Turnbull’s inner nerd flames multinational outsourcers

There’s never a more exciting time to dump outsourcers. Pic US DoD.


There’s never been a more exciting time to be at the nexus of technology and government in Australia – unless you’re a big name multinational outsourcer or systems integrator.

Amid of one of the most ruthless and arguably insincere election campaigns in Australia’s political history, companies that have for decades extracted billions a year from Australia’s public sector and taxpayers are on notice from Prime Minister Malcolm Turnbull their gravy train is about to end.

That’s if he’s re-elected.

Even if he isn’t, Turnbull’s made a call and it warrants some examination.

[quote]The catalyst for Turnbull’s spray against the likes of IBM, Accenture, HP (formerly EDS), CSC, Oracle, SAP and others (not that he named names) is the unrelenting campaign by Labor to link the potential outsourcing of Medicare’s fossilised payments system to industry with the privatisation or sell-off of the Medical Benefits Scheme itself.[/quote]

Turnbull’s response has been to knock any prospect of future outsourcing at Medicare, by the Coalition at least, on the head with a hammer – but it’s his more genuine criticism of government outsourcing in general that have more pertinence in the longer term for all sides of politics.

And the public sector at large.

Turnbull’s first spray against outsourcers came on the ABC’s Q&A program in relation to Medicare’s – and arguably by extension Centrelink’s – arcane back end that are now crippling anything approximating an acceptable user experience.

“But the point is this – the payment system has to be updated. It has to get to a sort of smartphone era. I think, as we all know, it is pretty out of date. But we will revive it or renew it. We will modernise it but we will do so within Government. Can I say this about outsourcing. I don’t have an ideological view about outsourcing Government services but I’m very sceptical about the way in which very large IT services have been outsourced to big systems integrators in the past. And the efficiencies have often been, you know, less in reality than they were in promise,” Turnbull said.

A predictable big plug for the Digital Transformation Office, which most Australian’s bar will never have heard, duly followed, which is not to say the DTO is not doing valuable work.

What came next was more illuminating yet.

[quote]“What I’m saying to you is a matter of genuine conviction, that what we have to do is ensure that you bring Government into the 21st century. Government services into the 21st century, and you don’t do that solely by pushing them all out the door so that there is nothing left inside Government. There is a lot of innovation that can be done in Government if you provide the right leadership and the right culture,” Turnbull said.[/quote]

Similar sprays followed shortly after but have been ‘managed out’ of the campaign, more the pity.

A fair interpretation of what Turnbull is really saying is the real reason why government services are so badly behind is a failed doctrine of lazy outsourcing.

To be explicit, abandoning internal technological development, implementation and execution capability to the short term savings of the labour arbitrage market. Or, to be blunt, bullying out the nerds and the people who don’t clap like performing seals at every new initiative.

Turnbull isn’t the first to lament this deficit.

[quote]Its legacy dates back to the 1980s to mid-1990s when the likes of Republican Presidential runner Ross Perot (the founder of EDS or Electronic Data Systems) made billions selling tech services into corporations and governments big and small around the world.[/quote]

In Australia and the US, blue chips and the government bought into the dream that divesting information technology functions and capability to heavyweight private sector specialists could deliver uplift much quicker and with big savings matched by even bigger deals.

The Commonwealth Bank, Westpac, Australian Taxation Office, Australian Customs Service and dozens of others learned the hard way that losing vital corporate knowledge and skills to suppliers looked good on annual headcount, but hurt bad after 10 years.

Think organisational osteoarthritis.

Ironically, both Centrelink and Medicare managed to resist outsourcing, but subsequently became dependent on the same supplier-driven culture of captivity. When old-school coders, architecture wonks and vendor wranglers who had risen to senior ranks finally retired things got ugly.

This phenomenon wasn’t without warning.

[quote]In the latter half of the Howard government seasoned public service chiefs like Peter Shergold were openly acknowledging that public sector online interfaces had failed to make the leap from static information to transactional facilities that everyday people now expected.[/quote]

Howard was voted out in 2007. It’s now 2016.

Shergold also candidly acknowledged that ‘whole of government’ outsourcing had substantially under delivered, a point not lost on then Special Minister of State and now geospatial evangelist Gary Nairn … who succeeded Senator Eric Abetz.

Labor’s election win under Kevin Rudd brought the NBN. It also brought the Gershon Review that squandered a trifecta of platinum opportunities to restore internal federal government technology execution capability in exchange for what amounted to a mini-Commission of Audit that completely missed the three biggest disruptive tech trends about to hit hard: cloud, mobility (the Apple factor) and convergence.

Notably, both Stephen Conroy and Malcolm Turnbull as Communications Minsters sought to wrest control over Federal Government technology policy – and the delivery of public services through technology – away from the Department of Finance.

[quote]Conroy’s success was limited by the distraction of the NBN and internal bloodletting.[/quote]

Turnbull has made more progress but has been similarly distracted by leadership issues, but has at kept the digital transformation agenda under his wing and protection bringing it into the Department of Prime Minister and Cabinet.

Under Tony Abbott there was a clear position to use Medicare as a transactional outsourcing guinea pig, which received a lukewarm industry response thanks to the ideological bolting-on of claims processing that scared off banks justifiably wary of collateral damage.

[quote]Turnbull has now flipped that dynamic and is asking industry to second its talent into government for the public good … and an easier life for themselves in the long run.[/quote]

It’s not a dumb idea, given the corrosive exodus of public sector tech talent to the private sector over the last 20 years. Or the lack of public sector acumen outside of politics in the corporate sector.

And it’s certainly better than forking out billion dollar deals to IBM, Computer Associates, Accenture and other legacy system maintenance rent seekers global firms.

Truth and candour are usually a casualty in election campaigns.

At least Turnbull has departed from that momentarily, even if by revealing his inner nerd.

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One thought on “Turnbull’s inner nerd flames multinational outsourcers

  1. Wow.

    In 30 years in Enterprise Architecture roles with government departments and large businesses I watched this happening. The ramifications of widespread acceptance of this new view would be enormously positive for Australia’s economy regardless of which party governs.

    Behind this trend:
    – Abysmal Executive management following like sheep to avoid making decisions that stand out from their peers.
    – Projects that are so expensive (and typically secretive) that nobody can question them, managers do not need to justify them.
    – Senior consultants that are often simply sales people knowing what is good for them and incidentally their employers.
    – Oversight by media that is typically looking for independent thinkers to knock down to create stories that are accessible to the widest audience.
    – Management that wants big projects and budgets to boost status and benefits.
    – Widespread reluctance to reward knowledge and skills that are rare and relevant.
    – An absence of the “Invisible Hand of the Free Market”.

    Consequences of the the existing situation in government and commerce:
    – Poor productivity improvements from business technology investment.
    – Investment that does not deliver returns (i.e. investment is not imperative).
    – Lower public regard for public services, public servants, and government.
    – Disillusioned rational observers and employees (who are often forced to resign).
    – Big suppliers who have become bloated and ineffective because rewards are only open to a small club of very large suppliers.

    Where next?
    – Get some of the remnants of idealistic, rational, highly skilled IT staff back on the job. There may even be some retired people who would volunteer for a good cause.
    – Management who know something is wrong and can learn to trust good advice from their staff – there are still employees, scarred maybe, but still ready to give good advice.
    – Boards that demand internal as well as external options that are equally funded and evaluated before spending good money on solutions.
    – Keep ignorant opinions on solutions to yourself and contribute where you have real expertise.

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