CenITex's Peter Blades: The exit interview

Peter Blades was founding CEO of CenITex, Victoria’s shared IT services agency. In this exclusive interview, conducted in his last week on the job, Blades explains why he feels CenITex is working while other shared services organisations struggle.

Shared services, according to Peter Blades, “sound like a good idea until it is done to you”. But Blades, who devised the model under which Victoria’s shared services agency CenITex operates and then became its first CEO, believes that’s in part because shared services have not been well-structured around Australia

The idea of shared services, however, he says is sound

“ICT infrastructure is something Departmental Heads should not hav e to worry about,” he told Government Technology Review (GTR) in an exclusive interview conducted in late March 2011, during his last week as CEO

“If you’re the Head of a Department or another agency, your worst nightmare is a big ICT project that falls over. That means you cannot manage what you are there to do. So you just want IT to work: you have bigger issues on your plate.” Shared services, he believes, is the way to make sure ICT infrastructure just works, and avoids the wasteful duplication of services and systems that inevitably accrete without central oversight

CenITex is structured to address these issues

“If you want to summarise the value proposition for shared services in this [Victorian] government in the long run, it is that the model we have will take away the need to have to continually find the money to upgrade its ICT infrastructure,” he said. Rather than have pockets of under-investment, Blades added, once CenITex is fully implemented, Victoria will find it has a self-sustaining entity with the capability to refresh IT infrastructure services

Shared vision

 Blades’ vision for this kind of IT operations developed in 2007, when the Victorian Government recruited him as a consultant to consider and devise a shared services framework

The model he developed was adopted and CenITex was the result. Today, the agency manages more than 36,000 desktop computers for 10 Victorian agencies

Victoria Police, VicRoads and the Department of Education and Early Childhood Development are scheduled to become CenITex customers, which will bring the total of desktop computers under management close to the 60,000 mark. CenITex is also consolidating networks and data centres, and investing in storage systems scoped to reach 50 petabytes of capacity

Provision of a central service desk is another of the agency’s tasks

Applications are beyond CenITex’s remit, as it focuses squarely on infrastructure services and charges its users for their delivery, believing that only when they are devised and delivered at scale can excellence be achieved and future funding secured

While modestly unwilling to declare his efforts a success, Blades said he feels CenITex was “on track” at the time of his departure. “We’ve gone from six departments under management to 10, and two major agencies (State Revenue Office, Environment Protection Authority), and from 300 staff to 600,” he said. A common desktop model is in place, consolidation of redundant services has been achieved and much work has been done on the new, central, infrastructure for the State

The organisation has also won broad acceptance from the agencies it serves, but did find some resistance as agencies insisted they should be allowed to continue to operate their own IT

“Agencies argue that they need to be different, and I ask: ‘Why do you need multiple data centres? Why do you need a spaghetti of networks?’ Our model is that they should not be able to argue they need to be different. They try. The argument I get is that ‘I’m different, one size does not fit all.” Blades tried to avoid using his legislative mandate to impress upon agencies that they had little choice but to adopt the new regime CenITex represented, and instead tried to demonstrate the value of CenITex’s approach

“Mandates don’t work,” he said. “Even though you say you have a mandate, until we deliver better services at a better price” agencies are reluctant to embrace shared services agencies

CenITex will be able to demonstrate through economies of scale a better value proposition around pricing and through its infrastructure investment plan will deliver innovation and improved services

“I felt that in a lot of jurisdictions shared services agencies struggle because they are part of a single Department. Other departments resent that.” “ We report to a Minister, but our responsibility to Treasury is around compliance: it’s not a solid line on the org chart.” CenITex’s board, Blades said, has a wider view and is therefore more likely to succeed

A third element of CenITex’s structure is its Stakeholder Advisory Committee, the forum in which IT people from its clientele have input to CenITex’s more technical decision-making

“The Stakeholder Advisory Committee is where we take new services and seek collective agreement,” Blades explained in the interview, and used an example of a Web delivery platform to illustrate its workings

“When we started CenITex, we were looking for a platform and different departments were going to go out and do their own thing. We said: ‘If we build one for all of you on an enterprise model, will you come? Will you pay?'” The answer to both questions was 'yes' and the result was $15 million in cost avoidance

The Stakeholder Advisory Committee is now a key forum for debate around what CenITex calls its 'catalogue', the list of services it provides. Blades said the catalogue is “a key thing: we spend a lot of time developing it.” “Let me put it this way: do they like the catalogue? Yes. Do they want to see it refined better? Yes. The first year at CenITex was about understanding the cost of a desktop in the CBD versus a rural desktop versus a remote desktop. What does that do? It gives the customer a choice and they can see they can control their configuratuion and reduce their costs accordingly

“CIOs and managers are getting more comfort with the catalogue and the pricing. They see we are being quite transparent and are not here to make a profit and they understand the agenda around building for the future and that we will bring down pricing.” That growing acceptance, Blades said, is a demonstration that CenITex’s role as a shared infrastructure provider is the right approach, and also vindication of how its governance model – independence, a board focussed on customer service, and customer collaboration around a services catalogue – helps shared services to deliver

“It’s a key thing to keep it simple, make something work, get it right here in the centre

“For years Victoria battled over where that demarcation ‘red line’ was. Should shared services be doing HR or payroll and that sort of thing. I think we have been quite specific in what we do and what we don’t.” “If I summed it up, although people might not like me saying it, we are putting a commercial model into government. We have tried to take emotion out of the customer-provider relationship through the use of a catalogue. We say: ‘Give me your provisions and from now on treat me as a service provider. You are buying a service, and it is our responsibility to replace your assets and deliver at the best quality and service that the market can offer.” Blades said that at the time of his departure from CenITex, some of the vision remains unrealised. Customers have been told that prices will drop in the fourth year of CenITex’s operations, once its own infrastructure build is complete, the investment requirement lessens and economies of scale kick in

At that point, Blades said he believes the true nature of CenITex’s impact will be felt

“It’s a transformation, not an IT thing,” he said. “IT is just an enabler. What I have said to our staff is that we are running a managed services business and we just happen to be a strong IT shop. We use IT as an enabler, but the real drivers in this business are around capabilities and upping your skill base and having the right business processes.” “We have up-skilled the people managing transformation,” and doing so has awakened people to the true meaning of what building a shared services organisation involves and enthused them to be part of the change

“People want to work for CenITex now,” Blades said. “Did they want to work for shared services two or three years ago? Did they feel good about it compared to now? “I have a very good feeling. The sort of farewells I am getting really feel like it is family here. Our people believe in what we are doing

“It all comes back to capabilities, skills base, investment in people, and we are doing that.”