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Australian Financial Review : October 17th 2006
FBA 029 Queue for a slice of $435mNSWpie Mark Jones Paul Edgecumbe says local assemblers have a leg-up in NSW. Photo:QUENTIN JONES Continued page 31 T echnology and telecommunications companies are lining up to bid for a slice of lucrative NSW government business worth $435 million. The NSW government last week held briefings for technology suppliers in which it outlined requirements for a computer tender worth $175 million and a telecommunications tender worth $260 million. NSW is Australia's second-largest government technology market after the federal government. The tender is a key element of the NSW government's People First strategy. Announced in July, People First is designed to achieve cost savings of $565 million over four years and improve public service delivery by using internet and e-commerce technologies. The new contracts are among the first tenders executed by the government's year-old CIO Executive Council, a cross-departmental governing body that heads up 17 individual working groups. Under the new strategy, the government is seeking to cut its technology costs by breaking down traditional silos of decision making that prevented individual departments from leveraging economies of scale by combining the purchasing power of each agency. NSW government chief information officer Paul Edgecumbe conducted an industry briefing last Wednesday to explain the PC tender. A key message given to suppliers was that the government required fixed prices for computers and telecommunications services across all departments. In a departure from previous tender processes, smaller agencies will no longer issue separate tenders for procuring PCs and notebooks. The agencies will simply order technology through a centralised e-commerce system from one of the approved suppliers. Mr Edgecumbe said the change was designed to eliminate the wasted time and expense of double bids --- once to become a government supplier and a second time on request by separate departments. The tender for personal computers, laptops and file servers has been broken down into two separate panels for computer vendors: one for vendors with Australian assembly plants and another for those without local assembly plants. Up to four vendors will be selected on the panel for computer manufacturers without local assembly facilities. No limit will be placed on the number of vendors that can be added to the panel for manufacturers with local assembly. Mr Edgecumbe said the strategy would give more local assemblers a chance of being selected by NSW government agencies. ''It's just in support of local assembly,'' he said. Local assemblers include Acer, ASI and Australian Stock Exchange-listed Optima. Other brands such as Dell, HP and Lenovo produce computers offshore. The NSW government has a pool of about 300,000 computers and it is estimated that one-quarter of these are replaced each year. Each supplier will be required to produce computers and laptops according to a single specification, TUESDAY 17 OCTOBER 2006 www.afr.com fINANCIAL REVIEW Edited by: email@example.com An IT revolution for taxpayers Peter Shergold is spearheading a public service overhaul. Photo: LOUIE DOUVIS Continued page 33 Julian Bajkowski The federal government plans to overhaul the way public service departments employ the internet to dramatically simplify the use of government services for business and taxpayers. In the biggest upgrade to the public sector's use of information technology during the coalition's 10 years in power, the reforms will require government agencies to adopt new work practices that will streamline everyday access to simple services. Hundreds of paper-based welfare benefit and community services forms will migrate to internet-based transactions, as the federal government changes its service delivery model. These include the much maligned 30-page application forms for family tax benefit and the baby bonus. People who register a change of address at one government agency will also be able to have their new details automatically carried though to all others --- including state registries and local councils. The reforms are intended to upgrade technology operations performed by several agencies including the Australian Taxation Office, Centrelink, Medicare and the Department of Family and Community Services and Indigenous Affairs. Spearheaded by public service chief Peter Shergold, the reforms are designed to make more effective use of the federal government's expenditure on information and communications technology which consume between $5 billion and $7 billion a year. Other moves include the widespread implementation of a controversial technology known as auto-population to allow computers at one government agency to retrieve the personal details and particulars of individuals from another. These include taxable income, welfare entitlements and concessional status. The system is already used between the ATO and Centrelink, and the government plans to extend it to Medicare, the pharmaceutical benefits scheme and pensions. Yesterday Dr Shergold, commonwealth auditor-general Ian McPhee and public service commissioner Lynelle Briggs launched new guidelines to govern how public sector programs and policies are implemented. Directed squarely at chief executives and departmental secretaries, the new rules hold major implications not only for how agencies buy their technology, but also how they measure its success. The government's attempts to put the internet to work for taxpayers has proved far from easy since Prime Minister John Howard promised in 1997 to have all ''appropriate'' services online by 2001. Although thousands of government websites have been created since, transaction technologies such as the 20-year-old Eftpos system are only now being adapted to provide consumer services such as electronic claiming of Medicare refunds. In August Mr Howard announced plans to pay up to $10 billion worth of Medicare refunds directly into patients' bank accounts using the Eftpos system. He said the new system would dramatically lower manual transaction costs of between $3.50 and $10, and remove the need to queue at Medicare offices to claim refunds that typically amounted to $35 per doctor's consultation. Dr Shergold acknowledged that the 1990s experiment with whole-of- government IT outsourcing had led Tech firms in Nasdaq comeback Emma Connors '' The Optium listing is good news for three venture capital firms.'' Australian technology is making a comeback on the Nasdaq sharemarket index in the United States, with several initial public offers in the works that will give investors welcome exposure to the world's largest market for IT equities. Optium Corp is in the final stages of becoming a public company after last week finalising the price range for its IPO. The company, which sells optical subsystems for use in telecommunications and cable-TV networks, is well known in Australia after it snapped up the Sydney tech firm Engana in March. Optium is shooting for an initial market capitalisation of about $US350 million ($466 million) after confirming it will sell 5.2 million shares for an estimated price of $US13.50 to $US15.50 a share. The Optium listing is good news for three Australian venture capital firms ± Starfish Ventures, Technology Venture Partners and Accede Capital (now managing the Ericsson-Deutsche Technology Fund) ± which swapped their interest in Engana for Optium stock. Venture capital firms are also following with interest the deliberations of Hitwise and Peregrine Semiconductor, which are understood to be contemplating Nasdaq listings. ASX-listed TZ Ltd is another tech firm with its sights set on the tech- heavy US exchange. ''If we can get a few really highly valued companies coming out of the venture portfolio here, it would give the market a lot of confidence,'' Technology Venture Partners executive director Allan Aaron said. Accede founding partner Mathew Koertge said the billion dollar-plus valuations now being achieved by tech ventures such as YouTube were one indicator of the tech industry's revival. ''A few years ago, every part of this industry was hard,'' Mr Koertge said. ''It was difficult for young technology companies to achieve targets, hard to raise capital and just about impossible for investors to make an exit. ''In the last few months, we've been raising funds for some of our portfolio companies and we've actually had a choice of term sheets from investors who were keen enough to compete against each other,'' Mr Koertge said. He noted that the cost and resources involved in complying with US regulations had ''raised the bar'' for Nasdaq listings. On Friday, intelligent fastening technology developer TZ gave some idea of these costs when it announced the proceeds of a $20 million convertible note placement would be used, in part, to help fund its Nasdaq listing. The high cost of a Nasdaq listing meant that when serial entrepreneur Larry Marshall wanted to take his latest venture public, he chose to do so on the Australian Stock Exchange. His optoelectronics firm Arasor makes its ASX debut in the next couple of weeks.