New Zealand’s bungled Novopay schools payroll contract should be a wake up call for government decision makers. Last week Steven Joyce, the minister sent in to fix the mess sacked Talent2.
As Rob O’Neill reports for ZDNet, Talent2 will pay between NZ$18 and NZ$22 million as part of a settlement.
While Novopay was disastrous and painful for teachers and their families, there wasn’t any lasting wider damage.
That won’t be the case if the huge NZ$1.5 billion IRD system refresh goes wrong. Should the contractors doing the work on New Zealand’s tax system get things as badly wrong as Talent2, the nation could be in for a bumpy ride.
That might be putting things mildly. According to Wikipedia, New Zealand government spending accounts for just short of half of GDP. Take that out of circulation for long and everything could grind to a halt.
The scary part is the chances of things going badly wrong are high.
Pickard Consulting is the lead solutions and applications architect for the Inland Revenue Department transformation project. Pickard Consulting is a SAP shop.
SAP’s main business is selling large-scale Enterprise Resource Planning or ERP software to corporations and government. ERP projects are notorious for missing deadlines and cost overruns.
Don’t take my word for it. Here’s what the State of ERP 2014 survey found:
- between 53% and 56% of projects run over budget
- The figure for “duration” (i.e., timeline) overruns was slightly higher and, in fact, is trending worse the past three years.
- The number of respondents saying they get less than half the expected benefits has risen steadily each year, to the point that two-thirds of respondents in the most recent year (2013) reported receiving half or less of the expected benefit.
Fortune magazine quotes Jim Johnson of the Standish Group saying 90 percent of ERP projects are either late or over budget. He says: “Your chances of coming in on time and on budget are statistically zero”
SAP has an interesting track record including being successfully sued by Waste Management for fraud after selling a US$100 million ERP system described as a complete and utter failure.
So, on the surface, it appears government is willing to entrust the backbone of our economy to a company and industry with a track record of spectacular failure.
Months after Microsoft stopped supporting Windows XP, thousands of New Zealand government computers still run the software.
There is no excuse for this costly and dangerous state of affairs.
At the National Business Review Chris Keall offers plenty of depth and background on the war of words between Labour technology spokesperson Clare Curran and Peter Dunne. The pair clash over the number of government Windows XP computers still in use.
Perhaps the most outrageous part of this is that Dunne has refused to release the information on how many computers are affected. The only conclusion one can draw from this is that the number is higher than officials would like you to think.
It’s extremely poor management to allow things to reach this state. Microsoft gave plenty of warning about closing off support and extended its original deadline. The cost of upgrading from Windows XP is not high and most XP-only applications can run on virtual machines on newer versions of Windows.
Heads should roll.
At Stuff, Tom Pullar-Strecker speaks to Labour IT spokesperson Clare Curran about the government’s half-hearted investigation into technology price gougers. He writes: MP claims IT report falls short.
Pullar-Strecker quotes Curran:
“It appears the ministry has not done what it was asked to do. It shows there is either a disregard for the committee’s wishes, or they are being given instructions from higher up.”
Technology price gouging is a big deal in Australia where the government called representatives from major international companies and asked them to justify higher prices to a Parliamentary inquiry.
If anything New Zealanders get a worse deal from the multinationals than Australians. A Green Party survey shows we can pay 40 percent more than Americans for the same goods and services.
Sadly there is little a government can do about price gougers that does not have repercussions.
On the other hand, getting the subject out in the open and talking about it is a positive move. At least the spectacle of watching the US giants foot drag, then clumsily fail to justify high prices means Australians are no longer under any illusions they are treated fairly by these companies.
And the transparency brings other benefits. Australian managed to shave A$100 million from Microsoft software licensing fees after the inquiry.
If New Zealand’s government could wrest similar concessions from the industry, that would be a start.
Randal Jackson is still writing strong news stories for Computerworld New Zealand. Earlier today he filed: Ministries, DHBs spend more than $2 million on XP extended support.
A document obtained from Labour MP Claire Curran’s office show that some government departments and DHBs are paying for extended XP support, even as others cease using the OS.
As the story points out between government departments and district health boards the thick end of 40,000 PCs still run Microsoft’s 12-years old and discontinued Windows XP software. Collectively the bill for extended support for these machines will come to more than NZ$2 million this year. That’s around $50 per device.
Presumably there will be support bills next year and the year after too.
No doubt managers will be able to trot out justifications for sticking with the unsupported and increasingly dangerous operating system. The excuses don’t stack up.
The way government buys software licences from Microsoft means the cost of upgrading the OS isn’t a plausible excuse.
While it could true that some of the 40,000 machines are not capable of running a newer version of Windows, that doesn’t apply to any PCs made in the last six or seven years — that’s more than long enough to sweat hardware assets.
If departments don’t have or can’t pay for the skills needed to handle the upgrade, that is a terrible reflection on them and their funding ministers.
Sooner or later even XP extended must go
The most plausible excuse is that applications built for Windows XP don’t run well — in some cases at all — on newer versions of Windows.
That can be true, but modern Windows versions can run most XP apps in compatibility mode or in virtual machines. This may need work. I’ve news for the government departments, you’re going to have to do this eventually.
As for software that can’t be tweaked to run on anything other than XP… what’s the plan? Carry on indefinitely? Come on, it’s not as if you haven’t known for years this day would come.
Patrick Smellie at BusinessDesk says the productivity commission wants government to use offshore cloud providers:
The government should lead the way to cheaper cloud computing services by using offshore providers rather than just New Zealand firms, the Productivity Commission says in its final report on improving productivity in the services industries.
The report goes on to say:
By favouring domestic cloud services, which are significantly more expensive than similar overseas services, the government has missed opportunities for cost savings and technology demonstrations.
Offshore cloud providers certainly have economies of scale not possible in New Zealand.
This can mean lower prices. In some cases much lower prices. One cloud customer told me a local supplier charges 11 times as much for storage as Amazon Web Services.
It’s not that simple. The company in question buys reserved international bandwidth to access overseas data centres.
Even taking that into account, local cloud services are many times the cost of using overseas suppliers.
That’s not always true. In some cases local cloud service companies like Revera and Datacom can match international providers thanks to using nimbler technologies.
If government departments export data to overseas cloud services, there’s even less opportunity for local cloud providers to build economies of scale.
Beyond cloud storage
Cloud storage and processing costs are often only a small part of the cost of a computing project. Often they can be tiny compared to other costs.
Paying less for storage may not change the total cost by much. It won’t help much if the human costs of deal with remote service providers are high.
Only two submarine cables linking New Zealand to the rest of the world. The risk of both legs of the Southern Cross Cable Network failing at once may be small, but it is not infinitesimal. Hopefully this will change.
Technology cultural cringe
The Productivity Commission report almost reads like it was written by an overseas cloud service provider.
There’s no question multinationals like Google and Microsoft have government affairs professionals in Wellington. They are paid to lobby politicians and get the company’s position in front of organisations like the Productivity Commission.
They spend millions on lobbying. Local cloud companies have nothing like their budgets. It sounds as if the Productivity Commission hasn’t listened to the locals, although I doubt that’s true.
The problem here could be ‘The wise men from the east” syndrome. Government employees and organisations like the Productivity Commission think when it comes to technology, people who speak with American accents know more than those who speak with New Zealand accents.