Another benefit that Health recognises is better cost control. A charge-back system was introduced coincident with outsourcing so that users pay for their use of IT services. Outsourcing has provided the mechanism to measure the use and for Health to bill internal clients. "This has already improved the consumption habits of Health users," Radik claims.
One area that Radik cites as a disappointment in Health's relationship with IBM GSA to date is that the latter delivers little "strategic value-add". "It seems to me that [if IBM did, it] would benefit both parties," Radik says.
"I can recall the internal planning sessions in the large outsourcing organisations where we would acknowledge that IT infrastructure outsourcing for government was a Â'cut-price supermarket business'; that you would take on this business in the hope of developing a relationship with the client that would lead to opportunities for higher-value business." In spite of that noble objective, a common observation from many Canberra agencies is that their outsourcers only want to discuss their current business with the agencies and are reluctant "to move up the food chain". "Maybe this will come with time," Radik suggests, "but I had expected the pushing would have come from the outsourcer rather than vice-versa."
All Quiet on the Outsourcing Front
Even if some of the agencies are now getting benefits from outsourcing, what of the broader future of IT outsourcing in Canberra? According to Radik, in terms of new deals the next few months in Canberra are likely to be pretty quiet. Sources within outsourcer organisations tell him several companies have "iced" their Canberra outsourcing sales teams.
It will take bureaucrats a while to sort out the implications of the Humphry report and its requirement that implementing the government's IT outsourcing policy is to be included in the performance agreements of agency heads. In the meantime, the IT outsourcing activities of OASITO are being wound down although the Department of Finance and Administration will offer IT outsourcing consultancy services on a fee-for-service basis. However, more uncertainly will come with the federal election, likely to be called in November or December this year. This could bring a new Labor government - and new uncertainties about IT outsourcing policies.
"It is my understanding that the Labor Party is not opposed per se to outsourcing," Radik says. "After all, it was under the then Finance Minister Beazley that the push towards IT outsourcing really commenced. I think that outsourcing would continue at a more measured pace and without what the Labor Party would call the ideological zealotry of the past few years."
Some observers are predicting that the pendulum will swing further, that in-sourcing will become the fashion. (In other words, that outsourcers will be replaced by teams of public service IT professionals - a return to the original situation.) Does Radik see this happening? "I think this is very unlikely; it is difficult to put this genie back in the bottle," he says.
"I think that there is a maturing of the outsourcers; they are developing the methodologies that three years ago I preached, and believed, they had! However, I think that the very large outsourcing deals may well be seen as dinosaurs - although the extinction of dinosaurs takes a long time, just look at mainframes. It will be interesting to see the impact of application service providers (ASPs) on this marketplace and also just what style of IT infrastructure is needed to support online government."
There is one thing that is certain: there are plenty of headlines left in Canberra's IT outsourcing initiative. The Senate inquiry into IT outsourcing is gathering pace. In an election year, the Labor Party inquisitors led by Kate Lundy will be digging deeply into the IT outsourcing deals, attempting to land more punches on the Howard government.
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