Contracts for Housing New Zealand’s Enterprise Transformation Project (ETP) have been awarded, as widely expected, to Oracle and UK specialist public services software company Northgate.
The complete recasting of Housing’s central ICT applications is budgeted at up to $80m. Estimates earlier this year were as low as $43.6m but still sparked condemnation as unnecessarily expensive.
The corporation says it has “firmed up” previous claims of long-term savings, predicting ETP’s cost will be recouped in four years, starting at 2012 and savings will rise beyond that to $70m per annum.
“The estimate of savings hasn't changed from original figures,” says chief operating officer Stephen McArthur. “The certainty about them has firmed up. We have consistently said from the word go that the benefits will peak at $70m per year. Bear in mind we have to get the systems and processes in place to start realising benefits, and this won't happen all at once. Different systems and processes will come on line at different times, which means we will start realising benefits at different times.
“Essentially benefits will rise up to a peak of $70m per year,” he says. “We expect to start realising the first benefits in 2012, and the programme will have paid for itself by 2016.”
The total cost of the new system is budgeted at $72m, including staff labour and funds that would have been spent on ICT in any event. New spending will amount to $54m, all to be met from the corporation’s own resources. An extra $8m has been provided for “contingency”.
Announcement of the likely cost of ETP and the savings claims earlier this year met reactions of disbelief both from other software vendors and from MP Moana Mackey, opposition housing spokeswoman, but were defended by the corporation.
One of the strongest past critics, Roger Phare, of Brisbane’s Technology One, declined to comment following the award of the contract.
Northgate will provide the systems Housing New Zealand uses to manage information about its 200,000 customers and tenants, says the corporation. Northgate applications are used by major social housing providers overseas.
Oracle will provide the financial and asset management systems necessary to run Housing New Zealand’s commercial operations, and manage the $14.5 billion state housing network.
The corporation needs to “work more proactively with tenants, and we need to redistribute, reconfigure or upgrade about 27,000 houses to meet demand,” says McArthur
“To achieve [these aims] we need our staff to be more mobile, to spend more time in communities, at the front door of our houses,” he says
“We need to automate, eliminate or centralise cumbersome manual processes. We need better information to base our investment decisions on, and we need to develop a more efficient and flexible way of delivering our services.”
McArthur says savings will accrue from:
- more efficient asset and tenancy management;
- reductions in the amount of time homes are vacant for, which will increase rental income;
- improved procurement and financial management;
- and more accurate rent setting.
“As a simple example, at present when our tenancy managers do a property inspection, they have to take a paper form to a house and fill it in and then take it back to the office and enter the details into a computer system. This is inefficient and creates a lot of double handling.”
The ETP project will mean Housing will equip its tenancy managers with tablet computers, McArthur says. “They will be able to attend an inspection and enter the results into the tablet and straight into the system on the spot. Small improvements like this can produce a lot of productivity gains in a corporation the size of Housing New Zealand.”
The current tenancy and asset management system, Rentel, is 18 years old and based on Oracle Forms software.
“We've looked at what we could do with our existing systems,” McArthur responds, “and to meet the future needs of our business, we would have to spend at least $18m over five years, without realising benefits of the same scale that we can achieve through the ETP programme.”