Procurement of software development and maintenance services for four business critical systems

Procurement of software development and maintenance services for four business critical systems
The Client: Australian Federal Government

The situation – Procurement of business-critical services

With the help of a small IT company, our client in the Federal Government developed four core IT systems to manage an ever-increasing case load. In the seven years since the start of this relationship, the systems have become more important to the client as more cases moved to the client’s online platforms. At the same time, the underlying Oracle Forms platform has become end of life and required significant effort to be ported to a newer technology platform. The workload associated with ensuring the reliability of the systems and developing new functionalities has become too much to manage for the current service provider.

The project – Four work packages to achieve value for money

Our client engaged Grosvenor to run the end to end procurement project. A series of workshops determined the critical success factors for the delivery of these services over five years. Tied in with this was a contract and performance management framework, service level agreements and a risk and reward model that incentivised good performance. This type of contracting approach was new to the client, but the benefits were quickly understood.

The services were split into four work packages, reflecting two service types (maintenance and development) across two different technology platforms (Oracle and Microsoft .NET). This was to give the market maximum flexibility to only bid for work that they could competently offer and ensured value for money for our client.

Grosvenor consulted widely in the business to clearly articulate in the procurement documentation what success looks like and how it will be measured. The specifications were based on describing the required outputs and the service levels associated to measure if a given output was achieved. We articulated what activities the service provider was responsible for and which would be retained by our client’s team.

The service providers were invited to view the source code of the systems in a data room and the cultural fit between our client and the tenderers was assessed during interviews. Parallel negotiations with the two preferred providers were completed using term sheets to keep track of items around draft contract non-conformances, pricing structure and operational issues. In the end all four work packages were awarded to a single supplier.

The outcome – Better system reliability, a development roadmap and higher stakeholder satisfaction

The contract with the new service provider was put in place in time before the current contract expired, following a three months’ transition phase. This ensured that the new service provider had sufficient time to train its staff on the client’s IT platforms and familiarise themselves with the typical problems that resulted from these systems. At the same time our client trained their staff in the management of contracts, making sure the contract and performance management framework included in the contract can be used as intended. This included the use of a Fee at Risk model, by which the service provider is rewarded is at least 80% of KPIs are achieved over a given six months’ period.

After this project concluded, the client used the procurement documentation and our contract and performance management approach for contracting other ICT procurement services. Grosvenor was retained to deliver advice related to the four core business systems.

Three years’ post the implementation of the new contract, the service provider has increased the reliability of the core IT systems of our client, have proven to be a pro-active service provider continuously improving the way the services are provided and increasing stakeholder satisfaction with the services from 3 out of 10 to 8 out of 10.

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