Hard News by Russell Brown

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Hard News: The unstable Supercity

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  • Russell Brown,

    From a comment on another recent Standard post:

    Deloitte were lying about the cost, and they knew it

    The estimated timeline was somewhat more realistic, but the cost estimate of $200m was complete deception

    Auckland Council have also outsourced contracts for Data Center, infrastructure management as well as other IT service contracts

    To give a simple example: Building of a Virtual Server (base only) cost approximately $2k internally. Same server cost approximately $9k under the outsourced contract

    Senior Managers in the department had a major falling out with the Head of IT in 2013, a number of them resigned. The fall out was over the outsourcing of services with cost involved, which represented tens of millions worth in service and maintenance contracts, alone. The numbers emphatically supported keeping the services internal, yet the external contracts were signed

    The Head of IT, Mike Foley was walked out the door in November 2015

    It would be very interesting to know what conversations were had before Foley's abrupt exit.

    Auckland • Since Nov 2006 • 22850 posts Report

  • Sacha, in reply to Russell Brown,

    and from a comment on today's Standard post:

    The finance department should have had its files raided and audited years back. CFO Andrew McKenzie resigned in mid 2014. The CFO was the head of council IT as there was no CIO. Only a HoIT which was Mike Foley

    Ak • Since May 2008 • 19745 posts Report

  • Bart Janssen,

    I'm not in IT, but everything I have ever read and experienced suggests SAP was designed to destroy modern civilisation.

    Auckland • Since Nov 2006 • 4461 posts Report

  • Ian Dalziel,

    the golden city...
    Much the same as in Chchch then - insomauch as the powers-that-be don't know how to design a city of, and for, the future - apparently any forward thinking here can only arise in our 'Innovation Precinct'...
    .... the flagship tenant of which is Vodafone, I'm not holding a lot of hope there then...

    Christchurch • Since Dec 2006 • 7953 posts Report

  • Ian Dalziel, in reply to Bart Janssen,


    everything I have ever read and experienced suggests SAP was designed to destroy modern civilisation.

    Now I see that SAP stands for Systemanalyse und Programmentwicklung
    they sure have absorbed a lot of companies
    - but they are philnthropic it appears

    SAP is funding a project to assess and educate autistic children. It has also launched an initiative to hire employees with autism and Asperger syndrome, citing their intelligence in the IT field and attention to detail; SAP aims to compose 1% of its workforce with autistic people by the year 2020. In May 2013, 6 people had been employed

    Christchurch • Since Dec 2006 • 7953 posts Report

  • Daniel Carr,

    I work in IT, but in a small group doing in-house stuff. I really don't know how this can happen. How do you spend that much money on a computer system? This isn't a question just for the council, it seems endemic for these sort of projects.

    Think about it. With a very generous annual employment cost of $200,000 (salary, workspace, expenses, etc) $1.2 billion a year is 6,000 people! Hardware costs are (or at least should be) minor compared to personnel in any IT project. Anything a council wants to do can be done with open source software, so if you are paying vendors big fees, you have to justify this against saved labour. I cannot see vendor fees being that high here. Lets say $200 million for vendor fees and hardware. That sill leaves 5000 very good salaries.

    Unless there are more than 5000 people working on this, then someone is making an absolute killing. And if there are 5000 people working, what are they doing? To put this in perspective, Facebook had 6337 full time employees in 2013, and they had money to burn. https://www.quora.com/How-many-employees-does-Facebook-have

    Melbourne • Since Jun 2015 • 10 posts Report

  • Mike Moller,

    as a 50 year IT veteran I can only observe that for big organisations that adopt comprehensive foreign sourced software packaged solutions
    "plus ça change, plus c'est la même chose"

    The present outcome was pretty predictable especially so with the politically driven lack of transparency

    OK the IT situation is a costly and ineffective mess. BUT what about all the other aspects of the supercity that were driven through a similar haze of smoke and mirrors?

    What could convince anyone that the same sort of wasteful behaviour hasn't happened there also? (?waste water? ?transport?)

    Northland • Since Nov 2006 • 3 posts Report

  • Bart Janssen, in reply to Daniel Carr,

    6,000 people

    My experience with management suggests that they always believe that what is offered by some big multinational MUST be better than what can be produced by anyone they could hire.

    So if Deloittes offers SAP then it must be better than what could be produced by kiwis. As proof they can show you how much it costs.

    Your logic has no impact on them, they are culturally immune to it.

    Auckland • Since Nov 2006 • 4461 posts Report

  • Jimmy Southgate, in reply to Daniel Carr,

    With a very generous annual employment cost of $200,000 (salary, workspace, expenses, etc)

    My guess is that you might want to re-work that model if you're including all the other expenses. At 48 weeks x 5 days x 8 hours that would work out to less than $105 / hr.

    I would guess that some of the contractors/consultants would be earning significantly more than that hourly rate without including all the other expenses.

    Wellingtown • Since Nov 2006 • 103 posts Report

  • Rich of Observationz,

    My view on complex systems is that you have to proceed incrementally. If you noticed, it was some years between ANZ buying National Bank and the two banks merging systems and premises (it might have been longer, but Lloyds wanted their pony back).

    The other thing, which empire building IT management will kick back at, is devolving stuff. If the crèche wants to use APT, or the library Koha, then they should be enabled to make that choice.

    And finally, and I've said this before, the public sector needs to lose the empire building money-grabbers from their management hierarchy - a $200k salary cap would do this well, backed up by some contract-busting legislation as needed.

    Back in Wellington • Since Nov 2006 • 5550 posts Report

  • Rich of Observationz, in reply to Jimmy Southgate,

    Which is the problem with hiring your staff by the hour from a management consultancy. Given the likely timespan and scale, employing the people needed directly would make much more sense.

    Back in Wellington • Since Nov 2006 • 5550 posts Report

  • linger,

    How hard can it be to require in a contract that the final cost should bear some resemblance to the estimate provided?

    Tokyo • Since Apr 2007 • 1944 posts Report

  • Stephen R,

    Several things to consider:
    $200k per year is probably half what it's costing per dev, once you take contract rates, Project manager, and hardware.

    Long term projects in large institutions are crippled because nobody wants to tell the new IT manager that they can't do it, and they're pretty sure that if they say that they can do it, in five years either
    a) the person being asked won't be there any more, somebody else's problem
    b) someone else critical to the problem won't be there any more and they can blame them, somebody else's problem
    c) it might actually work!

    Thus at the start of the project the IT manager gets all the good news, and a few years down the track it all goes to pieces.

    As to expecting the final costs to look like the original estimate; the problem won't be sufficiently understood, or described, for anyone to have made an accurate costing. If the people paying get strict about how much they're prepared to pay, the people doing the work can get strict about doing what they were originally asked to do, which probably isn't fit for purpose.

    This is why large long-term IT projects go over-budget.

    Wellington • Since Jul 2009 • 259 posts Report

  • Helga,

    Thankyou thankyou I'm so pleased to see a sensible response that knows what it's talking about. The cries of woe and 'Auckland Council is out of control' are just so unhelpful,
    On another note - as a local board member I have been trying to find out about Council IT ever since AC began, but Boards are deemed never to need to know a thing about it. No, we cannot develop anything, no, we cannot know anything.... Every other piece of arcane infrastructure yes, but IT? nothing.

    New Zealand • Since May 2012 • 18 posts Report

  • Gregor Ronald, in reply to Bart Janssen,

    It's made in Germany - and it shows.

    Christchurch • Since Nov 2006 • 103 posts Report

  • John Holley,

    Auckland • Since Nov 2006 • 143 posts Report

  • John Holley,

    Should also point out that Deloitte was the lead, not SAP, on the original tender response.

    Auckland • Since Nov 2006 • 143 posts Report

  • Moz, in reply to Stephen R,

    expecting the final costs to look like the original estimate

    Worse, if the supplier commits to that they might actually deliver what you originally asked for rather than what you turn out to need. I've interviewed at one conslutancy that was very clear that if the client demanded a fixed price, fixed term contract they would be given what they originally asked for, at the price and time specified. Then they would be bent over a barrel for the refit.

    I've worked for more than a few companies that have in-house software development teams and it's hard to overstate the advantages. Yes, it costs a bomb to get a capable CIO/IT lead/team leader or whatever you want at the top of your pile, but once you have that the costs drop. You might not have the depth of expertise (cough) but you don't have the overheads and profit margins either. $100k salary doubled for overhead... then doubled again hired as a consultant.

    One of the major hidden costs is software that more or less works, most of the time. That kills productivity in your wider staff as well as the direct loss of "we can't do that the software doesn't allow it". From simple problems like retail "I can't sell that it's not in the computer" to truly woeful "we don't know how much division X costs because the computer can't produce those numbers in a meaningful way". I've worked in a number of small, in-house teams where one major part of our job was "whatever the company needs, today" rather than the OTS model of "buy what we can get" from someone selling "whatever we think the users of our software might want in a few months when we release it".

    Sydney, West Island • Since Nov 2006 • 1233 posts Report

  • Moz, in reply to John Holley,

    my bit along with some of the other CIOs.

    Caution, link leads to site run by idiots. "ad-blocker detected, piss off".

    Sydney, West Island • Since Nov 2006 • 1233 posts Report

  • Alfie, in reply to Moz,

    Caution, link leads to site run by idiots. “ad-blocker detected, piss off”.

    Seconded. Went there, found that and pissed off.

    Dunedin • Since May 2014 • 1440 posts Report

  • Rich of Observationz, in reply to Moz,

    “I can’t sell that it’s not in the computer”

    I've worked in retail, that's not a computer problem, it's caused when a supplier sends a consignment of product with a PLU that hasn't been loaded. Unfortunately, the system doesn't do telepathy, but the supervisor can often guess a price or look it up by name.

    Back in Wellington • Since Nov 2006 • 5550 posts Report

  • Brent Jackson,

    Back in the early nineties the small Auckland-based company I worked for put in a tender for the Telecom Calling Card project for $300k and 3 months. After it was successfully implemented on budget and only slightly late, the Telecom project manager confided to us that he thought it unlikely that we could do it, but took the punt since the other two tenders (from overseas companies) were $1.5M and $2.1M and 15 and 18 months development time. He figured it was worth a gamble, because if we completely failed it wouldn't significantly increase the time and cost of the project.

    From what I know now, I think that it was an extremely courageous move on his part. I wish more managers had the perspicacity to punt on small NZ companies, rather than pouring money into the coffers of big overseas businesses.

    Auckland • Since Nov 2006 • 620 posts Report

  • poffa,

    I like your metaphor, but barriers and signs won't save us here as they are being tested surrounding the $100 million + shonkey building the council bought. They oversaw the building of it, were warned of buying it but bought anyway and now the chewing gum fixing of the granite veneer is giving way.

    auckland • Since Jun 2007 • 31 posts Report

  • bob daktari, in reply to Brent Jackson,

    as consumers we're always advised to buy kiwi, yet big projects seem to always go offshore - nova pay, the trains and stock, IT

    imagine if we invested locally, maybe we'd have more of a knowledge economy - I guess this will soon by scuppered by tenders having to be open to all TPPA signatories now too

    auckland • Since Dec 2006 • 540 posts Report

  • John Holley, in reply to Moz,

    I just disable it on the fly, view the page and turn it back on again.

    Auckland • Since Nov 2006 • 143 posts Report

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