Can $484mil + IBM fix myGov problems?

Australia_Customer_Dept of Social Services_1958_A_opt
Punchcards at Dpt Social Services 1955. Pic:IBM



It’s the deal that only a decade of chronic underinvestment in technology infrastructure and frequently oscillating policy can buy.

The Department of Human Services will almost quadruple its direct spending with veteran tech behemoth IBM after the massive agency inked a new $484 million deal over the next five years – a number that leaves the previous five years’ spend of just $128 million with Big Blue eating dust.

[Note: The Department of Human Services has issued the following statement following the publication of this report that was based on a ministerial announcement and previous contracts made public via the AusTender procurement system. Government News has requested further information on the latest contract renewal, the initial contract and the procurement processes surrounding both. The Human Services statement says:

“The IBM contract announced on 11 March 2016 provides for a range hardware, software, and IT support services to be provided to the Department. Under the contract these services are being provided to the Department as a whole, not to a specific project or initiative.

Contrary to recent media reporting, the cost of the previous contract with IBM over the past five years was $484 million. This is equal to $96.8 million per year.

The value of the new contract with IBM over five years is $484 million.

The new agreement provides greater flexibility over how contract funds are used to ensure value over the life of the contract term.”]

Announced by Human Services’ latest Minister Alan Tudge on Friday, the conspicuous big cash splash comes at a time when his department is fending off criticism from the public and the Opposition over the performance of online services like myGov, various welfare apps and call centres that infamously gave more than a quarter of callers the engaged signal.

Centrelink, Medicare, Tax and other agencies have all for the last few years been trying to migrate their clients to much cheaper, simpler and more efficient online channels.

But the frequently patchy performance of myGov – which is supposed to let its 8.6 million clients access multiple government agencies in one session – has instead been creating conspicuous headaches for ministers, bureaucrats and families across the nation.

On Friday Mr Tudge stressed that there was now real money, as well as big effort being thrown at the problem.

“This is a $484 million investment in better IT services for the millions of Australians that use our online services for a wide variety of payments” a statement from Mr Tudge said, adding that IBM’s  “technology and related services” would be underpin “key government programmes, on both internal and external facing platforms.”

“These include the myGov online interface to the Australian Taxation Office, Centrelink, Medicare and Child Support systems, and Personally Controlled Electronic Health Record, which shares critical information amongst health care providers,” Mr Tudge’s statement said.

In February Human Services openly acknowledged the frustrations of users with myGov, with its chief spokesman, Hank Jongen, reassuring customers the department was actually listening to their complaints.

“I acknowledge that while almost 200,000 people use myGov successfully every day, their experience is not always as easy as it should be and improvements are needed,” Mr Jongen said.

“The Department has listened to complaints and feedback from myGov users about how to improve the current system. A programme of work is now underway to address the most pressing issues that we have received feedback around.”

The Digital Transformation Office (DTO) is also listening intently to online users – and not just myGov customers.

A week ago the DTO revealed it had started work on creating a national secure digital identity credential to unlock online services, with an alpha prototype likely to be out by around August this year.

How that development ultimately influences myGov remains to be seen, but there’s widespread acknowledgement that things have to improve, and quickly.

At the same time, customers of myGov and the public are also being given an opportunity to tell the government what they really think about the facility after the Australian National Audit Office revealed it will formally assess the effectiveness of its implementation, with the Tax Office and DTO also roped into the probe.


Money Talks
Although it’s not immediately clear exactly how, where and on what the latest $484 will be spent, it’s understood that the deal with IBM is intended to let Human Services (and by extension many of the other agencies that rely on myGov) draw down services, software and computing power as and when they are required.

That approach differs significantly from so-called ‘waterfall’ development where customers committed to a highly formalised scope and requirement document that resulted in every change extracting a price.

The size of the latest tech investment with IBM is also instructive.

According to contracts published by the Department of Finance’s AusTender procurement system, Human Services spent an average of just $25.6 million a year with IBM Australia Ltd from 1st July 2011 to 14th March 2016.

That’s far less than the close to $900 million, or almost $180 million a year, that IBM extracted from Defence for the same five year period (which is exclusive of spending by the Defence Materiel Organisation.)

The latest win for IBM at Human services is also separate to the looming Welfare Payments Infrastructure Transformation project, the government’s equivalent of a bank core systems replacement for welfare payments now at $166 billion a year and rising.

That upgrade project was previously costed by former Treasurer Joe Hockey to be worth at least $1 billion, with a similar overhaul at the Australian Taxation Office estimated to be around the same cost.

“To continue to progress in the digital age the Government needs integrated and cognitive technology that enables quick transformation, streamlined services and constant adaption to customer needs,” the statement from Mr Tudge said.

“This will also ensure the Government is prepared to transition to new infrastructure with more dynamic capability to support future programmes.”

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One thought on “Can $484mil + IBM fix myGov problems?

  1. Seriously? IBM? IBM was tasked for this job when Medicare was outsourced to them. They couldn’t do anything, lost their own contract with Medicare. Few Govt employees from Centrelink (newly formed DHS) had to do it cause someone somewhere with no clue made a public statement. Then Medicare got merged with DHS(Centrelink) and DHS now maintains more than 14 Govt IT infrastructure with less employees (lets put it this way, instead of outsourcing to private companies, these was outsourced to Centrelink/DHS).
    And now IBM wants in? I can see that 484$Mil turns into a Billions without any improvements.
    This explains the job cuts, hire freeze in DHS portfolio…

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