Customs CIO throws cold water on vendor 'innovation'

Forget SLAs, keep an eye on supplier performance

A ten year journey from big-bang outsourcing to multisourcing is turning the IT tide at the Australian Customs Service, but false claims from vendors about driving innovation is not helping, according to CIO Murray Harrison.

Back in 1998 customs was one of the first large government organizations to outsource its IT "holis bolis", and as few as 20 people internally, and they were mostly managing contracts.

Harrison, a self-confessed fan of outsourcing, said the initial contract with EDS was a "very dramatic" exercise and "ideologically driven".

As Customs' first CIO, Harrison realized two years ago - after IT preoccupation with a cargo system project - there was a need to give some meaning to innovation in the organization, which could only be achieved by multisourcing service providers.

Harrison developed Customs' innovation agility framework in an effort to change the spending mix within IT delivery.

"We're spending 80 percent on operations and 20 percent on projects and want it to be the other way around," he said. "As a government CIO there is no shortage of work to be done as we have a list of projects as long as your arm."

Harrison's message to the vendors is the chances of getting on the to-do list depends on Custom's ability to get existing jobs done.

"I've heard innovation being talked about for many years, but never seen it happen," he said. "The reality is that innovation tends to work against the supplier. For us innovation involves better ways to do things and to save money."

He said the vendor community has a very short term view of innovation.

Speaking at the annual Gartner Symposium in Sydney, Harrison joked that one vendor he had spoken to about a long-term view was "next quarter's results".

"I've been managing outsourcing contracts for 10 years so we said to ourselves we must have leaned something," he said. "Let's try and apply those lessons to put something together that we can be proud of. We think we have gone some of the way to achieve that."

Customs now has an environment made up of six key services - from mainframes to voice services and application development.

After a six month testing period IBM won the mainframe hosting contract, Telstra got voice services, and the Internet gateways are managed by Verizon. Desktop support and service desk is now in-house.

With about 100 business applications, and thousands of user-deverloped apps, Customs will treat future application development on a case-by-case basis.

With an annual IT budget of $105 million - set to increase to $120 million this year - Customs' 6000 PCs are now equally split between desktops and notebooks.

The generic outcomes of multisourcing at Customs is it now has access to "best of breed", it promotes competition and hence lowers cost, removes the middle man, fosters a direct relationship with providers, eliminates being "captured" in long contracts, and allows for more specialist innovation.

"We have made a conscious decision to be in control of the IT environment," Harrison said. "Things like strategic planning, architecture, and the things that if you want to make a change here we need to say yes. When you do outsource these decision you tend to duplicate them internally so you know what they are doing, which is inefficient."

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