Government websites will switch to free, open-source software from Wellington firm Silverstripe under an "all-of-government" contract that Internal Affairs Minister Chris Tremain is due to announce this morning.

The Department of Internal Affairs estimates the government spends at least $40 million a year on its 600-plus websites. The decision to back local software could be good public relations in the wake of the Australian-supplied Novopay debacle.

Wellington Mayor Celia Wade-Brown said it was critical for Wellington's economy "that we see more successes like this, with local companies being recognised for their abilities".

DIA last year chose 33 firms to design and develop websites for government agencies through separate all-of-government web services contracts. The decision to pick Silverstripe as its "common web services platform" following a tender means those firms will use Silverstripe's software in place of about 50 other content management systems when carrying out work for government agencies.

Don Christie, co-chairman of NZ Rise, which lobbies on behalf of domestic information technology suppliers, said the win was "fabulous" for Silverstripe, which employs 50 people. The company was founded by three Wellington College and Scots College graduates in 2000 - Tim Copeland, Sam Minnee and Sigurd Magnusson, who still own 84 per cent.

Although its software is free, Silverstripe earns money from add-ons and consulting.

Silverstripe rose to prominence in 2008 when its software was used to manage the website for the United States Democrats' National Convention at which Barack Obama was selected as the party's presidential candidate.

Air New Zealand switched from a Microsoft content management system to Silverstripe the following year.

NZICT chief executive Candace Kinser said New Zealand firms had performed strongly in some other tenders for all-of-government IT contracts. She believed that was on merit, and not because the public relations stakes were higher for all-of-government contracts than for one-off tenders.

"New Zealand technology firms have improved their capability and now have the maturity to play on the world stage and win."

DIA picked two Kiwi-owned data centre providers, Datacom and Revera, and only one multinational, IBM, to host IT infrastructure for the government in 2010.

However, Christie said NZ Rise remained concerned that the trend towards all-of-government procurement could reduce innovation by whittling down the number of government suppliers.

Industry leaders including Xero founder Rod Drury and Institute for Information Technology Professionals chief executive Paul Matthews have also been scathing that a signalled overhaul of Inland Revenue's First computer system could provide a billion-dollar-plus bonanza for overseas consulting firms and software providers.

"All the indications so far is they are looking at this as a huge project that will go to an overseas firm," Matthews said.

- © Fairfax NZ News