Service provider mismanagement brings woe to NSW Councils

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Service provider mismanagement brings woe to NSW Councils

A rash of unpopular and forced council amalgamations across NSW over the last three years has produced technology train wrecks, and the state Auditor who unpicked the mess found plenty of known bad practices in the IT services sector contributed to the mess.

In the first substantive financial audit of NSW councils since amalgamations were initiated by former premier Mike Baird, auditors found councils are terrible at managing IT service providers and outsourcers.

The report lists 72 councils as outsourcing “at least one IT function to a third-party service provider” but keeping track of vendors doesn’t look like it is getting any easier.

51 councils were listed as lacking “clearly defined key performance indicators (KPI) in the Service Level Agreements (SLA)” with their suppliers. Another finding - “26 councils did not have a complete and accurate list of IT service providers engaged, along with the corresponding services provided.”

49 councils did not perform an adequate risk assessment before engaging the IT service provider, while “36 councils did not periodically assess the performance of the IT service provider”.

On the IT governance front, the news was even worse.

The audit found that a massive 94 councils lacked IT policies “over one or more” of the following critical areas:

  • IT security
  • IT change management
  • IT incident and problem management
  • disaster recovery
  • business continuity

To make matters worse, IT was cited as a high risk by an unreleased KPMG that assessed the council consolidation process ahead of the mergers. That report identified risks flowing from merging disparate financial, operational and asset management systems from as many as three councils into one.

Now NSW council IT chiefs are mopping up, and the mess isn’t pretty.

The integration burden has been so onerous that two councils, Hilltops Council and Maitland City Council were listed as needing extensions for their financial reporting deadlines because of system integration issues.

“The delay arose from consolidating and migrating financial data from three legacy systems into one new system for single entity reporting,” the audit noted for Hilltops Council.

Maitland Council cited “Issues associated with the transition to a new corporate financial management system and rating module.”

In the thick of the mergers are a range of software platform providers, including Technology One and Civica, which both stand to benefit as councils migrate off legacy or home cut systems.

Tech One in particular has called out growth from the mergers in its financial results.

Early warning signs ignored?

Many council IT chiefs privately warned state members of parliament that councils needed to standardise their tech platforms before the amalgamations rolled through because of the massive sectoral pressure IT systems mergers would exert.

The issue of IT risks was also flamed.

“Sixty-five councils do not have an IT risk register, and 44 councils do not regularly communicate IT risks to management and those charged with governance,” the audit said.

“It is important IT risks are identified and appropriately managed as councils rely heavily on IT for service delivery and financial reporting.”

What can’t be gleaned from the report, however, is exactly which councils are struggling the hardest in the fight to bed down their new enlarged tech estates, other than those missing the reporting deadlines.

Or whether the great systems merger is actually generating lasting efficiencies or a series of urgent fixes to simply keep things running.

Whichever it is, there’s no unscrambling the great tech omelette of council amalgamations.

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