Centrelink overhaul will need more than just cash

History  is about to repeat itself as the Abbott government embarks on a mammoth project to replace Centrelink’s core IT infrastructure central to the ­delivery of $150 billion in social security payments annually.

Joe Hockey all but gave the green light when he told radio station 3AW last week that the welfare agency’s 31-year-old mainframe system was “in bad shape” and would cost “billions” to upgrade.

The news sparked fond memories for Kevin Noonan, who in his younger days played a vital role in the original design of the system in the 1980s.

The Treasurer wants to overhaul welfare and payments as he prepares to hand down his first budget next month but the ageing Income Security Integrated System will be a challenge.

“My overwhelming concern is that it is inhibiting the capacity of the government, to some ­degree, to roll out policy that properly addresses the problems in the economy and the budget,” he told radio station 3AW.

He said he had “no choice” but to spend taxpayers’ money on the problem to refresh ISIS.

The ISIS model 204 mainframe was used by only one other customer in the world — the Pentagon.

The system is managed by Computer Corporation of America, which was acquired by Rocket Software in 2010. Model 204 is a database management system developed by IBM for its mainframes and compatible hardware.

Potential winners for the replacement project could be IBM, Fujitsu, Unisys, Oracle, SAP and consultancies such as Accenture.

More than $16 million was allocated to the Department of Human Services in the 2013-14 budget to conduct a business case for the replacement or upgrade of ISIS by 2015.

Mr Noonan, now research ­director with Ovum Australia’s government practice, said Model 204 had “paid for itself well and truly” in terms of depreciating assets. “Whoever thought it could have lasted 30 years?” Mr Noonan said.

He couldn’t recall the exact cost but said that at that time the “Stratplan project” was Australia’s largest systems development project in terms of both applications and accompanying infrastructure.

In today’s terms it would be the biggest system development and would eclipse the banks, Mr Noonan said.

He said the then Department of Social Security had largely batch systems for running payments and it was also responsible for other areas like assessment of pensioners. “The idea was to give everybody a computer on their desk and be able to interact more with customers,” Mr Noonan said. “It was a fundamental change in thinking,” and much more than a payments platform.

It was the equivalent of a modern-day banking system, which does everything related to managing a customer and not just paying money, he said.

According to Mr Noonan, the challenge for Centrelink was to rethink the core functions of the new system, what can be purchased off-the-shelf rather than designing a bespoke system and how to bring it all together. “This is a system that touches most people in Australia,” he said. “It needs to deliver services at scale.”

Mr Noonan couldn’t provide an estimated cost or timeframe for the replacement until more details were available.

Centrelink didn’t comment on the potential price tag and scope of the new project, citing federal budget considerations.

“Large developments are messy and have to be managed well where risk is the paramount consideration,” Mr Noonan said, adding that some of the code in ISIS “may not have been touched” in the lifetime of some of the people working on the system.

He said it was vital for cultural change issues to be addressed with any major transformation, especially since Centrelink, and the government at large, was moving towards a self-service model for services.