Housing NZ’s IT
April 5th, 2010 at 2:00 pm by David FarrarThe Dom Post reports:
A spokeswoman for newly reinstated Housing Minister Phil Heatley says he does not believe he will have a final say on plans by Housing New Zealand to spend $43 million replacing its software systems.
A pity, as there are some real questions about it.
The board of the Crown-owned corporation approved the business case for its Enterprise Transformation Programme last week. The spokeswoman says the project is an operational matter.
Two whistleblowers, two former managers and Roger Phare, operating officer at existing software supplier Technology One, have questioned aspects of the project, for which a bevy of consulting firms has been paid more than $6m for advice.
Yep that is $6 million just for advice on its IT.
Housing New Zealand has so far refused to detail projected annual savings of $70 million that have been called into question by opposition housing spokeswoman Moana Mackey, or comment on claims that it paid consultants up to $600 an hour and created a potential conflict of interest for strategic adviser Deloitte.
Now the very top lawyers in NZ do charge $600 an hour, but I’ve never heard of that level of charging on an IT project. You might pay it for top commercial lawyers in billion dollar deals, but rare for IT projects.
An earlier story in the Dom Post reported:
A whistleblower has claimed Housing New Zealand may have created a potential conflict of interest for a consulting firm that is providing advice for a $43.6 million information technology project. …
Housing New Zealand would not say whether Deloitte’s contract as strategic adviser precluded the consulting firm from securing any work implementing software that would be purchased as a result of the project.
Computer Society chief executive Paul Matthews says organisations need not preclude consultants that provide them with strategic advice from also having a role in implementing any solution, but it would be unusual and “not particularly good practice”.
“It really depends on the circumstances. With most conflict-of- interest situations, if the terms in the conflict of interest are clear and they are open and transparent and all parties are aware of it, then in some circumstances they may not be precluded, but you would expect in a larger project they would be.”
Housing New Zealand last month acknowledged a steering group comprised of senior executives had over- ruled a recommendation by an evaluation panel in appointing Deloitte. It said the panel had over- stepped its brief in recommending a rival firm do the job.
So the evaluation panel recommended another firm, and this was over-ruled by executives? This is the point as which you get nervous also.
April 5th, 2010 at 2:10 pm
Nervous would be an understatement.
How much “transformational” IT does HNZ need?
Sounds like some execs have promised the earth in business change objectives and are grasping at an IT solution to give it to them, IMHO. With some help from those nice clever chaps at Deloitte Consulting.
Sounds like a review of the IT projects business Case and overarching business strategies business case is in order.
Vote:April 5th, 2010 at 2:28 pm
$NZ600 per hour for IT advice (GST inclusive) does not sound that much. There is an international market for these things and not every country is struggling out of recession like NZ. I agree there needs to be an advisor/provider separation.
The savings don’t have a time frame listed- given that HNZ’s systems are early 90s based, I am sure the increased productivity from nearly all HNZ staff would be large over a decade.
Given that you’d need to know more about the contract.
Vote:April 5th, 2010 at 2:40 pm
“nice clever chaps at Deloitte Consulting…” are nothing more than your average common-or-garden university graduate dressed up in a nice suit except they have a lot of “best-practice” process maps and glitzy .ppt templates back at HQ which they wheel out on demand to impress the client management. Then they turn around and put armies of know-nothing 20-something consultants on the job and charge em all out at $200 p.h. It soon adds up.
As I understand it this is a simple ERP, some article mentioned SAP I think. Haven’t we all learned (a) that IT is no longer some mysterious blackbox thingy that only nerds understand and (b) ERP implementations are a dime a dozen these days and the open market have plenty of capable well-experienced private contractors happy to do it for much, much MUCH less than the big six charge.
I would suggest Stephen Joyce’s oversight would be a good thing to have on this. He seems to be becoming a bit like Birch was – Minister of Everything. So far, he’s been bloody good. Heatley doesn’t strike me as having the first clue.
Vote:April 5th, 2010 at 2:59 pm
Save all the money and get better rents and better rent collection by farming out the houses to good property managers.
Get rid of most of HNZ.
66000 houses is only a few each to add to their already existing systems.
no brainer really.
Vote:April 5th, 2010 at 3:55 pm
If Heatley had half a brain he would not have issued such a foolish statement. Neither would he have tearfully resigned a few weeks ago. Such conduct is reserved for failed Australian cricket captains.
He is weak and he will be targeted, most likely with success before the 2011 elections.
Vote:April 5th, 2010 at 4:00 pm
So let me guess, a computer system implemented in the early 90′s is being staunchly defended by the people who reap generous maintenance fees from it and the crusty old burger flippers who won’t let go of 1990′s technology are afraid that they will loose their “perfect” mainframe solution?
Vote:April 5th, 2010 at 4:12 pm
Plenty of organisations dream up grand programs of IT work that cost a fortune and promise large benefits. They almost always fail, sometimes catastrophically. If Housing NZ are even considering this, then it is time to clear out their management and hire replacements who know how to recognise and manage risk. Then make incremental changes over time in a controlled fashion, and where successful implementation and business benefits can be measured in a few months rather than several years.
Reid>Then they turn around and put armies of know-nothing 20-something consultants on the job and charge em all out at $200 p.h.
I’ve seen this happen and it seems to be business as usual for the ex-accountancy company consultancies. I was “audited” once by a couple of 20-somethings just a couple of years out of university and without a record of implementing anything. They would have been a lot more credible if they’d gone out and got a programming job for a few years and learned to walk the walk. But I suspect they saw themselves as high fliers who could overcome a lack of practical skills by their sheer genius. Then I got to meet the senior partner, who advocated a course of action not on the basis of reasoned debate but on the basis of “every one else does it that way”. (I was arguing that infrequent password changes improved security because they were less likely to be written down. I had some Gartner research that supported my position. Mr Accountant was in favour of 30 day expiry.)
Vote:April 5th, 2010 at 4:19 pm
ubuntu and openoffice are free, times that by many many many thousands and our servant group, AKA government could save us millions and millions and millions of dollars.
Vote:April 5th, 2010 at 4:21 pm
davidp
It would have been exactly the same when the current system was implemented, just the numbers were smaller around that time. I worked on several large scale implementation in the 90′s and have worked on many since then. One thing that never changes over time is that the custodians of the current system forget how much pain the organisation went through when it was their turn to crowbar a solution into place and make sweeping claims of operational savings and efficiencies. Incremental updates seldom work because of the politics involved, the current road-blockers (read: burger flippers) staunchly resist small changes and doom progressive updates to fail ultimately resulting in large scale upheaval much like occurred years earlier when they were the spotty faced grads telling the management they needed drastic change.
There is only one constant when it comes to large scale IT system changes, some people get rich, others get fired and life goes on.
Vote:April 5th, 2010 at 4:26 pm
I would recommend the people at HNZ give SSC a call and ask for a copy of the “Lessons learned” document from INCIS. See if they can spot any similarities.
Seriously, if this thing turns into a taxpayer-funded cluster-fuck the way it looks like it might, and they’ve been warned like this from the outset, then everyone involved: the Minister, the Secretary, the CIO – all need to resign.
An ERP implementation is NOT brain surgery and does NOT usually cost $43,000,000.00, in an organisation the size of HNZ. Unless of course it’s being built from scratch and why the fuck would you want to do that?
Vote:April 5th, 2010 at 4:29 pm
reid
The lessons learn document from SSC is a political report. You would need to talk to the people on the floor that were involved and perhaps you could talk to the people that keep it running today… Oh that’s right – that project was shut down in 1999 wasn’t it…..
I loved the reporting in the Dom the day INCIS went live, a big front page splash about the wow’s of the project with no mention of it going live. On page 9 was a tiny column saying ‘Phase-I of INCIS goes live today’…..
Vote:April 5th, 2010 at 4:30 pm
burt your on to it..
You can see why a lot of the top civil servents went out on their own in the 80s and 90s and set up their own consulting firms.. they all have the one client the government.
Vote:They sore them coming.. the easy pickings of incompetent Ministers and SOEs that needed to pay for advise.
April 5th, 2010 at 4:57 pm
Yeh I was being sarcastic burt…
Vote:April 5th, 2010 at 5:08 pm
So if HNZ embark on a new project and it is running next year, who will be the new Doone for the Labour party to make stuff up about as they black-ball the HNZ project for political gain ? I can see it now, Heatley said ‘That won’t be necessary’ when stopped in a drink-drive check point… Oh, no that old script will need to be changed…..
Vote:April 5th, 2010 at 5:11 pm
DPF said…
Yep that is $6 million just for advice on its IT.
That’s a bloody rip-off, no doubt about that.
DPF said…
Now the very top lawyers in NZ do charge $600 an hour.
Top IT people can charge more than that, but I am talking about PhD level people that invent things that had never been done/publish before (original R&D). Those “self-proclaimed experts” from Technology One have definitely overcharged for their work, which any software consultancy company in the country could have done the same job for much less.
Dang! I wish I could charge that much myself, but I will be pricing myself out of the market in this country since the demand for technical computing (numerical computing) here is very tiny (almost non-existent).
DPF said…
but I’ve never heard of that level of charging on an IT project. You might pay it for top commercial lawyers in billion dollar deals, but rare for IT projects.
As I have stated above, top notch consultants that I know in the US and Europe who consult to the military/defence industries do charge much more than $600/hour. I know one person who specializes in designing of sophisticated control systems who consults to Raytheon in the US (the developer of Patriot Missile System) as one of his client, who came to NZ to attend an international computing conference that was held at AUT KEDRI (Knowledge Engineering and Discovery Research Institute) about 3 years ago.
It is true that IT project consulting fees of $600/hr is unheard of and it is definitely a rip-off.
Vote:April 5th, 2010 at 7:35 pm
We had great experience in Christchurch when McTurk she was ceo of the city council who still have 160 IT staff ! She was a recruitment consultant prior to that so yes the consultant spending probably reflects the lack of skills from the CEO
Vote:In the state of Victoria Computershare have the contract to manage all the bonds for all private and public rental properties perhaps that might be a less politically suicidal path for Mr Heatly and us taxpayers. You dont have to be a rocket scientist to see this IT issue is going to blow up in the Nats face, rightly or wrongly.
April 5th, 2010 at 7:59 pm
I worked once for a UK company which had a very nice housing-association system, off the shelf. Most UK housing assn’s are larger than HNZ, and there are hundreds of them. The system handled everything from renta collection to welfare claims. Oh, and it had a built-in commercial GL as well for the accounting thereof.
I can quite understand Roger Phare’s worry about the lack of process in all this (we used to work for another company together, long ago, far away).
So my take is fairly basic: the missing factor is a survey of existing commercial systems, and an estimated fit.
Get to something with a 75%+ fit, buy it, mod it to local conditions (welfare system interactions etc) and just get on with it.
Commercial consultant chargeout rates run $120-$180/hr. And you trip over ex-consultants everywhere.
Key point: HNZ just ain’t that big…
Vote:April 5th, 2010 at 11:06 pm
Exactly Waymad.
Exactly.
Vote:April 6th, 2010 at 9:10 am
$6m on consulting – Shades of the Otgao DHB debacle perhaps?
Vote:April 6th, 2010 at 5:36 pm
Saying their existing systems are out of date because they’ve been using them for 17 years is akin to saying I should get rid of Windows 7 on my desktop because Windows was first released 25 years ago.
Vote:April 7th, 2010 at 9:43 am
Truth be known is that National have never been exactly IT savvy.
How much was the Russian built system for the Social Welfare about 16 years ago (which failed) ?
And someone allegedly stole Dn Brash’s e-mails
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