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Victorian Government looks to outsource CenITex services

by Paris Cowan •
Free resource

Updated:Troubled Victorian shared services agency CenITex is likely to become a broker of outsourced ICT services rather than a provider of them, according to a briefing reportedly delivered to staff yesterday by CEO Michael Vanderheide.

The briefing slides have been obtained by The Age journalist Melissa Fyfe and published online.

[At the time of publishing CenITex had not yet responded to requests to verify the authenticity of the slide deck.]

They make it clear that while nothing is set in stone, the Victorian Government favours an approach to market to outsource all four service areas currently provided by CenITex on a mandatory basis to the State’s agencies: desktop services, processing, storage and network.

CenITex plans to begin issuing requests for proposals as early as July 2013, in the hope of having selected suppliers by July 2014. Interested suppliers are likely to be expected to participate in early-stage RFP rounds before qualifying to submit tenders later on.

In 2012 CenITex provided $153 million worth of services to client agencies, at a cost of $159 million to the agency itself, according to its latest annual report. When the costs of other under-performing programs were added to its bottom line it recorded an operating deficit of $37.5 million for the year.

In the briefing Vanderheide conceded that CenITex could not replicate the operating behaviours of private vendors in a way that would make it competitive. He said that around 75 per cent of the agency’s desktop, storage and hosting environments were classified as legacy but the funds were not available for them to be replaced.

Updated 22/05/2013 9:45 am: A spokesperson for Technology Minister Gordon Rich-Phillips says that it is important that the Victorian keeps up with a changing ICT environment.

"The Victorian Government understands the ICT world has changed rapidly since the inception of Cenitex – we now have access to systems via mobile devices, cloud infrastructure and other off the shelf systems that were not available previously.

"It is appropriate for the Government to consider these new innovations against Cenitex’s legacy systems.  We believe that testing the ICT market is an important step in potentially adopting some of the recent innovation," she said.

The agency has also been plagued by a series of damaging scandals. In October 2012 the Victorian Ombudsman uncovered evidence of nepotism and corruption amongst CenITex staff, including one who awarded a contract to his own shell company established just a day earlier.

Vanderheide did not detail any staff reductions that would come about as a result of the CenITex transformation. However it is likely that a much smaller workforce made up of procurement specialists rather than ICT service specialists would be needed to run a broker organisation.

He did reassure his audience that staff would be kept up to date on the changes and that an anonymous mailbox for questions would be set up on the CenITex intranet.

The option of outsourcing some selected services and keeping others was also entertained, documents show, but reviewers found that full outsourcing offered the fastest and most streamlined transition to the outsourcing model and would allow the agency to leverage greater economies of scale.  Full outsourcing will also dramatically increase complexity and risk, they said.

An emphasis on ICT outsourcing in the State’s whole-of-government ICT Strategy was cited as another reason for the move. Incoming Coalition governments along the east coast have all set their sights on increasing the amount of ICT service delivery handed over to the market in pursuit of cost efficiencies and performance improvements.

The CenITex reform plan appears to take its cues from the Service Executive model favoured by Queensland Government Chief Information Officer (GCIO) Peter Grant. Under Grant’s proposal up to three Service Executives would be accountable for lining up the supply chains needed to meet the Government's ICT needs. Vendors could come from the private sector, they might be shared services providers, or they might even be other jurisdictions.

Grant has told Intermedium that the Victorian, Queensland and NSW GCIOs (or equivalent) have been meeting intermittently to share ideas and to discuss ways to coordinate their efforts. The NSW shared services model is also currently under review.

Related Articles:

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Minister not yet firm on what 'ICT as a Service' will actually mean for Queensland


For more information, please contact the Editor (02) 9955 9896.

  • VIC
  • IT Services
  • Finance & Services
  • CenITex
  • ICT Outsourcing
  • Michael Vanderheide
  • Peter Grant
  • Shared Services