news The Queensland State Government this week confirmed plans to sell its ICT shared services division CITEC, as well as its information brokerage arm, adopting recommendations stemming from the Commission of Audit into the state’s operations led by former Federal Treasurer Peter Costello.
CITEC sits within the current Department of Science, Information Technology, Innovation and the Arts, with its core business being to deliver centralised IT services to departments and agencies on a user pays basis. However, over the past several years it has several times come under heavy fire from Queensland’s Auditor-General for not being able to deliver large technology infrastructure projects on time. For example, in June 2010 an audit report found that both the ICT Consolidation Program (ICTC) and the Identity, Directory and Email Services (IDES) project, both managed by CITEC, had substantially blown its timeframe.
The ICTC was a project established after the state’s Service Delivery and Performance Commission handed down a report on ICT Governance in the state government in October 2006. Its aim was to establish a whole of government consolidation of CBD datacentres, networks and infrastructure services. It was initially managed by the state’s Office of the CIO, but then transitioned to be managed by CITEC in September 2009. In mid-2010 it was slated to be implemented by October 2011. As at January 2010, there was “no method of identifying, recording, tracking and reporting demonstratable financial benefits” for the program.
The next project examined by the Auditor-General, IDES, had the aim of delivering a whole of government email, identity management and authentication service, to be based on Microsoft Exchange and administered by CITEC and with a budget of $252 million over ten years. But again, it has suffered problems. The project was expected to transition all existing agencies using Microsoft Exchange onto the new whole of government platform by December 2009 — 24 months after the project was initiated. But the date was extended to June 2011, after delays were experienced.
The implementation phase plan was originally expected to be completed and approved by December 2008, the report stated. “However, actual delivery of this milestone occurred on 18 September 2009.” In December 2011, the Courier-Mail newspaper revealed that the Queensland Government had spent $46 million on the platform, despite it catering at that point to just 2,000 accounts.
Because of these and associated issues, in June 2012 Costello’s Commission of Inquiry recommended that CITEC and other ICT shared services units within the Queensland Government be sold off, as there was no guarantee they could provide IT services to the government efficiently.
Costello’s report noted that CITEC was expected to record an operating deficit of about $26.4 million this financial year, with further deficits expected in succeeding years. “These financial difficulties relate to changes in its business model, and difficulties in the implementation of whole – of – government information technology initiatives,” the report stated.
In July this year, the State Government engaged consulting firm EY (formerly Ernst & Young) to conduct a strategic review of CITEC. And this week the state’s ICT Minister Ian Minister confirmed CITEC was definitely to be sold.
“CITEC ICT and CITEC Information brokerage will be divested from Queensland Government in a move that will deliver much needed benefits to the IT sector, the economy and the people of Queensland,” Walker said in a statement.
“A plan has been approved by government that promises no job losses and a smooth transition for clients. CITEC staff will be offered positions with the new owner and will also be invited to take up other opportunities within the Queensland Government.”
Walker said the Newman Government was getting on with its ICT reform agenda and was transforming ICT to deliver the best results and value for money to Queensland taxpayers.
“Research shows strong market interest in CITEC’s agency specific services, its information solutions business and in continuing the CITEC business as a going concern,” Walker said. “A CITEC Divestment Board will progress the plan with support from commercial and industry experts. It is expected the CITEC divestment from the Queensland Government will be complete before the end of 2014.”
Walker said the divestment of CITEC was recommended by the Commission of Audit and outlined in the state’s new ICT Strategy. It is seen as a key part of the government moving away from owning and operating ICT services.
“CITEC has valued government and private sector clients and is a trusted provider of services. This trust will be maintained through open lines of communication with all customers. The welfare of staff and continuity of service to clients are priorities,” said Walker.
It is not yet clear what is to happen to Queensland Shared Services, a separate division which also provides some IT services to government departments and agencies.
As I wrote earlier this year:
“I am strongly of the view that the once-hyped IT shared services paradigm is virtually dead in Australia’s public sector and should be abandoned. I would support a recommendation by the Queensland Commission of Audit that the state’s internal IT services units be privatised or sold off to commercial IT services firms.
It’s good to see Queensland progressing this one. I would suspect that likely buyers might include Queensland-based diversified IT firm Data#3, as well as some of the major global players — Fujitsu, perhaps, which has proven itself willing to buy local firms recently, or NEC, which has also been on the acquisition trail.”