TechnologyOne in Brisbane City Council stoush, could lose deal

The ASX-listed group in embroiled in conflict with Brisbane City Council, with termination of its $122m contract threatened.

Adrian Di Marco blamed confusion around the project’s benchmarks and status for the stoush.

ASX-listed enterprise software provider TechnologyOne finds itself embroiled in a potentially damaging fight with the Brisbane City Council (BCC), with the city’s lord mayor Graham Quirk giving the company six months to deliver on a $122 million IT contract or lose the deal altogether.

The contract to upgrade 13 outdated customer service IT systems used by the council with a new local government systems (LGS) program was awarded to Technology One in June 2015. However, the project has been beset with problems, with an implementation delay of up to 18 months and potential cost overrun of up to $60m, according to the Brisbane City Council.

Scheduled to be completed by the middle of this year, the project is unlikely to be finished by the end of 2018 at its current state of progress.

With a review underway on the botched implementation, Mr Quirk said that “decisive and immediate” action was needed to get the project “back on track.”

He added that the decision to direct council officers to renegotiate the contract was based on information provided in a briefing on Monday.

Graham Quirk has threatened termination of the $122m contract. Picture: Annette Dew.

“On Monday Civic Cabinet received a briefing about progress of an independent review of the Local Government Systems Program that is being conducted prior to any further investment, to gain assurance that appropriate due diligence has been undertaken to ensure a successful outcome,” Mr Quirk said on Wednesday.

“Council stopped making payments to the service provider Technology One in October until it delivered on significant milestones.”

“This review is ongoing, but Monday’s briefing has already identified some looming problems and I am taking decisive and immediate action,” he added.

Apart from the six-month deadline, the renegotiation process will see the appointment of a systems integrator to assist in the system’s implementation into the council’s existing systems and design a viable alternate option to ensure that existing IT systems keep running as usual.

TechnologyOne has defended its work to date on the project, saying that the council bears much of the responsibility for the delays with the LGS project.

According to TechnologyOne, the council has already been provided with a completed and tested version of the software and the implementation delay is a direct result of the council shifting the goal posts since 2015.

“There appears to be confusion and misunderstanding within BCC on the history and status of this project,” CEO Adrian Di Marco said in a statement.

“It was agreed that BCC would be development partners with TechnologyOne on the award of the tender, but as the project progressed it became clear that BCC struggled with this strategy.”

“At the request of BCC the decision was made that TechnologyOne would complete the build of the new product before the project implementation continued. This change in strategy has introduced delays to the project.”

TechnologyOne further contends that the council requested substantially more functionality than was originally tendered, with the cost absorbed by the company.

“TechnologyOne found council existing business processes were not well defined when the project commenced, as such, BCC took the opportunity to document them clearly while the software build was completed,” the company said.

“This review has led to substantially more business processes being identified (500+, approximately 100 per cent more business processes) than was originally contracted.”

Brisbane City Council is the largest local government organisation in the Asia-Pacific region, with an annual budget of $3.4 billion. It manages more than 2.2 million transactions each year for activities such as rates payments, infringements and waste collection, that it is seeking to roll into the one program.

The average age of the current systems is almost 15 years and these outdated systems are increasingly costly to maintain.

Mr Quirk said the council has previously successfully implemented a $350m IT project that rolled 62 different IT systems into one and will deliver $450m in benefits over 10 years.