Vic Govt kicks off CenITex outsourcing



news Just several months after the plans leaked to the media, the Victorian Government has gone to market for IT outsourcing partners to replace large chunks of the service delivery functionality currently provided by its extremely troubled IT shared serices agency CenITex.

Dramatic internal documents leaked from CenITex in May revealed that the Victorian State Government planned to turn the IT shared services agency into a ‘broker’, rather than a provider of services, and that the Government was considering outsourcing massive chunks of CenITex’s work.

The troubled agency’s future has been in a cloud over the past year, with the Victorian Government putting CenITex’s formal status on ice pending a number of investigations into its future. Following a series of troubling reports into its ability to deliver IT services to client agencies in the state, and audit reports finding “nepotism and favouritism” in the company’s contractual processes. It has also gone through major redundancy rounds, sacking 200 staff in one event in May last year, for example.

In May, Melissa Fyfe, a journalist with the investigations unit of Melbourne newspaper The Age, published an extensive document which appeared to be a PowerPoint presentation by CenITex chief executive Michael Vanderheide to an all staff forum held by the agency on Monday this week. In the document, Vanderheide noted that CenITex was to undergo a significant shift in its mission, from being a pure provider of IT services to a number of Victorian Government agencies to becoming a broker of third-party services.

In the document, Vanderheide noted that evidence supported approaching the private sector to provide services in four key areas currently being provided by CenITex: Hosting, storage, network and desktop services. All of these areas are generally considered by the IT industry to be so-called ‘commodity’ IT services, in that they represent standardised infrastructure services that almost any medium or large organisation would purchase in a similar fashion.

This week, those plans moved another step forward, with the state’s ICT Minister, Gordon Rich-Phillips, noting that it had gone to market for an initial tranche of IT services.

Rich-Phillips said in a statement that the move to use the market to provide ICT services to the Victorian Government was a significant shift, and in line with the aims of the Victorian Government ICT Strategy 2013-14 released earlier this year.

“We are looking to the private sector to deliver more efficient and effective ICT services for government,” Rich-Phillips said. “Today’s call for Expressions of Interest marks the beginning of a competitive tender process for the delivery of ICT services, including desktop and end user services, processing platform, storage platform, network management services and service desk.”

These ICT services are currently provided directly through government owned CenITex, whose role will eventually become that of a broker of services rather than that of direct provider, Rich-Phillips confirmed.

“The EoI is an opportunity for government to access innovative ICT services and delivery models that will enhance the capabilities and productivity of the public service and enhance its capacity to serve the Victorian public,” Rich-Phillips said. “We are calling on highly experienced providers of ICT services with proven track records in the delivery of reliable, effective and innovative ICT solutions to respond. This EoI is also a great opportunity for the Victorian ICT services industry, as it increases the size of the ICT market in Victoria.”

CenITex currently provides ICT services worth over $100 million annually to many Victorian Government departments.

“New opportunities have emerged in the market, including cloud and cloud based services,” Rich-Phillips added. “These services offer potentially more cost effective and responsive ways of delivery than can be provided by an internal service provider. The call for Expressions of Interest closes on 10 October 2013.”

The news comes as other states, such as Queensland and NSW, are also going down the path of focusing on services provided through cloud computing platforms, as a method of working around existing service delivery issues.

My views on CenITex have been broadly known for quite some time. They boil down to: Kill it. Kill it with fire. The era of mass-scale IT shared services agencies in Australian governments is clearly over, with such initiatives failing terribly in most states. CenITex is a particularly good example of how these things can go wrong, and has required direct ministerial intervention in its affairs for quite some time.

Image credit: Jonathan LaRocca, Creative Commons, Parliament of Victoria


  1. Good luck to them I guess. The challenge will be to try and use this process as a way to give agencies a step-up in service modernization … not just “same-mess-for-less” outsourcing … inflexibly locked in with long-term contracts.

    Fingers crossed! This will be a good test of the emerging cloud services market in Australia … and the preparedness of the major vendors to put forward iteratively improving cloud services offerings as a strategic play rather than just hedging their bets with traditional set-in-concrete managed services bids.

    It will also be a test of the Vic Gov’s ability to architect a win-win procurement approach which creates incentives both for the vendors to invest ahead of the curve in service innovation and also for the agencies to be more flexible and pragmatic about their requirements.

    Agile thinking + cloud services = innovation and productivity. It can be done … but will it?

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