Reseller News

IBM NZ carries cost of troubled health cloud platform project

No District Health Boards have yet deployed to Big Blue's platform.

IBM New Zealand appears exposed to significant costs over a troubled national cloud-based health platform it was contracted to deliver in early 2015.

After failing to deliver within the required timeframes, the project was re-scoped in December, with Big Blue losing exclusive rights to offer the service to 12 participating District Health Boards (DHBs) and two regional health IT services agencies.

A series of official information requests and queries by Reseller News with Health Partnerships Ltd, the state-owned company running the project, reveal the project has since been re-scoped to allow multiple vendors to deliver services to the DHBs.

Contract negotiations with Datacom and Revera, both members of the government’s Infrastructure-as-a-Service (IaaS) panel, now allow those companies to supply the services in competition with IBM.

That is a problem for IBM because it appears to have carried the cost for building a platform specifically for that purpose, aiming to recoup those expenses as the DHBs and agencies adopted it as originally required.

Now DHBs can choose other vendors and the time-frame for them to make a choice and begin shifting to the cloud has also been relaxed.

As of April there was only one participant DHB using the National Infrastructure Platform (NIP) platform – or platforms – and it had opted for Datacom. That implementation was not complete.

“The remaining participants are in varying stages of discovery, design and planning to commence utilisation,” said Steve Fisher, general manager of communications and human resources at DHB-owned NZ Health Partnerships, which has succeeded the entity that managed the tender process, Crown-owned Health Benefits Ltd.

“DHBs are responsible for managing their own transition.”

An IBM spokesperson said the company continues to work closely with NZ Health Partnerships.

“Our Infrastructure-as-a-Service platform is available and fully certified by the Department of Internal Affairs. We are ready to help the District Health Boards migrate to a common IT infrastructure and to host the applications and systems that support the delivery of health care in New Zealand.”

The NIP project had been the subject of monitoring by the Treasury as one of the government’s major projects.

These show that the project as originally contracted to IBM was twice delayed after technical assessments – it was also put on amber/red alert, requiring urgent action for successful delivery.

The “monitoring delivery confidence assessment is amber/red due to the non-performance of the vendor”, the Ministry of Health is quoted as saying.

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One of the curiosities of the monitoring reports was that the NIP section always carried the statement “forecast expenditures are not available” in contrast to most of the other project which carried expenditure amounts to date and overall budgets.

It now appears that was because IBM was carrying the cost of development – effectively taking on the risk of project non-delivery – while aiming to recoup those costs through usage charges when the DHBs came on board.

It is not known how much IBM has spent on the project.

The NIP contract was announced in February 2015 to increase security, reliability and service levels and reduce the risk of critical outages as had already struck several DHBs

“IBM’s cloud-based IT infrastructure services will be the foundation for the National Infrastructure Platform (NIP),” a media release at the time said.

“The programme will transition DHBs from their current 40 data centres of varying size, age, quality and adherence to standards, to two IBM-managed world-class data centres with higher security classifications – one in Auckland, the other in Christchurch.”

The variation in the contract to allow Revera and Datacom to also provide those services means up to six data centres may now be in use.

Furthermore, the release stated that IBM was selected because of its deep expertise in the healthcare sector, as well as its credentials when it comes to building and managing world-class enterprise grade cloud infrastructure solutions.

“Public sector agencies are adopting IBM’s Government IaaS offering to create cost savings and provide new, enhanced services to their communities, suppliers and staff,” said Rob Lee, then managing director of IBM New Zealand.

“We have assembled a best-of-breed team of global and local partners to deliver on this project, including Computer Concepts Ltd, Racemi and FX Networks.”

NIP as then scoped was to provide financial benefits of $23.9 million total cost of ownership over 10 years across all DHBs.

The transition to NIP was to start from mid-2015 and was expected to take three years.

The NIP is not the only troubled national health IT project. Another, the $65 million National Oracle Solution, was “still receiving management attention” last month, according to NZ Health Partnerships.