Written By: - Date published: 6:26 pm, March 6th, 2016 - 62 comments
Categories: accountability, act, auckland supercity, community democracy, infrastructure, local government, national, public services, rodney hide, water - Tags: auckland council, it, super city
Guest Post from SaveNZ:
The massive budget blow out in Auckland Council’s IT budget is the direct result of the incompetent way in which the NACT government set up the SuperCity. It was made worse by the way council ran the NewCore project, using mates and cronies with little or no experience of integration of core IT systems.
Mark Ford (appointed by National Government, via ACT’s Rodney Hide) created a massive mess when he set up the transition authority. He ignored modern business practices and ignored sensible advice by dividing transition planning into siloed ‘work streams’, and relegating IT to a minor role inside ‘infrastructure’.
Ford showed little understanding of, or care about, the critical, extensive and expensive role IT plays in modern businesses and not for profit entities. The result is a massive cost overrun.
IT industry best practice is to conduct an ‘application portfolio analysis’, analysing existing IT assets using a framework to classify what to do with these assets. Instead, Ford baked a home grown approach, supported mostly by Deloitte with ‘auditing’ by Ernst & Young, with little consideration given to the costs and complexities of change, and how the existing assets could play a role in the new Council.
Various experts identified this silo approach as a problem, but Ford decided to ignore them.
Once the SuperCity came into being, Ford’s previous Chief Information Officer from Watercare, Mike Foley, (ex SkyCity, Deloitte, Ernst & Young as well) was appointed as CIO, and proceeded to make every IT mistake in the book.
Normally, a programme steering group would be appointed with representation from business owners and consumers, with clear lines of accountability. Once established, this group would appoint a highly experienced core systems Enterprise IT architect to blueprint the future state and they would retain design control. Essentially they are the ‘Architect’ of the entire project, having a role similar to an architect writing the blueprint for a new house.
Requirements from key stakeholders, represented in the steering group, would be gathered and the IT architect would use these to create the plans for the new solution. Again, ideally, experienced resources would be employed, and these would be peer reviewed by another top Enterprise IT architect.
Instead, with no previous experience of application development, complex integration or even large scale transformation, Foley set up the IT transformation programme without following this best practice, and used inexperienced internal staff and contractors from his previous employers.
Foley also created a governance model with no business representation, which was later identified by Ernst and Young as being totally inadequate. Reading their report is a real shocker as it appears none of the normal governance best-practices were followed.
But even following the Ernst and Young recommendations would not be considered ‘best practise’, according to my sources in council. The council’s governance re-design still fails to follow industry practice as it has no representation from the Enterprise Architect in decision making. Essentially, the person who designed the system then gets locked out of enforcing it.
My sources working in Council at this time claim that the programme team, principally run by Deloitte, burnt through nearly $50 million of council money without writing a single requirement. This means it would be impossible to ensure the solution actually delivered something that was needed. Deloitte have history here, as they apparently also blew $28 million on a property records management project with no requirements and no discernible improvements.
This massive failure was confirmed by Council’s own reporting around this time, which identified major problems with scope changes and designs not being signed off when they were supposed to be building the solution. It is surprising that even after apparently identifying failures from Deloitte the Council still keep throwing ratepayers cash at them.
To add to the problem, around the time this IT project was being planned, many of the few quality Auckland Council IT staff left, as their concerns and recommendations were being ignored. Other divisions, like ATEED, simply broke away to create cheaper and working IT systems.
Incredibly, the poor programme governance, poor decision making, and lack of accountability identified in the reports were still occurring. For example, Foley decided to undertake a major re-design of NewCore, which blew time and a lot of money, and threw out the existing software used for property, consents and LIM’s (Pathway), in favour of heavily customising the expensive off the shelf SAP package. Maybe this was based on a 19 year old SAP project he once worked on in the UK. Who knows?
Customisations of massive monolithic software such as SAP hugely increase long term costs as every update to the product (e.g. new version, security update etc) has to be tested by Council against their customisations. Eventually the core product diverges significantly from the customised code and the entire IT system has to be re-written, again at massive cost.
This has also been the experience of a major NZ utility firm, who’s customised version of SAP has locked them into a lifetime of exceptionally costly testing, re-coding and upgrading as SAP changes. These problems are well known in the IT industry, but were ignored by the council’s IT leadership.
Rather than go down this insane path, Auckland Council could have acknowledged its lack of experience and skills, used top IT firms and personal who specialise (and have recent references) for integrating core IT systems at reasonable value without failure and long term costs of maintenance. If truly experienced, these firms would have looked at integrated solutions designed specifically for Council’s and at a fraction of the price.
For example, Technology One, used in several NZ Councils, provide a plain vanilla suite of Council enterprise applications, for less than a tenth of the cost of the customised SAP processes used in NewCore.
In the end, Auckland Council have left our largest city with a huge mess of their own creation due to their cronyism, incompetence, culture of arrogance, lack of accountability, and inability to even understand how to approach the problem let alone how to solve it. It’s frustrating that Mike Foley resigned late last year rather than face the music for his decisions.
The costs exceeding 1 billion dollars which we the ratepayers have borne for the last 5 years cannot be recovered and the white elephant IT system will keep on being a massive cost for Auckland ratepayers. That means that positive changes that the council could be making are left on the back burner.
This needs to be seen in the context of how central control of the Supercity is really playing out. Cronies and mates being appointed has meant more than a billion of ratepayers cash has been committed to the IT build with little to show for it.
While IT is a ‘yawn’ for many people, the failure of IT structures is a massive burden on any operation. Big projects need to be closely scrutinised as failures can quickly cripple an organisation. Despite their size and dominant position, councils are also vulnerable to bankruptcy and then ratepayers are forced into bailing them out.
We see what has happened in the USA when Detroit council went bankrupt. The banks took over and shut off ratepayers’ water. The courts ruled that ‘water was not a human right’.
Locally, the Kaipara council went on their own secret spending spree with ratepayers money on a white elephant waste water system that, in spite of being audited, did not raise enough flags. The rates rose a shocking 20% and the resulting council debt is now considered unsustainable by many.
Under the ‘central control’ of the Supercity the democratically elected mayor and councillors have been left with little real power and are now at the mercy of a business structure totally out of control with zero accountability to the public. This is not an issue we can blame the elected representatives for failing to control. This not something Mayor Brown and the councillors have any effective control over at all.
The Supercity was set up this way from the start. The elected council has no real oversight powers and as the potential IT spend was not costed correctly at the start, that’s been a costly NACT political decision for the rate payers of Auckland to cough up for.
The warning is very clear. The supercity structure is highly vulnerable to massive cost overruns.
It’s vision seems to be more about appointing mates to push through a National government agenda than actually serving the ratepayers of Auckland.
In addition, there are potential further problems coming our way because of the TPP. Here in NZ, we have potentially billions to be spent on IT and other compliances as a result of signing up to that dodgy deal.
The government is reckless to have signed up to TPP without having a detailed costing of the IT and other related expenses for all Kiwi businesses and organisations. If you want to see how that kind of willful blindness ends up, you only have to look at the Auckland City Council’s IT department. It’s a brutal lesson in how to get the basics badly wrong.