news Treasurer Joe Hockey has strongly hinted that the upcoming Federal Budget will include “billions” of dollars worth of funding for a core systems replacement at the Centrelink division of the Department of Human Services (DHS), in a move that represents one of the Federal Government’s most long-awaited and largest IT project approvals.
For the past several decades, the core system underpinning Centrelink’s transaction processing platform has been the Model 204 software developed by Computer Corporation of America and running on ageing mainframes technology. The platform supports Centrelink’s Income Support Integrated System (ISIS), which makes assessments and delivers transactions to more than seven million Australians.
The platform is best understood by comparing it to the core banking platforms run by most of Australia’s major banks. On top of Centrelink’s core sit many subsidiary platforms which are used by the organisation to hold information about Australians and disburse payments. On average, the system deposits over half a billion dollars into Australian bank accounts every working day, according to DHS’ most recent annual report.
Centrelink, merged in DHS several years ago with other government groups such as Medicare and the Child Support Agency, has been seeking to replace the Model 204 platform for some time.
“The technology upon which ISIS was developed is ageing. As the software has been modified over its life it has become increasingly complex and changes are becoming more difficult to implement,” DHS’ annual report last year states. “The current ISIS platform is limited in its ability to meet a 24/7, 365 days per year standard for online self-service.”
“The 2013 Budget included an investment of $16.2 million over two years for the department to develop a business case outlining options to replace or upgrade its major ICT system. The cost of this measure will be met from within the department. It is likely that any future upgrade or replacement of the system will take several years.”
In a radio interview with 3AW host Neil Mitchell last week, Hockey, who was Minister for Human Services in the Howard administration from October 2004 to January 2007, and Minister for Employment and Workplace Relations from that point until December 2007, said Centrelink’s upgrade need was the most surprising feature he had witnessed since the Coalition came into power in the September Federal Election last year.
“The deterioration in the infrastructure of Government has certainly made policy development much harder and there are huge challenges ahead for us in that regard,” he said.
Hockey said Centrelink’s mainframe was “in bad shape” and “run down”, with only Centrelink and the US Pentagon using the Model 204 platform. He linked poor waiting times for Australians needing to speak with Centrelink (the current average is 17.5 minutes) to the issue.
The Government had “no choice” but to fix the problem, the Treasurer said. “… the two most important computers arguably in the Government are the mainframe for the Australian Taxation Office and the mainframe for Centrelink … The question is how we do it and how we try and ensure we have better service delivery into the future.”
“My overwhelming concern is that it is inhibiting the capacity of the Government to some degree to roll out policy that properly addresses the problems in the economy and in the Budget.” Asked what the replacement project would cost, Hockey replied: “Billions”.
Approval of the replacement project will likely make it one of the Federal Government’s largest ever IT projects, alongside Immigration’s $450 million Systems for People project, the Australian Taxation Office’s Change Program, which ran to $814 million, and the similarly expensive Integrated Cargo System overhaul at Customs.
Major vendors such as IBM, CSC, Fujitsu, Accenture, HP, SAP and Oracle and many more would be likely to be interested in competing for chunks of the work. Historically, the Federal Government has typically appointed a prime contractor for this kind of initiative, overseeing several sub-contractors.
The news comes a year after the previous Labor Federal Government approved another major IT project at the Department of Human Services, which some commentators have seen as being an early stage preparation project for Centrelink’s core overhaul. It involves replacing the Child Support Agency’s key ERP system, previously known as ‘Cuba’.
I kind of predicted that this would happen a year ago when the Child Support Agency’s ERP replacement project got under way. At the time, I wrote:
“It’s not hard to guess that if the CSS overhaul goes well, then Centrelink’s much, much larger core IT infrastructure will be the next cab off the rank in terms of a massive upgrade. This would make sense. You don’t want to undertake these kinds of projects simultaneously; and the CSS upgrade is probably more urgent, given that Centrelink’s core IT infrastructure has been well-maintained over the years. The IT department at Centrelink, led for a long time by legendary public sector CIO John Wadeson, has a strong reputation as one of the best in the Federal Government, and words is also that Wadeson’s successor Gary Sterrenberg has kept things very much on track.
However, it’s also true that Centrelink’s IT department, which has formed the heart of the newly integrated IT department at the Department of Human Services, hasn’t faced a massive IT re-development project such as Systems for People or the Change Program for some time. It looks as if the CSS overhaul will be used as a step project to gain experience, with a much, much larger IT overhaul down the track. In this sense, the performance of DHS in conducting the CSS upgrade will be closely watched indeed, both internally and externally.”
And this statement also applies to the new project Hockey discussed last week:
“It’s been a while since Federal Government watchers had a major enterprise IT re-development project to keep tabs on. Let’s hope the Department of Human Services keeps its ‘Cuba’ overhaul on track. Because there is no doubt that if it doesn’t, the office of the Auditor-General will not be lagging very far behind.”