analysis The date of November 23, 2011, will go down in history as one of the blackest for the thousands of technology workers belonging to the many departments and agencies making up the Victorian State Government.
The State’s public sector workforce had already suffered many ignominies over the past few years. The cancellation of Victoria Police’s LINK crime database, following the departure amid allegations of contractual improprieties of its former chief information officer. The incredible series of delays, budget over-runs and shadowy claims associated with the gargantuan myki public transport smartcard overhaul, which were revealed in a series of damaging leaks.
Of course, the HealthSMART e-health overhaul, which had been quietly going off its rails for years, was also in the picture. And central IT shared services agency CenITex … let’s not even go there.
The state’s technology workforce was already aware of all of these problems — and many more — when dawn broke on Wednesday the 23rd of November 2011. But by the end of it they would be in shock all over again. That day last week marked the publication of a landmark report into ten of the state’s largest IT projects rolled out over the past half-decade and beyond. And what it found was remarkable. Total cost over-runs: $1.44 billion. Almost every project had been delayed, in some cases by up to half a decade. And in several cases, major, important IT projects had simply failed to deliver and been scrapped.
In the wake of the publication of this report, which analyst firm Ovum has branded the signal of “an emerging crisis of confidence in government ICT” in Australia, Delimiter undertook over the past week to put some thoughts as to what should take place next.
When almost every major IT project has broken its budget and its timeframe, and many have completely failed, after soaking up hundreds of millions of dollars of public money that could have been spent on health, education, cutting down crime or public transport, what happens now? Where does the Victorian State Governments and its technology workforce turn to? We’ll investigate the issue in a series of articles this week.
Don’t do it again
When we asked Australia’s top enterprise IT analysts what Victoria should do next, several of them made comments which reminded us of one of the fundamental precepts taught to all medical students as a first step when approaching any emergency medical situation: First, do no harm.
Peter Carr, the managing director of analyst house Longhaus (which has had a ringside view of similar state government IT disasters in its home state of Queensland over the past 18 months), was emphatic that the Victorian Government must not launch straight into the kind of comprehensive review of its technology operations that made Sir Peter Gershon famous (or infamous) within the Federal Government in 2008 and beyond.
“The last thing they need is a Gershon-style review,” Carr said. “They always end badly, to be honest.”
The reason for this, the analyst said, was that conducting such a review would inevitably lead the Victorian Government into repeating the cycle of technology underinvestment which led it to get into its current mess in the first place.
Carr said Longhaus had conducted research that tracked the performance of Federal Government technology operations over more than a decade — right from the establishment of the controversial Office of Asset Sales and Information Technology Outsourcing (OASITO) more than ten years ago under the Howard Government, right through to Gershon in 2008 and the fallout from the British efficiency expert’s recommendations over the recent period.
Over that period, Carr said, the Federal Government had gone through a clear cycle. The colossal IT outsourcing initiatives driven by OASITO — which saw major organisations such as the Australian Taxation Office sign multi-million-dollar outsourcing deals with companies like EDS — had been aimed at cutting billions out of public sector costs, but actually led to chronic levels of underinvestment.
Carr didn’t mention these examples, but it’s possible that it was such underinvestment which caused agencies such as the Department of Immigration and Citizenship, the Customs and Border Protection Service, the Australian Taxation Office and even Defence to be forced over the period since OASITO to kickstart IT systems overhaul projects worth billions — several of which went drastically off the rails and caused real-world impacts on industry and individual Australians, especially at Customs and the ATO.
The level of funds required always surprised the politicians involved, said Carr. “All of a sudden we’ve got a billion dollar spike in IT costs,” he said. “Forget the fact that we’ve underinvested for ten years. Suddenly some politician says: ‘They’ve screwed us again. Let’s do a Gershon review.'”
The issue, Carr said, was that the savings made from initiatives recommended by Gershon-style reviews into effiency and effectiveness weren’t reinvested in technology projects to keep systems up to date. The current Labor Federal Government had initially planned to set up a billion-dollar fund for IT reinvestment with savings stemming from the Gershon Review. But it famously canned the approach as part of the 2010 election campaign, re-allocating the funds to other budget areas and immediately justifying, Carr said, Longhaus’ theory on IT underinvestment. The analyst doesn’t want the same thing to happen in Victoria.
A once-off colossal review wouldn’t solve Victoria’s problems, Carr said. “It all starts with a continuing and mature Government investment approach, which we can’t seem to achieve.”
Don’t call in Superman
The second solution which Longhaus recommended Victoria avoid is the so-called ‘Super-CIO’ approach which has served the state poorly in the past.
In 2003, Victoria poached high-ranking Defence IT executive Patrick Hannan to become its first whole of government chief information officer. This ‘Super-CIO’ role was set up with the explicit intention of reining in the State Government’s troubled IT operations and establishing a more commercial approach to buying, implementing and maintaining IT solutions.
Hannan declared himself willing to git the task “a bloody good go” and made some headway on issues such as broadband for schools, but quickly became bogged down in interdepartmental power struggles and issues with staff misconduct in the ranks. He famously never returned to his post after a Christmas break, taking the CIO of the Department of Education and Training, Ian Paton, with him.
After that point, the state had several other high-profile executives in its central CIO group, notably another ‘Super-CIO’, Jane Treadwell, who was plucked from Centrelink’s well-regarded IT management team but suffered a similar fate as Hannan. Another high-flier was deputy state CIO Steve Hodgkinson, who landed as a senior government analyst at Ovum. We’ll hear from him on Victoria’s IT woes later this week.
However, Carr points out that in all of these cases, the ‘Super-CIOs’ concerned failed to make much of a dent in Victoria’s problems — despite the fact that high-fliers such as Treadwell and Hannan tried different approaches to the same problem — Hannan being more technically minded and Treadwell possessing more traditional management skills.
“They’ve kind of tried the high-profile CIO thing and the central governance thing and it hasn’t worked,” he says. “What are we achieving, trying that again?” The problem, according to Carr, is that the problems in the Victorian Government when it comes to IT are “systemic”. Extending his logic, a Super-CIO wouldn’t just be wrestling with the projects themselves. They’d be struggling in a quagmire of embedded practices reinforced by multiple layers of bureaucracy. And that’s not a recipe for change.
Don’t focus on shared services
Another recipe for change which has been popular amongst Australian state governments over the past decade has been the notion that government IT service delivery could be consolidated into shared services centres — one or more per state government, to serve a number of agencies. Western Australia, Queensland, the ACT and New South Wales have followed this strategy over the past decade, as well as, to a perhaps lesser extent, the other states and territories.
Victoria’s already gone a long way down this path with the 2006 creation of several IT shared services organisations by the Department of Treasury and Finance. These groups merged in 2008 and were re-badged as CenITex, an organisation which provides basic IT services to mega-departments like Health, Justice and Human Services, as well as a number of smaller agencies.
Others in scope for transitioning to CenITex are Victoria Police, VicRoads and the Department of Education and Early Childhood Development (DEECD).
However, all is not well when it comes to IT shared services strategies in Australian state governments. Over the past year, the Western Australia and Queensland governments, which had been most advanced in their IT shared services implementations, have both broadly abandoned the strategies following a series of widespread which resulted in their own massive cost over-runs, extensive delays and abject failure to deliver. Gartner distinguished analyst Andrea di Maio — a foremost global expect on government IT service delivery — recently published a blog post in Australia noting shared services as a concept was under attack globally.
“There is no doubt that duplication of services and spending across different government agencies makes little sense,” wrote di Maio. “But experience shows that there is insufficient attention to the governance aspects (agencies want to have a say in how the shared services are structured) and – more recently – to technology evolution that is making some of the technology that is being targeted through shared services more and more commoditised.”
“The challenge is no longer to put one organisation in charge of delivering shared services, but to look at how to support agencies in efficiently buying the same service from external service providers.”
Longhaus’ Carr agrees.
The analyst points out that with an rough estimate of 500,000 to 600,000 IT professionals in Australia, and something like 130,000 along being contractors, it is unlikely that enough skilled labor exists for state governments to competently run their own on-shore IT service delivery centres at cost levels which they can afford to pay.
In Victoria, CenITex has been criticised for having too high a percentage of expensive contractors in its resources base, and has over the past several years been attempting to convert some of those IT professionals into permanent staff. However, Carr points out that when Federal Government agencies tried the same thing following the publication of the Gershon Review — which slammed the Commonwealth’s high reliance on contractors, a nasty little cycle occurred.
Federal Government CIOs were forced to let contractors go, the analyst says, only to have to re-hire them when important projects came up. “There’s nobody else to do the bloody job,” he says.
And the pain is already being felt at CenITex. Inter-departmental skirmishes are currently being fought between the shared services agency and some of its clients, who just want to get the job done and have been frustrated in some cases over the past year about the agency’s inability to do it. One can only imagine what the reaction was from CenITex’s government clients in mid-October when an outage at the shared services agency left thousands of government staffers without email and other IT systems for up to a week.
Whispers are rife in the Victorian Government that some agencies are bulking up their own internal IT teams to get work done on the sly that the official CenITex resources haven’t been able to complete. And CenITex isn’t even involved in IT projects, mostly — it tends to focus on standardised service delivery such as desktop PC support.
Ultimately, the Victorian Government’s IT problems are not going to be easy to handle … in fact, that’s probably the understatement of the decade. And both a long-term view as well as short-term tactical decisions will need to be taken.
However, what we’ve tried to outline today is where the obvious and immediate pitfalls lie for the state. If analysts and the past experiences of other states and Victoria itself are to be believed, the state will not find its way out of its current mess by conducting a huge, Gershon-style review, or by relying on Super-CIOs or shared services agencies. Those methods have been tried; and broadly they have demonstratedly failed repeatedly in other jurisdictions.
“Shame on the politician who endorses a Gershon Review for Victorian Government,” said Longhaus’ Peter Carr this week. “Shame on the politician who tries to bring in some external CIO superstar. A super-CIO isn’t going to fix it, shared services isn’t going to fix it. Hiring more IT public servants isn’t going to fix it.”
We’ve heard a fair bit from Longhaus on how not to fix Victoria’s IT problems. So what will fix Victoria? Next up, we’ll hear from Ovum analyst and former Victorian deputy CIO Steve Hodgkinson as well as from veteran analyst firm Gartner on what will work and has worked in similar situations. We’re also planning to look at who is actually responsible for ICT in the Victorian Government; putting some faces and names to the task ahead.