Wellington Mayor says new IT system to only cost $10 million

I feel a Tui Billboard coming on. I commented the other day that it looked like theCouncil’s Ninth big project was a potential $100 million plus, based on a Deloitte Report that was published on the Local Government Commission’s Website. More about that later. The Mayor has told me “I am reassured by the Chief Executive and by [ED: Senior Council Officer] that the proposed budget is in the region of $10 million.” That’s right, $10 million, ish, to replace 120 different IT systems, of which a proportion are aged, legacy (meaning very difficult to upgrade), and complex, plus the same across potentially eight other Councils.

Let’s get something straight here. The reason that I have an interest in this is for a variety of reasons. I think that the approach of buying a monolithic, proprietary system stifles innovation. I think that innovation comes from picking best of breed solutions from a variety of suppliers and tying them together to make an open system. I think that the Council has an opportunity to not only modernise their internal systems, but also go a long way down the route to Smart City thinking; Open Data, Citizen Engagement, Citizen developed software and applications, integration with Sensing City technology, and a host of twenty first century technologies that will Grow Wellington. Frankly, as a resident of the city, I want to see us move to a Smart City model as quickly as we can. $10 m could unlock that significantly, let alone $100m. I also think, that as a resident, we should have been consulted about the service changes we want, rather than being told what we will get.

Now, the email itself that was sent out to myself and a few other commentators, was interesting. Because the top half of it looks like it went through the Council procurement, legal, and comms team, while the second half is written in a distinctly different style. The first half is very much a pre-canned, cleaned, say-nothing statement that sadly doesn’t answer any of the questions I have raised so far.

The second half is far more pragmatic and raises an interesting point: “Given the multitude of services the Council provides, a situation could arise where TechnologyOne cannot provide a ‘vanilla’ solution that fully meets the needs of one or more particular Council units. In that case we may have to look to a bespoke solution and that may involve another call for local RFPs.” Is that room for a back down?

Let’s deal with cost quickly shall we? The $10 million budget assurance feels like a bit of obfuscation to be honest. Let’s be honest, I have never seen a total system replacement that cost $10 million dollars. There seems to be some discussion about the total cost of ownership over ten years. So perhaps the $10 million is just for year one? Perhaps if we add up the ten years we get to … I don’t know … $100 million? But, I am wildly speculating and admit it. We also know that the project is meant to be delivered well within two years.

So where did you get that $100 million from you ask? Well, from this fabulous report by Deloitte titled “Wellington Local Government Re-organisation Options – Transition Costs and Benefits for Technology Changes” where the total cost of a “One Wellington” solution is estimated to be between $105 – $150m.

Now, I have read the report and I want to note a few things.

First, I think it’s overly optimistic on costs. Now, this is not likely a failing by Deloitte, I used to work for them after all, and I can tell you that you can only write a report based on the data that the customer gives you. In fact, at times the customer gives you the data that is used to justify their decision so they can wave a report around saying “but Deloitte says it’s all good!”

Second, it is related to amalgamation versus Project Odyssey directly. However, it mentions Project Odyssey sixteen times.

Finally, while the context is slightly different. The stated outcomes of the report and Project Odyssey are the same. That is, to get all nine regional Councils to operate using the same IT systems. Therefore, we can conclude, that if Project Odyssey were to get all nine regional Councils onto the same system, the estimated cost will be $105m – $150m.

Now, reading the report, you can see where the $10m, ish, figure comes from. The lowest entry point option for Day One Transition quotes the range of cost between $6m and $10m. Now, this cost is fraught with risk and simple does not represent the total cost of moving to a shared IT systems across nine councils. It is a very low sub-set of business applications and excludes a lot of costs, including costs incurred by Council.

The full analysis of that report will be the subject of a later blog, so I’m just going to leave it there.

The cost of replacing IT systems is massive. $10 m buys you almost nothing these days. $10 m is probably the kind of maintenance figure that the Council in Wellington pays on an annual basis.

Here’s some examples I’ve come across of costs in the past few years. Replacement financial system for a mid-size government department. +$30m. Remember that Odyssey seeks to replace 120 systems. Replacement of an e-business gateway at a mid-size private company. $35m. The last attempt I saw at an integrated system, a financial company, that failed to reach its objective, was $150m. Re-platforming of Financial IT Systems (moving it onto a more modern server effectively), two examples, both $3m.

But, like I said, the costs are an obfuscation in my opinion, the questions remain, and are growing, and have not been yet answered by the Council:

• Why, when the Council says that it is all for local business and pouring dollars into investing in IT companies, growing start-ups, creating an IT precinct, investing in advertising to attract companies to move to Wellington, and physical work spaces are we giving this business to a company that is not based in New Zealand?

• Is the Council really saying that with an IT industry with billions of dollars in exports, already supplying local government here and abroad, is unable to do this work?

• Why is such an important decision not going to full Council?

• Why, when the public are the end consumer, were they not consulted?

• Why, anecdotally, I am hearing that some camps in the WCC do not support Project Odyssey and see it as a lost opportunity?

• Why are we doing this in the year of debate about amalgamation?

• How many councils have actually signed up to this decision and how were they involved?

• Where is the business case? Can we (the public) have a copy please?

Further on obfuscation, expect the Council PR machine to keep trotting this out: “It [the decision] has caused some upset among some people in the local IT sector – and some of their claims and concerns are likely to be aired in a DominionPost story either tomorrow or early next week. The main concern is that TechnologyOne is an Australian-based company, not a local one.”

Nope. That’s not my main concern, and speaking with a few other IT people over the last twenty-four hours it’s not theirs either. The concern is that for some reason the WCC thinks that not a single IT company in New Zealand is up for the job. And they’d like to know why. Which is fair, because you need to learn from your losses. Plus, the love our city and want the best for it. Pretty simple. They are confused as to how we ended up here.

To Come:

• Unraveling the Deloitte report and looking at the costs in a worst case scenario.
• Is New Zealand IT really not up to the job? Examples of New Zealand IT Companies successes in Local Government.
• The full list of questions including request for material that was generated during the tender process.
• How international Smart Cities have handles IT modernisation.
A recipe for starting again.

Comment On This Post At Wellington.Scoop & strathmorepark

Ian Apperly is a Freelance Writer and sometimes ICT Consultant. "I've been in IT for over twenty years and a freelance writer for longer. I live in Wellington, New Zealand, the city on the edge of the world."@ianapperley on twitter. Blogs at http://strathmorepark.org/ . Appears occasionally at scoop.co.nz .

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