A reader emails about Auckland Council’s IT blow out


A reader emails their thoughts on the Auckland Council IT debacle and predicts that it won’t be the last we hear about the wasteful and idiotic IT spend.


“An Auckland Council IT project originally budgeted to cost $71 million should be delivered for the new cost of $172 million”, says a senior council executive.

I just love how committed they sound…

This is absolutely bloody disgusting.  That is an overrun of $65 for every man woman and child in Auckland.

The council only has staff of 8000, meaning the number is $12,500 for every employee.  You could almost build a brand new infrastructure for that in the private sector, in fact it is basically the baseline average private sector IT cost per employee per annum gone out the window in one project overrun; this is $13164USD in a recent Gartner study.

Perversely over here one of the main guy’s responsible for it is being lauded as the next top future CIO:

“To try and achieve a world class IS transformation with a limited budget is of course a new challenge for me,” says Holtzhauzen.”


“It was non-negotiable,” Holtzhauzen recalls. “We acknowledged the deadline and understood the significance of exposing the Council after this date…”

You can speak in absolutes when there is a public purse to pick it up.

“We’ve had a busy year and it’s not often you get the chance to pause and acknowledge your achievements,” he reflects. “But it’s testament to my great operations team who, despite going through changes which impacted them personally, still managed to pull it together and not drop the ball.”

Yes quite an achievement, but I am not sure we agree on the meaning of not dropping the ball.

Back over at the Herald article:

The IT project, which was supposed to be completed by June 2016, now has two key dates for implementation – June 2016 and June 2017.

So it is going to be late too… and;

While the costs of NewCore have increased by $100 million, these costs will come out of the $454 million budget for IT in a new 10-year budget.

Other than the humorous fact that the MSM can’t decide if Auckland ICT is great or awful, my maths says that leaves $354M remaining to fund the council for the next 10 years; that’s an average of $4425 per employee or about 1/3 of what a competent private sector CIO allocates.

So you can be sure we have not heard the last of this.


THANK YOU for being a subscriber. Because of you Whaleoil is going from strength to strength. It is a little known fact that Whaleoil subscribers are better in bed, good looking and highly intelligent. Sometimes all at once! Please Click Here Now to subscribe to an ad-free Whaleoil.

  • Andy

    Unfortunately, this kind of stuff is all too common in government IT projects. Having worked on a few train-wrecks in my time, it makes me weep see taxpayer money wasted like this

    • You should try Australia, they make NZ look like scrooge.

  • Pluto

    $12500 per employee eh.
    That’s an easy fix Len, get (even) more employees.

  • Peter

    If I blew my clients budget by more than 15% they would sack me. If I blew it by 300% then there would be a court case.

    • Deane Jessep

      Absolutely, heads need to role for this.

  • Peter

    However in saying that I would probably look at the client brief first before looking at the IT company. The fact this client is trying to push this through without pushing the providers face in it points to a gigantic and undeniable cock up on their part.

  • Peter

    If we were in china we could probably get five support staff per employee and they could hand deliver and file everything for a fraction of the price. And likely one will design the new IT system in his or her down time…lol

  • Bayman

    Give me $70m and im pretty sure I could build them a brand new system!!!

    Seriously, how does it cost that much, let alone another $100m??

    • burns_well_eh

      It’s worse than that, far far worse. It’s not even building a new system, it’s “configuring” a system that already exists, that they already have.

    • taurangaruru

      I assume they are not the only local government organisation in the English speaking world that has computerised their systems – i.e. why is the wheel being reinvented in Auckland? Developing bespoke software is a nightmare not only during the development cycle but in terms of on-going support & maintenance. Who do you think is best placed to provide the on-going support? The very people that were involved in the original cost blow outs & you can bet your bottom dollar that is where the council will “hide” a lot of the cost overruns now, the developers will be awarded the ongoing contracts at exorbitant rates to make up for any shortfalls that are agreed to make this deal politically acceptable.

      • SP

        I’ve had 20 years experience in building large bespoke software systems. Without fail every client believes their business is unique. When you try and tell them that buying off the shelf would save them millions they often refuse to contemplate changing their own internal processes even slightly to make use of a cheaper solution.

    • jcpry

      No doubt it is being built based on what if’s, exceptions and pie in the sky exceptions.

  • There have been a number of government IT projects in the last few years that have blown out in a major way. I was curious if there was a common cause, were they overly ambitious to start with, incorrectly budgeted, redesigned repeatedly, what is causing these overruns?

    • Auckland ratepayer

      Buffoons, managed by buffoons, reporting to chimps.

      • So your saying that bad IT companies, hiring staff nobody else wants, managed by the previous generation of not wanted staff with clients that haven’t defined exactly what they want/need the project to do?

        • Deane Jessep

          Three letters Damian; SAP. The product is rock solid, but this kind of project overrun is very common and is basically a thin end of the wedge services sales practice. Everyone deludes themselves into thinking they can get SAP customised for what SAP themselves say it can be, but not everyone is a SAP rockstar, and I suspect that is what SAP baseline on. We just don’t have enough product guru’s in NZ. The scary part is everyone in the industry seems to know or think it but projects budget they way they do regardless.

          • Andy

            Spot the SAP salesman!

          • Deane Jessep

            Andy, you misread my sentiment, I’ve never worked with the product in my life. But have been done over by lots of my suppliers implementing it and becoming impossible to deal with during the transition. All great to deal with now, but my observation is their projects were undersold, then under delivered, then overrun. That kind of bull$%t sales practice should be ended, as it is unethical and leads to this kind of stuff up. My point is they should know better by now.

          • Andy

            Ok sorry I was just having a laugh.
            Having worked in IT many years, I have come across many “enthusiasts” (euphemism for zealot) for a particular platform or product, which I assure you I am not suggesting for a minute that you are one.

            Now, on a slightly different topic, someone from Otago wrote a book about NZ IT govt failures. Can’t for the life of me remember the name. Any ideas?

          • Interesting, so a propriety customisable application program that sells itself as a base to almost any business software. but there are insuffiecent trained staff in the country to customise it. So the half trained muddle through learning by mistakes. No wonder the cost blow out.

          • Bluemanning

            SAP is a bottomless money tree, had it pushed on me back in the 2000’s when working with a Euro company, cost over runs galore for years and what we received in the end wasn’t better than the old system; SAP was to us antipodeans a license for some one to print money. In the ACC case add the extras, including the integration and in some cases the dissolution of old regional council systems, the result we now have a dogs breakfast.
            If it is as simple as just importing some SAP experts to solve the problems wouldn’t it have been done by now? Why weren’t the experts part of the original contract? I am skeptical, someone is making a lot of money from this debacle, I would like to know who and where the allocated funds are actually going?

          • SP

            Ditto… had exactly the same experience in the UK in 2002. Would love to know how many SAP projects have actually come in on time and on budget. The overruns were so horrendous the board biffed them out to the tune of 80mill GBP then went off the shelf and ended up with a better system. SAP is a rort – their sales people spend a bomb schmoozing so I’d love to know the Auckland Council palms were greased!

          • Deane Jessep

            Exactly, but people still insist on buying it, and sales people still insist on selling it. Need fills vacuums. No excuse for ignorance and waste though.

    • Just wait for the IRD stuff up to come.

    • ex-JAFA

      One with which I was involved for several years (!!) was an upgrade of a system for a local government – I won’t say which one. The ongoing support/maintenance charges were going to be double what they’d previously paid, but that was very small change – under $30k pa.

      Where they went wrong was in not disclosing the detail of the other systems with which our solution was supposed to integrate. The implementation took three times as long and cost about five times as much as we initially believed, just because Council’s internal IT people protecting their patch were very backward in coming forward.

      In contrast, a similar project with a government ministry, done at the same time, was easy. They signed up for the off-the-shelf product, changed their workflow to accommodate its design, and commissioned incremental functionality improvements as they arose. At the same time, they helped greatly with our BAU usability improvements by engaging their staff and letting us watch them at work.

  • Auckland ratepayer

    This has put me in a rather poor mood for a friday morning !

  • Lion_ess

    15 Drunken Monkeys with a jigsaw puzzle – so true.

  • Korau

    Five things strike me about this story.

    1. It’s only a mid size stuff up. That’s why it’s been released this week. A large stuff up would have been released next week, to disappear in the Christmas rush. So, $101,000,000 isn’t the largest we can expect from the ACC.
    2. “Costs of NewCore have increased by $100 million”. This suggests it’s the “core” of the system. I wonder what other programming extras will be needed to make it fully functional.
    3. Has any statement been made about the flow on requirements, such as new computers, updated operating systems etc. that will be required to use this system.
    4. Wonder what the training budget is. These systems typically have a sizeable budget for training, and also provide helpdesk assistance to negotiate through all the “features” in the system. (features mean bugs!)
    5. No mention of security being built in. All you Aucklanders risk having your pool booking details stolen and hawked to the press.

    • Deane Jessep

      Actually it looks on the surface that the ‘extras’ have been rolled into the project excessively, this includes massive transition overruns. The real issue seems to be that they have cannibalized the normal operational budget to pay for it. The budget will run out before 10 years is up and we will have another rate rise as a result.

    • 4) Training (& documentation) is being completed as the project proceeds. The execution of the training should be a minor cost, confident that ACC is competent (I think).

  • “To try and achieve a world class IS transformation with a limited budget is of course a new challenge for me,” says Holtzhauzen.”

    this budget figure doesnt seem to “limited” to me – they blew the first budget, doesnt seem like not too long ago they were talking about just another $70 million to complete – not the funds have been upped another easy $30 million without anyone involved blinking an eyelid

    I equally cant believe that the budget includes $45 million per year – or $5625 per council employee (given that only 50% of them use a computer daily that figure is probably closer to $10,000 per employee) – when i try and do the maths in my head figuring that a good computer costs around $1000 – my head comes close to exploding

    • Deane Jessep

      To be completely fair, $15,000 per employee is more common, the fault here is not budgeting enough to begin with. You need to understand that in modern businesses ICT just does a lot more than it used to. This is not necessarily a born cost, usually it offsets other real costs. For example, I specialise in using technology to improve the productivity and efficiency of organisations; the last four six figure video conferencing projects I have implemented saved ten times or more their cost in travel budget reductions.

      • Im obviously working in the wrong profession as i doubt i could even keep a straight face telling a company of 7 people that a video conferencing systems is going to cost over 100k – especially when i could buy an off the shelf license for any number of packages for less than $200 per year
        A company could save many times the $15k per employee per year by getting rid of the deadwood at the top of the tree

        • Deane Jessep

          To be fair mike, It would take very unusual circumstances for me to do that either. In fact I more than once talk a client out of a solution into using Google Hangouts or Skype. Though I did have one very good product in my kit bag that is enterprise grade and available in 10 packs for around $1200. When we talk six figures we are usually talking about 500-10000 employee businesses where management, reliability, and sheer scale of deployment require much higher standards.

  • ozbob68

    Seriously, break it into constituent components, put it as questions on stack overflow (a forum for computer questions) under different aliases and collate the responses. Three people for a year, max.

  • Dumrse

    These goons should be buying a proven “off the shelf” system that has been implemented elsewhere and can be visited, observed, tested, trailed. If, it requires minor titivation to tailor it to Browns clowns later on, so be it.

  • Bart67

    When it comes to this Council, and expenditure, it’s good to have a little context. Here we go.
    “We can afford this rail network.”
    :The Attorney general said we can’t”
    “Well, let’s artifically increase everyone’s property values while complaining about housing unaffordability!”
    “That’s not enough”
    “Let’s pinch all that electricity share money then!”
    “That’s not going to go down too well.”
    “We could charge tolls on existing roads!”
    “The Government won’t let us!”
    “Well, we could sell some assets like the port and the airport, and shelve some of these frivoulous projects like state house sculptures, stop paying our CEO three times what the Prime Minister earns and get council spending under control rather than smacking the ratepayers all the time!”

  • John1234

    All I want is the roads and footpaths maintained, the berms mown and the rubbish taken away…

    But I am now paying $4000 pa to support these jumped up little Napoleon bureaucrats and their little empire building dreams.

  • Reaper

    But – you Aucklanders are going to be able to book your swimming lessons online! You don’t know how lucky you are!

  • Crookednose

    And it will still be DOS.

  • AlbanyGuy

    In a similar vein (waste & costs), I note the Aussie Fed Govt. is culling 175 Govt. Agencies which are deemed not required. Given that I would presume they are going to keep some worthwhile Agencies, it makes you wonder about what the previous regimes got away with.

  • Tom

    3 years time it will be out of date and needing replacement. Cue the ratepayers.

  • Richard

    Been in IT for many years.

    What typically happens is:

    1. Companies believe their business issues are ‘unique’. They’re not, never have been. Off the shelf software that is available that is suitable for different industries / sectors will do the job.

    2. SAP is one of the biggest scams going. Cost blowouts are the norm, not the exception. SAP promotes ‘customisation’ – playing on customer egos – read ‘extra cost’ for no real gain.

    3. All IT projects are initially under costed – to get them under the (customer board and public) approval radar – with the project going cap in hand later (once point of no return reached) for additional funding.

    So what is happening in the Council is not new. It is however unforgivable. The Council spends millions on ‘consultants’ who should know better. If they claim otherwise, or they are clearly not up to asking the hard questions of vendors, they should be fired.


  • PhantomsDoc

    I had a little birdie whisper in my ear something about ACC’s security upgrades and live CCTV coverage with huge analytics on top.
    This includes wide rollout of numberplate recognition, behaviour analysis, items taken, left and the uploading of images to the US for real-time facial recognition. This stuff isn’t cheap, the bandwidth requirements huge and the ongoing licensing costs won’t be cheap either.

    Then there is the petabytes of secure and redundant storage required.

    We’re not talking 1 or 2 cameras here either.

    Edit: I wonder if this is a big part of the blow-out? The technology wouldn’t have been budgeted for at budget time.

  • Andy Brown

    The government (read: taxpayer) sponsored conference center at the sky tower has blown it’s budget much more than the council’s IT.