The Australian Government's Abandoned Infrastructure Outsourcing Program: what can be learned?

Abstract

Early in 2001, after a damning public report by the Auditor-General, the Australian Federal Government abandoned its highly promoted “whole of government” IT infrastructure outsourcing initiative. This about-face was greeted in the press with reports that the initiative was a “fiasco”. Yet a four-year case study conducted by the authors suggests a more complex picture. Like many other “selective” outsourcers of IT, the Federal Government had been led to believe that it was adopting a relatively low risk strategy that would, if well managed, lead to significant cost savings and operational benefits. Instead, despite having implemented many widely promoted “best practices”, the Federal Government found a substantial discrepancy between what outsourcing promised to deliver, and what was actually achieved. In this respect their experiences were no different from those of many other large IT organizations engaged in selective IT outsourcing, who responded to a substantial contemporaneous survey. This case study examines why the Government’s expectations were not achieved, and arrives at conclusions that have important implications for decision makers confronted with choices about sourcing IT service delivery.