Is Australia facing another ICS-style IT disaster?


opinion As I have watched the Australian Taxation Office’s troubled IT Change Program sink to new and disturbing lows over the past few months, I can’t help but be reminded of that other Federal Government IT initiative that cost the nation so much — both financially and in others’ confidence in our ability to drive major IT projects.

I speak of course, of the Cargo Management Re-engineering project, the botched implementation of which plunged Australia’s ports into chaos just as the rush of retail inventory was due to hit Australian shores for the 2005 Christmas season.

I’m sure the events are etched into the organisational DNA of the Australians Customs Service, no matter that it has had a change of CIO since that time — with its IT department now steered by the dapper Joe Attanasio.

Those of us with long memories will recall, that like the Change Program — or, as the ATO has attempted to re-badge it, the Change Agenda — the CMR project and the contentious Integrated Cargo System module at the heart of it suffered budget over-runs and continued its development for years and years with the end game hard to see.

“In 1999, Customs estimated the project would cost $30 million. The total reported cost of the CMR project as at the end of February 2006 was $205 million,” wrote the Federal Government’s Auditor-General in early 2007. “Between February and June 2006, Customs made additional payments of AU$7.7 million for further developments and support.”

The ATO likewise began the Change Program in 2004 under then-ATO chief information officer Greg Farr, who has since taken a similar posting at the Department of Defence. At that stage it was billed as a $445 million, four-year program, with its major partner to be IT services giant Accenture.

Sure, the program’s scope has been expanded since then, but can the ATO really justify the fact that its budget has essentially doubled, reaching $879 million, according to the Australian National Audit Office?

There are also other similarities between the two initiatives.

Like the ICS debacle, the ATO’s main work — processing tax returns — is starting to pile up on its wharves as it struggles with drastic changes to its internal systems. And although ATO second commissioner went public last week to assure Australian taxpayers that “millions of returns are not delayed”, and “the new system is working well”, it’s plain that it’s not, by the sheer volume of complaints that are reaching the Australian media about the problem.

And of course there is the ecosystem around both organisations that has swung into action to express its outrage about the ongoing debacle.

In Customs’ case, it was customs brokers, importers and freight forwarders that the IT disaster hit the hardest, leading to such dramatic Churchillesque statements being uttered on the wharves as “There is a clear and present crisis.” Chilling.

For the ATO, it’s the agency’s extensive community of tax accountants, who are frustrated with the ATO’s inability to deliver the services they had become used to working like clockwork and have indicated they may sue for redress. Will the ATO be forced to pay compensation to those whose businesses have been harmed by its IT bungle, like Customs did?

But the thing that disturbs me most about the Change Program’s gradual fall from grace from the lofty heights of being one of Australia’s best-run IT projects to its current status as a “nightmare” being debated ad infinitum by the nation’s vicious cadre of radio talk show hosts is the amount of staff the ATO has been forced to hire just to keep things ticking along.

I’m not quite sure how many extra staff Customs put on during the heights of the ICS debacle, but at one point it was more than 200. The ATO shockingly revealed last week that it had already hired an extra 320 staff, and 500 more would be brought on over the next few weeks.

The logistical problems of finding, deploying and administering that many employees are immense and display starkly just how desperate the ATO currently is to solve its IT disaster — and maybe to get it off the airwaves before the next election.

I’m not privy to all of the details about what is going on inside the ATO, and no doubt the media, the Opposition and the accounting community are over-hyping the problems at the ATO.

But I agree with Nick Xenophon that its time there was an inquiry into the problems — one it looks like Australia is going to get, with Assistant Treasurer Neil Sherry’s revelation last week that he had asked the Inspector-General of Tax to look into the project.

If I could recommend a list of questions, they would go something like this: What responsibility does the agency’s major technology partner hold for the problems? Where did the failure of IT governance begin? What was the exact nature of the cost over-runs and when were they discovered? When and how often was the relevant minister informed?

If these questions seem familiar, there is a reason. It’s the same questions I and my colleagues were asking during the dark days for Australia’s IT industry in Christmas 2005.

Image credit: United States Geological Survey, public domain