It does not compute

Red Radio reports on yet another IT shambles costing the country.

What is it with local body and government contracts?  Why are so many such monumental foul-ups that only benefit the consultants brought in to advise on them? The colour of the government seems to be irrelevant as it is the bureaucrats that decide to embark on these projects, the consultants get involved and the politicians believe the spin and sign off the budget proposals. Quote.

The National Oracle Solution (NOS) project was to set up a common system across all District Health Boards for ordering and paying for everything from office supplies to surgical equipment.

Health Minister David Clark said the project still needed further work and the company running the project had asked for a further $22 million last year, having already received $90 million since 2012.

After being asked for more money the ministry sought a review, and Dr Clark was not committed to continuing the project.

“Further work is being done following the Deloitte review,” Dr Clark said.

“It is clear that between 2012 and 2017 a lot of money, tens of millions of dollars of taxpayer money, was burnt through.

“Ministers will now have to take careful decisions about whether we progress [with] any work in that respect.”

Dr Clark said the Deloitte report showed “how far down the track this got without being focused on outcomes “.

“Spending $90 million and having nothing to show but a focus on getting a system together is deeply troubling. End quote.

When you are spending someone else’s money it is very easy for mission creep to worm its way in.  If the people writing the cheques knew that the money spent was directly affecting their hip pocket or their end-of-year bottom line or their bonus, more care would be taken.  I started supplying computer solutions to small and medium businesses before the PC came along. Way back in the day when a 5Mb hard drive cost $5000. (No that is not a typo – I meant megabyte).  If the systems I sold did not deliver the required solution then I would not be paid and very likely taken to court. Quote.

“I want to make sure that where we go from here generates real value for money for the taxpayer.”

Dr Clark commended the ministry for conducting the review, but criticised how it went about hiring Deloitte which owned Asparona, the IT company contracted to the NOS project.

He said there was a perception of a conflict of interest, backed by an Audit New Zealand report just released.

It said: “Ministry needs to significantly improve its awareness of conflict of interest in procurement processes.” […] Consultants always seem to do quite well out of these debacles. It would be very interesting to tally up the worldwide total of money earned by Deloittes, EY and PwC, consulting on delivery of, or reporting on the failure of, IT projects for local and central governments.  This review of the DHB project failure benefited Deloittes to the tune of $150,000. End quote.

Large IT project failures are not a new phenomenon but no one seems to learn from the failures of the past.

In 1999 the Integrated National Crime Information System was abandoned at a cost to the taxpayer of some $110 million. A 30% overrun before being ditched. (IBM was the main supplier)

In 2012, Novopay hit the headlines on a daily basis.  At least $45 million has been spent fixing this $185 million project, a 24% blowout. Apparently it may all need to be rewritten by 2020 at another huge cost.

In 2013 The National Property and Land Information System (NaPALIS) required an extra $2.5 million to finish off a $5.6million project. A 44% over budget cost for a project not delivered on time because of “ineffective governance and management” which “has meant that a successful outcome had not been delivered“.

In 2014 The first stage of the Joint Border Management System (JBMS) – merging the computer systems of Customs and the Ministry for Primary Industries – was supposed to be finished by the end of 2012 at a cost of $75.9 million.  Three years later and $30 million over budget the IBM based system was in trouble.  40% blowout.

In 2016 reports of $1.2 billion wasted by Auckland City attempting to integrate the technology systems of the cities it subsumed were in the news. (SAP were the beneficiaries of this ratepayer largess.)

In 2017  Kiwibank wrote off $90 million, the value of its investment in the information-technology project, which it has dubbed CoreMod. (SAP was the main supplier).

Five other smaller Kiwibank ICT projects were also written off that year.

Also in 2017 plans to introduce an expensive IT system to make life simpler for Wellington ratepayers fell into disarray after software glitches and staffing problems.  The council spent more than $15 million on the three-phase Project Odyssey but, a year after its introduction, phase two was on hold after problems with phase one.

And now the DHB debacle where they wanted to pour another $22 million down a $90 million hole – a 24% overrun.

No doubt there are other similar failures that come to mind, but there certainly seems to be a pattern.

Let’s finish with a good news story:

The Western Bay of Plenty District Council uses a program called Stellar Library (headquartered in Rotorua) to deliver all briefing papers, minutes, agendas, submissions and so forth to the councillors and Community Board Chairs.  The councillors and Community Board Chairs are all supplied with decent large size iPads to access these papers and there is obviously some backroom cost for the program and data hosting.

Word is that, in only three months, the savings in printing and courier costs for all this paperwork paid for the cost to set up and roll out this project.  A stunningly successful project with a very impressive return on investment.

It can be done.


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