The decommissioning of a shared government pool of IT services in Western Australia has resulted in a business bonanza for an Australian software vendor.
Brisbane-based TechnologyOne has stitched up deals with 21 of the 59 WA government agencies bringing their enterprise systems back in house after a centralisation strategy soured.
The WA government pulled the pin on its Office of Shared Services centre in July 2011 after a report by the state's Economic Regulation Authority found the project was over-budget and unlikely to deliver promised savings. Centralising IT service delivery was expected to save the government about $57 million a year.
The ERA report found the project had incurred costs of $401 million and achieved minimal savings for the 59 agencies it was servicing.
The Shared Services Centre ran an Oracle enterprise resource planning (ERP) software suite which was subject to a range of technical problems.
Agencies subsequently began
re-establishing their own finance, human resources, procurement and payroll systems in preparation for final shutdown of the centre in early 2014.
Besides TechnologyOne's One Government offering, other products on the state's common use agreement panel for financial and HR systems include Oracle, Peoplesoft, SAP SunSystems and Pronto.
The state went to tender recently for a contract administration system under a similar arrangement.
TechnologyOne founder Adrian Di Marco claimed the wins were evidence of a shift away from "big and expensive" multinational vendors and market resentment towards their delivery models.
Historically, Oracle and SAP have dominated the ERP market in the state and federal public sectors.
"We have people who 10 years ago wouldn't talk to us," Mr Di Marco said.
Oracle and SAP rely on third-party implementation partners, which can charge several times the price of the software to customise and install it. By contrast, TechnologyOne did its own implementations at much lower cost, Mr Di Marco claimed. He would not put a value on the body of work in Western Australia.
In recent years, TechnologyOne has focused its marketing efforts on pre-configured software which can be deployed with minimal customisation in less than six months. It has about 150 state and federal public sector clients. A growing number have opted for cloud services.
The firm was drawn into controversy in its home state of Queensland last year after it emerged it had donated to the
re-election campaign of Ros Bates and had four meetings with her after her elevation to the IT ministry.
While Oracle and SAP have historically been viewed as a safe choice, more customers now appeared willing to take a punt on lower profile alternatives, according to IBRS analyst Alan Hansell.
"I believe organisations will increasingly select tier two providers, such as TechnologyOne, with mature software and a cloud offering, based on user pays principle," he said.
"My only concern is the capacity of the tier two providers to implement when they are too successful and their resources are stretched."
Servicing all 21 WA agencies could push TechnologyOne to the limit of its capacity, Mr Hansell added.