Datacom completes mammoth Health ICT takeover

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news New Zealand-headquartered IT services group Datacom this week announced it has successfully taken over the ICT infrastructure of the Federal Department of Health, in a long-awaited move which has seen the department remove large tranches of work from the hands of long-term outsourcer IBM.

The Department of Health is a sizable operation with several thousand staff located in Canberra and hundreds more located around the country, serving policy objectives related to bolstering the general health and wellbeing of all Australia. It also counts a number of subsidiary agencies under its umbrella, to which it provides services.

Since 1999, the department’s IT needs have largely been provided through a key IT outsourcing contract with IBM. However, despite Federal Government procurement regulations which are supposed to see long-running contracts tested every few years, the deal had not been formally put out to competitive tender over that period, resulting in running criticism of the department over the topic series of articles on the topic.

The arrangement has not always been a peaceful marriage. In October 2011, for example, Health accused IBM of causing a “catastrophic failure” in its IT systems stemming from an update to its storage environment that took down a number of services for a period of time. Health Secretary Jane Halton spoke directly to IBM’s top Australian management regarding the issue.

Finally, in June 2014 Health put much of IBM’s work out to formal tender. A highly competitive procurement process resulted in Datacom picking up a $242 million contract with the department for much of its IT infrastructure work in April this year.

This week the outsourcer issued a statement noting it had successfully completed handover for the contract.

Datacom said the five-year contract, was “considered a ground-breaking departure from traditional IT Services outsourcing, as it is the first of its kind to be constructed solely around an outcomes-based, fully managed consumption-based pricing model that provides Datacom with the autonomy to deliver a solution set which best fits the Department’s needs”.

In Canberra, Datacom has a large dedicated team predominately located on site with the Department of Health. Service Desk services are provided out of Datacom‘s office in Queensland.

Lisa Thorburn, Datacom ACT Director said: “Datacom is committed to delivering market leading technologies to government and enterprise. We have a proven track record working with all levels of government and this has enabled us to build a strong team nationally who were able to deliver this complex and sizeable transition on time and to expectation. We look forward to continuing to develop our relationship with the Department of Health.”

Datacom‘s portfolio of federal government clients now includes CrimTrac, the Department of the Environment, the Australian Taxation Office, the Australian Competition and Consumer Commission, the National Health and Medical Research Council and Airservices Australia.

In my opinion, Datacom has a job of work ahead of it with respect to the Department of Health’s systems. This is what I wrote about the Department of Health’s systems when the department put its IBM contract out to tender:

“If you take a look at Health’s existing IT systems, as well as its approach to the IT outsourcing process outlined in its tender documentation published this week, it seems that that the long-term impact of Health’s continued reliance on IBM and failure to test the market has been typical in terms of organisations that do not test their IT outsourcing relationships and just keep going with the same supplier over a period as long as a decade.

Firstly, it is clear that Health’s internal IT platforms are not up to date and streamlined. The IT outsourcing process, when it is refreshed regularly tends, to force organisations to standardise their systems in an efficient way, so that external parties can easily take them over. We’re not really seeing this at Health — its infrastructure looks a little too much like aged spaghetti for my liking. It also appears that we’re also seeing legacy platforms continue to be used, as well as non-standard methods of purchasing hardware and software.

There are some very up to date portions of Health’s infrastructure, such as its completely virtualised desktop infrastructure. However, in general it seems like the department has let its technology systems fall behind.

Secondly, the complexity of the tender documentation issued by Health this week indicates that it is not very used to going through the IT outsourcing process from scratch. Its documents are complex and paint a picture of an IT organisation which has become a bit inflexible. It doesn’t appear yet to understand that it needs to move with the times and track the best practice way of conducting enterprise IT support; instead it’s kind of seeking an IT outsourcer to match its existing practices somewhat.”


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