I hereby give notice that an ordinary meeting of the Finance and Performance Committee will be held on:

 

Date:††††††††††††††††††††††

Time:

Meeting Room:

Venue:

 

Thursday, 17 March 2016

9.30am

Reception Lounge
Auckland Town Hall
301-305 Queen Street
Auckland

 

Finance and Performance Committee

 

OPEN ADDENDUM AGENDA

 

 

MEMBERSHIP

 

Chairperson

Cr Penny Webster

 

Deputy Chairperson

Cr Ross Clow

 

Members

Cr Anae Arthur Anae

Cr Calum Penrose

 

Cr Cameron Brewer

Cr Dick Quax

 

Mayor Len Brown, JP

Cr Sharon Stewart, QSM

 

Cr Dr Cathy Casey

Member David Taipari

 

Cr Bill Cashmore

Member John Tamihere

 

Cr Linda Cooper, JP

Cr Sir John Walker, KNZM, CBE

 

Cr Chris Darby

Cr Wayne Walker

 

Cr Alf Filipaina

Cr John Watson

 

Cr Hon Christine Fletcher, QSO

Cr George Wood, CNZM

 

Deputy Mayor Penny Hulse

 

 

Cr Denise Krum

 

 

Cr Mike Lee

 

 

(Quorum 11 members)

 

 

 

Mike Giddey

Democracy Advisor

 

15 March 2016

 

Contact Telephone: †(09) 890 8143

Email: mike.giddey@aucklandcouncil.govt.nz

Website: www.aucklandcouncil.govt.nz

 

 


Finance and Performance Committee

17 March 2016

 

ITEM†† TABLE OF CONTENTS††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† PAGE

19††††††† Tamaki Infrastructure Investment

This report will be provided in a confidential addendum agenda.

 

23††††††† Information and Communication Technology (ICT)†††††††††††††††††††††††††††††††††††††††††††††††† 5 ††

PUBLIC EXCLUDED

Procedural motion to exclude the public††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† 13

C3†††††† Tāmaki Infrastructure Investment†††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††††† 13

††


Finance and Performance Committee

17 March 2016

 

Information and Communication Technology (ICT)

 

File No.: CP2016/03862

 

††

 

Purpose

1.†††††† To inform the committee of the findings a review of councilís Information Services (IS) department and outline a roadmap of future actions that will improve effectiveness and reduce costs.

Executive Summary

2.†††††† The councilís IS performance since amalgamation has been the subject of significant scrutiny. During this time, the councilís IS systems have provided the platform for the largest rating transition in New Zealand and a large scale desktop upgrade for around 9,000 users. More recently in November 2015, the Group Chief Financial Officer (GCFO) led the renegotiation of the SAP contract which will deliver savings of $33 million over the Long-term Plan. However, it is prudent that council undertakes periodic formal reviews to ensure the councilís IS strategy is fully optimised and delivered at the most appropriate cost.

3.†††††† On 19 November 2015, the Finance and Performance Committee resolved

ď(g)††† request the Chief Executive to direct staff to undertake further work to identify and minimise duplicated common back-office functions and operational costs, including HR, communications, and ICT across Auckland Council Group by ten per cent to save $15.2 million annually as estimated in the Ernst & Young report in option 3a (p65).Ē

4.†††††† In response, the GCFO initiated a review of the councilís IS functions. As a consequence of that work the GCFO believes that the councilís current IS strategy can be more fully optimised with a consequential saving of $36.8 million including an on-going saving of $10.8 million annually. This can be achieved by:

∑††† Prioritising the number of IS projects underway and stopping underperforming or non-essential projects.

∑††† Evaluating the IS functions that could be better performed by third parties.

∑††† Disestablishing non-critical IS staff functions.

5.†††††† The review noted that the councilís focus is to drive value at the council group level covering the council and its CCOs. The review recommends the council parent focus on getting itself Ďfit for purposeí before extending to the CCOs. This approach has been confirmed with the CCOs Chief Executives. The immediate work programme consists of five workstreams, closely aligned with the initiatives that will deliver the anticipated cost savings.

6.†††††† Council will pause consideration of the establishment of a Group Chief Information Officer (CIO) and will focus instead on the immediate recruitment (either external or from within current staff) of a Director of Information and Communication Technology (ICT) reporting to the GCFO. This role will be on a contract or fixed term basis of up to 12 months and will drive through the review recommendations.

7.†††††† The GCFO will provide the committee with an overview of the review and the proposed next steps.

 

Recommendation/s

That the Finance and Performance Committee:

a)††††† note the contents of this Information and Communication Technology report.

 

 

Comments

Context

8.†††††† The Auckland Council Group is a significant user of IS products, software and equipment. IS provides the backbone for core internal functions which includes rating, billing, finance, procurement, HR and desktop services. IS is also instrumental in providing services to the public, including library transactions, property consents information and licensing and regulatory services. It is therefore essential that Auckland Council has an effective and robust IS strategy that delivers a fit for purpose solution at the most appropriate cost.

9.†††††† Committee members will be aware that the council inherited over 5,000 legacy IS systems from the former councils. The large number of IS systems, of varying conditions and state, presented a challenge in terms of functionality, relevance and cost to maintain. Changes to the IS environment were initiated by the Auckland Transition Agency (ATA) and handed to the newly formed council to complete.

10.†††† The major IS drive since 2010 has been threefold:

∑††† To maintain the inherited IS systems and integrate them as best as possible into the councilís new operating environment.

∑††† To implement NewCore and decommission legacy systems across Finance, Procure to Pay, Property Management, Rates Billing, Consents and Customer Relationship Management (CRM).

∑††† To implement SAP applications across Asset Management, GIS data and reporting that leverage the core SAP Enterprise Resource Planning (ERP) structure.

11.†††† A schematic of the Auckland Council Group IS Roadmap is attached at Attachment A.

12.†††† The councilís IS performance to date has been the subject of significant scrutiny and speculation. Despite the large challenges of amalgamation there have been no material IS failures. Further, since amalgamation the IS network has assisted in the complex rates transition process without error and council has undertaken a large scale desktop upgrade for all of its users. Financial savings have also been secured, most notably the renegotiation of the SAP contract in November 2015 that will deliver savings of $33 million over the Long-Term Plan.

13.†††† Our largest IS project, NewCore, is progressing to its new delivery parameters following the approved reset in November 2014. Several NewCore functions will go live across a third of the region in June 2016 (the Rodney, North Shore and Waitakere areas) covering customer interactions, licensing, property management and financial management. Rating will go live in July 2016 following the rates being struck as part of the 2016/17 Annual Plan process. Consenting and property information functions will follow in October 2016. NewCore is tracking to its revised budget and is expected to deliver benefits of $58 million by 2022.

14.†††† Managing the councilís IS is a complex and challenging task that requires significant financial commitment of around $80 million to $90 million opex per year. Council now has the foundation to significantly transform its services. Staff and the public will begin to experience this from mid 2016 onward.

15.†††† Examples of what Aucklanders will see in the near future include being able to lodge and track consent applications from start to finish, easy access to property files, one location to book community facilities across the region and the ability to pay for council services and licenses online. For staff, there will opportunities to simplify our business processes, work more collaboratively and ultimately to deliver services in a more cost effective way.

16.†††† Despite the progress that has been achieved to date, it is prudent to reassess the councilís management of its IS network and test whether the current roadmap is the most appropriate and cost effective. In late 2015, the GCFO commissioned a review of the councilís IS functions and asked Ernst Young to provide a dispassionate assessment that drew upon work they had undertaken as part of the Alternative Sources of Financing review and their role in providing Independent Quality Assurance (IQA) to the NewCore project.

17.†††† The review also addresses the Finance and Performance Committee resolution of 19 November 2015:

ď(g) †† request the Chief Executive to direct staff to undertake further work to identify and minimise duplicated common back-office functions and operational costs, including HR, communications, and ICT across Auckland Council Group by ten per cent to save $15.2 million annually as estimated in the Ernst & Young report in option 3a (p65).Ē

Analysis and New IS Roadmap

18.†††† Following an analysis of the councilís IS functions and consultation with the GCFO, it is believed that the councilís IS strategy can be more fully optimised with a consequential saving of $36.8 million including an on-going saving of $10.8 million annually.

19.†††† This can be achieved by:

∑††† Prioritising the number of IS projects underway and stopping underperforming (over budget or behind schedule) or non-essential projects. This could deliver savings of between $23.1 million to $33.7 million.

∑††† Assessing the IS functions that could be better performed by third parties. An initial estimate indicates that savings of $2.1 million could be achieved through increased efficiencies and reductions in staff numbers if nominated functions were outsourced.

∑††† Disestablishing non-critical internal IS staff functions to deliver an estimated $1 million of savings.

20.†††† The review noted that the councilís focus is to drive value at the council group level which includes the CCOs. However EY strongly recommend that the council parent must focus on getting itself Ďfit for purposeí before extending the scope to include the CCOs. This ensures that focus and effort is not diluted. This approach has been confirmed with the CCOs Chief Executives.

21.†††† As an initial first step, the council will pause consideration of the establishment of a Group Chief Information Officer (CIO) and will focus instead on the immediate recruitment (either external or from within current staff) of a Director of Information and Communication Technology (ICT) reporting to the GCFO. This role will be on a contract or fixed term basis of up to 12 months and will drive through the review recommendations.

22.†††† The immediate work programme consists of five workstreams, closely aligned with the initiatives that will deliver the anticipated cost savings:

∑††† Workstream 1 Ė Reassess Project Priorities. This will lead to more responsible budget utilisation and allocation of resources.

∑††† Workstream 2 Ė Improve Project Delivery. This will improve project performance so that they are delivered on time, on budget and delivering expected value.

∑††† Workstream 3 Ė Actively Manage Workforce Performance. This will improve delivery performance and cost optimisation.

∑††† Workstream 4 Ė Re-align Shape and Size of IS Department. This is to ensure the department is the right shape, size and cost.

∑††† Workstream 5 Ė Group Roadmap Phase II. This will standardise the councilís IS platform and reduce SAP implementation costs.

23.†††† A schematic of the approach and proposed workstreams is provided at Attachment B.

Implementation

24.†††† The proposed changes will create a more robust IS structure for the council. With fewer projects we can focus more on those IS initiatives that are critical to the performance of the council. The changes will also deliver cost savings.

25.†††† Staff have been informed of the proposals.

26.†††† A workplan is currently being developed.

Consideration

Local Board views and implications

27.†††† The views of local boards have not been sought for this paper. Improved operational performance and cost efficiencies achieved through the IS transformation will ultimately benefit local boards through the delivery of improved operational and financial outcomes.

Māori impact statement

28.†††† A Māori impact assessment has not been undertaken for this report, but Māori outcomes achieved through council interventions will ultimately benefit as a result of improved operational and financial outcomes.

 

Attachments

No.

Title

Page

aView

Auckland Council Group IS Roadmap

9

bView

ICT Proposed Workstreams

11

† ††††

Signatories

Author

Michael Quinn - Executive Officer

Authoriser

Sue Tindal - Group Chief Financial Officer


Finance and Performance Committee

17 March 2016

 

PDF Creator


Finance and Performance Committee

17 March 2016

 

PDF Creator

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Finance and Performance Committee

17 March 2016

 

Exclusion of the Public: Local Government Official Information and Meetings Act 1987

 

That the Finance and Performance Committee:

a)††††† exclude the public from the following part(s) of the proceedings of this meeting.

The general subject of each matter to be considered while the public is excluded, the reason for passing this resolution in relation to each matter, and the specific grounds under section 48(1) of the Local Government Official Information and Meetings Act 1987 for the passing of this resolution follows.

This resolution is made in reliance on section 48(1)(a) of the Local Government Official Information and Meetings Act 1987 and the particular interest or interests protected by section 6 or section 7 of that Act which would be prejudiced by the holding of the whole or relevant part of the proceedings of the meeting in public, as follows:

 

C3†††††† Tāmaki Infrastructure Investment

Reason for passing this resolution in relation to each matter

Particular interest(s) protected (where applicable)

Ground(s) under section 48(1) for the passing of this resolution

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.

s7(2)(b)(ii) - The withholding of the information is necessary to protect information where the making available of the information would be likely unreasonably to prejudice the commercial position of the person who supplied or who is the subject of the information.

s7(2)(h) - The withholding of the information is necessary to enable the local authority to carry out, without prejudice or disadvantage, commercial activities.

In particular, the report contains information relating to the provision of infrastructure which is the subject of an upcoming procurement process. Releasing this information prior would prejudice the commercial position of Panuku Development Auckland or Auckland Council.

s48(1)(a)

The public conduct of the part of the meeting would be likely to result in the disclosure of information for which good reason for withholding exists under section 7.