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When will Government walk the talk?

Perce Harpham. 07 March 2012, 7:03 am
When will Government walk the talk?

Perce Harpham founded Progeni Systems Ltd, New Zealand's first software company and a driving force in computing in New Zealand for many years. Perce was involved in dealing with Government for many years and in this article looks at Government contracting and local industry.

Our Government, like governments everywhere, says it will grow our economy by fostering high-tech industries. This is an improvement compared to fifty years ago when Government didn't even mention such industries.

Now they are even more explicit by singling out the IT industry amongst others. But the result is the same. Government, by and large, still has a primitive "Cargo Cult" mentality which believes that all good things come from overseas and "the skills do not exist in New Zealand". So long as these views exist then New Zealanders with skills in the areas concerned are better to migrate.

Examples of Government myopia have been plentiful down the years. Customs Department's requirements for tenderers last year was really explicit, in weasel words, that no NZ company would be permitted to bid. It looks as if IRD are going down the same track.

I have documented our experience in Progeni in the NZCS book Return to Tomorrow.  Others have done the same and they too have recorded the difficulty of obtaining overseas work when they do not have an example system in their own country.

It is almost always true there will be no NZ company which has installed a Government system of a type required. If that fact precludes NZ companies from bidding then there never will be such a NZ company. And NZ companies will struggle to get such work overseas. So how should Government deal with letting contracts for large systems?

The first thing is to appreciate that results are delivered by people not companies. And that there are many levels of expertise, skill and experience required.  Much of that is here but some particular parts will not be - it may have to be imported.

This was the case with my company Progeni's delivery of the Wanganui Computer software. There were 16 Progeni people involved, plus two from Government and six from overseas from our joint venture partners. Of these six only two were actually employees of the JV partners and the other 4 were specialist individuals contracted for the job.  We delivered it on time, on budget, exceeded the specification, made a profit and paid tax on it. The system ran for over thirty years and many will remember the $100,000,000 fiasco of IBM's attempted replacement of it.

The important thing is for Government to ensure that NZ companies can bid on its procurements and that their offerings are properly judged.

They should also remember that maybe one third of the price will be returned to them in NZ taxes from NZ residents and NZ resident companies. And NZ doesn't get tax dollars from workers in Bangalore!

Further than that it should not be beyond the wit of Government to set up their own Integrating Group which breaks down the large project into parts which are more digestible for local companies to bid on. The model is what was done in the US by NASA. Conceivably an Integrating Contract could be let separately and maybe even to an overseas company. It is essential in the latter case that such a company cannot bid on any of the components.

Any competent management evaluating and pricing a contract knows where its expertise is deficient and sorts out people who can make up the deficit. It is the people who will be delivering the project who need to be judged by the evaluators as well as the management of the company and its overall track record.

Big companies do not necessarily withstand such evaluations. They may be wanting to transfer an existing system. This almost guarantees that it will be obsolete, bloated with unnecessary functions and will have been built by people who are no longer available or who do not wish to transfer to NZ. Also, and importantly, the people will lack local knowledge.

I remember the Health system from some thirty years ago. One of the big accounting firms got the feasibility study, manipulated it into a contract for the whole job and then staffed it with a myriad of Americans from different partnerships in the US. I spoke to the Communications Project Manager nine months after the start of the job and he had only just discovered that we had no Sprint service in NZ. The project was abandoned at a cost of $28,000,000.

If we are to have high tech industries in NZ then there must be work here for them.

That is how they develop their expertise and the examples that they can show overseas. Without such work in the beautiful, small "pilot plant" that NZ should be then many innovative small companies are well advised to transfer to the more fertile ground next door. Yes, some things are possible "in the Cloud" but much depends on "pressing the flesh".  Exchanging your family for an airplane seat is not everyone's choice.


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