Accenture.

Butler also revealed that another small review of the Change Program governance was being carrier out — CPT Global’s Peter Wright — who Butler described as “our IT expert”, will do a quick review of the ATO’s IT governance, producing a report which Butler said would give the agency an indication of what else it could do to ensure governance structures were working effectively.

Two other consultancies act as checks and balances on the Change Program — Capgemini and Acquitaine — and provide monthly reports on the project.

The Change Program has been running since 2004, when it had an initial budget of $445 million. This has since increased by several hundred million, both due to increased legislative scope of the reform, but also budget overruns.

The objective of the program is to migrate away from the ATO’s decades-old technology platform and on to a more modern architecture that will deliver the agency improved flexibility in the way it conducts its business. The vast majority of the Change Program has already been delivered, although in September 2008 the ATO’s chief information officer Bill Gibson attempted to re-brand the program the ‘Change Agenda’ in recognition that ongoing change would not stop.

In the Senate Estimates hearing, Butler faced sustained questioning from independent Senator Nick Xenophon and other parliamentarians, who raised again issues of delayed processing that have caused an uproar amongst the accounting community and some constituents.

One particular issue examined was the integration of the ATO’s business activity statements system into the Change Program IT infrastructure. Butler maintained that over the past several years since he took the second commissioner job there had not been plans to integrate the system, as the thinking around the integration had changed since the Change Program was begun in 2004.

However, he said, the BAS system was only about 10 years old, compared to the 30-year-old original ATO taxation platform being replaced under the Change Program, and was the only major core system not to have been integrated.

One final task according to Butler, remained before the ATO’s legacy systems were put to rest. “What we have on the table to do, and what we want to progress this coming year, is to build what is called pay-as-you-go instalments,” he said. “That will allow us to completely retire the 30-year-old system.”

“At the end of July 2011 we will be able to retire the old system completely.”

Image credit: Matt Aiello, royalty free

Resources giant Woodside Energy has renewed its IT outsourcing arrangement with IT services giant CSC for the exact same amount it did three years ago — $30 million over three years.

In a statement released this morning, CSC said it would continue to provide infrastructure outsourcing and support services, including service desk and field services, problem, change and configuration management, and datacentre and server and network resources to Woodside — as it has been for the past four years.

CSC’s statement today on the matter is virtually a carbon copy of the statement it sent out two and a half years ago in September 2007, when it said it had signed a similar three year, $30 million contract as a follow-up to an initial one year deal with Woodside.

“CSC has also expanded its scope of services and is now one of two preferred suppliers on a panel that will see CSC delivering resources, consulting and project services in the areas of infrastructure and application design and implementation, architecture and the company’s enterprise resource planning (ERP) solution, SAP,” CSC said today.

Woodside’s chief information officer is believed to be David Humphrys. A company spokesperson has not yet responded to a request for comment on the CSC deal.

The news comes as Woodside appears to have recently been quite active in signing IT contracts. For example, in early March, IT services company Ajilon revealed it had inked a two-year (with several extension options), multi-million deal with Woodside to provide application and infrastructure development, architecture, technology and support services to Woodside.

“Projects and services have just commenced. The contract also involves subcontract partners Kinetic IT and Prospecta, which will support infrastructure and technical SAP services respectively, as required,” said Ajilon’s WA resources sector director Annabel Flynn at the time.

Image credit: Woodside

Image credits: CSC

IT services giant CSC has firmed its grip on Western Australia’s Department of Corrective Services with a new three-year contract worth about $4.3 million.

The company had already won a separate multi-million-dollar deal with the department and sister agency the Department of the Attorney-General to provide a wide range of IT services, ranging from help desk support to network security and infrastructure services supporting the state’s courts and prison systems, in addition to computer links with the WA Police and the Department of Transport.

Today, the group said it had won a new deal to provide applications support for the Total Offender Management Solution (TOMS), a database maintaining records on all WA criminal offenders in custody.

“Since TOMS was introduced into the Department of Corrective Services in 2000, it has been upgraded and enhanced to become a core part of the operations within prisons and detention centres,” said Ravi S. Ravindran, director of Business Systems for the Department of Corrective Services in CSC’s statement.

“To secure increased support for TOMS we conducted an extensive and thorough vendor selection process and CSC Australia was chosen for providing the best value. The department will be working with its service providers, including CSC Australia, to deliver on the department’s strategic objective of providing an Integrated Offender Management regime across the entire department.”

The win marks the first new piece of work for CSC to be announced under the remit of its new Australian chief Gavin Larkings, a former local executive with the group who returned from Harvard’s Advanced Management program to take the company’s reins on April 6.

It also caps off a few recent wins for the US-headquartered IT services giant.

On March 26 it was revealed that steel giant BlueScope Steel had re-negotiated its long-term IT outsourcing arrangement with CSC, with a new, potentially eight-year agreement linked. On March 11, the Australian Taxation Office picked CSC for a renewal of its Australian Business Registration system, and on December 14 the company revealed it had won a four-year contract with the Australian Electoral Commission.

Image credit: Miguel Saavedra, royalty free

US IT outsourcing giant CSC has replaced incumbent Australian chief Nick Wilkinson with Gavin Larkings (pictured), a former local executive with the group who is returning from Harvard’s Advanced Management Program.

International executive Wilkinson has led the company in Australia since December 2007, relocating down under to do so. He was previously the company’s vice president of its Chemicals, Energy & Natural Resources division.

Wilkinson’s next role has not yet been announced, but in a statement, CSC’s global CEO Michael W. Laphen praised the executive, saying he had been instrumental in fostering growth in Australia, with a “stronger focus on marketplace recognition and improved sales and marketing capabilities in CSC Australia’s target verticals”.

Larkings has recently completed the Harvard program. Previously, he was assigned as vice president of service delivery with CSC’s Managed Services Sector for Europe, the Middle East and Africa regions. He was previous vice president of service delivery in Australia, and has held several senior positions since he joined the company in 1999.

“Larkings’ career in information technology (IT) spans over 30 years and includes management roles within the Commonwealth Bank of Australia and EDS. His experience in IT has been broad and diverse, ranging across line and executive management roles in data centres, technical systems support, applications development and account management,” CSC added in its statement.

The executive has a Graduate Diploma in Information Technology from the University of Technology Sydney and a Post Graduate Diploma in Banking Management from Macquarie University Sydney, in addition to his new Harvard qualification.

It hasn’t been all plain sailing for Wilkinson during his stay in Australia.

In April last year, CSC confirmed it would make a number of its Australian staff redundant as a result of the global financial crisis — shortly after Wilkinson had emailed journalists personally referring to the year ahead as “a banner year”.

However the company also won a number of large IT outsourcing clients in the period — generally renewals such as last week’s deal with BlueScope Steel.

Larkings will take over CSC’s Australian operation on April 6.

Image credit: CSC