Housing IT claim astonishes

Labour questions claimed cost savings from $43.6 million IT overhaul

Labour housing spokeswoman Moana Mackey has called on Housing New Zealand to reveal more about a proposed $43.6 million overhaul of its information technology systems, saying it has not explained how "astonishing" projected annual savings of $70 million would be achieved.

Mackey has also questioned the Crown-owned corporation about the appointment of a consultancy to provide independent quality assurance for the project.

She says she received anonymous correspondence from people who appeared to have a detailed knowledge of the project, in which it was claimed Deloitte had been appointed to the role on the wishes of Housing NZ chief executive Dr Lesley McTurk after an initial evaluation of tenders recommended appointing a different bidder.

Housing NZ is due to submit a business case for the proposed Enterprise Transformation Project to ministers next month. One option believed to have been under consideration was the installation of software from Germany's SAP.

The project has a capital budget of $43.6 million, and $17.3 million is budgeted for operating expenditure to June 2012. So far, $6 million has been spent scoping requirements.

McTurk told a select committee the initiative would involve re-engineering Housing NZ's processes, but she could not detail how the estimated annual benefits of $70 million had been calculated.

Housing NZ chairman Pat Snedden said many of the corporation's processes and IT systems dated back to 1992 and had been repeatedly adapted.

"If we are to refit ourselves for a future environment where we've got to be a lot more efficient and economic ... then we have got to address the issues that have been hampering our business processes."

Corporate services manager Roy Baker says $70 million is "the maximum value" of the proposed performance improvements which would be explained later. The business case is being checked by Independent Quality Assurance New Zealand and independently reviewed by KPMG.

Baker says Deloitte was appointed Housing NZ's strategic partner following a robust evaluation of tenders, after an initial evaluation panel over-stepped its brief.

"An evaluation panel and a steering group to guide the selection of a strategic advisor were set up from the start. It was always intended that the evaluation panel would report [its] results to the steering group which would make the final decision, as it was the only body capable of making a strategic decision.

"The evaluation panel was asked to put forward two candidates. Instead it put forward two candidates and expressed a preference. The steering group set aside the preference, and reviewed both candidates from a strategic perspective, as was originally planned. Following that evaluation, the group decided to appoint Deloitte."

Mackey says MPs are none the wiser as to what the corporation aims to achieve.

"What are we doing so badly now, that you can achieve $70 million in savings?"

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