Boston Consulting Group was involved in the process that led to the Australian Taxation Office (ATO) signing a $604 million extension with IT outsourcer EDS, the agency revealed yesterday.
ATO CIO Bill Gibson
The ATO has been working towards breaking up EDS' monopoly on its IT outsourcing roster, splitting its $1 billion technology contract into three segments over the past few years; managed network services, end user (desktop) computing, and centralised (mainframe) computing.
ATO announced earlier this month that the managed network services contract was to go to Optus, but the other two contracts are yet to be awarded to suppliers. Although the EDS contract for the other two services was set to expire June 2010, the two-year EDS extension announced yesterday will move the changeover back.
"BCG have been back again and they've been a part of it", ATO chief information officer Bill Gibson told ZDNet.com.au yesterday.
BCG has had an ongoing relationship with the ATO since its first engagement in 2007 to report on the agency's ICT procurement strategy. Over the two years, the agency has spent almost $8 million on consulting services with the group. The titles of the contracts have varied from "ICT Sourcing Strategy" to "Provide Support to EUC bundle strategy" and "Provide strategic direction to Centralised Computing bundle" to the final contract from March this year to June — "Perform ICT sourcing strategy refresh and vendor projects function".
Along with obtaining the consultant's opinion, the ATO had also been gathering intelligence from the industry. It had put out an expression of interest to vendors who might be able to provide the required services last year. Gibson said the response the ATO received was that the transition of the non-network components it required could be done, but not by June next year.
Instead, the sourcing contract change would take another three years from now. "We require some 18 to 24 months to transition our very comprehensive datacentre environment from EDS to a subsequent provider," Gibson said, noting that the period consisted of six months of planning and 18 months for the transition.
Although he admitted the agency might have wished to transition more quickly, Gibson said the advice it was receiving was not to rush it. "We're not going to put the operations of the tax office at risk," he said.
The ATO mentioned savings in its release yesterday to result from the longer EDS tenure. According to Gibson, the reason savings could be made via an extension rather than via a new contract was transition timing. The extension would allow better running of the agency's desktops, more virtualisation of its datacentres, and improvements in "operational reliability", according to Gibson.
The official request for tender has gone out for the desktop contract, but not yet for the mainframe contract.
The ATO's end-user computing deal, worth around $60 million a year, has CSC, HP/EDS, Fujitsu-owned Kaz Group, Lockheed Martin Australia and Unisys still in the race. The mainframe contract, worth around $160 million per year, has been whittled down to Lockheed Martin, CSC, IBM and incumbent EDS.