EDS contract stifled Customs

The Australian Customs Service says outsourcing most of its IT functions to one vendor was successful, but resulted in lack of innovation and internal expertise.Through lessons learnt, Customs decided to move away from a single-vendor outsourcing approach.

The Australian Customs Service says outsourcing most of its IT functions to one vendor was successful, but resulted in lack of innovation and internal expertise.

Through lessons learnt, Customs decided to move away from a single-vendor outsourcing approach. "One provider can't do it all," Jo Hein, Customs national manager of IT market testing, said at a conference by analyst firm Gartner in Sydney yesterday.

She was careful to highlight that any blame should not be placed on its outsourcer, EDS.

Hein said other negatives included the fact that Customs had no direct relationship with sub-contractors hired by EDS. This 'middle man' arrangement made costs rise.

Subsequently, it is likely to split the EDS contract -- which ends in June 2007 -- into several key areas and pursue a multi-sourcing strategy. The organisation has already settled on Telstra to provide wide area network services and Cybertrust to manage security on its gateway and network perimeter systems.

Various business units within Customs have also made direct contact with individual suppliers to maintain specific applications. Hein said it was unusual in the public sector for IT departments to allow this to occur.

It has an IT budget worth around $120 million, she said, with about 80 percent being spent to just "keep the lights on", with the remainder on new projects and applications.

Multi-sourcing would allow Customs to gain access to best of breed specialists, Hein added, as well as removing the middle man, promoting competition and lowering costs -- all which should result in innovation.

The manager said her organisation is currently involved in finalising its outsourcing strategy, and would shortly begin to issue Request for Tender documents. Building the strategy, she said, had taken around five months, which was "a lot longer" than was initially estimated.

Assuming EDS is not successful in bidding for the new tenders, Hein said the time frame for changing the systems over to new outsourcers would depend on how the various Customs' IT functions were bundled.

"Six months would be an outside limit for the biggest components," she said. "Three months as a minimum for the smaller."

Customs has around 4,900 desktop systems and 700 laptops nationwide. Although these machines are not connected to the public Internet, another 300 standalone machines are, and remain isolated from its internal network.