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51Quarter Two 2012
“A sceptic might argue you can achieve
more efficiencies by having better
trained, more well-informed customer
services staff rather than through
the implementation of IT, but you
still need the means to make them better-informed in the first
place,” says Murray Foster, CIO at Thames Coromandel District
Council (TCDC). “Almost 100 per cent of our data is electronic,
all of our processes are electronic. There isn’t a way to be better
informed without using systems to find it.”
Foster is a technology convert in a smaller council, but
understands that good IT does not necessarily result in better
service, nor reduced costs. “I’d like to say that by using technol-
ogy effectively you can be more efficient and keep rates down
but I don’t think there’s a group manager around who’d say,
‘Because of IT we’ve been able to reduce rates.’”
What ratepayers get for their dollar might come down to
personal experience. Good customer service may come from
someone bright on the other end of the phone, not necessarily
use of the latest technology. Likewise, outdated business prac-
tices might be to blame for a bad experience rather than poorly
operated IT systems.
Around half of the 1,000 business respondents to an MYOB
Business Monitor survey of perceptions of council services last
year said they were dissatisfied with local government. Bad
customer service and lack of responsiveness to the urgency of
business needs were frequently cited concerns.
The cost of delivering IT systems to support council services
has been in the spotlight since the early stages of the Auckland
Supercity amalgamation. The Royal Commission on Auckland
Governance first recommended a unified local governance
structure and amalgamated councils as recently as 2009.
Government only announced an Auckland Supercity would be
set up in time for the 2010 local body elections.
A high level of ICT duplication in the region was noted in the
Commission’s report, which continued: “The Commission does
not contemplate the Auckland Council’s ICT infrastructure will
be built from scratch. The objective will be to ensure smooth
transfer of the eight current councils’ ICT systems to the
Auckland Council and to plan the migration of the numerous
duplicated council business systems to a single ICT infrastruc-
ture platform.”
Cost comparisonsFollowing murmurings of an IT budget blowout and a price
hike to more than NZ$500 million, Auckland ratepayers as well
as those involved in the transition process are asking questions
about the necessity of a brand new IT system and about senior
management governance.
Auckland CIO Mike Foley was once headhunted by Deloitte.
He became CIO of Watercare before being appointed informa-
tion services manager of Auckland Council in 2010. Recently
he’s been under fire for not insisting on a more rigorous evalu-
ation of the legacy councils’ systems. But Foley is adamant
new IT systems will improve ratepayers’ ability to interact with
Auckland Council through multiple channels. “We’re looking at
online processing of resource consents, dog licences, online
payments, more interaction through the call centre if you need
it.”
SAP implementation specialist Deloitte provides consultancy
services to Auckland Council. Since the New Zealand Herald
obtained a confidential Deloitte proposal showing it charging
daily net rates of between $1200 for an analyst and $3400 for
a senior manager, the minister of local government has been
asked before Parliament if he has confidence in the Council’s
financial management.
An IS Capital Plan presented to Auckland Council in May
2011 shows a correction in its forecasted “Enterprise Capability
Development” investment of around $230 million in the years
between 2011 and 2015. But Auckland Council chief financial
As debate rages on both sides of the Tasman over Council rate rises exceeding inflation, Auckland’s Super Council is spending hundreds of millions amalgamating IT services hoping to improve customer service and efficiency while reducing costs. iStart investigates what Councils are doing with technology to improve service and asks if amalgamation is the answer. Chris Bell spoke with a range of councils and vendors supplying the sector and found that both IT and amalgamation are touchy subjects...
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52 Quarter Two 2012
officer Andrew McKenzie says this considerable variance is
attributable to the eight legacy councils halting their investing
in systems. “When we came in, the proposed investment levels
were well under $20 million a year for the eight councils, about
$2.5 million each, so they weren’t realistic. We’ve just done a
long-term plan and we’ve flattened out our investment profile.
We’re still refining it at the moment but it won’t be as peaked as
we’ve suggested for 2012-2014.”
Beyond the pain barrierMalcolm Fraser is CEO of the Future Cities Institute, a non-
profit organisation focused on empowering citizens. “If central
government says it’s going to amalgamate a city because
there’s too much duplication and they don’t communicate that
there will be a period of pain, they’re setting the wrong expecta-
tion.”
It seems Aucklanders are going to need a high pain thresh-
old. Bernard Orsman reported in the Herald in May last year
that the cost of building a new SAP computer system over the
next eight years would be NZ$506 million. Already spent dur-
ing the transition was $54 million to set up the bare minimum
for day-to-day functions, including payroll, email, telephone and
recruitment, which the Council’s 16 December strategy and
finance meeting agenda says was within budget.
Comments on the Public Address blog after Russell Brown
published a post titled ‘Someone has to be accountable for
this’ last May were largely connected with the ballooning cost
of systems and a lack of transparency about decision-making.
“If it transpires that [the Auckland Transition Agency (ATA)
the local government minister, Department of Internal Affairs,
Feature // Council IT
“ Where we have to, we bring in a specialist because we don’t merge systems every day. When you’re trying to merge eight into one, you have to bring in the people who understand them. ” Mike Foley, CIO, Auckland Council
“ I don’t think they’re going to realise the potential of Auckland Supercity until the next generation – you’re talking 20 or 30 years down the track. ” Mike Wanden, CIO, Otorohanga District Council; president, ALGIM
Auckland Council: Behind the scenesSince ‘Day One’, 1 November 2010, the following applications have been merged and are live:
• Email• SAP (core finance functions, asset
register, procurement, HR, payroll)• Hyperion (budgetary planning – monthly,
yearly, 10-year plans)• Telephony (common platform across most
legacy councils)• Website (currently an overlay – legacy
websites are still operating where online payments were in place)
53Quarter Two 2012
Cabinet and the Prime Minister] knew that the costs would be
far in excess of what we were told, then there is only one way
of characterising what happened,” Brown concludes: “We were
lied to.”
Auckland City CEO Doug McKay admitted to “poor commu-
nication” on the part of the Council in a Computerworld article
in June last year. But he told iStart media portrayals of the
Council signing off on a $500 million IT spend are inaccurate.
“In practice it’s nothing like that. It’s broken down into all these
individual projects. I’ve met with a number of our critics over
the past few weeks and I’ve got a better idea of where they’re
coming from. But in a lot of cases they’re out of date on their
information, they’re still poring over the ATA investment cases.
In many of these situations we’ve moved on.”
The Auckland Council senior executives remain unable to
provide a total cost for the new system because, they say, they
have yet to decide to what extent SAP will be used. “We’re see-
ing how much extra we want to put onto [SAP] as opposed to
other technologies,” McKenzie says.
Starting from scratchFormer Auckland Regional Council (ARC) CIO John Holley
questions the SAP project’s governance. He’d like to know
why Auckland Council didn’t follow best practice by having its
vendor migrate data onto the existing systems at a fixed price.
The admittedly much smaller council-controlled organisation
Auckland Transport did just that when it ‘cloned’ the existing
Auckland Regional Transport Authority (ARTA) SAP system
for $2.2 million. Transport started its implementation after the
Council’s and had it fully operational in time for the Council’s
‘day one’, 1 November 2010, including functions yet to be fully
deployed at the Council.
Foley counters that since Auckland Transport only had
to replicate the functions of the legacy Auckland Regional
Transport Authority from 1 November 2010, its migration was
simpler. “We were merging eight separate businesses into a
new entity. It was felt better to put it under the umbrella of the
overall programme and do the data migration within that pro-
gramme.”
CFO McKenzie adds that Transport also didn’t have so many
financial applications: “We have five different systems and a
multiplicity of brands.”
Questions remain over why ATA chose a new SAP install for
Auckland over one built on an existing implementation as had
originally been planned. Holley says the Council’s December
agenda document – in which it states a fresh installation was
“a better fit for the scale and longer term needs of Auckland
Council” – is full of misdirection and inaccuracies. Among these,
says Holley, is a worrying knowledge gap about ARC’s ERP sys-
tem. “At the ARC and ARTA we had SAP asset management. It
had two components: plant maintenance and a module called
real estate.” The strategy and finance agenda document claims
“ARC’s system did not include the real estate solution” when in
fact it was incorporated in asset management.
Foley, on the other hand, remains convinced the existing
ACC and ARC SAP systems were unsuitable. “They were way
behind in terms of support and the versions they sat on and
didn’t have some of the modules we needed. So we’d have
had to do significant upgrades. Starting from scratch gave us
a more robust platform. It gave us the version compatibility
“ If central government says it’s going to amalgam-ate a city because there’s too much duplication and they don’t communicate that there will be a period of pain, they’re setting the wrong expectation. ” Malcolm Fraser, CEO, Future Cities Institute
››
54 Quarter Two 2012
Feature // Council IT
that we wanted so we don’t now have to do another significant
upgrade for another 12 or 18 months, which is a huge task to
undertake. You always want to go back to a vanilla implementa-
tion, which is where we started from. The other systems had
some kind of customisation buried somewhere and the major-
ity wouldn’t have worked.”
Holley defends ATA’s selection of SAP, as well as that of
Deloitte as implementation partner. However, he maintains
there was no consultation with the council CIOs on the imple-
mentation approach. “After Deloitte was selected it was effec-
tively given free reign with the ERP implementation steering
group, which had no real SAP implementation experience, no
CIO representation and no one from the councils with experi-
ence in dealing with SAP implementations and external con-
sultants. This meant the key advisor to the steering group was
Deloitte.”
The Council document contradicts this: “The decisions,
assumptions, costs and implementation approach were tested
and validated by a numbers of parties throughout the life of
the project including … chief information officers of the legacy
Auckland local government organisations.”
McKay has said it was preferable not to have legacy council
CIOs on the steering group because they lacked objectivity but
Holley contends anyone with significant council experience of
implementing SAP would have recommended a clone of an
existing environment. “The consultants, with the most to gain
from a green-fields implementation, were taken at their word
that none of the environments was suitable.”
Foley says Auckland Council follows accepted project man-
agement standards and all large investments have to be ratified
by councillors. “There are two internal checkpoints for every
project: an IS governance review that makes sure it technically
fits with what we want, and then it goes up to the executive pri-
oritisation group to ratify the solution and in terms of the invest-
ment and whether the business case stacks up. Once we get
into an inflight project there are the usual committee meetings
around scope, budget, quality, timelines and milestones.”
McKay is also sensitive about governance, given his CEO
responsibilities. “We have to put up a 10-year plan for our IT
investment, which we’ve done, but we don’t consider that
an approved budget. Every single project within that overall
10-year timeframe, we put them all in front of the politicians,
either for an approval or an FYI. They’ll have somewhere
between 80 and 100 opportunities over that 10 years to make
comment on any of those investment proposals.”
Sour grapes?Richard Hunter is director of Origen, a vendor whose prod-
uct was squeezed out during the amalgamation. Origen’s ERP
suite Ozone was installed at Franklin District Council. Hunter is
disappointed ATA didn’t evaluate any of the Auckland councils’
legacy software. “No one ever came to see Origen or Ozone.
The decision-making was based on prejudice and not robust
evaluation. None of them was ever evaluated, a cost-benefit
analysis looked at or a strategic fit for the longer-term view.”
A neutral observer might dismiss these as the sour grapes of
a vendor whose products weren’t chosen but Hunter dismisses
that. “Irrespective of the system it’s the process I’m talking
“ What ratepayers want is evidence that we’re not spending money we don’t need to spend. ” Julian Moore, director of organisational services,
Wellington City Council
55Quarter Two 2012
about. They’d never select Ozone – it’s a New Zealand product.
I’m not talking about what’s happened to Origen. I’m talking
about the entire process and decision-making.”
Mike Wanden is both CIO of Otorohanga District Council and
president of the Association of Local Government Information
Managers (ALGIM). Wanden saw Foley’s presentation at
ALGIM’s annual conference last year. Foley is on the ALGIM
executive. For the CIO of a small council like Otorohanga,
Wanden says, it’s hard to comprehend the IT task faced by
Auckland. “I don’t think they’re going to realise the potential of
Auckland Supercity until the next generation – you’re talking
20 or thirty years down the track before any benefits will be
realised.”
Origen’s Hunter was also at the ALGIM conference for Foley’s
presentation. “Everyone just listened to this guy talk and their
jaws dropped – they’d never heard anything like it. He was
coming out with some very big generalisations and rationalisa-
tions.”
What about my rates bill?Auckland Council’s current programme of work is part of a
wider organisational transformation to assess which applica-
tions are best suited for council-specific functions such as
managing consents, field services, licensing, property records,
websites, document management. The legacy Papakura and
Franklin rates systems are currently being migrated to the old
Auckland City Council rates system, Pathway. In October, says
Foley, the Council will probably migrate the regulatory sys-
tems, but this will only be an interim fix. In the longer term the
Council will need to evaluate a permanent replacement.
Foley says the Council has yet to select suppliers for licens-
ing, compliance, regulatory and rates functions. However, iStart
understands from one industry source that the decision to
implement SAP’s regulatory modules has already been made,
although the Council will still issue a request for proposal later
in the year.
Ratepayers around the country may be wondering whose
interests their council serves. Foster from the TCDC says the
fact IT is still considered a “black art” by the public increases
the difficulty of communicating IT project costs. “I’d like to say
that by using technology effectively you can be more efficient
and keep rates down but I don’t think there’s a group manager
around who’d say, ‘Because of IT we’ve been able to reduce
rates.’”
Auckland Council’s CEO says the fact its new systems will
make the Supercity a more efficient council will ultimately cut
costs, but rate increases are beyond the control of council
executives: “Politicians make the rating decisions, we make the
cost and savings decisions,” says Mackay. “We saved $81 mil-
lion in our first eight months – not all of it was related to IT but
a lot of it was enabled by new processes and systems – and
that couldn’t have been achieved under the legacy councils. It
was the equivalent of 6 per cent of rates we didn’t have to ask
the people of Auckland for – 1 per cent of rates is about $14-16
million.”
McKenzie says ratepayers ought to view IT costs relative to
total Council spending. “In the technology area you’re talking
about a $0.5 billion investment and about $300 million of that
is in new IT infrastructure and systems. Across Council we’ll
spend about $13.5 billion on transport, wastewater, storm water,
new buildings, libraries, and of that $13.5 billion around $9 billion
is on buying new assets. In spite of that massive investment in
the city, we’ve got rates increases of 3.6-4.9 per cent over the
next 10 years.”
Passing the ‘Dom Post test’Citizens want to see their council operating efficiently to
reduce rates, says Julian Moore, director of organisational ser-
vices at Wellington City Council (WCC). “What ratepayers want
is evidence that we’re not spending money we don’t need to
spend.”
So who’s accountable for ensuring that? Foster of TCDC’s
take on that is straightforward: “The guy who signs the cheque.”
Moore sees it as a standard chain of command with the
CIO accountable to the CEO who’s accountable to the mayor
and councillors. “I’d be accountable for the effectiveness and
efficiency of our IT operation but these things are not just IT
decisions – the decisions you make around systems need to be
driven by business.”
Hunter of Origen is sceptical ratepayers will notice benefits
from Auckland City’s new system. “They keep talking about
improved customer service but I don’t really see any value in it
at all. It’s got more consistent but it’s not actually lifting the bar
in any way.”
Moore of WCC says his council places the interests of rate-
payers above those of suppliers. “Most people on councils want
to be sure they can defend their procurement. That can lead
to us having undue process around it. In Wellington we call it
the Dominion Post test – any decision you make, you have to
defend it to the public.”
It’s always challenging for councils to justify expenditure to
ratepayers. Foster of TCDC reckons the public sector should hire
more CIOs who’ve worked for suppliers. “It’s always good to go
and work for a vendor and have some P&L responsibility – that
sharpens your focus.” Ratepayers are more likely to appreciate
sharpened focus if the picture makes sense. That calls for a more
business-like attitude on all sides of the debate.