Hey big spender: Centrelink's IT dept

news analysis Centrelink continues to allocate substantial amounts of capital to IT projects, with multinational technology giants as well as local companies grabbing a piece of the welfare agency's pie.

Like most government agencies, Centrelink is legally required to publish contracts, standing offers and purchase orders it signs above the value of AU$10,000. The vehicle for this disclosure process is the federal government's AusTender system.

ZDNet Australia's research into contracts reported by Centrelink since October 2005 suggests that the agency has allocated a substantial portion of its IT spend to international services giants IBM and CSC.

Centrelink reported AU$42.6 million and AU$34.6 million in deals signed with Big Blue and CSC, respectively over the last year. Some of these are multi-year contracts and purchase orders within existing agreements.

The majority of the IBM work was listed as a four-year, AU$31.7 million transaction consisting of a variation to Centrelink's "IBM Open Enterprise Offering", however Centrelink reported over 40 other contracts with IBM and more than 50 with CSC. At least some of this business related to Centrelink's project to implement the federal government's Welfare to Work package of reforms -- which affect a substantial portion of Centrelink's IT systems.

"CSC provides project services related to data warehousing," a spokesperson for Centrelink told ZDNet Australia via e-mail.

"IBM provides maintenance and support services for existing, distributed one-time charge software, and hardware products as well as infrastructure software and support to establish a staging and delivery environment and an extension of the Linux laboratory."

Centrelink is also currently involved in the third-year of a five-year, AU$312 million IT refresh announced in the 2003-04 budget. It is likely that many of the projects and parties mentioned here are contributing to that process.

If telecommunications is added to the mix, the biggest winner would certainly be Telstra, which pulled in some AU$45.4 million of reported contracts, including a three-year, AU$31 million deal signed in August for outbound telephone calls and mobile services.

Telstra also nabbed a one-year data communications contract worth about AU$7.3 million, in addition to inroads made by its subsidiary Kaz.

In comparison, the nation's second-largest carrier Optus was only awarded close to AU$4 million of deals, mostly comprising satellite services.

The second tier
A number of other parties picked up varying, but overall lesser amounts of work from Centrelink over the same period.

Telstra's Kaz nabbed a total of AU$22 million for Welfare to Work changes, among other items, while network integrator Dimension Data was awarded AU$19.7 million to upgrade Centrelink's core network and switching infrastructure with Cisco, RSA Security (owned by EMC) and Senetas hardware.

"Kaz provides expert services to support the development and management of some IT projects," Centrelink's spokesperson said. DiData has a long-running relationship with Centrelink dating back to the agency's first major network upgrade in 1993.

Some other interesting second-tier suppliers (in terms of amount allocated) include Sun Microsystems (AU$18.3 million), Acer (AU$14.5 million) and SAP (AU$10.3 million), which all supplied the hardware and software products.

Centrelink signed a deal in March with Acer that is expected to reach a value of AU$30 million over time and cover some 24,000 desktops, while most of Sun's total related to server hardware and associated services. The SAP business refers to licensing fees for its popular enterprise software, particularly the mySAP business suite.

One surprise entrant in Centrelink's top ten was the little-known Computer Corporation of America (AU$9.7 million). Centrelink purchased several pricey software enhancements over the past year for CCA's Model 204 data management solution, which is believed to form the basis of an in-house application.

Managing the horde
The Centrelink spokesperson said the agency had a centralised contract management unit, which was responsible for managing the thousands of IT-related contracts signed each year. "Centrelink has in place a range of policies, frameworks and practices to make sure these contracts are always managed appropriately and in line with government regulations."

One might think it a tough job managing myriad vendors under one roof, but Centrelink has mechanisms in that area as well. "Several successful projects have been undertaken with different vendors co-located and working as joint teams to a Centrelink project manager," the spokesperson said.

The agency noted it conducted a "thorough and open tender process" in 2004/05 to establish service provider panels for application and integrated services.

When asked who the agency considered its strategic partners for ICT service delivery, the spokesperson nominated most of the big name vendors included in the list above, as well as Microsoft, Novell and Fuji-Xerox.