Shared services: Learning the lessons from Queensland and WA
- 13 July, 2011 10:49
- Comments 1
First Assistant Secretary of the Australian Government Information Management Office (AGIMO), John Sheridan.
Really, they should have seen it coming. All the signs were there. Queensland Health, a state government department responsible for paying its 78,000 staff some $210 million in salaries fortnightly, was in dire need for a replacement to its existing payroll system.
Support for its LATTICE system had expired in September 2008, leaving the department vulnerable and unable to make significant changes.
Implementing a replacement would be complex, covering 205 individual allowances across 13 different awards and five different industrial agreements. Things didn’t go well.
In fact, according to the Queensland auditor-general, the project was doomed from the start. Signs of project failure emerged early. Between February in 2008 — just two months after contracts for a new payroll system were signed — and March in 2010, project contractor IBM Australia submitted some 47 requests for changes to Queensland Government’s shared services supplier, CorpTech, a result, apparently, of poorly defined business requirements originating at the beginning of the project. Yet, CorpTech approved all requests.
“During October 2008, detailed planning revealed that the size, complexity and scope of this phase of the program had been severely underestimated, with the consequence that its revised implementation cost estimates significantly exceeded the original tender proposal,” the auditor’s autopsy report reads.
The Queensland Health payroll project would ultimately cost $102 million to implement but go on to take double the time and price to fix. The project’s failure, ultimately pinned on improper testing and lack of contingency reports, could happen to any organisation, but the repercussions of this collapse were huge. Queensland Premier, Anna Bligh, held IBM Australia responsible for the bungle, government agency CorpTech lost exclusivity as shared services provider to other departments and the Queensland Government Chief Information Office was submitted for independent review.
The payroll project and other cost blowouts and project failures among various governments have led to the viability of the shared services approach being questioned.
Most recently, the West Australian government accounted it will decommission its shared services body, following a report from the Economic Regulation Authority (ERA) which advised the state's shared service firm to cease rolling-in new agencies, and further, to disband entirely.
Despite the question marks hanging over shared services New South Wales has forged ahead with its plan, establishing and in some areas even accelerating a services framework to consolidate operational IT staff across major departments.
The Federal Government is also continuing with shared services initiatives as recommended by the 2008 review into ICT procurement by Sir Peter Gershon.
Even without the overarching guidance of lead agency, the Australian Government Information Management Office (AGIMO), individual government departments have begun discussing the potential of virtualising and sharing their infrastructure, creating an internal government Cloud that may ultimately become a precursor to aggregated data centre arrangements.
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Comments
Howard Clark
1
Shared services are dead .... long live shared services.
Despite there being no evidence to support shared services, apart from estimates and projections and surveys, even now the CIOs, the IT companies, the consultants and the private BPOs are pushing for more of the stuff using taxpayer dollar.
In the UK, despite massive shared services failure, and in light of a hostile public reception to outsourcing public services, they are to continue mandated by the government. Why? Yes why.
erience in public sector systems says that there are two arguments for sharing services. The ‘less of a common resource' argument and the ‘efficiency through industrialisation' argument.
The former argument is ‘obvious': if you have fewer managers, IT systems, buildings etc; if you use less of some resource, it will reduce costs. But the reductions are often minor and one-off.
The second argument is ‘efficiency through industrialisation’. This argument assumes that efficiencies follow from specialisation and standardisation – resulting in the creation of ‘front' and ‘back' offices. The typical method is to simplify, standardise and then centralise, using an IT ‘solution' as the means.
The problem with the industrial design is simple - it doesn't absorb variety in demand. Because of this, costs soar as the IT system has to be modified and customers ring back again and again because they can't get what they want.
The evidence of this flawed theory can be found everywhere especially in the UK's HMRC. Unanswered phones. Millions of letters unopened. Millions of wrong tax bills. South West One with massive estimates for success and real term losses year on year and major inaccuracies.
So ask yourself. Why with this evidence would CIO's, IT companies, private BPOs, consultants want to carry on regardless with your money?