NZ Transport Agency CJS unit scrapped after scathing review

Disbanded after Deloitte Consulting reporting

The NZ Transport Agency (NZTA) has disbanded its Connected Journey Solutions (CJS) business group, following a scathing review commissioned from Deloitte Consulting.

CJS was set up in October 2016 as a small business unit within NZTA to focus on developing technology innovations. In the two years of its existence it grew from eight to 80 staff.

NZTA interim CEO Mark Ratcliffe said the review had been initiated in response to a range of concerns relating to the management, governance and activities of the group, identified during an overall assessment of NZTA’s functions undertaken following his appointment in January 2019.

"That assessment and feedback provided by staff made it clear that there were serious concerns with the way the group had developed and operated,” he said.

The Deloitte report said that CJS had been set up as an NZTA innovation function structured around an ideas pipeline to take concepts through innovation, incubation and, finally, integration with the core business, but by default had become a secondary technology function for NZTA.

“Such ownership of operational functions fundamentally sits at odds with the innovation value-chain concepts of progressively proving a concept in a safe environment before integrating it into operations,” Deloitte said.

Deloitte found CJS’s focus on innovation coupled with a lack of accountability undermined its ability to operate effectively and deliver quality products.

“Despite the significant operational responsibilities shouldered by CJS they retained their ‘innovation privilege’ – a mandate to drive change to build the future, challenge constraints, and a license to operate without applying some of the applicable corporate policy and practices,” Deloitte said.

It also said CJS had operated at arm’s length from management and governance functions within the rest of the NZTA and had developed too close a link to the then CEO, leaving board and governance teams out of the loop about its activities.

“‘Innovative change’ appears to have been pushed through without applying expected practices,” Deloitte said.

“This included examples of pushing through recruitment processes, disregarding advice and consultation with corporate procurement and instances where conflicts of interest have not been proactively declared or managed appropriately.”

Further, Deloitte found weak financial management, lack of visibility of the overall expenditure and technology management immaturity.

“Shadow technology, inconsistent identity and access management processes and a lack of technical and architectural input have led to vulnerabilities in security and resilience,” it said.

Ratcliffe said ring-fenced ‘innovation hubs’ were an increasingly common feature of large organisations but they had to be balanced by strong systems and processes to ensure high levels of transparency and accountability.

"The Deloitte report makes it very clear this was not the case within the CJS group,” he said. “The group was allowed to ignore many of the Transport Agency’s own processes and rules. That is not acceptable, and we have moved to address these issues to ensure that these mistakes are never repeated.”

Deloitte presented a long list of recommendations designed to remedy the issues it had exposed, all of which were based on the CJS unit continuing to operate.

However Ratcliffe said the group had been dis-established and its functions were now being managed within NZTA’s Operations Group.

CJS’s former director, Martin McMullan, resigned in March 2019. In June Radio New Zealand reported that NZTA had reopened an investigation into McMullan's decision to award a contract to a company run by a close friend. An earlier investigation cleared him of any wrongdoing.  

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