CenITex to become service “broker”

CenITex, the Victorian government’s troubled ICT shared services agency, appears to be planning to shift from a provider to a broker of ICT services.

It is believed CenITex chief Michael Vanderheide, briefed staff on May 20 about the shift in direction at the agency.

The briefing slides – which are still yet to be verified – were reportedly obtained by Melissa Fyfe, a journalist at The Age, who subsequently posted them online.

CenITex had not responded to CIO’s request to verify the documents at time of publication.

Although Vanderheide’s alleged presentation indicated he didn’t know all the details yet, the slides indicate the Victorian government appears to be favouring a move to outsource four core desktop, processing, storage and network services, which are currently being provided to agencies by CenITex. Under the new scenario, CenITex would still retain core management functions.

“Evidence supports approaching the market for services in all four of these areas,” one of the slides states.

One slide said that the agency’s current operating model is under pressure from supply side forces such as new capabilities around cloud, and demand side forces such as utility ICT models that challenges the agency’s cost structures. Budgetary constraints, and pricing and cost transparency problems were also causing problems.

According to the presentation, “lower costs with vendors were driven by a mix of factors we can replicate” such as new technologies, labour, service levels and standardisation.

The presentation said where the agency’s costs differed, “approximately 15 per cent was driven by scale differences and the rest related to the complexity of our environment.”

The presentation also said “about 75 per cent of desktop, storage and hosting environments are legacy and our customers don’t have the funds to migrate” while “close to 80 per cent of our environment is fixed cost” and “revenues are expected to drop or not grow for 3 of the 4 service streams.”

CenITex has come under fire in recent times. Last year, the agency was the subject of the Victorian Ombudsman’s report after the ombudsman heard allegations of improper conduct by a whistleblower.

Since then, the division at the heart of the investigation, Efficient Technology Services (ETS), has been closed and the agency cut 200 staff.

Vanderheide was hired as CEO of CenITex in July 2011. In his report, the ombudsman acknowledged that “he [Vanderheide] is taking steps to improve CenITex.”