End of IT shared services experiment looms for SA govt

The last agency using the South Australian government's shared services body for IT support has flagged its intention to leave, a move which threatens to put an end to the state government’s failed effort to centralise technology services.

The state's public sector minister Susan Close told a budget estimates committee last week that Shared Services SA was in talks with the SA Attorney-General’s Department about a transition out of their service arrangement.

“It is possible” the department might take its IT back in-house, she said.

The AGD would become the latest agency to pull out of the IT arrangement following the state transport department late last year. Transport's move left a $5.9 million hole in SSSA’s income for the 12 months to June.

The departures mean Shared Services SA is likely to be be left supporting the IT needs of only its parent agency, the Department of Premier and Cabinet.

It will, however, keep delivering the bulk of its corporate services - such as e-procurement, payroll, financial services and accounts payable - to agencies in the South Australian public service.

When the state government's 'tranche 4' project to expand shared services into IT launched in 2010, the government initially opted to make migration to the arrangement mandatory for agencies.

But it was forced to pull the onboarding the following year after agencies pushed back against the effort. It later also stopped funding the onboarding program.

As a result, the scheme never achieved the economies of scale originally envisioned.

“The challenge is that there was not really a transition in the first place,” Close said last week.

“These are matters of judgement, and that is the judgement that has been made”.

The 2015 SA budget papers (pdf) revealed a continued deterioration in the finances of SSSA that will not be helped along by the latest agency departures. In 2015-16 its costs are expected to outweigh its income from agencies by just over $7 million.