Govt writes-off $440m IT project

The state government has decided to write off a $440 million investment in its Office of Shared Services, announcing today that it is abandoning the plan to centralise finance, payroll and procurement functions in one agency.

The plan, initiated by the former Labor government in 2005, was described by premier Colin Barnett as fundamentally flawed and outrageously expensive.

"It is simply failing to deliver what it had promised," Mr Barnett told journalists.

"It was increasingly evident that it was flawed from the beginning."

When the ambitious plan was launched in 2005, then treasurer Eric Ripper, said it would cost $82 million, be completed in 2007, and deliver annual savings of $57 million, largely as a result of reduced staffing in government agencies.

Mr Barnett said the cost had escalated to $444 million, the system was still not complete, and the 58 agencies using OSS were complaining about poor service delivery.

Today's decision follows a review by the Economic Regulation Authority, which recommended that the least cost option was for OSS to be decommissioned.

"The ERA's analysis indicates that decommissioning the OSS represents the least cost and most certain option for delivering corporate services," Mr Barnett said.

"There remains considerable work to progressively decommission the OSS, including how to best leverage off existing systems and continuing procurement services," he added.

"The impact on the budget will also need to be fully considered."

Mr Barnett said trying to bring together finance and payroll functions for 150 agencies with staff covered by dozens of different awards was overly ambitious.

He noted that the Queensland government had recently made a similar decision.

Mr Barnett said one of the tasks ahead was to sort out commitments with various contractors. These include IT firm Oracle.

Finance Minister Simon O'Brien said an implementation committee chaired by the director general of the finance department, Anne Nolan, would guide the decommissioning process.

"The committee will include representative directors-general and CEOs, and an independent person," Mr O'Brien said. The independent person has not yet been selected.

"It will determine the best way forward to decommission the OSS including working through budgetary impacts which will be an important component of the process.

"Work on the implementation process will start immediately.

"I would like to emphasise that the staff at the OSS have worked very hard and their efforts have been valued by the Government.

The Premier said the government would continue to pursue centralised procurement.

Also see Mark Pownall's analysis: http://www.wabusinessnews.com.au/en-story/1/90140/Analysis-400m-cost-for-big-government-