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NSW looks to private sector to replace ServiceFirst

by Michael Read •
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In a long anticipated move, the NSW Government has indicated that it will open up Registrations of Interest (ROI) in April to vendors who are interested in undertaking the functions delivered by ServiceFirst.

According to the statement from Minister for Finance and Services Andrew Constance, the NSW government believes that the private sector will generate “more efficient outcomes and better value for NSW taxpayers”.

According to the statement, ServiceFirst’s 350 staff currently offer end-to-end transactional services, human resources, ICT, analysis, financial reporting and compliance to 7,500 people across 46 agencies.

 “As part of the Registration of Interest stage, which is scheduled for release in April, parties will be invited to present options and respective cost benefits for alternative service delivery models”, says the statement.

 “We want to achieve value for money from shared service providers and we are open to different delivery models if it leads to better outcomes, reduced costs and increased productivity”, states Constance.

Following market consultation, the Department of Finance and Services (DFS) expects to complete assessing responses to the ROI by late 2014.

DFS has already begun outsourcing some of its back-office systems. In February 2014, the Department issued a Request for Information (ROI) on Software-as-a-service solutions to consolidate the Cluster's array of disparate Finance and Human Resource systems.

Operating outside the ServiceFirst umbrella, the NSW Trade and Investment cluster is also approaching the market for as-a-service solutions. In March 2014, The Department of Trade and Investment (DTI) requested Expressions of Interest (EOI) for an Infrastructure-as-a-service platform to host and test development systems in a hybrid cloud model.

In January 2014, Constance announced that it had appointed independent broker Housley Consulting “to review pricing, vendor offers and help agencies focus on achieving value for money” on the NSW Government’s telecommunications arrangements. A spokesperson told Intermedium at the time “there are no plans at this time to apply broker-style arrangements to other ICT service categories” although it was not ruled out for the future. The effectiveness of the broker services will be used to inform future procurement reforms.

Victoria’s specialist IT services agency CenITex is currently being transformed into a broker of shared services whilst Queensland has terminated the mandate for agencies to source corporate services from Queensland Shared Services. NSW’s own use of brokerage services suggests that the same fate could be on the cards for ServiceFirst.  There has also been suggestions that the Department of Family and Community Service’s (FACS) shared service provider BusinessLink will begin to act as a broker of services.

Another possibility for ServiceFirst is that it may end up for sale. In December 2013, NSW Government announced that it had sold 100 per cent of its shares in ICT service provider the Australian Centre for Advanced Computing and Communication (ac3) to Klikon Solutions. The press release noted “the NSW Government’s ICT Strategy sets out a road map for Government to move away from being a provider of ICT services to being a knowledgeable purchaser of ICT services from a contestable market place.”

ServiceFirst was first established in 2008 following the merger of the NSW Department of Natural Resources Corporate Shared Services division with the NSW Department of Commerce, which had its own Strategic Management and Corporate Support division that offered corporate services functions to other Departments.

Kerry Schott’s Commission of Audit in August 2012 was scathing in its review of ServiceFirst and BusinessLink.

“Neither [ServiceFirst nor BusinessLink] is truly integrated and in many instances the level of service is poor…staff morale is low and customer satisfaction is poor. Clients of ServiceFirst are united in their frustration and dissatisfaction with the service provided”.

The Commission of Audit conceded that this was not wholly due to the shared service model but also due to the fact that both Service First and BusinessLink had been “starved of funds”.

“A not dissimilar issue has been a lack of investment to upgrade and standardise technology…The basic point is that to make savings and improve service quality in [Corporate Shared Services] there is expenditure required up front”, stated the Commission of Audit.

Despite this concession, Schott recommended that the service delivery functions of ServiceFirst should be contracted out to vendors in the private sector, rather than increasing funding to the agency.

At an industry briefing in September 2013, Constance confirmed that he was investigating the option of outsourcing some of ServiceFirst’s functions.

“In terms of corporate shared services, there is no doubt that we want to see better outcomes…From my perspective as the new minister I think we are right to expect more contestability in these areas,” he said.

Related Articles:

NSW ServiceFirst considers storage-as-a-service

Winner takes all in ServiceFirst telco contract bundling

NSW government sells ICT services provider ac3


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  • BusinessLink
  • CenITex
  • Housley Consulting
  • NSW Commission of Audit
  • NSW Department of Finance and Services
  • ServiceFirst