What was the point of this?

10
1

.

treading water

.

Two years ago, National awarded $7 million in grants to local businesses. As then-Science and Innovation Minister Wayne Mapp said,

… research science and technology was the way to create jobs, economic growth and a higher living standard for the country.

“To that end, it is vital that high-tech, exporting companies maintain their competitive edge in global markets.”

Of  a total figure of about $50 million, $7 million was awarded to high-tech companies;

Core Technology: $629,400

Open Cloud: $2,394,920

Xero: $4,040,000

TDB Recommends NewzEngine.com

.

$7m grants for Wellington tech businesses

Acknowledgment: Fairfax Media – $7m grants for Wellington tech businesses

.

So far, so good; National assisting small-medium businesses to build and hopefully hire more staff.  What could possibly go wrong, you ask?

Well, this is the National-led government we’re talking about here…

Fast forward to 2013, and on 1 May, Revenue Minister Peter Dunne announced

… the Government’s biggest ever overhaul of a Government IT system – a $1.5b upgrade of the department’s “First mainframe” computer system.

Mr Dunne admitted the system was “fully stretched” and a 10-year project to upgrade the system was required.

He said he wanted to make sure a Novopay-like situation could be prevented in the roll out.

“It’s fair to say the revenue system is at capacity, and the Government recognises the need for a substantive transformation programme to shape Inland Revenue to best serve New Zealand in the future”.

Acknowledgment: NZ Herald – $1.5b upgrade for IRD’s ‘fully stretched’ computer system

Aside from the extraordinary cost of such a project – $1.5 billion!?!? – which even rightwing blogger, David Farrar has questioned (see:  Drury on IRD computer system) – this would be a prime opportunity for local IT businesses to get stuck in and tender for the project.

Companies like,

Core Technology

Open Cloud

Xero

These companies, remember, have been given $7 million of our taxes to grow their businesses.  The IRD project would be ideal to fulfill those expectations of growth.

Except – and remember, this is National we’re talking about – the criteria for tendering excludes most (if not all) local IT companies,

The information technology industry is crying foul over the criteria set by Government departments to work on multi-million dollar contracts.

A lobby group, backed by the Green Party, says the Inland Revenue Department is making requirements too hard for local companies to meet so contracts are going offshore.

[…]

Local firms say the criteria meant they couldn’t bid for the job.

You have to have $400 million worth of assets for example, it makes it very very difficult for New Zealand ICT companies to get over those bars,” Green Party co-leader Russel Norman claims.

Acknowledgment: TVNZ – IRD under fire for hiring international firm

What New Zealand company holds $400 million worth of assets?

Not many, if any, to quote The Scribe.

Unsurprisingly, the criteria was written by  French multinational Capgemini – one of the world’s largest IT consultancy companies.  The same company,  Capgemini, has also been hired to  “advise” on the tender process which is worrying the  IT industry that it  will be cut out.

This, to put it mildly was met with disgust and derision by local New Zealand IT companies such as Xero CEO, Rod Dury, who wrote a scathing op-ed for the NBR on 2 May,

The New Zealand Government has recently agreed to spend $1.5 billion to redo the New Zealand tax system.

To anyone in IT this is an obscene amount of money to spend on any software project.

From the outside it seems like a slow moving train crash reminiscent of earlier Big Bang projects that always blow out if they are ever delivered.

It reeks of global consulting firms winning the business and then rapidly hiring a bunch of grads and putting them up in hotels for years.

It’s just not smart.”

Acknowledgment: NBR – Dear IRD: how to shave $1b from your $1.5b software spendup

Rod Dury points out,

“A $1.5 billion  injection into local service companies, that are world class, would grow an industry. Government spending of this magnitude should see numerous other benefits.

It’s easy to say nothing but the fact is government officials have no idea what’s reasonable. The companies with the budgets to win these projects are the people officials meet.

To a well meaning amateur $1.5 billion seems a massive amount of money for a relatively moderate volume transaction system.”

Acknowledgment: IBID

Far from being a nay-sayer, he then offers four positive, practical, constructive suggestions how the IRD (and National) should proceed on this issue.

This blogger concurs with Mr Dury.

We’ve  had previous disasters with INCIS (American IBM); Novopay (Australian); and problems with imported locomatives (Chinese) – projects  which could, and should,  have been built here in New Zealand, with money going to local workers and firms.

This is not left-wing fantasy, this is fairly obvious common sense. We can do it; we have the skills; the nous; and the determination.

Aside from generating local  jobs and business growth here in New Zealand,  Xero’s Rod Dury sez we can build a new system for IRD for far cheaper than the $1.5 billion mooted by Peter Dunne and others,

But rather than just criticise here’s some practical suggestions I’d offer to to see if we can save $500 million to $1 billion in spend.

Acknowledgment: IBID

Rod Dury did not mince his words,

This just flies in the face of best practice in the way New Zealand companies have been building world-class software really for the last five or 10 years.”

Acknowledgment: TVNZ – IRD upgrade another potential train wreck – expert

So why isn’t National giving local companies the opportunity to bid fairly for the contract?

Why give grants worth millions of tax-dollars to  local companies if this government is not prepared to subsequently support them with contracts?

What was the point of this?

.

.

= fs =

10 COMMENTS

  1. National since Muldoon does not believe that Kiwis can do anything. The idea that foreign is better is written into their DNA, so that we end up obeying Washington and importing Heads of Department from the UK. And now, software from France.

    • The political right in NZ is, and always has been, of the opinion that we can’t do anything and that we must import almost everything elsewhere. As far as they’re concerned, the only thing we can do is farm. It is this lack of belief in NZ and NZers that make helps them such a bad government for the country.

      The other reasons is that they’re a bunch of socio/psychopaths who really only care about themselves and their rich mates.

  2. In an alternative universe the government didn’t post this requirement, they gave the contract to a small country on a financial knife-edge that could afford to bid low because of their low asset levels, that company fell over due to lack of assets and the government is being castigated on this blog for their financial irresponsibility by allowing companies existing on debt and leveraged assets to bid, rather than some nice stable company with a large asset cushion.

    • Assets have nothing to do with ensuring the success of a SW project.
      Large assets might represent your large cushion; something to fall back on when things don’t work out; almost like you’re planning for failure; right?
      But, guess what, those assets are always preserved because the failures are “shafted back” to the customer anyway [and sometimes with justification].
      To ensure success, you need a firm with a track-record; passion, commitment and demonstrable “deep domain expertise” of the area being computerised; or at least your local consortium should include such a firm.

  3. What the NZ government really needs is an in house IT department to develop this stuff. It’s got the economies of scale to support it and having everything developed in house would build consistency across departments.

  4. Key is a Wall Street and Hollywood puppet.
    Key lives in Hawaii.
    Key does not care less about NZ.
    Key brown noses his yankee mates.

    • Pete, it appears you may be in error. When I contacted Rod Drury on this issue he responded via Twitter, he replied on 4 May;

      Rod Drury ‏@roddrury 4 May

      @fmacskasy @clarecurranmp the companies that should be doing it are Intergen, Datacom, Simpl, Optimation. Works class local services biz’s

      He actually suggests other companies that could be involved – not his own.

      Also, you refer to “consultation”. There is no indication that Dunne is consulting with Rod Drury. That point is not made on that Q+A quote you offered,

      Well, we’re working closely with Rod Drury. I’ve talked with him on occasions. I know he meets with the commissioner of the department regularly.

  5. The people who work on these projects regardless of if they are a foreign company or not tend to be NZers. It is their NZ based subsidiaries who do the majority of the work.

Comments are closed.