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ATO’s ICT Sourcing Program Raises Ideas for Other Agencies

by Kevin Noonan •
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As Greg Farr stepped to the podium at last week’s vendor briefing, interest from vendors clearly went beyond the business at hand. Farr was recently confirmed as the next CIO at Defence and he will be charged with modernising Defence ICT, along the lines recommended in the Defence Review earlier this year. Some of his comments about the ATO approach to ICT purchasing may well have implications for other agencies.

The Australian Taxation Office is a large Tier 1 Agency (annual ICT purchases worth more than $100m) that processes 90% of Australian Government revenue. Daily peak loads can reach up to 111,000 phone calls, and 737,000 website visits. The Tax Agent Portal can peak at 137,000 logins per day, and its business portal at 29,000 logins.

The Sourcing Program is the product of a long maturing understanding in the ATO about how it deals with vendors. Farr has long championed this more mature approach, as demonstrated in the ATO’s current applications contract with Accenture.

ATO’s preferred approach is to develop deep strategic partnerships with a small number of vendors, with risks and rewards built around outcomes. This is not body shopping, nor is it just a simple purchaser-provider relationship where risks/rewards flow in one direction. Instead, it is an approach where vendors are expected to work with each other and with internal teams, to deliver integrated service outcomes. As Farr said, “Vendors are expected to provide value beyond cost savings”.

This sort of partnering does not come easily or quickly.

The evaluation process at the ATO is expected to continue through to the end of 2009. Following evaluation of Expressions of Interest , the ATO will conduct workshops with prospective vendors prior to issuing the Request for Tender. Prospective vendors will be able to directly engage with the ATO business staff to ensure a mutual understanding of the ATO’s business outcomes, as well as developing the ATO’s understanding of potential vendor solutions, using international best practice. The ATO could be willing to modify its own business practices if it means leveraging best practice in applying technology.

Click here to see a copy of Greg Farr's presentation, for information about the ATO ICT Sourcing Program, and for other detailed information about the ATO.

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