When is an IT project just an IT project?23 Jun 2014
And when is it something more?
Every year, I report on the progress of IT outsourcing in BC (news flash: it keeps going up, 2011, 2012, 2013) and marvel at the sums we lavish on international consultancies, fees that largely march offshore, generating no local innovation or economic growth.
Last fall, I came across a news release from the Ministry of Health, describing a $842 MILLION “Clinical and Systems Transformation Project”. I now realize, I’ve not been tracking a significant seam of IT spending: the systems being commissioned by the five regional health authorities and their central services arm, the Provincial Health Services Authority.
Indeed, a quick perusal of the 2012/13 PHSA suppliers list shows a $50M spend on IBM, and an $11M spend on HP in just one year. That’s enough to change my annual spending tracker quite a bit!
So, IBM won the new “Clinical and Systems Transformation Project”, worth $842 MILLION over 10 years, I wonder what that RFP looked like? I asked for it, and was refused, so I FOI’ed it, and it came back. It’s 500 pages long. Have a look.
Fun sidebar: On page 186, in the “economic model” of the RFP, they direct that “proponents are to include 4% growth per year in infrastructure (e.g. storage capacity, network bandwidth, processing capacity, etc.) needs over the Term.” Any readers see a problem modelling IT capacity requirements at 4% growth per year over 10 years? Hint: A 2003 iMac shipped with 256Mb RAM; a 2013 iMac ships with 8Gb RAM: that’s 32 times more capacity. 4% compounding over 10 years generates only a 50% increase in capacity over a decade. Think those terms will need to be renegotiated?
It’s a long read, but fortunately there’s a really interesting bit right away, in the Mandatory Requirements:
Proponent is willing and able to transition any Public Sector union agreements relevant to the Managed Services to their organization, if required
Whoa! This isn’t just an IT systems agreement after all, it’s an outsourcing deal.
The government seems to have learned little from the experience of BC Hydro outsourcing to Accenture or Medical Services Plan to Maximus, or from reports by the Auditor General, or even their own consultants who reviewed outsourcing from 2001-2010 and noted that:
- Contracts were structured towards a specific solution or specific outputs rather than a desired outcome
- Contracts were negotiated in isolation gave the same scope of services to multiple vendors
- The procurement process resulted in contracts that while defined, are no longer what is required
- Risk transfer objectives were not met
- There was no consolidated vendor management
- There was no central management of the deals or the benefits achieved
The “Alternative Service Delivery Secretariat” wound down in 2010, but the government is still hard at it, now quietly preparing to outsource the clinical systems of three health authorities to IBM, for $84M a year over 10 years. Significant portions of critical government operations are being transferred beyond direct government control for very long periods of time.
Perhaps the managers who pushed this solution didn’t trust their own staff, or themselves, to successfully bring an ambitious project to conclusion. They didn’t want to “take the risk” so they took the “safe” option. They need to spend some time behind the velvet curtain in organizations like IBM or Accenture: the only results that matter to those organizations are the quarterly results.
There will be some good people in them, and some bad ones, but the level of competence or capability won’t be orders of magnitude better than you could build yourself in-house. And as organization, as corporations, they have only one bottom line, and it’s theirs, not ours.