A govt IT insourcing success story


blog With all of the IT disasters that have come out of the Victorian State Government recently, sometimes it’s hard to believe that anything has gone right recently in the state with regards to government technology use. That’s why we were pleasantly surprised to read this case study published by iTNews today (we recommend you click here for the full article) detailing how utility Yarra Valley Water has successfully switched away from an outsourcing model and brought its IT support in-house. The article states:

“Yarra Valley Water has credited a nine-month “in-sourcing” project for improving its IT project delivery and shaving $2 million off its annual expenditure.”

When we did an in-depth series (here and here) investigating how the Victorian Government could resolve some of its long-term IT issues, one of the issues which came up again and again was how to source competent staffing resources — whether they be in-house, outsourced or even offshore. Well, it seems at least one agency in the state has managed. Perhaps this is the kind of positive story which could be fed back up the chain through the current review into the state’s IT strategy.


  1. Government and Business find that keeping their own IT staff instead of outsourcing Saves them money and keeps clientbase happy and resolves issues faster.

    News at 11 :)

  2. The only advantage to outsourcing, as with so many things lies with the Lawyers and Accountants.

    The Lawyers draft the contracts that ultimately show the company who failed to deliver on expectations actually met the specified outcomes in the original contract. Any change to the specifications is of course, billed at the full rate. This is how one enormous Telco got screwed by the company that made one of its core systems. $50,000 per change (yes, even a typo) was the last I heard.

    The accountants fiddle the books so it looks like a Capex investment that can be depreciated rather than an Opex cost that cannot.

    And the company? Well, when you actually look closely, they’re not gaining any efficiency.

    I have however worked at a smaller company with in-house developers, and believe me, it gave them the agility of a fox. New product? Sure! Give us a week to tie it into our existing systems and get it down to two clicks. When it broke, they were there immediately. When you didn’t like how it worked, you slapped them on the back of the head and bitched till they fixed it (or bribed them with lunch).

    Anecdotally, the small company mentioned actually resold a product from the larger company mentioned above, and having had the pleasure of working for both, the larger company took many, many times longer and much much more effort on the sales staff’s part to provision the exact same product.

    In-house developers will save uncountable man-hours. Period.
    Forget the lawyers. HR can deal with them. Forget the accountants. Focus on what you really want to get done and ignore the shrieks of deduct-ability.

  3. the f’ing circle of IT life…..

    lets outsource!!! we’ll save money and get better functionality!

    yay and the peasants rejoiced

    years down the track… lets insource!!! we’ll save money and get better functionality !

    yay and the peasants rejoiced

    years down the track … lets outsource! …

    usually what has changed is the new manager with their need to “make a change” rather than a real desire to make things better….

    • Ain’t that the truth of it, unless it happens to be a Government. Then it is what is ever the political dogma of the Party over any form of rationality.

      • I remember at one workplace (like many) , where IT was controlled by the CFO… he called me in one day

        CFO “I want to save on internet costs, I’ve been contacted by a new ISP offering to knock $20 000 off our internet costs”
        Me: “ok .. let me go talk to our current provider”

        next day

        Me “they are willing to match the costs – so all good”
        CFO “no .. i think we should change , i want to be the big fish in the small pond”
        Me “If we change, we will need to replace some equipment we currently use that the current ISP gives us for free”
        CFO “how much to replace?”
        Me ” around $18,000″
        CFO ” oh.. that’s ok , i don’t mind spending $20,000 here or there….”

        I’ve still got no idea why we changed… probably kick backs somewhere. But i detest non IT people making IT decisions

  4. It all comes down to managerial wit at the end of the day … in-house ICT provision is a great model if the organisation’s executives have the enthusiasm, ability and money to invest in and manage ICT people, processes and technology. Unfortunately managerial wit too often turns out to be either a scarce or unsustainable resource … despite the best of intentions. I wish them well.

    • Agree entirely and it applies doubly to the service provider.

      Outsourcing benefit is reducing staff liabilities such as superannuation to the company in question. It has never been about improving service, quality, etc. Just moving risk (and often blame).

  5. Outsourcing should work better than it does.
    The big issue I have seen is that Outsourcers can’t leverage properly because they give into the demands of the customer in regards to configuration etc.
    So instead of the outsourcer supporting 10 clients with the same base and only small variations. They end up supporting 10 very different systems. Which means they start “dedicating” staff which of course results in less support capability across the clients…. Sigh…

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