NSW Government flags new era in software procurement

Open source and SaaS under consideration to cut $100m annual bill on software licences

The NSW Government has put a call out to the ICT industry for more options for alternative delivery and acquisition models for the provision of software solutions.

In an request for information (RFI) document, the NSW Government said it is keen to investigate all potential alternatives to acquiring and using common enterprise software applications and solutions, across a broad spectrum of categories for government agencies.

“Industry is encouraged to respond to this RFI to ensure their views are considered in the development of future procurement strategies, including vendors able to offer open source solutions or Software as a Service,” the RFI reads.

The RFI follows the creation of the Better Services and Value Taskforce in June which advocated the amalgamation of 160 government agencies and offices into 13 super departments to cut government spending.

In 2008/2009, the ICT related contract spend of these agencies was $700m including software licences, ICT services, hardware, and telecommunications. Of this, it is estimated the NSW Government spends over $100m annually on software licences.

The efficient procurement of software solutions under a whole-of-government approach was instrumental and consistent with the intention of the Better Services and Value Taskforce, the RFI reads.

“NSW Government has traditionally acquired software by purchasing software from the vendor either directly or through vendor appointed agents, most commonly by means of vendor specific contracts,” the RFI reads. “More recently, the introduction of the Government Selected Application Systems (GSAS) contracts for corporate applications introduced an alternative approach based on product categories.

“With a number of existing vendor contracts either expiring or due to expire within the next year, NSW Government is reviewing how it intends to best acquire software solutions into the future and is seeking market input on how this may be achieved.”

The Government said there were a number of objectives and desired outcomes of the adoption of alternative delivery and acquisition models for ICT including the reduction of licensing costs and the TCO for the provision and management of enterprise software solutions.

“[The model approach] provide agencies with alternative acquisition models, e.g. vendor bundles, software as a service (SaaS), open source, subscription, purchase/support, that allow the choice of best fit for individual agency’s needs [and] enable transition to software as a service and related cloud based services.”

Additionally, taking a new approach would encourage the uptake of standards based products, increase interoperability within and between agencies, and clearly defined interoperability between software categories, and remove barriers to the adoption of open source solutions.

The NSW Government also flagged that the use of SaaS – enabling NSW Agencies to 'turnoff' software without further costs and/or penalty - and the decision not to take up software maintenance were also considerations.

“NSW Government expects that most common software products would have an effective operational life of three-five years before deployment of a newer version would be necessary – any maintenance charges would need to consider this,” the RFI reads.

Similarly, the state is considering the implementation of open source solutions and becoming a contributor to the respective open source community(s).

“This could involve Agencies requiring assistance with implementation and support provided by suitable third parties for a transition period of two to five years, or continuing enterprise level support by third parties,” the RFI reads.

Kevin Noonan, head of consulting at Government procurement consultancy Intermedium said the RFI was “breath of fresh air” for the NSW government.

“In this approach they are really standing back a long way from the day to day problems of software implementations and looking very broadly,” he said. “The approach of going for a EOI/RFI/RFT is a sound one – they’re looking for ideas through the EOI, the RFI will work out who the contenders are, and then they’ll issue a restricted RFT. It’s the sensible tech-wise approach which is likely to yield them some sensible answers.”

The approach, Noonan said, was notable for its consideration of open source solutions and SaaS as well as its consideration of new and more efficient ways of software procurement – such as the limit purchase of software maintenance.

“Most government agencies have multiple domains where they run their software through before it goes into production - development, testing, pre release then production,” he said. “In production there is a very good business case for having maintenance but in the others it’s not so strong, so agencies can save a significant amount of money simply by looking at what their maintenance costs may be."

The inclusion of Open Source and SaaS as software sourcing methods was both a reflection of the maturity of these two approaches as well as a way to drive down traditional on-premise software providers, Noonan said.

“Just the mere prospect of opening up it more widely to competition is a great way of bringing large corporates to the bargaining table,” he said.

Despite the potential of new sourcing approach, the NSW government faced challenges in the later stages of bringing the approach into a coherent strategy he said.

“We’re a long way from calling this a success but it’s certainly a strong start,” he said. “Co-ordination and transition – moving from where they are into new models are challenges. The third is vendor engagement – making sure you don’t lose key vendors along the way. So long as the process doesn’t get bogged down along the way, vendors will come to the table.”

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