news The Victorian State Government has over the past month started holding hearings which touch in depth on the wide-ranging IT project delivery issues which have resulted in the state’s departments and agencies broadly failing to deliver ten major IT projects over the past half-decade.
Australia’s state governments are currently facing a systemic failure to deliver major IT projects, with initiatives in Queensland, New South Wales and Western Australia all failing over the past several years. In the case of Queensland, the state’s catastrophic payroll systems overhaul at Queensland Health was notorious enough that it attracted a great deal of public interest and contributed to the downfall of the incumbent Labor Government at this year’s state election.
The situation is particularly acute in Victoria, where in November last year, the state’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 past half-decade.
Some of the most extreme examples were the Department of Human Services Client Relationship Information System (CRIS), which ballooned in cost from $22 million to $70 million, the Victoria Police’s LINK overhaul, which expanded from $49 million to $187 million (if it was completed, as it has been cancelled), the myki transport ticketing system, which started at $999 million and will require another $350 million and HealthSMART health systems overhaul, which was originally budgeted at $323 million and will require a further $243 million to complete.
The publication of the report was greeted with public silence by most of the public sector players concerned, with few being willing to comment on what steps the state might take to address what appear to be systemic problems. However, in hearings over the past month by the Victorian Parliament’s Public Accounts and Estimates Committee, the issues started to be aired.
One of the most prominent groups to appear before the committee was a delegation from the Ombudsman’s office, consisting of deputy ombudsman John Taylor and Erin Barlow, principal investigation officer with the ombudsman and the lead on the project to examine ICT project failure in Victoria. Taylor told the committee (the full transcription is available online in PDF format) that the key issue in all of the IT project failures was “leadership”, with the Ombudsman finding in its examination of the failed IT projects that leadership was “lacking” in all.
The sole exception to the lack of leadership shown in the IT projects examined, Taylor said, was in the HealthSMART project. He said: “At a key point in the implementation of HealthSMART where things were foundering and there were tensions between the contractor and the department, the then secretary got on the telephone — and it is reflected in our report — and spoke to the principal vendor and said, ‘You need to get someone over here and start fixing this up’. That is the only example of clear leadership demonstrated in the 10 projects we looked at.”
This kind of executive-level intervention is extremely common in the private sector when it comes to IT project delivery. For example, in August, technology giant HP confirmed its global chief executive Meg Whitman had flown to Australia, in a move that is believed to have been at least partly aimed at soothing tensions with core client the Commonwealth Bank of Australia, after a bungle at a HP unit in New Zealand took down thousands of desktop PCs at the bank and some key IT systems.
In another example, then-Telstra chief executive Sol Trujillo held then-Ericsson chief executive Carl-Henric Svanberg strictly to account for the vendor’s part in constructing Telstra’s new national 3G mobile network in 2005 and 2006, with the Swedish national flying to Australia for the project and also taking regular phone calls from Trujillo to go through progress.
Other issues, according to Taylor, included the need for better planning and adequate funding for projects. Probity was also an issue, with conflicts of interest coming up regularly.
“Too often agencies will put up a proposal to their minister without fleshing it out,” he said. “It might even be in some instances — and I can think of one good example, [the VicRoads RandL program] — two pages of a document proposing, ‘You either do it this way or do nothing and the whole system will fail’, which of course were not the only options available. So there needs to be adequate planning, and there needs to be planning before announcements are made by government that we have got this wonderful new something that is going to happen, because then there is a commitment that you have to go ahead and proceed, and the risks there are amplified.”
The ongoing lack of project management experience in the Government was also an issue.
“Finally, one of the problems we have identified, which was glaringly obvious in one case, is a lack of project management experience,” said Taylor. “It is not good enough to have well-intentioned amateurs spending tens, and sometimes hundreds, of millions of dollars, and then wondering why it has failed. The report reflects on the LINK project, where an experienced senior police officer was given the responsibility but without the underlying skills and tools to do a very important job. To give credit to the current head of information technology at Victoria Police, he closed down the LINK project last year after four years and $52 million with nothing to show for it.”
Barlow also had a great deal to say about the issue, focusing in one of her comments on the need for evidence-based planning.
“If you look at a couple of the projects and some of the assumptions that were made in business cases, there was no evidence to support those,” she told the committee. “There seems to have been a lack of oversight or a lack of accountability for some of those assumptions that were made in business cases — for example, with the myki project that you are looking at there was the assumption that this project could be completed in two years, and yet the evidence was that no similar system had been implemented in less than five. So it is not only the public officers who are putting up these business plans with assumptions that are lacking evidence but also where is the oversight to test those sorts of assumptions?”
Technology services giant CSC, whose iSOFT subsidiary was involved in the failed HealthSMART project and which holds a number of other major IT services contracts with Australian Government organisations and large corporations nationally, also appeared before the committee to give its own opinion on the ongoing problems (PDF of transcription here). The two executives to appear were iSOFT Asia-Pacific managing director James Rice and iSOFT operations chief Gary White. The iSOFT HealthSMART contract was signed but the government never actually engaged iSOFT to deliver on large sections of it – leading to a degree of “frustration” on iSOFT’s part, according to Rice.
White told the committee that while he believed the public servants he was dealing with in the contract were “competent”, in practice the contract was complex as it saw iSOFT engaged both with the HealthSMART organisation and the separate agencies – hospitals and other health facilities – that it was supposed to deliver its new IT systems to. “The contention in the project management space was very much a three-way, tripartite agreement going on, where you had ourselves trying to deliver to HealthSMART and ourselves trying to deliver to the agency,” he said. “No three were trying to deliver an outcome. I suppose the issue always is in that situation is that there were always three different opinions and three different drivers from each party.”
The mindset behind the project as a whole was also away from where it should be, according to White, with those behind the project not necessarily seeing it as the long-term endeavour that it needed to be, and change management processes not taking into account the fact that different hospitals and health facilities all worked differently – so the IT upgrades concerned could not always be implemented the same way.
“I think there is a lack of change management involved in the program, and therefore when we started to implement it in the agencies, we started to come across issues that they do not admit patients that way, they do not discharge patients that way, they do not transfer patients that way,” White said. “HealthSMART, as an agency, did not seem to have the power to force or implement that change upon the agencies. It was very much the agencies driving HealthSMART. That is where that contractual thing got slightly awkward because we were trying to implement in the agencies something which HealthSMART defined as a footprint, but the agencies were pushing back and were not willing to implement it.”
The project also appeared to have been poorly defined right from the get-go.
“I do not think a wide-enough community of the stakeholders was engaged in that up-front defining of the process, and therefore what was perceived as being an inadequate system, possibly by some users, was not,” said White. “It was just a system which was poorly defined by key stakeholders in the initial stages. I think there needs to be built in that review process, every six months or every year, a continual review of those functional specifications to make sure it meets the needs of the client.”
Another organisation to comment extensively on the HealthSMART project and other IT projects in the State Government in general was the Victorian Office of the Auditor-General, which sent several representatives to the committee, including the Auditor-General himself, Des Pearson. The PDF record of that transcript is available online.
I want to say several things about the parliamentary committee hearings which have been touching on these failed IT projects in Victoria. I realise that some of this article has been raking over old ground, so bear with me here as I explain my rationale for covering it this way.
Firstly, the Ombudsman’s report into this issue last year made it clear that these are extremely serious issues. Cost overruns of $1.44 billion, extensive delays and a general failure to deliver in 10 major IT projects carried out by the Victorian Government over a half-decade? That’s pretty much the definition of systemic failure, and it needs to be addressed at a systemic level. I published several articles last year looking at steps which could be taken to start to address these issues.
But what the committee hearings last month demonstrated is that fundamentally, these issues are not being addressed yet at a systemic level. The parliamentarians questioning the government auditors and CSC didn’t appear to have much knowledge of IT governance themselves or the details of what these projects were supposed to do, let alone knowledge of how to put in place sustainable structures across government to stop major IT projects going off the rails again. And all the auditors and ombudsmen can do is recommend, recommend and recommend, while they wait for the politicians to decide to take action … on something they don’t really understand. As I believe the ombudsman representatives said at one point in the hearings, they understand the issues but have no actual power to enforce change on recalcitrant and often incompetent departments.
If you look at what happens in Federal Government, it seems that there is more connection between the secretaries of departments and the departmental chief information officers; more understanding of the importance of IT project delivery at a secretary and chief executive level, and even more communication between the secretaries and ministers on these issues, as well as cross-department between chief information officers.
But in state government, not only do the politicians not appear to understand the issues, but it looks to me as if the CIOs of the various departments are also operating in more of a siloed approach than in the Federal Government, meaning less controls on projects to stop them failing, and less knowledge-sharing across departments.
So what to do?
For starters, better skills in departments. Head-hunting highly capable IT project management specialists in major departments, and placing them on lucrative long-term contracts to ensure they see major IT projects through to completion. Link them directly with departmental secretaries and cross-departmental bodies, so that when major projects go off the rails, warnings bells get flagged very early. As Queensland-based IT analyst firm Longhaus has mentioned (see our articles on this subject here and here), thinking outside the box in terms of basic IT skills resourcing for governments – following the private sector into areas such as offshoring if possible, outsourcing if necessary. Governments keep on trying to hire these resources in Australia but can’t really afford to compete with the private sector to do so.
Above all, standardised, off the shelf solutions should be the norm in government. Keep everything as normal as possible and resist customised solutions. Get great change management people in place to help force through business process change so that software solutions don’t need to be customised.
And of course, underpinning all this, these departments and agencies need strongly competent, strongly willed and savvy chief information officers that can push all of this change. It’s not going to happen by itself – it needs a guiding hand rather than the vagueness which seems to pervade state government IT projects at the moment. Public sector executives who want to take responsibility for change and have enough energy to back it and enough political nous to negotiate the public sector bureaucracy minefield. I guess that’s going to be the hardest part. From that, all else will flow.
Some of this may end up being the purview of Grantly Mailes, a former whole of government chief information officer for sister state South Australia, who was appointed in June this year to lead a committee to establish a new wide-ranging IT strategy to resolve Victoria’s ongoing problems with IT service and project delivery.