CenITex to move from IT provider to broker

The Victorian Government looks set to make its shared services agency CenITex a broker — rather than provider — of IT, according to documents published online.

A presentation delivered by CenITex CEO Michael Vanderheide to staff on Monday, according to presentation slides published by an Age journalist, reveal the agency looks likely to outsource the desktop, hosting, storage and network services it currently provides.

CenITex’s operating model is “under pressure” from a smaller customer base, less available funds for asset refresh, and an inability to compete with vendors' lower costs, according to the documents.

An internal review, which commenced prior to the end of last year, found around 75 percent of the agency’s desktop, hosting and storage environment were legacy, but the funds to upgrade were not available.

The agency highlighted four options, including staying as is; pursuing incremental savings through selected opportunities; taking selected managed services to market; or taking all core services to the market.

Vanderheide indicated the latter as the preferred option due to the ability to offer faster transformation and lock in step changes in unit price.

The agency will begin issuing request for proposals from next month until March next year. It plans to have suppliers locked down by next July, at which time the transition to the new operating model will commence.

CenITex did not respond to request for comment from iTnews on the potential downsizing of the agency by the time of publication.

In the presentation Vanderheide told staff the agency did not yet know all the detail and the transition would take time.

Last year, evidence from agency whistleblowers forced an investigation into CenITex’s internal operations, which uncovered improper conduct and questionable procurement.

The investigation identified "failures in internal checks and balances; serious improper conduct; undeclared and inadequately managed conflicts of interest; and poor procurement and recruitment practices" in the agency’s Efficient Technology Services (ETS) division.

The Victorian Ombudsman report highlighted 19 of the most serious issues, which included cases of alleged nepotism, favourism and conflicts of interest informing procurement and recruitment.

The report found companies and contractors were awarded contracts up to $4 million in value without a competitive process. 

It also found CenITex employed a high proportion of contractors lacking the required knowledge of experience.

"Owing to a flawed, decentralised procurement system, such contractors were able to engage other contractors," then- Ombudsman John Taylor noted. "Unsurprisingly, poor practices developed as a result."

CenITex spent $159 million providing $153 million in services to customers in 2012, and recorded an operating deficit of $37.5 million against a budgeted deficit of $22.8 million.

It attributed the increased deficit to increased expenditure from new IT environments being designed and built while “significant” legacy environments still required maintenance; a drop of $9.9 million in reduced annual costs from the implementation of several initiatives related to ETS; and several projects being put on hold and cancelled.

During 2012, CenITex also poured $10.4 million into operational change within the agency.