Informatyion Technology Stocktake

Maurice Williamson Communications

Executive summary

Ministerial concern about the risks associated
with public sector information technology (IT) projects has led to a 'stocktake'
of the IT activities of 41 government departments. This paper reports on the
results.

Technologies
The stocktake showed that departments depend heavily on information techno-logy as the main infrastructure for running their businesses. Among the departments surveyed, 455 applications are in use and 174 major IT projects are running or have been initiated over the last five years.

The number and the scope of these projects indicate that departments are
keeping up with the rapid changes in information tech-nology. Classical
computing has largely given way to client/server technologies. Internet
technologies, as well as open systems that can collect and share infor-mation
across departments ('data warehousing'), are either in use or about to be
developed.

Expenditure

Expenditure on hardware and software over the past three years was $369.5 million - that is 0.35 percent of government revenue in 1996. This is half of the international average for government expenditure on IT in 1996. However, it should be noted that the New Zealand figure contains only hardware and software expenditure, whereas the international figures are likely to include other IT expenditure. Overall expenditure on major IT projects initiated and completed over the last five years was $186.2 million. This represents a two percent under-expenditure on the total of the budgets for these projects.

Management

Management of IT and IT projects in departments has improved since computing in the State Sector was last reviewed in 1991. Gaps in the linkage of corporate business objectives to information system plans have been closed and IT standards and methodologies are widely used. This is reflected in the fact that, of 174 major projects, only three have been terminated before completion and another three are on hold.

Areas of risk

Overall, the review showed that departments perform well in managing complex, large-scale IT projects. However, it also identified areas in which the Govern-ment could be exposed to a considerable degree of risk. These areas should be carefully monitored.

Risk management

Departments did not always use risk management, or assess the risks before major projects began. In order to mitigate risks to the Govern-ment and to themselves, departments should carry out formal risk assessments before every IT or IT-related project.

Supplier dependencies

The survey also showed that given the large number of IT projects,
departments have to rely on a relatively small pool of vendors, outsourcing
contractors and consultants. It is important that the departments' relationships
with these suppliers are well managed, so that the inevitable dependencies do
not have adverse effects on any of the parties.

Outsourcing

Government departments could be exposed to considerable risk by out-sourcing
strategic areas in IT such as key human resource aspects of IT manage-ment, and
certain functional areas such as high-level business analysis and system and
technical strategy. This could lead to a loss of expertise in the core business
sectors of departments.

Planning

There appears to be significant interaction between departments on IT
matters when critical decisions need to be made. Planning, however, seems to be
done with little formal input from other departments. It will become even more
important in the future for departments to co-ordinate between themselves and
co-operate to make more and better information available.

Conclusion
This stocktake was designed to provide a listing of the
projects and their costs and the procedures and standards departments have in
place to manage their IT projects.

It has shown that departments are generally managing their IT projects
effectively, and within budget.

Terms of reference and approach

1.1 Background

Information technology has become, and will continue to be, a major vehicle
for conducting Government business, particularly as departments pursue
improvements in efficiency, effectiveness and business outcomes. In line with
trends in the private sector, IT in the Public Service is moving beyond the
automation of processes into a new era of development focused on making more and
better information available to all members of the organisation and the public.

Many of the capital expenditure proposals that will come before Cabinet in
future will contain a significant IT com-ponent. These proposals will place a
continuous call on governments of the day to make significant investments in the
technological capability of the Public Service to deliver the policies and
programmes they require from it. Recently, ministerial concern has been
expressed over the failure of the National Library's NDIS project, problems with
the education payroll system, and the high cost and apparent deadline slippage
of the Police INCIS project. This, combined with a general unease over the level
and quality of government investments in information technology, prompted the
Cabinet to direct the State Services Commission, Treasury and Ministry of
Commerce to undertake a stocktake of IT in the Public Service.

This report is the result. The information it contains will, if kept up to
date, provide a basis for the future monitoring of Government IT investments.
The database of stocktake results will also be made available to all
departments, to give them a means of achieving ongoing exchange of information
and IT expertise across the Public Service.

1.2 Terms of reference

The stocktake had to achieve the following:

  • Ministers should be able to see the size, scope and cost of IT activities
    across Government.
  • Central agencies should be able to use it as an information base in
    assessing, on Ministers' behalf, the risks facing Government in its IT
    investments.
  • Departments should be able to use the same information base to facilitate
    the exchange of good practice and the sharing of skills, and, where appropriate,
    to improve cross-sectoral integration.
1.3 Approach

The stocktake team comprised two consultants from Pohlen Robinson, a New
Zealand based IT consultancy, two represent-atives of the State Services
Commission and a project team with representatives from four government
departments.

Two questionnaires were developed for all departments to complete. These
questionnaires were:

Departmental IT Profile
This was designed to gather data about IT
policies, practices, applications, network connectivity and hardware and
software purchases.

IT Projects
This gathered key data about 'major' IT projects
undertaken by departments over the last three to five years. A major project was
defined as one that:

  • would damage the credibility of the department or Government if it failed;
  • involved a time commitment of four person years or more;
  • involved expenditure greater than $500,000;
  • had a timescale of twelve months or more.

The definition excluded projects that met the criteria but were system
upgrades, or simply changed the scale of a department's IT rather than
introducing new or enhanced systems or services.

The complete data set will be presented as a database on the Internet at
www.govt.nz.

1.4 The information base - understanding the data
The stocktake did
not require departments to verify their responses by, for example, providing
relevant documents such as departmental accounts, policy statements, procedure
manuals, and progress and audit reports. It is therefore not possible to state
how accurate the cost figures are, whether procedures are actually used, how
well applications work, or why a given project succeeds or fails. A more
in-depth analysis would require fuller investi-gation. The stocktake was
designed to provide a listing of the projects and their costs, and the
procedures and standards departments had in place to manage IT projects. If
these are satisfactory, it is more likely that projects will be both well
implemented and effective.

With respect to cost data, departments were generally able to supply figures
for the past three years only, due to a change in the way of accounting for
software costs during the last five years. The total cost of the IT projects is
not comparable to the total hardware and software expenditure on IT. This is
because these projects involve more than hardware and software expenditure -
there are other costs that departments are free to account for in differing
ways, such as the costs of change management, user training and data migration.
Where appropriate, the data was compared with the conclusions and
recommendations of the 1991 Review of Computing in the State Sector. Few figures
for IT in foreign public administrations or foreign private sectors are publicly
available. However, the available ones have been included for comparison.

IT Costs

2.1 Hardware and software

All departments purchased or leased hardware and software over the three
years ending 30 June 1997. The following table shows their total expenditure on
hardware and software in this period:

Table 1: Total expenditure on Hardware and Software

Computer systems 111,334,000
Desktop Hardware 94,345,000
Software 163,879,000
Total 369,558,000

This expenditure represents 0.35 percent of Government revenue1. The 1996 international average for governments is 0.7
percent of revenue2. It should be noted that the New
Zealand figure contains only hardware and software expenditure, whereas the
international figure is likely to include other IT expenditure.

2.2 Outsourcing

Over the last three years, departments have spent an estimated total of
$277.1 million on outsourcing IT services.

2.3 Outsourcing

The total expenditure on projects completed and initiated over the last five
years was $186.2 million.

This figure is not directly comparable to the above figure because IT
projects include more than hardware and software costs. According to research
into IT spending conducted by the Gartner Group in 19963, a large amount of IT spending is outside the direct IT
budget. The researchers suspect that 'non-IT' spending on IT, if identified and
tracked correctly, would inflate formal IT budgets by at least 40 percent to 50
percent. This seems to indicate that the IT budget is no longer an accurate
picture of total IT expenditure. The Gartner Group recommends that organisations
might be better to focus on getting results from their own IT spending rather
than continuing to compare their budgets, as a percentage of revenue, with those
of other organisations.

1 For 1994/95 and 1995/96 the Actual Total
Revenue was taken; for 1996/97 the Estimated Actual (December Update) was taken.

2 IS Budgets Fail to Reflect Real IT Spending. Gartner Group,
1996

3 IS Budgets Fail to Reflect Real IT Spending. Gartner Group,
1996

IT management

3.1 Project successes and failures

Projects completed
Of the 174 major IT projects that were either
current or initiated over the last five years, 168 had been completed or were
still in progress. Three had been dropped and another three were on hold.

Costs in relation to budget
A number (14 percent) of completed
projects came in over budget. The total over-expenditure, however, was only two
percent ($3.8 million) of the total of the budgets for all completed projects
($190 million). Three projects went over budget by 20 percent or more.

There was under-expenditure on projects, which corresponded to four percent
($7.2 million) of the total of the budgets for all completed projects. Overall,
therefore, there was a two percent under-expenditure on the total budget.

Definition of failure
Few IT projects end up exactly as planned.
Statistics from the USA indicate that only nine percent of IT projects in the
public and private sector are com-pleted on time and within budget; 31 percent
are cancelled before completion; and of those completed, 53 percent cost, on
average, 189 percent of their ori-ginal estimates . These original
estimates4 are commonly based on sophisticated
project ma-nage-ment, with precise goals for budgets, staffing, functionality
and timelines. More than 80 percent of new system initiatives fail to meet one
or more of these goals, but IT managers are constrained to assess these projects
as failures.

In many cases, sophisticated set-ups, the increa-sing complexity of IT, and
rapid changes in technology mean that projects are unlikely to meet their
budget. At the same time, be-cause projects reflect key business processes that
may be undergoing significant re-engi-neer-ing, new implementations of core
systems may take much longer than planned because their delivery requires the
interaction of many departments and layers of management.

Because large-scale projects involve complex technical and managerial
planning, expectations of achieving project goals should be set within
reasonable boundaries, and in the light of changing technological developments.

Gartner Group suggests that a definition for large-scale project failure is
going over allotted time or budget by 30 percent or more. On the basis of
traditional timelines for return on investment, this level of divergence will,
in many cases, delay the expected revenue stream for new systems long enough to
cancel their business value.

New Zealand Government experience
The stocktake shows that the NZ
Public Service success rate is different to success rates overseas, as shown by
available figures. With very few projects dropped or coming in 20 percent or
more over budget, departments appear to have performed well in terms of
completing projects on budget.

3.2 Overall IT management

Links to strategic and business planning
The stocktake indicates
that IT planning and IT projects are tied to departmental business and strategy
in many, but not all, cases. 32 of the departments had an individual or group
assigned to overall strategic business planning for the entire organisation. 33
had a steering committee that met on a regular or ad hoc basis to review
projects and priorities. 134 of the 174 projects arose out of business strategy
or business processes.

Good practice5 occurs where there are strong
links between the corporate plan and all IT activities in the organisation. IT
needs to be subject to managerial control, just like any other major corporate
resource. This should ensure that an organisation uses technology only in
order to meet its business objectives.

IT management structures
Even though the departments reported
different degrees of geographical and managerial centralisation in their entire
organisation and in their IT, 37 departments reported that they had a clear-cut
organisational structure, with a clear under-standing of who was the ultimate
decision-maker.

This indicates that there is, in most cases, a strong link between the
organisational structure of a department and an organised, strategic approach to
IT management.

IT standards
Good practice6 in IT
management involves establishing and documenting standards for relevant items
such as: software, hardware, communications and user interfaces, policies for
user equipment support, data security, software piracy, virus control, induction
and training of new staff, and work practices.

Respondents were asked to indicate whether they had certain standards in
place and whether these standards were documented.

40 of the departments reported that they had desk top hardware standards,
desktop software and peripheral standards and standards for shared equipment or
software
in place. 38 reported that they had standards in place for data and
voice networks. However, not all the departments had these standards documented.

3.3 Project management tools and methodologies

35 departments indicated that they used project management tools or
methodologies, and seven did not indicate one way or the other.

Good practice7 is to have a standard methodology
that is used for all significant projects.

3.4 Risk management
27 departments had
standards for risk assessment in place. 27 said these stan-dards were
documented. Some did not have their own risk assessment standards, but were able
to say they used documented standards because they used those of their vendors.

Good practice8 is for every project to have
policies, plans and pro-ce-dures covering risks to either the department or
Government. Of the 174 major projects listed, 165 were reported as being mission
critical/important or process critical/important, and of such a nature that
failure could affect the department's business or performance. However, a risk
assessment was undertaken beforehand for only 116 of them.

This reflects a need for greater awareness of risk management practices.

4 Charting the Seas of Information Technology
Chaos. The Standish Group International Inc, 1994

5 Review of Computing in the State Sector. PA Consulting Group,
State Services Commission, 1991

6 Review of Computing in the State Sector. PA Consulting Group,
State Services Commission, 1991

7 Review of Computing in the State Sector. PA Consulting Group,
State Services Commission, 1991

8 Review of Computing in the State Sector. PA Consulting Group,
State Services Commission, 1991

4. IT trends

4.1 Hardware

Application architectures
202 of the 455 applications running in
the departments were client/server based; another 168 applications were
host-based. In 119 of 169 projects, the application architectures used were
client/server-based.

Client/server architectures are up to date and widely used in both the
private and public sectors. They appear to offer departments greater flexibility
in the use of their IT.

41 projects were based on classical (mainframe) computing models. Classical
com-puting is still acknowledged as appropriate for applications with huge,
centralised databases or a large num-ber of users. However, there is a trend in
IT, in both the public and private sectors, to replace classical computing by
client/server architectures. This trend is reflected in the purchase of desktop
units over the last three years: the departments purchased 24,466 PCs and
laptops and 905 servers and mini computers, but only 644 'dumb' terminals and
seven mainframes for classical computing.

4.2 Networks
Device connectivity

The stocktake shows an increase in device connectivity, reflecting the trend
in IT to focus on making more and better information available to all members of
an organisation.

Internet mail access
Eight departments had at least one device
with Internet mail access. In 23 departments, 100 percent of devices had
Internet mail access.

Local Area Network access
All departments had at least one device
with LAN access. In 28 departments, 100 percent of devices had LAN access.

World Wide Web access
35 departments had at least one device with
World Wide Web access. In nine departments, 100 percent of devices had World
Wide Web (WWW) access.

Future Projects
The departments also listed a number of LAN,
Internet mail and WWW projects. This indicates that the level of device
connectivity will increase in the future.

4.3 Software
Project functionality

The departments listed and described 174 major IT projects. Generally, these
were categorised as addressing functional areas that covered the departments'
own business needs, such as operations, systems, finance, corporate and
purchasing. Reported key benefits of the projects were improvements in cost
efficiency and quality of service.

Most departments had developed database and management applications that were
specific to their own needs. However, there were issues common to various
departments. A number had initiated the development of Document Management
Systems, Data Warehouse Projects, Human Re-source Management (payroll) Systems,
Financial Management Systems, Local Area Networks or the use of IT Tools for
Business Process Re-engineering (BPR).

In particular, their use of BPR tools could be a subject of further interest.
Gartner Group research suggests that over 80 percent of highly effective
enterprises have undertaken BPR programmes within the past three years9. IT personnel will have to ensure a fit between new
business processes and increasingly sophisticated IT.

Interfaces between new systems and existing systems
134 of the 174
projects had interfaces, at some level, with other internal systems. 87 had
interfaces, at some level, with external systems. Another 70 had interfaces with
both internal and external systems.

This is a considerably high degree of interaction. Among other things, it
should enable information to be collected once and shared by authorised users,
where this is practical, cost effective, and consistent with legislation.

4.4 Open Systems
The trend toward
client/server application architectures and systems that enable information to
be collected and held in common indicate a trend toward open systems that allow
much more interaction and sharing of information between computer systems than
did the proprietary systems of the past.

Open systems enable the departments to meet the requirements of a new era of
IT development that focuses on making more and better information available to
all authorised users.

4.5 Outsourcing
Of the 455 applications
running in departments, 283 were purchased and 171 developed in house.

Outsourcing of IT services does not apply only to applications development.
The review iden-ti-fied a wide range of areas of outsourcing, and various
degrees of outsourcing (see page 21). Good practice is to outsource IT
development and IT services only if this enables an organisation to meet its
objectives more effectively than it can in-house. In considering the value of
outsourcing, organisations should ensure that this will not lead to a shortage
of critical (especially strategic) skills within the core business of their
organisations.

In this connection, a considerable number of departments (25) have outsourced
some or all of their business analysis function; two have outsourced this
function 100 percent. While seven respondents are considering reducing their
level of out-sourcing in this area, six are considering increasing it.

Although there is no hard and fast rule in this area, such a high level of
out-sourcing business analysis, if not properly considered and managed, could
leave the Government exposed to a degree of unspecified, high-level, strategic
risk. The outsourcing of core business functions should remain the subject of
continuing review.

9 Creating IT Processes: Organizing Work
Across Distributed Computing Boundaries. Gartner Group, 1997

5. Key future issues

5.1 Use of the stocktake information base

The Government has agreed that the stocktake of IT projects should be kept up
to date, so that there is an ongoing record of IT projects. The State Services
Commission and Statistics New Zealand plan to co-operate in making the database
of stocktake results available to all departments via the Internet. It is
intended that the database will be kept up to date with new IT projects by
connecting it to the newly established monitoring regime for major IT projects
that the State Services Commission and the Treasury are currently implementing.

Technology has been growing explosively over the last five years, and will
continue to do so. The Government, its or-gani-sations, and the public expect
more and better information to be easily available. The increasing need to share
applied research and develop-ment in a devolved Public Service highlights an
ongoing increase in the need for departments to share information as efficiently
and effectively as possible, where it is appropriate, and according to statutory
requirements. Better information sharing impacts on the collective issue of
developing greater co-ordination and, where appropriate, improved co-operation
between departments.

Recent concerns about information sharing and co-ordination are not new. The
Review of Computing in the State Sector in 1991 found that:

"Departments individually and collectively need to keep abreast of the
emerging technologies. In particular there is a need for sharing applied
research and development."

There appears to be significant interaction between departments on IT
matters, but the issues are problem oriented. For example, some departments are
working together to address Year 2000 issues. Although Public Service IT
networks appear to be used effectively when critical decisions need to be made,
future IT planning is often done with little formal input from other
departments.

An analysis of the projects listed in the stocktake identifies the following
areas where an information base on Public Service IT would make more and better
information available, which should help to improve information and IT project
management in departments, with consequent individual and collective benefits:

Areas Information Coordination Cooperation
Year 2000 Issues X X
(Strategies)
X
(that is,
for
same applications)
Cross-departmental collecting and
sharing of information
X X X
Development of applications that
could meet the needs of various departments: Office Systems, Document Management
Systems, Financial Management Systems, Human Re-source management (payroll)
Systems, Data Warehouse Projects, WWW Projects, Local Area Networks
X X X
Lessons to be learned from
experiences gained from business process re-engineering projects
X    
Use of IT tools for business
process re-engineering
X    
Lessons to be learned from
experiences during application development (pitfalls)
X    
Lessons to be learned from
experiences with vendors/software developers
X    
Lessons to be learned from
outsourcing: for example, contracting, strategic issues
X    
IT monitoring (devolved and
central)
X    
Database of experienced skilled
staff in area of IT project management
X    

5.2 Accountability

Chief executives
Chief executives of departments are responsible
and accountable for the management of IT projects in their departments. The
Government has directed that any major IT projects should be included in the
chief executive's performance agreement.

Chief executives should ensure that:

  • Information as a key strategic resource is managed throughout its life
    cycle.
  • Accountability for information management and technology projects is managed
    in such a way that the chief executive can maintain independence and focus on
    the overall needs of the department.
  • IT projects are operated in accordance with agreed Public Service standards
    that allow access to, and sharing of, common core information, subject to
    statutory requirements.
  • Where practical and cost effective, information is collected once and shared
    by authorised users.
  • Common definitions for shared information will be agreed and implemented.
  • There is appropriate reporting to central agencies and Ministers. A
    up-to-date database on IT in the Public Service should make more and better
    information available to support chief executives in meeting these expectations.

5.3 Risk management expertise

The stocktake has shown that IT projects expose the Govern-ment and its
departments to operational and fiscal risks. In order to manage these risks, it
is clear that a risk assessment needs to be done for every IT or IT-related
project.

Good practice is for departments to assess the risk of IT projects, using
commonly agreed risk management princip-les, processes and practices.

Even though a considerable number of projects were reported as incorporating
a risk manage-ment strategy, the departments' risk management practices do not
cover all aspects of sound risk management.

For example:

  • Many IT projects still have a large number of custom-designed components.
    Departments should manage risk by avoiding or isolating custom-designed
    components and using commonly available technology, where appropriate.
  • As noted in section 3.3 of this report, seven of the departments did not
    report the use of project management tools or methodologies. If this means these
    tools and methodologies are not being used, there are concerns about IT risk
    management in these departments.

6. Risks to Government

  Although the IT stocktake was not designed to assess
IT-related risk that Government is exposed to, the following issues have
emerged.

6.1 Supplier dependencies

The stocktake has revealed that the Public Service undertakes a significant
number of IT projects. In doing so, it must rely on a relatively small pool of
vendors, outsourcing contractors, and consultants.

With the move away from mainframe-based IT systems to smaller client/server
type environments, some of the most crucial dependencies are reducing.
Nonetheless, it is important that the departments' relationships with suppliers
are well managed, so that the inevitable dependencies do not have adverse
effects on any of the parties.

6.2 Outsourcing

While outsourcing many IT functions is commonly accepted practice, the
significant level of outsourcing that this stocktake has revealed, if not
carefully and strategically managed, may present considerable risks to
Government.

This risk falls into two broad categories. Firstly, there is the contractual
and operational risk that outsourcing involves, much of which is related to the
issue of supplier dependencies discussed above. Secondly, there is the potential
that departments will not develop appropriate IT capability, or that the
capability will be eroded. This is especially so in strategic areas in IT such
as key human resource aspects of IT manage-ment, and high-level business
analysis.

6.3 Risk management

As noted in section 3.4, only 27 departments had risk assessment standards in
place. This must be seen as an issue of concern - effective risk management
should be fundamental to any department's approach to information management.
This applies to IT projects and to the management of information systems.

6.4 Increased dependency on IT

The use of IT pervades the operation of departments. It has truly become the
pen and paper of the modern Public Service. It is no longer restricted to the
'back office' of departments; it features in all aspects of business, from
policy development to service delivery. This means that departments need to
recognise the importance of effective investment in, and management of, IT as a
key factor of Public Service production. Failure to do so will lead to
individual organisations, or indeed the whole government, being unable to
function as effectively as would otherwise be the case. This could occur
relatively quickly; for example, in the event of a natural disaster. It could
also occur over a longer period if the right strategies are not put in place to
effectively harness the potential benefits IT offers to Government and the
public.

6.5 Change

As revealed by this stocktake, departments have joined the wider trend to
move away from the mainframe-based classical computing model towards 'open
systems' based on a client/server architecture and a more flexible software
solution. The stocktake has also revealed a high level of Internet connectivity
(see section 4.2) - nine departments currently give all their users access to
the World Wide Web.

Once again, this is not seen as a risk in itself. What is important is that
appropriate signals are taken from this about the impact technology is having on
the way departments are able to carry out business. It is no longer possible to
equate the informational and organisational boundaries of organisations. This
needs to be considered when issues relating to organisational design and
capability in the Public Service, and issues that affect the wider State Sector
are discussed.

The rapid pace of change in the global information technology environment
will place pressure on the Public Service, particularly in terms of its ability
to maintain appropriate capabilities for accessing, storing, manipulating and
sharing information. Another ongoing pressure for change will arise from the
fact that departments are continuously hiring staff with increasing levels of
'information awareness' and IT skills. Public servants of the future will have
increasingly sophisticated expectations of the level of support which
information systems will provide for their work.

7. Key figures
from the stocktake

7.1 Expenditure on IT by
government departments over the last three years

Computer system numbers and costs
The following table summarises
the numbers and costs of all minicomputer, server and mainframe systems
purchased or leased over the last three years.

Table 3: Total expenditure on computer systems

Item Total number of units purchased or leased over the last three years Total cost of purchases and leases over the last three years ($000's)
Mainframes 7 75,258
Servers 694 24,090
Minis 211 11,986
Total   111,334


Desktop hardware numbers and costs
The following table summarises
the numbers and costs of departmental purchases of desktop units over the last
three years.
  Table 4: Total expenditure on desktop hardware

 

Item Total
purchases over last three years
Total spent
($000's)
Desktop
PCs
21,174 62,701
Portable PCs 763 4,356
Laptops 2,440 15,124
Network computers 0 0
Terminals 644 1,291
Workstations 89 2,633
Printers 2,591 8,240
Total   94,345


Software costs
The following table summarises the total costs of
software purchased or leased over the last three years.

Table 5:
Total expenditure on software

Software Total cost of purchased
and leased software over the last three years
($000's)
User licenses 270
Operating systems 13,229
Database systems 11,977
Application software:  
Developed in-house 49,132
Purchased from 3rd party 33,327
Utilities 4,781
Others 51,163
Total 163,879

7.2 Major IT projects in government departments

Departments were asked to provide information on all major IT projects that
were current or had been completed over five years ending 30 June 1997.

Total number and costs of projects
Within the departments
surveyed, there were 174 major projects listed either as current or initiated
over the last five years. Of these projects, 86 were completed, 82 were in
progress, 3 were on hold and 3 had been dropped.

The overall expenditure for the completed projects was $186.2 million.

Costs in relation to budget
For the following two tables, the cost
to 30 June 1997 has been subtracted from the relevant budget figure and the
difference calculated as a percentage of the budget. The tables give the
distribution of over- and under-budget projects for current projects and
completed projects. Budget data was received for 80 out of the 86 completed
projects and 62 out of the 82 projects in progress.

Current projects
For the 62 projects that are "in
progress", the following table presents the difference between the budget to
date and the cost of the project to date.

Table 6: Costs in relation to budget (current projects)

  Difference % Number in this
category
Over budget More than 20% over budget 2
  -20% to -10% 2
  -10% to <0% 1
On budget 0 13
  >0 to 10% 14
  10% to 20% 11
Under budget more than 20% under budget 19

Completed projects
For the 80 projects that are "completed", the following table presents the difference between the budget to date and the cost of the project to date.

Table 7: Costs in relation to budget (completed projects)

  Difference % Number in this
category
Over budget More than 20% over budget 3
  -20% to -10% 4
  -10% to <0% 4
On budget 0 40
  >0 to 10% 16
  10% to 20% 8
Under budget more than 20% under budget 5

Although 11 of the 80 (14%) completed projects came in over budget, the total
expenditure over budget was $3.8 million, which corresponds to 2% of the total
budget for all completed projects. For the completed projects that came in under
budget, the total amount saved was $7.2 million, which corresponds to 4% of the
total budget for all completed projects.

How critical are these systems? Respondents were asked to indicate the
criticality of the systems. Responses were as follows.

Table 8: Criticality of systems

System category Number of projects in
this category
Mission critical 71
Mission important 40
Process critical 15
Process important 16
Infrastructure 23
Reporting 11

Note that some departments described their projects as falling into more than
one category, and therefore these are counted more than once in the above table.

Priority level of these projects
Of the systems that were in
progress, 109 were deadline critical and 55 were not.

What type of projects have been undertaken by departments over the last
three years?

Departments were asked to put their projects into
functional categories. The following table gives the total number of major
projects falling into each functional area.

Table 9: Functional areas of projects

Functional area Projects addressing
this area
Manufacturing/operations 46
Systems 38
Customer service 37
Financial 28
Corporate 28
Human resources 13
Purchasing 9
Distribution 7
Scientific 6
Fisheries services 2
Miscellaneous 26
Unspecified 13

Note that some departments put their projects into more than one category,
and therefore these are counted more than once in the above table.

7.3 Outsourcing

The following table summarises the numbers of departments that reported their
plans for outsourcing IT services in the future.

Table 10: Outsourcing of IT services

Service Number outsourcing some or all of
the activity
Number reporting 100%
out-sourced
Considering increasing level of
outsourcing in future
Considering reducing level of
outsourcing in future
Will not
outsource
Applications development/
implementation
34 12 9 5 1
Applications maintenance 33 10 11 4 3
Business analysis 25 2 6 7 8
Data centre operations 13 6 6 1 6
End user support 25 6 11 3 3
Help Desk 18 7 9 2 6
LAN design and
implementation
27 7 7 4 3
LAN operations 20 6 8 3 4
System and technical
strategy
21 5 5 4 9
System design and analysis 29 6 5 5 5
Technical support 34 8 9 2 2
Training 35 8 8 5 2
WAN design and
implementation
27 7 8 3 2
WAN operations 19 13 7 1 5
Education pay service 1        
Facilities management 1        
Internet services 1     1  
Network management 1        
Oracle DBA 1        
Printing     1    
Voice operations     2    

Appendices

Appendix 1 Participating Departments

The following departments returned profile and project questionnaires:

Crown Law Office
Department for Courts
Department of
Conservation
Department of Corrections
Department of Internal
Affairs
Department of Labour
Department of Social Welfare
Department of
the Prime Minister and Cabinet
Education Review Office
Government
Superannuation Fund
Inland Revenue Department
Land Information New
Zealand
Ministry for the Environment
Ministry of Agriculture
Ministry
of Commerce
Ministry of Cultural Affairs
Ministry of Defence
Ministry
of Education
Ministry of Fisheries
Ministry of Foreign Affairs and
Trade
Ministry of Forestry
Ministry of Health
New Zealand Health
Information Service
Ministry of Housing
Ministry of Justice
Ministry of
Pacific Island Affairs
Ministry of Research Science and
Technology
Ministry of Transport
Ministry of Women's Affairs
National
Library of New Zealand
New Zealand Customs Service
New Zealand Defence
Force
New Zealand Police
Office of the Auditor General
Office of Youth
Affairs
Public Trust Office
Serious Fraud Office
State Services
Commission
Statistics New Zealand
Te Puni Kokiri - Ministry of Maori
Development
The Treasury
Valuation New Zealand
Appendix 2 List of
IT projects

This appendix summarises the data from all the project questionnaires
returned by departments. The table below lists all projects identified by
departments. Summaries of the data collected about these projects follows.

Twelve departments specified a total of 44 projects that were not to be
identified under the Official Information Act. The reasons were either
commercial or security related. These projects are not included in the table
below.


 

Project Name

Brief description

Department

Status

 

Data Management

Establish data management standards & platform for development projects
to be set up & run from.

Agriculture

Completed

 

Paquis

Turn Key text management system for development of standards, workflow
procedures, around these include draft dissemination, then final post to Web
site. Results help manage agriculture risk to New Zealand from imported products
(animal & plants)

Agriculture

In Progress

 

Paeris

Same as for Paquis but for plant & animal exports. Results help manage
agriculture risk to New Zealand for exported plants & animals

Agriculture

On hold

 

IMSIS 1

Document distribution & manage responses system. Results help manage
agriculture risk to New Zealand for exported meat & seafood

Agriculture

In-Progress

 

IMSIS2

Electronic certification system based on website technology: with checking
engine of base MAF information to ensure content to correct. Results help manage
agriculture risk to New Zealand for exported meat & seafood

Agriculture

In-Progress

 

CABS

Customer Account Billing System

Commerce

Completed

 

FMIS

Financial management Info Sap

Commerce

In-Progress

 

IMP/DMS

Information Management Project - Document Management System

Commerce

In-Progress

 

Internet Access

Provide Internet Access for public

Commerce

Completed

 

LAN

Installation of a Local Area Network hosting PC's and Netware file servers.

Commerce

Completed

 

MVSR Replacement Project

Redevelop Motor Vehicle Securites Register

Commerce

Completed

 

PRISMS

New radio spectrum management system. Replaces and upgrades existing systems.

Commerce

In-Progress

 

REGIS Replacement Project

Redevelop Companies Registor

Commerce

Completed

 

Visitor Asset Management

Database to assist the effective management of Visitor Assets

Conservation

In-Progress

 

Customs Modernisation

Replacement and integration of all core border management systems to support
a restructured business operation

Customs

In-Progress

 

YR2000 Readiness

 

Customs

In-Progress

 

FMIS

Financial Management System

Education

Completed

 

Property Management Information System

Administers capital works projects and profile of Ministry's property
portfolio

Education

Completed

 

School Transport Funding System

Calculates entitlement then funds school bus operators

Education

Completed

 

Staffing Entitlement and Exception Reporting

Calculates and maintains school staffing entitlements.

Education

Completed

 

Catch & Effort

Provide accurate catch and effort information for scientific Compliance and
Policy functions.

Fisheries

Completed

 

Implementation of Fisheries Act 1996

Implementation of the Fisheries Act including operational policy, standards and specifications and business process development and implementation. In some cases the implementation will include computer systems development. The extent of the Fisheries involvement in the development and operation of the future systems will be determined by the end of the 1997 calendar year.

Fisheries

In-Progress

 

Quota Management System - Stabilisation/Rationalisation

To maintain the QMS systems until they are replaced by systems designed under
the Fisheries Act 1996

Fisheries

In-Progress

 

Vessel Monitoring System - Phase 2

Redevelopment of the Current Vessel Monitoring System, used to track deep
water fishing vessels in NZ EEZ

Fisheries

In-Progress

 

Freedom

Implementation of new infrastrucure for core MOH systems

Health

Completed

 

META

Ethnicity and automated domicile coding for national systems.

Health

Completed

 

National Systems

Redevelopment of national health information systems

Health

Completed

 

A Review of FIRST online Architecture Enhancement

Technical and performance improvements made to FIRST to avoid a processor
upgrade

IRD

Completed

 

Automated Customer Services Christchurch and Auckland Implementation

Establish an interactive voice response service in Auckland and Christchurch

IRD

Completed

 

Automated Field Support Pilot

Pilot project to investigate viability of remote access by field staff.
Implementation did not proceed.

IRD

Completed

 

Batch and Online Architecture Enhancements

Batch and online enhancements to improve processing effectiveness and ensure
processing completed in nightly batch window.

IRD

Completed

 

Child Support Noticing and Employer Enhancements

This project is required to make a number of improvements to the child
support system specifically improved noticing and employer processing.

IRD

In-Progress

 

Child Support Reengineering

System was designed prior to legislation being passed; recognised it would
need enhancements over time.

IRD

Completed

 

Client History

Archive taxpayer related data based on specific business rules

IRD

Completed

 

Compliance and Penalties Review

System developed to implement the new compliance and Penalties regime,
effective 1/4/97

IRD

Completed

 

Disputes Resolution

System developed to implement the new Disputes Resolution legislation,
effective 1/10/96

IRD

Completed

 

EIS Phase 2

Executive Information System - Incorporate key result area (KRA's) into the
existing EIS system

IRD

Completed

 

FBT Integration

Integrate the existing FBT System into the generic FIRST System

IRD

Completed

 

First Data Restructuring

The FIRST system has grown extensively since 1991. This project is required
to resolve design issues and known technical limitations associated with the
current technical architecture.

IRD

In-Progress

 

FMIS (Design Phase)

Development of a new Financial Management system to provide users with a
fully integrated budgeting and reporting system (Design Phase only)

IRD

In-Progress

 

FSTC Phase 2

Family support Tax Credit Phase 2 - functionality required to support end of
year processing

IRD

Completed

 

GST Integration

Integrate the existing GST System into the generic FIRST System

IRD

Completed

 

Imaging-Remittance Processing

Reengineer payment processing work flow through use of image technology

IRD

Completed

 

Imaging-Returns and Correspondence

Investigate project to determine the viability of image technology for return
and correspondence processing. Decisions on implementation yet to be made.

IRD

On hold

 

Information Management Study

Develop a strategy for improving decision support capability using technology
such as Data Warehousing. Developing an archiving strategy for the long term
management of the corporate's data.

IRD

Completed

 

Integrated Network Design

Investigate and design a corporate network architecture.

IRD

Completed

 

International Tax Integration

Required to Implement the international tax regime

IRD

Completed

 

NRWT Integration

Integrate the existing Non-Resident Withholding Tax system into FIRST

IRD

Completed

 

Office Automation Architecture

Investigate and recommend a corporate Office Automation environment

IRD

Completed

 

Office Automation National Office Upgrade

Rollout of the Office Automation product set (Novell Groupwise, Office 97) to
National Office sites.

IRD

In-Progress

 

Open Systems Environment

Establishment of the technical architecture to support future open systems
developments

IRD

Completed

 

Organisational Review System Changes

Changes required to FIRST to accommodate the new IRD organisational structure
resulting from the review.

IRD

Completed

 

Resident Witholding Tax Integration

Required to support the withholding tax regime on interest income

IRD

Completed

 

Student Loans Reengineering

Reengineering of selected functions of Student Loans System to improve
processor effectiveness and efficiency eg Loan call up and part year
assessments.

IRD

Completed

 

Tax Agent Management System

This project provides automated support for tax agents - the system maintains
the lists of relationships between agents and their clients.

IRD

Completed

 

Technical Reference Support

The system allows legislation and technical reference documentation to be
electronically accessed based on keyword search functions

IRD

Completed

 

Year 2000

This project is required to implement the changes so that FIRST and other
systems are year 2000 compliant.

IRD

In-Progress

 

BDM Computerisation

Infrastructure to support electronic capture and management of NZ Life Event
Registrations

Internal Affairs

In-Progress

 

Citizens Operations System

Management and Process support for Citizenship Application Processing

Internal Affairs

In-Progress

 

Implementation of FMIS

Implementation of Oracle Financials

Internal Affairs

Completed

 

Lottery Grants - Netware systems

Replace legacy terminals with PC Network - over five regional sites

Internal Affairs

Completed

 

Lotus Notes Project

Implement Department Wide E-Mail

Internal Affairs

In-Progress

 

MIS

MIS - Data warehouse and budget management systems

Internal Affairs

In-Progress

 

NZLGB System

To process applications for grants from the NZ Lottery Grants Board

Internal Affairs

Completed

 

Territorial Database

Construction of population of a database of information on NZ territorial
authorities

Internal Affairs

In-Progress

 

Application Management (AMS)

NZIS core business system

Labour

In-Progress

 

Client Information Management (CIMs)

NZIR core business system

Labour

In-Progress

 

DOLFIN

Acquire and implement financials package

Labour

Completed

 

Entry & Client Management (EMS/CMS)

Border control system for managing entry to NZ. Interfaces to NZ Customs
CAPPS system

Labour

Completed

 

HRIS

Acquire and implement HRIS and payroll package

Labour

In-Progress

 

NZES Data Warehouse

Data Warehouse

Labour

In-Progress

 

PaC Replacement

OSH core business application

Labour

In-Progress

 

Pre-Clearance

Interface border control systems with Australian Immigration for Trans-Tasman
passenger pre-clearance

Labour

Dropped

 

PRISM

CEG monitoring and reporting system

Labour

In-Progress

 

SOLO

NZES core business system

Labour

In-Progress

 

1997/98 Representation Commission

Redistricting of New Zealand's Parliamentary Electoral Boundaries

LINZ

In-Progress

 

Digital Cadastral Database

Converstion of Cadastral record maps to a digital database

LINZ

Completed

 

LARES

Audit trail of land allocation decisions bring part of the environmental
restructure into SOEs of L&S

LINZ

Completed

 

Sea Land

Computerisation of NZ's core topographic record for the support of GIS
applications and NZ's published mapping.

LINZ

In-Progress

 

Development Assistance network and Student Information Database

Database application to assist delivery and evaluation of NZODA funded
projects and students

MFAT

Completed

 

Financial Management Information System (FMIS)

To implement ORACLE financials throughout the Ministry. Replacing system in
Wellington Head Office and a variety of systems globally

MFAT

In-Progress

 

Head Office LAN

Installing Novell LAN at MFAT Head Office Buildings

MFAT

Completed

 

HR and Payroll

Human Resource and Payroll

MFAT

Completed

 

LAN Cabling

LAN Cabling Ministry Posts

MFAT

In-Progress

 

Merlin 1

Integrated communications system

MFAT

Completed

 

Merlin II Project 1

LAN infrastructure document management desktop applications (Word etc)

MFAT

Completed

 

Merlin II Project 2i

Implementation of LAN based e-mail in Wellington and LAN/WAN in 5 posts

MFAT

Completed

 

Merlin IIProject 3

LAN Based infrastructure and office automation products at posts

MFAT

In-Progress

 

Safe X.25 Network Encryptors

Network encryption of MFAT's unclassified WAN

MFAT

Completed

 

Tempest PC Replacement

Tempest PC replacement

MFAT

In-Progress

 

Trade Database

Stores data on trade barriers experienced by NZ exporters and WTO compliance

MFAT

In-Progress

 

New System Project

Replacement bibliographic/interlibrary loan. Core business process.

National Library

In-Progress

 

AFIS Capacity Upgrade

Additional optical disk storage for fingerprint system

Police

Completed

 

CARDS

Communications and resource deployment system

Police

In-Progress

 

HRIS/Payroll

Replacement Human Resources information system and payroll system

Police

In-Progress

 

PDSI

Police decision support infrastructure (management info system/data
warehouse)

Police

In-Progress

 

PIBIS

Police infringement bureau information system.

Police

In-Progress

 

PIMS

Photographic image management system

Police

Completed

 

Year 2000

Year 2000 - first phase assessment to identify and scope year 2000 problems
across all police systems.

Police

In-Progress

 

Consolidated Network

Network Consolidation and Fileserver and PC install at 130 offices.

Social Welfare

Completed

 

CYPFS

Business Process and data modelling

Social Welfare

Completed

 

CYPFS Programme Management

IBSP Programmes coordination

Social Welfare

In-Progress

 

Debt Enhancements

Enhance Income Support's Trace debt recovery system.

Social Welfare

Completed

 

Document Management

Records and electronic document management. Ministerial tracking and routing.
Online policy.

Social Welfare

In-Progress

 

DSW Network Access

DSW Network Functionality and Operational Management System Support.

Social Welfare

Completed

 

High Level Integrated Design

 

Social Welfare

Completed

 

Holex Service Delivery

 

Social Welfare

Completed

 

Human Resource

HRMIS

Social Welfare

Completed

 

KAURI

FMIS

Social Welfare

Completed

 

NZISS Human Resources

Implementation of a coporate payroll and human resource package

Social Welfare

Completed

 

PABX Upgrade

Replaced and standardised all DSW telephone switches. Centralised control.

Social Welfare

Completed

 

PC Office and FAMIS

Evaluation of mobile worker's requirements and distribution of FAMIS

Social Welfare

Dropped

 

SWiS Management Enhancements

Enhancement of CYPFS case management system, interfaces and services
ENTRY/MAINCE

Social Welfare

Completed

 

SWiS Project 9

Provide KP1 reporting for output classes 2 and 3.

Social Welfare

Completed

 

Technical Platform

Implementation of UNIX, replacement of WYSE terminals and U6000 application
servers for case management

Social Welfare

Completed

 

Technical Integration

Develop Client/Server conceptual design and systems architecture

Social Welfare

On hold

 

Tui

Integrated document management & records management system

SSC

Completed

 

Access Systems

Migration and development of systems to enable the extraction and publishing
of statistical data

Statistics

In-Progress

 

Analytical Systems

Migration and redevelopment of systems for the analysis of statistical data

Statistics

In-Progress

 

Corporate Office Systems and Application Standards

Redevelopment and implementation of electronic communication and document
management systems and standard tools for system design

Statistics

In-Progress

 

Data Management

Establishment and support of a structured data environment to ensure quality,
security and availability. Includes migration of data from mainframe to client
server.

Statistics

In-Progress

 

IT Strategy Programme/ Management and Support

To migrate the department's mainframe computing systems to a client server
computing environment and to maximise the opportunities presented by the new
technology to re-engineer systems wherever appropriate.

Statistics

In-Progress

 

New Computing Environment

Establish and support a stable and secure client server environment

Statistics

In-Progress

 

Statistical Classifications and Frames

Migration and development of centralised survey infrastructure systems for
classifying data and survey respondent units

Statistics

Completed

 

Statistical Survey Systems

Migration and development of systems for the collection , capture and
processing of statistical data

Statistics

In-Progress

 

Crown Financial Information System

Implemented a package for collection of financial information from all
government departments and offices of Parliament

The Treasury

Completed

 

NZDMO IS Project

Implementation of a financial trading, risk management and settlement
operations system

The Treasury

In-Progress

 

LATTIS

Land Transport vehicle inspection system

Transport

Completed

 

Database redesign

Full redesign of database structure to facilitate data access, data exchange
& applications development - as well as introduce strategic business
applications

Valuation

In-Progress

Appendices

Appendix 3 Definitions

The following descriptions were used to define the terms used in the
questionnaires and in this report. These were obtained from Real Decisions, a
member of the Gartner Group of companies, and are the copyright of Real
Decisions
.

Functional Area

Departments used the categories and their corresponding descriptions when
allocating their projects to the functional areas they are intended to address.

Financial

Accounting, costing, income reporting, receivables, billing, credit, taxes,
asset register, depreciation

 

Purchasing

Procurement, vendor analysis, barter, commodities

 

Manufacturing/

Operations

Materials requirements planning, inventory, quality assurance, production,
plant scheduling, process control, manufacturing operations, engineering,
safety, regulatory, compliance, environmental, plant security; equivalent
operations for service businesses

Distribution

Human Resources

Scientific

Customer Service

Corporate

Warehousing, transportation, truck routing, order fulfilment

Payroll, personnel, benefits

CAD/CAM, R&D, product design, algorithms, analysis

Customer records control, customer hotline systems

Planning, real estate, travel, phone directories, legal, contributions,
public relations, executive, stakeholder services, forms control, auditing,
insurance

Systems

Functional business systems for internal use by the systems department (such
as a labour time tracking system)

Hardware Platform

Since the distinctions between hardware platforms are rapidly blurring, the
departments used the following as guidelines to describe the type of platform
the systems would be using.

Mainframe

A "large" computer that serves at the highest level of platform size used. It
does not link "upwards" to "larger" computers. It is readily considered a
mainframe in industry jargon. It is not common to have PC/Workstations directly
linked into a mainframe.

 

Minicomputer

A "medium-sized" computer that frequently serves as the largest computer at a
site. It may be linked to larger computers. It is readily considered a
minicomputer in industry jargon. It is not common to have PC/Workstations
directly linked into a minicomputer. Examples are many DEC VAX units or IBM
AS/400s.

 

File Server

A "medium-sized" computer that holds data and/or software for use by multiple
intelligent computers linked into it. It may be linked to larger computers
and/or to similar PC/Workstation database or file servers.

 

PC/Workstation

A base level "small" computer that generally has no other units linked into
it. It may be linked to a larger computer, frequently a file server as described
above. Personal digital assistants fall into this category.

Interfaces with other systems

Departments indicated how heavily any system interacted with other systems,
both internal and external to the organisation, using the following guidelines:


None

A completely stand-alone system


 


Low

There are connections to other systems, but there is only a minor
amount of work (typically less than 10% of the labour effort) in supporting
these connections when changes are made .


 


Medium

There are connections to other systems, and there is a reasonable
amount of work (typically 10% - 25% of the labour effort) in supporting these
connections when changes are made.


 


High

There are connections to other systems, and there is a major amount of
work (typically more than 25% of the labour effort) in supporting these
connections when changes are made.

System Category

The following descriptions were used to indicate the degree of criticality of
the systems resulting from the projects.

Mission Critical

The availability of the system is critical to the organisation's operations.
It directly affects the customer and the revenue stream. Loss of the system for
a period of time leads to non-recoverable consequences. An on-line sales system
would be an example.

 

Mission Important

The availability of the system is critical to the organisation's operations.
It directly affects the customer and the revenue stream. However, a period of
downtime is perhaps recoverable.

 

Process Critical

The availability of the system is critical to the organisation's operations.
It directly affects the building of the organisation's product, but not directly
visible to the customer. Loss of the system for a period of time leads to
non-recoverable consequences. A manufacturing system for a 7-day 24-hour
production cycle would be an example.

 

Process Important

The availability of the system is critical to the organisation's operations.
It directly affects the building of the organisation's product, but not directly
visible to the customer. However, a period of downtime is perhaps
recoverable.

 

Infrastructure

Helps run the internals of the organisation. A period of downtime is usually
recoverable. A payroll system would be an example.

 

Reporting

Provides information necessary to run the organisation, but a period of
downtime has only internal consequences. Many accounting systems fall in this
category.