The IT programme to upgrade the New South Wales school finance, HR and student management system, called Learning Management and Business Reform, had a budget of $483 million and was projected to be rolled out by 2014. The project was slated to save $139 million per year. More than a year late and almost $100 million over budget, 2,000 schools are yet to see the upgrade. In a bid to improve the outcomes of large IT projects, the NSW Government has hired the Boston Consulting Group to create a strategic, whole-of-government framework for best practice ICT project delivery – a three month project at a cost of $863,500.
IT project overruns are an all too common phenomenon. These overruns can cost both time and money to companies; while in the realm of digital transformations, up to two thirds fail according to a recent research. As legacy systems become too expensive to manage, and as demand increases for cost cutting and automation, the introduction of computer systems that manage a range of services – at what appears to be cut costs – is rising.
In 2006 the Learning Management and Business Reform (LMBR) programme was signed off on – the computer programme would replace a range of siloed legacy systems to provide more than 2,500 schools in New South Wales* (NSW) with a one stop solution for finance, HR payroll and student administration. The programme had a budget of $483 million and was projected to be rolled out by 2014. The LMBR was at end-state estimated to realise savings of $139 million per year.
According to recent figures the budget has been overstepped by $90 million, while the programme itself is yet to be fully implemented. As it stands, around 2,000 schools are still awaiting the upgraded SAP-based finance, payroll and student management solutions. The originally estimated cost saving may too have been significantly overstated, with a more recent estimate placing benefits at $26.3 million per year. The programme was also split in two, with the department opting to rollout the finance and student administration functions to high-schools later this year, and within two years to primary schools.
A number of issues were flagged as causing issues in the development of the LMBR, related primarily to ineffective governance and programme management. To combat future issues with the development and rollout of IT programmes within the NSW local government, the Boston Consulting Group (BCG) was awarded a three month contract to create a "strategic, whole-of-government framework for best practice ICT project delivery”. The contract is valued at $863,500.
To tackle issues such as unclear project expectations, as well as governance and project management issues, a clear guide for ICT investments focusing on state priorities will be developed by BCG with the target of reducing budget blowouts such as that of the LMBR.
While the blowout of the LMBR’s budget has been significant, analysis from BCG suggests that value for money may still be realised if a cumulative payback of $80 million after 15 years is realised, or through the development of additional, unaccounted for, savings from the project.
* New South Wales is a state on the east coast of Australia and home to Sydney, the nation's most populous city.