by Rodney Gedda

Defence CIO group plans for fewer suppliers in IT shake-up

Jan 19, 2010
GovernmentGovernment ITManaged IT Services

The Department of Defence will appoint one or more service providers to deliver IT projects and assist with its strategic reform agenda as part of a larger move to transform how services are delivered by agency’s internal IT organisation.

Defence consists of multiple business groups, each of which uses currently uses a combination of shared and division-specific IT infrastructure and application services.

With technologies and processes defined and acquired based on individual project and capability needs, the department has admitted that this approach to service delivery is becoming too costly and time consuming to maintain.

Moreover, Defence has found that business needs are “outpacing the capabilities” provided by the CIO group’s (CIOG) ICT Services and Technologies Operations Divisioný.

As a result, Defence is embarking on a strategic reform program (SRP) with a vision to deliver and sustain the Force 2030 milestone. As part of this program, Defence’s IT reform strategy must also meet SRP objectives.

Tender documents recently released by the department outline the desired changes and call for expressions of interest from suppliers. CIOG’s ICT Services and Technologies Operations Division will also hold an industry briefing in Canberra this week to discuss the program.

IT reform objectives include achieving savings of more than $1.9 million over the next 10 years by “rationalising, reforming and improving the Defence Information Environment (DIE) to support the armed forces and business reform objectives to 2030; rationalising and reforming sourcing arrangements to meet savings objectives, and establishing “a more manageable set of strategic vendor relationships”.

The new CIOG IT sourcing strategy seeks to move to fewer and “deeper” vendor relationships, reducing the number contracts and signing agreements of longer duration.

Defence bases its IT sourcing on five “technology bundles” covering distributed computing, centralised computing, terrestrial communications, specialist communications and applications.

A spokesperson for the Department of Defence told CIO it is too early to predict the likely number of ICT suppliers that Defence will have post-reform. However, Defence will review all ICT suppliers and contracts as they approach expiry.

The Distributed Computing Central Services (DCCS) tender only relates to the distributed computing (DC) bundle and represents the first stage in reforming sourcing arrangements.

This tender will consolidate five existing contracts that are approaching expiry within the next 12 months.

“The outcome sought is a single supplier (prime contractor) for all ‘centralised’ services within the DC bundle,” the spokesperson said.

“The second stage of DC bundle sourcing reformation will be to consolidate all distributed computing central and regional ICT services into a single supplier arrangement around 2014.”

The key milestones for the DC bundle include selection of the preferred tenderer by June 30 2010, followed by a staged transition of services to the new contract over the next year and pans to go back to market for a single supplier of ICT services in mid-2013.

“The current approach is to engage a single prime provider for each bundle. If this thinking changes prior to 2013, then this will impact future sourcing decisions,” the spokesperson said.

Pressing technology issues for the CIOG include SOE management, what should the architecture be for initiatives and capability and alignment of IT services and business strategy. A focus on core competencies and more collaboration with industry is also on the agenda.

CIOG management plans to view and manage IT as a “services business” from now on, transforming it from a “reactive, support and cost-driven organisation to a pro-active, responsive and business-driven organisation”.