Published on the 06/07/2023 | Written by Heather Wright
$532m IT spend expected amid billion dollar budget blowout…
US software company Infor has won the cornerstone $107.5 million contract to supply systems for New Zealand’s $2 billion to $3 billion water services reforms, with work now underway to migrate data from multiple systems to a single platform.
The Three Waters water services reform program will see 10 new publicly owned water services entities managing and delivering New Zealand’s drinking water, wastewater and stormwater services, which are currently operated by 67 councils.
Designed to help handle ever increasing costs for water infrastructure, which is estimated to be around $120 billion to $185 billion over the next 30 years, the reforms have proven contentious with some councils, including Auckland Council, opposed to plans for how the reforms would be carried out.
“The change from multiple existing IT systems to a single platform will deliver richer and more consistent data.”
The expected cost of developing and implementing the systems of record for the new water services entities is $532 million, with a contingency of $147.7 million.
Heather Shotter, executive director of the National Transition Unit which is heading up the changes, says the ICT systems of record project is critical to ensuring the success of the reforms.
“Systems of record are the core IT systems that support key business and operational processes for organisations,” Shotter says.
“For the water services entities, this will include financial and supply chain management systems, asset planning and construction, asset operations and work management, people systems, customer management and billing, data analytics and visualisation. The water services entities will not be able to operate water services without these systems.”
Documents show the systems of record are expected to account for 70 percent of implementation costs for all systems required by the new water services.
Infor is the incumbent at Auckland’s Watercare which is New Zealand’s largest water services provider, servicing 36 percent of the country’s asset base. Infor won the contract for a six week ‘platform discovery’ late last year, worth $349,000. Its win of the contract proper followed a closed tender process and will see its solution used by all entites.
Shotter says the need to work with a proven solution to manage technical migration of data and delivery risk was critical to Infor’s win.
“It is inherently more efficient to scale a proven existing system than to build a new one,” she says.
“We are confident it is the right system for the future, where bigger transformational opportunities lie beyond day one transition.”
The National Transition Unit says several local companies have also been awarded contracts relating to the Systems of Record project, including Ghost for the data migration portal, Harmonic for analytics, Integration Works for data integration and Cyma for systems architecture.
Documents released by the office of local government minister Nanaia Mahuta show a number of technical options were considered, with two shortlisted.
Several options were also considered for deployment, including using a mix of Infor and SAP.
Infor’s win will see all entities using its systems of record solution in what the documents say is the ‘lowest cost technical option, with the lowest delivery risk, least complexity and lowest change management requirement’.
“The Watercare Infor system has a proven track record of being scaled to other councils, including Tauranga City Council, Western Bay of Plenty District Council and Waikato District Council, for their systems of record needs.”
Shotter says the change from multiple existing IT systems to a single platform will deliver richer and more consistent data to enable more proactive water asset management.
“This means the ability to address issues before there is an asset failure that adversely affects customers,” she says.
“It will also support strategic investment in response to new demands from population growth and climate adaptation.”
The new water services entities are due to start operating on July 1, 2024. Auckland and Northland are expected to go live first, with the remaining entities ‘staggered’ out until July 2026.
All technology assets will be transferred to the entities, with the Crown expecting to recover the cost of purchasing and implementing the systems of record from the entities.
Meanwhile the overall cost of the reforms have reportedly already blown out by $1 billion, from an earlier estimate of $1 billion to $2 billion to a new estimate of $2 billion to $3 billion, with Simon Watts, National spokesperson for local government, saying three waters has been ‘a gravy train for highly paid consultants and contractors with around $280,000 a day being spent’.
National has said it will repeal Three Waters if it gets into power.
