Auckland Council targets $280M group ICT spending for more value
- 31 January, 2019 08:45
Auckland Council is looking to its wider group to get more value for money from ICT spending.
After rebuilding most of its core IT systems in a painful $157 million project, Auckland Council is now targeting savings across the group.
An ICT value for money review published in December reveals the council is aiming to share more common systems with its subsidiaries, to align group data centre procurement and go "cloud first" and to procure more hardware and software-as-a-service, among other initiatives.
The core council owns or operates a number of separate businesses including Watercare, Auckland Transport (AT), Panuku Developments and Regional Facilities Auckland.
Each of these procures its own systems and software as well as data centre services with the group spending $280 million a year, 4.5 per cent of total operating costs. This is back in line with Gartner benchmarks for government after several years of heavy capital investment.
Auckland Council itself accounts for 57 per cent of the expenditure while AT accounts for 30 per cent. Together Council, AT and Watercare account for 95 per cent of the expenditure and these will be the focus for further analysis.
The review found there are around 900 external suppliers of ICT to the Group with the top 100 accounting for 90 per cent of group spending.
"Currently, there are small pockets of collaboration across the group in in procuring generic ICT goods and services," it said.
A category plan for end-user device hardware was presented recently to the Strategic Procurement Committee, covering Auckland Council, ATEED and Panuku, but did not include AT or Watercare.
"This appears to be a missed opportunity to leverage the group buying power for a generic commodity item," the report said.
Auckland Council provides ICT shared services to ATEED, Panuku and, to a lesser extent to Regional Facilities.
In addition to grading Council's current levels achievement, mostly favourably, the review found opportunities for further gains through aligning the group application environment when functions are common to all its organisations and are "technology solution agnostic".
The review found opportunities to standardise systems in areas such as financials and reporting, billing, purchasing, payroll and asset management. Council itself mostly uses SAP for these functions.
Other application areas potentially to be targeted are document management (Council uses OpenText), sourcing and procurement (Ariba), content management (SharePoint), service management (ServiceNow) and desktop productivity (Office 365).
The review also identified opportunities for procuring more goods and services through the Government Chief Digital Officer's All-of-Government contracts and the new digital marketplace.
"The opportunity for the Group is that using these contracts avoids it needing to having to undertake investigation work on suppliers, enables it to tap into volume discounts, lower the cost of the procurement process, allowing it to focus on actually delivering services," the report said.
The group currently owns most of its ICT hardware and software but has started to procure “as-a-service”.
Meanwhile, data centre operations have been outsourced separately by each organisation and a common approach may be appropriate to increase value, the review found.
"This changing approach changes how ICT is accounted (moves from capital to operating cost) for, and introduces new skills required of ICT teams with an increased focus on service orchestration, change management and contract management," the review noted.
"The accounting change may put pressure on future operating budgets, in particular exponential growth in data storage requirements."
The review also recommended the group conducts an assessment of current data centre providers and any options that may be part of the All-of-Government contracts and designs and implements a consistent approach.
It is anticipated this will include appropriate service levels required segmented, where appropriate, by organisation and service requirement, including an appropriate assessment of risk.
Council itself uses Spark's Revera for its data centre requirements, but after describing the service as "too costly and restrictive" last year has inked a new contract for Revera to deliver a multi-cloud approach across All-of-Government, infrastructure-as-a-service, private and public cloud services.