You can’t buy innovation, you can’t get no satisfaction, and why we don’t buy NZ made ICT

NZInc-logo-sand-on-redOver the past few years I’ve been watching a couple of ongoing battles in the IT industry, particularly around buying innovation and the move by local IT industry to get more work out of government agencies, rather than going to the default international supplier model. The battles are ongoing and neither side is winning, what we are doing is spinning our wheels and burning cash while we all rail against the same issues.

So two issues. First, government doesn’t purchase enough local IT services and second, we need more “innovation”. Let’s deal with them one by one.

There are a number of arguments that Government Agencies make that stop the higher usage of New Zealand based IT Companies. I’ve heard them all, these are:

  1. They don’t have the capability.
  2. Plausible brand deniability.
  3. They haven’t dealt with anyone our size.
  4. They won’t, or can’t, get through the tender process or agree to our contract terms.
  5. The Department of Internal Affairs.

Let’s tackle these one by one.

Most New Zealand IT companies do have the capability and more importantly do have the ability to reach out within the IT community to bring partners and resource as needed. Don’t forget that the largest IT company trading in New Zealand is Datacom, who own the government market most effectively. This is a non-argument. NZ based IT companies are trading in the billions of dollars these days, onshore, and off, and are proven to be solid.

Plausible Brand Deniability is when a company buys the product or service from a household name. In IT, that is an international company, one of the “big six”, or the top IT companies on the planet. The reason for this is simple, if it all falls to pieces, then the executive can throw their hands in the air and say “but we hired the best!”

Interestingly, that choice to hire brand names is what is suppressing innovation. These companies are on a dead man walking path in most cases, having missed the new startup and disruptive business models. HP Cloud for example. We all know that the “big six” are deeply entrenched at board layer in NZ now and their model is to roll in interns at $180 per hour to fill in pro-forma scripts.

It suppresses innovation because these are dinosaur companies and dinosaur business models.

“They haven’t dealt with anyone our size.” An old favourite excuse. Well nonsense. The number of users these days, thanks to Cloud, is almost irrelevant. It can be three, three thousand, or thirty thousand, it makes no difference. This excuse often alludes more to the fact that they are so old, large, and full of red tape, that signing a contract could take about three years.

Which falls into category four. The terms and conditions of a lot of contracts are onerous and silly. They are. Hundreds of pages long, you need an array of lawyers, procurement people, and accountants to analyse them. It’s a gravy train. I’ve worked with a couple of agencies who’s contracts are two pages long. My god that is refreshing. It’s about trust.

DIA. Dear old DIA. Best of intentions, sometimes excellent results, but not actually delivering the results they promised in my opinion. Worse, messing in the market in some cases, in my opinion, to the point that many companies, local or otherwise, are locked out. What started as a good idea, decades ago, is now a complicated shambles.

Let’s look at why I think government agencies and private companies don’t buy NZ made ICT.

  1. A dinosaur attitude.
  2. Parochialism.
  3. Vendor immaturity.
  4. Poor requirements.
  5. Contract managers, Accountants, and DIA.

Dinosaurs still abound in certain sectors of government. No one every got fired for buying an “insert brand name here” product. Though, these days, that is become more and more of a dangerous proposition as the world moves from the old stalwarts to the new bloods. Thankfully, this is becoming less common.

We are insular. Parochialism is probably too harsh a word. But the theme is correct. It means a narrow-focus and slightly inwards looking. The real issue may be that we are so busy as IT workers just doing it, that we don’t have time to actually get out and explore what others are doing. And we have too. This is not a competitive environment. This is a small country at the bottom of the world (isn’t it grand) that needs to work together.

Shared services are not about the oldest government agency in New Zealand telling you want to consume because it’s mandated, shared services, and innovation, are about having the freedom to talk too each other and experiment.

But I wander.

Vendor immaturity. Whether you like or it not NZ IT you can be very immature and it freaks out large government agencies that are governed hard by risk. As good as your product is, running it out of a garage in Thorndon won’t cut it. Neither will not understanding simple industry standards.

Poor requirements. If we all had a dollar every time we saw a project launch to do “something, anything” we’d be rich. The dinosaur companies just soothe, soothe, soothe, until the business is won. This may also involve trips to see pretty lights and other flashing technical items in foreign parts of the world, via business class, etc.

Kiwi IT companies generally really want to get this right. So faced with an RFP that says “give me Data Virtualisation” and three paragraphs that talk about reducing storage footprint before referring a forty-two page RFP document is really not going to help.

Contract managers, Accountants, and DIA.

Somewhere along the IT journey in New Zealand we gave away our decision making power as IT professionals to contract managers and accountants. Both necessary in the big machine, but certainly not advised to be involved in complex business and functional discussions around IT.

We really do need to put them back in their place. One agency in town has over one hundred IT contract managers. Actually, that should be Contract Contract Managers. In other words they aren’t permanent, they are being paid a premium. For that one agency, the bill is around ten thousand per hour.

We talked about DIA. It is my opinion that they should move into a guidance role, not a mandating role. Mandating products in an explosively changing market is a fool’s errand. In fact, it is giving government agencies plausible brand deniability. They bought the mandated service, it was a shambles, they were told to do it, sorry about that, not their fault.

New Zealand IT companies, instead of railing against the machine, should simply get together and list agencies that are sympathetic to an fair and open tender process for all parties. They should also list agencies where it is highly likely they will never win business with.

As should international IT companies.

At the very least, this will stop an outrageous flow of money into tenders that are already pre-determined.

There is, in my opinion, a current gravy train of people being paid to try and solve this problem, when it seems to me that this is a lose-lose-lose result for all. Several initiatives have been underway or are about to happen and as far as I know, none has made a jot of difference.

All the tech hubs in the world will not solve these issues.

If I am a company that is paid to “help” agencies with buying more NZ IT (even though they don’t), then I have an instant conflict. If I say anything publicly that is counter to the “success” of those projects then I won’t be allowed back in.

Government similarly, can cynically turn around and tell the entire industry that they were “consulted with”.

You can’t buy innovation. You can only uncover it.

One other thing is for certain, you can’t play their game if you want to innovate, you have to play your own.


  1. Ian, a SUPERB post! Excellently and expertly summarised. I couldn’t agree more, other than to add that the incumbent dinosaur ICT companies embedded in the government gravy train also expertly manipulate executive and agency decision making roles behind the scenes in an endless lobbying, wooing, and dubious pre-sales practices. They themselves also get manipulated with these same practices by the international giants. Net result is zero innovation, near-zero benefit to citizens, and almost no cost reductions except via the race-to-zero margins with closed vetted panel procurement contracts. The RFP processes used are a huge waste of everyone’s money and time, and could easily be replaced with sub 4 page requirements tenders followed with interested-vendor workshops to thrash out next-steps, strawman solutions etc. Also, in my opinion, the ICT functions of the DIA should be independently reviewed by an external party with no vested interests in government business, to measure their net effectiveness in their current role. Time for a disruptive change in how NZ government ICT processes function.

  2. Ian, yes, clearly written on a firing-on-all-6 day. Something I’ve learned over the years is that when procuring technical systems those making the decisions, or at least closely advising the decision makers, need to be at least as good as or preferably better engineers than prospective suppliers. Engineers with a reasonable understanding of accounting and contract law, not the reverse. Otherwise the culture moves towards exactly what you have described so well, decision by brand name and schmoozing, which is a recipe for mediocrity if not disaster. My own experiences when I have been a public servant purchasing technical services, had repeatedly indicated that the most creative, and by far the best value solutions typically comes from the smaller. leaner, meaner firms, whilst I have had no experiences that such purchases are any more risky than procuring from brand name organisations, in fact quite the reverse.

  3. Excellent article, Ian. If I might humbly suggest something – the NZ gov’t could take up what I consider to be a *very good idea* already taken up by the UK… they’ve mandated the use of open standards for gov’t software procurement and interaction with the private sector. Doing this levels the playing field and massively reduces the barriers for NZ-owned companies competing. We’ve put together a wee website outlining the situation: – would be interested in your thoughts.

  4. Interesting perspective, and I share a lot of the frustrations. Thanks for naming the vendor naivety point here too. It’s very easy to gang up on the government machine and actually, it’s a shared problem.

    Secondly, one aspect that is off of your list is actually wanting to innovate. Most innovation doesn’t come by ministerial decree or team spirit, it comes by having a desperate need to do something to survive. I’m not sure we have a shared attitude to innovate, and would be interested to learn of the success stories.

    By contrast, the Government Digital Services discussion in the UK continues to be an inspiration, setting new standards but also being incredibly open, communicative and mission driven that gets both agency and supplier excited to be coming to work.

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