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Health Group - IBM Global Services Australia
The Health Group comprises the Department of Health and Ageing (DHA) and the Health Insurance Commission (HIC). Its prime contractor is IBM Australia (formerly IBMGSA).
This is IBM's fourth annual report. In 2003-04 IBM exceeded all but one of the ID targets set out in the contract. Some issues that were in dispute with regard to out-of-scope initiatives in previous years have now been resolved by the contractor. In particular, IBM's breach notice with regard to its Wizard initiative was lifted following a settlement agreement between the two parties.
IBM 's industry development report was submitted within the timeframe agreed in the contract schedule. An independent review of this annual report was conducted as required in accordance with Australian auditing standards applicable to review engagements-AUS902 Review of Financial Reports.
In-scope achievements 2003-04
|
|
Target |
Achievement |
|
Australian Value Add (AVA) |
78.9% |
91.6% |
|
Payments to SMEs |
$20.7m |
$18.0m |
|
Total net employment-FTE |
246 |
253 |
|
Total regional employment-FTE |
227 |
253 |
IBM achieved most in-scope targets for Year 4. However, there was a shortfall in the payments to SMEs category. While over the four years of the contract IBM total SME spending has exceeded its set dollar and percentage targets, DCITA has asked IBM to investigate this shortfall in Year 4 further and propose appropriate corrective measures in Year 5.
Out-of-scope achievements, 2003-04
|
|
Combined Target |
Achievement |
|
Strategic investment |
$0.4m |
$0.9m |
|
Exports |
$22.0m |
$67.3m |
|
Total employment-FTE |
335 |
778 |
|
Total regional employment-FTE |
163 |
551 |
IBM originally proposed ten out-of-scope initiatives (as detailed below), many of them focussed on developing local SME companies. Several projects have been completed and some have been terminated prematurely and had their targets transferred to other initiatives. In total the out-of-scope initiatives results have exceeded the original targets, particularly in terms of export earnings and regional employment.
1. Wizard Information Services Marketing Agreement
Objective : IBM Australia committed to work with Wizard to develop and enhance the marketing of its WizDom client/server application development environment. This would build on IBM's previous agreement with Wizard to provide research and development resources for ongoing enhancement to the WizDom tool set.
Status : Little progress was made towards fulfilling this initiative and IBM and Wizard agreed on an alternative settlement arrangement in July 2004. The Department has accordingly lifted the outstanding breach notice it issued in relation to this initiative and the initiative is now closed.
2. Approved Systems marketing agreement
Objective: IBM committed to work with Approved Systems to assist in the local market development of its services. The objective of this initiative was to accelerate the uptake of Approved Systems' advanced methods of Internet applications development and its systems integration and consulting services.
Status: Although some initial investment in this project was completed, IBM was unable to continue with it when Approved Systems entered external administration. This initiative has therefore been terminated and its ID targets have been incorporated into the targets for Initiative 3 (APITSEC).
3. Asia-Pacific IT Services Export Centre (APITSEC)
Objective: IBM committed to establish the APITSEC to leverage from its current services export activities to promote the remote delivery of Australian IT solutions and capabilities throughout the Asia-Pacific region.
Status: APITSEC has continued to leverage significant investments into Australia. The establishment of enterprises such as the Linux Technology Centre (OzLabs) in Canberra and software development centres on the Gold Coast and in Perth have generated significant results for IBM and associated SMEs. Employment was high and over $50 million in exports resulted from APITSEC activities in 2003-04.
4. Australian IT Technical Assistance Centre (AITTAC)
Objective: IBM committed to build upon the Technical Assistance Centre established in Brisbane as a result of Telstra Enterprise Services' (TES - formerly Advantra) successful tender for the Group 5 services agreement, primarily servicing clients based in the Philippines and Singapore. This is the second stage of the initiative which was first developed under the Group 5 contract (see separate section).
Status: The AITTAC has performed very strongly against all indicators, particularly export earnings. As noted in the Group 5 report, following the dissolution of the Advantra partnership IBM is now incorporating all the achievements of this initiative into its results, instead of reserving a base amount for Group 5 as in previous years.
5. Lexmark printer manufacture and Asia-Pacific corporate accounting relocationObjective: Lexmark committed to establish operations to manufacture its high-end range of laser printers in its existing manufacturing facility in Sydney and to transfer the company's corporate accounting division from locations in Asia to the centralised Asia-Pacific headquarters in Sydney.
Status: Lexmark has completed its initial commitment to manufacture printers locally and to relocate the corporate accounting division to Sydney.
6. University of Ballarat e-Health Project
Objective: The contractor committed to assist the University of Ballarat's Collaborative Centre for e-Health (CCeH) to promote the capability of the Australian software industry to support government health initiatives. The CCeH worked with a range of IT and health enterprises to perform research and development in the application of electronic technologies to improve the provision of health care in Australia.
Status: This initiative is now complete with all funds expended during the first two years of the contract.
7. ASI Solutions
Objective: IBM committed to work with ASI Solutions to implement an Enterprise Resource Planning (ERP) solution to support ASI's proposed manufacturing and services operation in Darwin.
Status: This initiative was completed in the first year of the contract.
8. Telstra core network design
Objective: This industry development initiative involved Telstra awarding contracts for the roll-out of its core network on the basis that they included a provision for one per cent of the labour to be subcontracted to SMEs located in regional Australia. This was to be implemented through Telstra inserting a clause in the awarded contracts ensuring that the requirement be met.
Status: Due to difficulties in obtaining data from Telstra on the outcomes of this initiative, the Department has agreed to IBM's proposal to close the initiative and transfer its employment targets to Initiative 3 (APITSEC).
9. Industry training
Objective: IBM committed to employ 50 students per year for each of the five years of the Services Agreement. The amounts payable to each of students were $25 000 for the first year, rising by 4 per cent for each year after.
Status: The Cooperative Student Placement Program employed 105 students in
2003-04, most of them from NSW and Victorian Universities. This is more than double the agreed target. Of these, 32 were placed in IBM's Ballarat facility.
10. Synergy Plus (formerly Nettrack)
Objective: IBM committed to provide assistance to Synergy Plus to increase its annual revenues by $2.5 million per year over four years. Synergy Plus is a group of highly skilled UNIX and network-based computer professionals providing leading edge information technology services.
Status: A lack of achievement in the first two years of the contract led IBM and Synergy (with the Department's agreement) to restructure the project and redistribute the revenue targets over the last three years of the service contract. Company revenue continued to climb in Year 4 in line with the revised target, putting this initiative on track to achieve $10 million in additional revenue for Synergy by the end of the contract.