Bloated budget for Sydney Water CRM

Bloated budget for Sydney Water CRM

Summary: A report by NSW auditor-general Peter Achterstraat has criticised Sydney Water's implementation of a Siebel customer relationship management system which is running $34 million over budget and one-and-a-half years over schedule.

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A report by NSW auditor-general Peter Achterstraat has criticised Sydney Water's implementation of a Siebel customer relationship management system which is running $34 million over budget and one-and-a-half years over schedule.

Sydney Water

(Water supply image by recoverling, CC2.0)

"Sydney Water customer management system is now expected to cost $55 million, more than double original budget of $21 million and one-and-a-half years behind schedule," the auditor report said. The original due date was August 2009, but it is not set to be delivered until February 2011.

The expanded budget was due to external costs, according to the auditors. "The significant increase in budget is due to the system integrator costs," the report said.

ZDNet.com.au understands that IBM won the integration work, but it seemed prices were higher across the industry than the utility expected. "The budget for this stage of the project was found to be inadequate after receiving quotes from prospective service providers," the report said.

The schedule was dragged out by a year-and-a-half because of extending the design phase and a long procurement process. The integration work went out to tender in October last year.

Once implemented, the project, which also has a second phase, bringing expenditure up to $68.9 million, is expected to reduce operating costs by $1.9 million a year. It is also expected to improve customer service and reduce reliance on multiple unsupportable systems.

"Sydney Water is currently undertaking a major upgrade of its IT systems," said a spokesperson for the utility, responding to the report. "The reason why two large IT projects have exceeded their original budget estimates is because they were early estimates."

"They were done before detailed project design was undertaken and didn't factor in the cost of implementing the software and integrating it with Sydney water's systems. The higher costs became apparent once tenders were received from service providers. The increased costs are relatively small compared to Sydney Water's overall budget."

Another project, a roll-out of IBM's Maximo asset management system, is also running a year behind schedule and millions over budget. "The corporation underestimated the complexity of the Maximo consolidation project and this is the main reason for the $12.9 million increase in the project budget," the auditor said.

The replacement of Sydney Water's current systems was necessary, the auditor said, as they were "approaching obsolescence" and were unsupported by vendors.

Achterstraat was unimpressed by yet another NSW government IT project breaking its time and money bounds. Recently he also reported on the NSW government's licensing consolidation project which was nine years late and $23 million over budget. "It is imperative that government computer projects are well thought out, budgeted for and governed to deliver benefit to the NSW taxpayer," he said.

Sydney Water already has a bad record with IT spending after a failed billing system implementation in 2001. The agency has only just begun to receive funding for technology projects again.

To balance out the bad news, however, the audit report revealed that Sydney Water's project to replace a number of disparate document management systems with one which will allow better access and sharing of information was on time and budget. Sydney Water was looking for a project manager for the program earlier this year. The delivery date for that project is June 2011.

Topics: Government, Government AU, IBM

Suzanne Tindal

About Suzanne Tindal

Suzanne Tindal cut her teeth at ZDNet.com.au as the site's telecommunications reporter, a role that saw her break some of the biggest stories associated with the National Broadband Network process. She then turned her attention to all matters in government and corporate ICT circles. Now she's taking on the whole gamut as news editor for the site.

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3 comments
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  • Performance

    I wonder if the projects performance is linked to individuals performance KPI's. I doubt it.
    anonymous
  • Amateurs

    "They were done before detailed project design was undertaken and didn't factor in the cost of implementing the software and integrating it with Sydney water's systems..."

    I can understand an incompetent bunch of in-house IT try hards who obviously have had no experience delivering a successful project before, missing something as basic as implementation costs in their estimates, but if IBM didn't even "factor in" a ballpark figure for such an obvious stage of the project, they're patently a rank bunch of incompetent amateurs as well.

    Just remember this if you're ever given a project estimate by IBM.

    This is so typical of service companies that provide what their clients say want rather than what they need. These are people who don't know how to run IT projects, that's why they bring in the likes of IBM.

    For a service company to neglect to raise the subject and costs of implementation early on in the project is tantamount to criminal deception.
    anonymous
  • Return on investment

    So it is estimated to save $1.9M a year but all up costs close to $68.9M, sure there are other benefits but really it would take 30 years or so to break even on this outlay. Sure you always need capital outlay for IT systems but this is ridiculous. Now I know what my water bill is actually being used for.
    anonymous