$200m 'supercity' IT bill?

BY CLAIRE MCENTEE
Last updated 08:43 25/05/2009
Fairfax Media
EXPENSIVE: Merging council IT systems to create an Auckland "supercity" could cost $200 million and take eight years to complete.

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Merging council IT systems to create an Auckland "supercity" will cost the best part of $200 million and could take eight years to complete, according to consultancy firm Deloitte.

The estimate includes the cost of changing business processes to fit new systems. Software and hardware costs alone are expected to be $21m, says Deloitte Consulting managing partner Matthew Hitch.

The supercity project will see Auckland's regional council and seven territorial authorities disbanded and replaced by a single authority.

Mr Hitch says Deloitte has investigated the likely costs and timeframe of the IT systems merger. Others' assumptions about the size and complexity of the task are simplistic, he says.

"It's going to take about four to eight years. If you look at large complex mergers, such as the Fonterra merger - they merged a long time ago and they're still slowly rolling different parts of the business on to other parts of systems. This is going to take at least that long."

Mr Hitch says there are about 300 IT staff across the eight councils and this number could increase as the merger progresses.

"These organisations have very busy IT departments now just keeping all the systems running, and this will be a huge project.

Local Government Online chief executive Jim Higgins estimates the project could cost about $100m. "It's enormous, you can't understate that, and inevitably it will take longer than you think."

The impact on public services will be serious if the project fails.

"The potential for another Incis is there, in fact it would probably make Incis look like a kindergarten party." Incis was a $107m failed police computer system.

Councils run "a mountain of systems", including general ledger, payroll, dog registration and document management systems, and there are six or seven vendors of "core" systems, he says.

Converting data from systems such as building permit and geographical information systems will be a mammoth task as councils collect different types of information and have different standards for collecting data, he says.

Deloitte Consulting partner Grant Frear says core systems, such as finance and customer- facing systems, should be integrated first to ensure continuity of service.

The councils vary considerably in terms of the sophistication of their IT systems. Auckland City Council has led the way in investing in customer relationship management, performance reporting and strategic planning systems, he says.

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Some councils may prefer their own systems and resist change, Mr Hitch says.

"Whoever takes on the job of interim chief executive needs to take a pragmatic view as if he were working in a commercial setting. When you step out of the emotion and politics, this is no different to any other billion-dollar merger."

Auckland City Council chief information officer Ian Rae says it is too difficult to guess what systems the new authority will run without an idea of its operating model and structure.

"But, given the number of organisations coming together with some similar systems and some quite different systems over time, you'd expect some rationalisation and consolidation."

Microsoft country manager Kevin Ackhurst believes the financial benefits of the IT systems' merger will probably outweigh its cost.

"There will be costs associated with integration. But over time you'll reduce the total costs associated with running 17 systems. You need to look at the picture in two to three years time."

- The Dominion Post

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