Transformed CenITex delivering wins for its customers, CEO says

To say Victoria’s CenITex has a chequered history is putting it mildly. But although the government shared services organisation still has its critics, the organisation has fundamentally transformed itself over the last half decade according to CEO Michael Vanderheide.

In 2012 a report from the Victorian Ombudsman found that that “serious improper conduct” had taken place at the CenITex. The Ombudsman’s investigation “discovered numerous breaches of the relevant procurement policies and guidelines”.

Vanderheide, who joined the organisation in 2011, says that CenITex doesn’t hide from its past, but believes the organisation has undergone a significant change.

“The year before I started we had a loss of $25 million. My first year we ended with a loss of $37 million, which was a low point,” the CEO.

“Last year we turned a surplus of just over $8 million and we’re on track for having a surplus again this year; we’re budgeting for a surplus next year and I see no reason why we won’t operate in surplus for the foreseeable future.”

Operating at a surplus has allowed CenITex to reinvest its funds based on its customers’ priorities, Vanderheide says.

In addition, the organisation has established a $2 million innovation fund. That money can be used to fund or co-fund projects by departments.

Projects so far have included shifting an application to Azure for one department and another called Mobile Access Gateway, which is focussed on giving secure access to corporate systems via mobile devices (including BYOD) and will go live in a couple of months, the CEO says.

A number of the projects have focused on core cloud-enabling technologies, such as Active Directory Federation Services (ADFS), that are “fundamental building blocks for where our customers are going to want to go over the next two or three years”

The fund will be available again next year, he adds. The criteria for funding are that a project needs to benefit the customer that initiated it, but also has to have the potential to benefit more departments.

Turning a surplus has also had an impact on pricing for the agency’s customers.

“The surplus enabled us to cap our prices this year at last year’s levels and we’ll reduce all prices across the board next year by 5 per cent on everything,” Vanderheide says.

“We have a program of driving costs down in place which I would expect to continue to deliver – possibly not at that level – that kind of advantage to customers.”

The CenITex operations environment has also become significantly more reliable, the CEO says.

“Our operations environment was probably well known for outages; there certainly were some front page stories four or five years ago where things just broke and took a long time to fix. We’ve had a reduction in serious outages by 40 per cent and we habitually meet our service levels these days.”

Although Vanderheide believes CenITex is on track, it was only a couple of years ago that the organisation was almost replaced by the former state government.

After Labor came to power in the state in late 2014, a government-commissioned review backed away from privatising shared services providers, including CenITex.

However, the organisation did find itself operating in a changed environment, with the government removing the mandate to use CenITex.

“I’m not sure our mandate was ever wildly strong in the past,” Vanderheide says. “But what it has done has sent a really clear signal that if we are to keep our customers, who have the choice to work with anybody they want to, we’re going to keep them on the basis of offering the services that they want to consume — at a price that’s good, at a quality that’s reasonable and in a way that means accessing them is reliably easy.

“That’s driving a real change of focus and a sense of excitement in the organisation,” he adds

“It’s not that we didn’t have a focus on customers before – it’s the nature of what we do. But it’s now a very deliberate, very explicit focus for the organisation. So we’ll be running customer satisfaction surveys [and] we’re placing staff on customer sites — which is not something we did on a regular basis.

“We’re also bringing customer IT staff onto our sites so that they get to work with our people. There’s a range of training happening within the organisation.”

The CenITex CEO says that the organisation is finding way to make customers “much more intimately involved” in its decision making.

As an example he cites a program that involves a $2 million boost to security spending over the next three years.

“That program is driven entirely by our customers’ priorities,” Vanderheide says.

A group with representatives from each of the organisation’s customer departments on it and chaired by a department CIO is mapping out the priorities of how that money is spent.

“First cab off the rank is a 24/7 security operations centre that will go live by Christmas this year – that was their decision,” the CEO says.

Governance and leadership

CenITex has refreshed its leadership, including bringing on two new senior executives earlier this year, one with responsibility for customer engagement (Nigel Cadywould) and one with responsibility for service operations (Scott Ayer). Both Cadywould and Ayer have significant histories in private sector IT.

“They’re having quite a profound impact on the organistion, even in the short time they’ve been here,” Vanderheide says.

In addition, in January the CenITex board was augmented, bringing on board four new members from customer departments.

“They’re not there to represent their department — they’re very much there to be stewards of the organisation,” Vanderheide says. “But every decision we now make is explicitly done through the lens of what the customers’ expectations are. That’s already having a really positive impact on the organisation.”

Vanderheide is optimistic about the organisation, but steers clear of hubris.

“I am absolutely not declaring victory yet; there’s so much more that needs to be done in the organisation and I’m acutely aware of that, but I’m very confident we’re on a really good path,” he says.

“We’ve come through some really hard things, but the path that we’re on now is one that I’m really confident is going to take us into a future where we have customers who are happy with the services that they are getting and the services that they are getting are enabling them to provide better services to the community,” the CEO says.