Cost cutting reshapes government IT services

Shared IT services strategy flagged by two agencies under pressure

Line-by-line reviews of government spending have hit home with agency IT services joining the search for cost savings.

The Ministry for the Environment and the Department of Corrections are both looking at alternative ways to deliver IT services — and both are flagging sharing IT services with other agencies as one option.

Following a restructure at the Ministry for the Environment, which Radio New Zealand reports cost $920,000, a review of IT operations is being kicked off to “support the ministry to deliver on its new strategic direction”.

The cost of any changes to the ministry’s ICT systems as a consequence of the review will be over and above that $920,000, says a ministry spokesman.

Findings from the review are to be delivered in the form of two reports, the first analysing current systems and recommending options and, once the ministry has made its choices, an implementation plan, according to a document seeking expressions of interest from consultancies.

A review has become necessary partly because “a number of our IT systems are quite dated”, says ministry senior analyst Jane Paterson, and partly because the change of government and expenditure reviews have produced new work programmes for the ministry.

“Our focus has shifted,” she says.

The ministry was one of the first agencies to be put under the cost-cutting knife, with the loss of about 20 jobs.

“We’re looking forward to receiving expert advice on all options,” Paterson says.

The briefing document emphasises the potential for savings by outsourcing or sharing services with other government agencies. The reviewer is asked to consider options to either retain the in-house ICT status quo, outsource, or share technology with similarly sized agencies as well as to examine opportunities “at the business layer”.

Paterson says all options are open.

The Department of Corrections is also considering relinquishing ownership of some of its ICT hardware as part of an ICT refresh, but a spokesman for the department declined to add any comment to the text of a document requesting information (RFI) from vendors and consultancies.

“While some services are already outsourced, the department is seeking to optimise the way that services are delivered to allow suppliers to operate more effectively, to provide innovation, to enable business agility and to reduce complexity and cost,” says the Corrections document.

“The department is also interested in exploring new options for service provision that may include changes to the ownership model around some or all IT assets.”

Cost is clearly part of the motivation for considering relinquishing ownership, but the spokesman again declined to comment on whether there are other drivers for this direction.

The department already outsources maintenance and support of a number of its systems, which range from SAP enterprise resource planning to specialist applications such as the Integrated Offender Management System for managing inmates in prison and on home detention.

The RFI also mentions the option of sharing systems such as ERP, back-office applications and infrastructure with “similar-sized agencies”.

Corrections’ Information and Technology Operational Strategy 2008-2013, referenced by the RFI, discusses the advantages of “multi-sourcing” — sourcing services from a greater number of suppliers — to avoid lock-in and promote competitiveness.

The document solicits responses that will “enable the department to understand the capability of external parties to provide service delivery functions in the context of the IT Operational Strategy”.

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