Released under NSW GIPA Act GIPA Application TRA Page 1

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3 Executive Summary Introduction and Context > A new IT Service Delivery (ITSD) function was established within TfNSW in 2012 as part of the broader NSW Government Corporate and Shared Services Reform. > The Making IT Work For You program (MITWFY, and formerly known as NGIS) commenced in 2013 to consolidate infrastructure services platforms across the Transport Cluster and included: migration of infrastructure from Agency datacentres to GovDC, transformation of networks and end user computing services, and establishing a Service Integration and Management (SIAM) capability within ITSD. > As part of MITWFY, three new vendors were engaged between 2014 and 2016 to provide services under three service portfolios namely: Hosting, Network and End User Services. > A new ITSD operating model was then designed and implemented in 2016 to accelerate the operationalisation of SIAM capabilities and delivery of centralised services. > In the interim, there have been service performance issues within ITSD and significant challenges in remediating this situation. > In response, Third Horizon was engaged in November 2017 by TfNSW to conduct a point in time review of ITSD at this interim stage of its transformation with the following objectives: review the overall approach to the centralisation of infrastructure services under ITSD, review the ITSD operating model and its implementation, and recommend any interventions that may be required to improve the services and performance. Released under NSW GIPA Act 2009 GIPA Application TRA Page 3 Confidential NSW GOVERNMENT SENSITIVE PAGE 3

4 Executive Summary (continued) Current Situation > ITSD is currently in a challenging situation and is facing substantial challenges: service delivery performance trends appear to be worsening, financial benefits associated with the centralisation of service delivery functions into ITSD are not being fully realised, unprecedented growth in demand for IT services, and ITSD credibility is declining, impacting Agency tolerance and support for remaining centralisation and transformation. > This situation is likely to get worse: MITWFY is scheduled to implement significant technical change with large end user impacts in the next four months, and MITWFY has limited remaining funding to deliver the required ITSD capabilities to successfully function as a service integrator. > More broadly, ITSD does not appear to be meeting the service requirements of the Cluster which is having significant broader impacts. Key Findings > The rationale for the chosen service portfolio based multi-source arrangement to deliver centralised IT services is sound. > There are three fundamental issues that have led to, and are perpetuating, the current situation: higher than expected technical debt (i.e. end of life and untransformed legacy infrastructure) and technical complexity (i.e. concurrent old and new infrastructures), ITSD process maturity, governance (e.g. capacity, demand) and tooling (e.g. process maturity of low 1s on a scale of one to five), and vendor performance management and vendor performance. > There are two other significant related issues that exacerbate the problem: the 2016 IT Service Delivery operating model design (ITOM) gaps and its limited suitability to the current environment, and the broader IT operating model and governance issues. Released under NSW GIPA Act 2009 > Along with the above, a number of issues relating to mindsets and behaviours within ITSD that hinder improvement have been identified including leadership, risk aversion and customer orientation and overall ITSD requires major interventions to address the current situation. GIPA Application TRA Page 4 Confidential NSW GOVERNMENT SENSITIVE PAGE 4

5 Executive Summary (continued) Recommendations > There are a number of critical and significant actions required to break the current cycle and put ITSD on a positive pathway: Recommendation Progress the ICT infrastructure services centralisation reform through a significant 24 month transformation and fundamental turnaround program. Implement a revised transformation and migration delivery model with more effective Cluster-wide governance. What's Different > Smaller well planned 3-6 month iterations with clear outcomes and funding stage gates. > Focus on transformation in parallel with migration as specified in the roadmap. > Leverage market capabilities to deliver complex technical and SIAM transformation. > Capabilities and capacity to simultaneously run and transform. > Greater agency engagement and visibility at both strategic and tactical levels. Reduce infrastructure technical debt and complexity. > Technical delivery prioritised to address areas of greatest benefit/pain. > Delivery aligned to realizing a defined target technical and service architecture. > Migration to transformed environments where possible. Significantly uplift ITSD process maturity, governance, tooling and ways of working. Address vendor performance and contract management issues through structural change, greater role clarity and enhanced partnering. Close critical ITSD functional, capability, capacity and customer orientation gaps and augment resourcing to support transformation activities. > Specified and prioritised SIAM based processes and governance maturity improvements. > Service management tool improvements as a critical enabler of process improvement. > Improved ways of working aligned to SIAM and address mindsets and behavior issues. > Clarification and reset of vendor performance management roles and governance. > Intensified activity to address vendor performance. > Operational Level Agreements between vendors to streamline activity. Released under NSW GIPA Act 2009 > Stronger leadership of program and ITSD. > ITSD organisation structure and capacity reset to meet transform and run requirements. > Greater customer alignment through agency communities of practice. > Once the environment is stabilised, new additional streams of work need to be completed to realise the full vision and benefits of centralised and optimised IT service delivery. GIPA Application TRA Page 5 Confidential NSW GOVERNMENT SENSITIVE PAGE 5

6 Further considerations Executive Summary (continued) > Further consideration has been given to alternative operating models, de-scoping of ITSD services, outsourcing the service integrator functions and full ITSD outsourcing, however, these will not necessarily provide an improved pathway or in itself address the root causes. Roadmap > These recommendations represent a significant transformation and fundamental turnaround program from where ITSD is today, how it has operated previously and its current trajectory. It will impact all aspects of ITSD, along with the Cluster Agencies and vendors, including its people, leadership and capability, processes, technology, governance and customer engagement. > A robust and carefully planned roadmap with significantly resourced and focussed initiatives capturing these recommendations is required to break the current cycle, turnaround ITSD s current situation and guide this transformation. > This transformation program carries a number of significant risks which will require ongoing management and mitigation. Key risks are: Complexity of delivering a large multi-workstream transformation and a concurrent technical migration, Underestimation of remaining legacy technical debt and complexity, Strategic alignment and support for the transformation program between both vendors and Agencies, Ability and willingness of Agencies and vendors to adapt to new processes, governance and tools and support technical transformation, Re-contracting and continuity of service vendors, Under-estimation of the Cluster-wide capabilities and capacity to support the program, Inadequate management of people change within ITSD, Ability to attract and retain staff with the required capabilities and knowledge within ITSD, and Ability to shift mindsets within ITSD and across the Cluster. Released under NSW GIPA Act 2009 Co-operation between the proposed ITSD and ITSD Service Operations functions. GIPA Application TRA Page 6 Confidential NSW GOVERNMENT SENSITIVE PAGE 6

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8 Current Situation 1. ITSD is currently in a challenging situation and is facing substantial challenges: service delivery performance trends appear to be worsening, financial benefits associated with the centralisation of service delivery functions into ITSD are not being fully realised, unprecedented growth in demand for IT services, and ITSD credibility is declining, impacting Agency tolerance and support for remaining centralisation and transformation. 2. This situation is likely to get worse: MITWFY is scheduled to implement significant technical change with large end user impacts in the next four months, and MITWFY has limited remaining funding to deliver the required ITSD capabilities to successfully function as a service integrator. 3. More broadly, ITSD does not appear to be meeting the service requirements of the Cluster which is having significant broader impacts. Key Findings Current Situation Summary 4. The rationale for the chosen service portfolio based multi-source arrangement to deliver centralised IT services is sound. 5. There are three fundamental issues that have led to, and are perpetuating, the current situation: higher than expected technical debt (i.e. end of life and untransformed legacy infrastructure) and technical complexity (i.e. concurrent old and new infrastructures), ITSD process maturity, governance (e.g. capacity, demand) and tooling (e.g. process maturity of low 1s on a scale of one to five), and vendor performance management and vendor performance. 6. There are two other significant related issues that exacerbate the problem: the 2016 IT Service Delivery operating model design (ITOM) gaps and its limited suitability to the current environment, and the broader IT operating model and governance issues. Released under NSW GIPA Act Along with the above, a number of issues relating to mindsets and behaviours within ITSD that hinder improvement have been identified including leadership, risk aversion and customer orientation and overall ITSD requires major interventions to address the current situation. GIPA Application TRA Page 8 Confidential NSW GOVERNMENT SENSITIVE PAGE 8

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18 6. Other Related Issues Broader IT Operating Model and Governance There are two other significant related issues that exacerbate the problem. Findings Supporting Analysis > The broader IT operating model and governance across the Cluster, and specifically the centrally lead nature of IT reforms, appear to have impacted the alignment of agencies to programs and their willingness to work together to overcome challenges. Agency Feedback Agency feedback indicates that while they were involved in the ITOM design, if they had a greater say in subsequent decision making the running of ITSD and its provision of services would be better aligned to their requirements. Released under NSW GIPA Act 2009 GIPA Application TRA Page 18 Confidential NSW GOVERNMENT SENSITIVE PAGE 18

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21 Recommendations Recommendations Summary 8. There are a number of critical and significant actions required to break the current cycle and put ITSD on a positive pathway: Implement a revised transformation and migration delivery model with more effective Cluster-wide governance. Reduce infrastructure technical debt and complexity through a significantly reframed migration and transformation program based on discrete tranches which address critical priorities. Significantly uplift ITSD process maturity, governance, tooling and ways of working with external partnering to provide critical skills and accountability for outcomes. Address vendor performance and contract management issues through structural change, greater role clarity and enhanced partnering. Close critical ITSD functional, capability, capacity and customer orientation gaps and augment resourcing to support transformation activities. 9. Once the environment is stabilised, new additional streams of work need to be completed to realise the full vision and benefits of centralised and optimised IT service delivery. Further considerations 10. Further consideration has been given to alternative operating models, de-scoping of ITSD services, outsourcing the service integrator functions and full ITSD outsourcing, however, these will not necessarily provide an improved pathway or in itself address the root causes. Released under NSW GIPA Act 2009 GIPA Application TRA Page 21 Confidential NSW GOVERNMENT SENSITIVE PAGE 21

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23 8. Technical Environment Reduce infrastructure technical debt and complexity through a significantly reframed migration and transformation program based on discrete tranches addressing critical priorities. Recommendation Details Rationale Undertake smaller and prioritised waves of technical transformation based on criticality, impact and dependencies. Undertake staged migration of the remaining RMS and other Agency infrastructure. > We have identified the following major foundation technical transformation activities beyond current MITWIFY scope which are required to stop the cycle: Network site refresh (additional 500 sites in addition to current 250) and a single logical network Data Centre Remediation of data centre architecture to enable rapid service provisioning End User Compute Windows 10 rollout, Citrix and Active Directory consolidation Cloud Public and private cloud service uplift Resilience improve infrastructure resilience pending external review recommendations and refresh critical end of life infrastructure Tooling event management and service orchestration implementation > Staged migration plan developed in a planning and preparation phase to balance planned ITSD technical infrastructure transformation, Agency application roadmaps, GovDC migration timelines and delivery risk. Released under NSW GIPA Act 2009 > Smaller delivery packages typically require clearer scope definition and are less complex to deliver thereby reducing overall risk. > Aim to migrate to transformed environments where possible to reduce rework rather than migration without transformation which has been the predominant model to date. GIPA Application TRA Page 23 Confidential NSW GOVERNMENT SENSITIVE PAGE 23

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25 8. Vendor Management Fix vendor performance and contract management issues through structural change, greater role clarity and enhanced partnering. Recommendation Details Rationale Restructure vendor performance and commercial management governance. Reset vendor management roles and responsibilities. Establish Operational Level Agreements (OLAs) between vendors. > Service Portfolio Directors participate in the Tier 1 forum. Vendor Management Forums > Improve vendor performance management and coordination within TfNSW and provide the Service Portfolio Forum TfNSW Group IT Commercial Mgmt. Vendor Directors with greater leverage to improve service outcomes, build relationships and develop goodwill. T1 T2 Service Portfolio Directors Service Portfolio Directors > Agree on a common set of roles and responsibilities for all vendor management activity as set out in the RASCI model in Appendix G. > Establish OLAs between each of the three service vendors which clearly define the way the vendors work together and outcomes required. Proposed SLAs/OLAs TfNSW Account / Project Exec. Ser ice Delivery Lead Operating Level Agreement Released under NSW GIPA Act 2009 Service Level Agreement > The Commercial Management framework and the ITOM design differ in structure and responsibilities resulting in a lack of a common understanding of roles. Using a common framework detailing clear roles and responsibilities will ensure ITSD have the ability to effectively manage the performance of vendors, whilst being able to draw on Commercial Management s services when required. > OLA s between vendors will reduce the dependencies on ITSD for process management because vendors will have a contractual capability to work with each other in the provision of services. Complete current Service Improvement Programs (SIPs)), undertake a strategic vendor review and improve overall levels of partnering through more strategic engagement. > Develop a strategic view on vendor performance improvement and ensure contractual mechanisms are in place to enable vendors to support transformation. > Buy-in and support from vendors is critical to the transformation and managing frontline service delivery within the current complex environment. GIPA Application TRA Page 25 Confidential NSW GOVERNMENT SENSITIVE PAGE 25

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27 8. Operating Model (continued) Close critical ITSD functional, capability, capacity and customer orientation gaps and augment resourcing to support transformation activities. Recommendation Details Rationale Increase customer alignment within the current ITOM structure. Improve leadership and performance management. > Establish Agency aligned communities of practice across ITSD and ITSD Service Operations with periodic and regular forums to gather, store and distribute Agency related information and plans. > Consider greater structural alignment of ITSD to customers once the current cycle is stopped. > Undertake a robust leadership assessment and identify major gaps. > Establish a clear and well communicated performance management program that focuses on role expectations and ensures transparent reporting of organisational performance. Released under NSW GIPA Act 2009 > ITSD engagement with Agencies and understanding of Agencies beyond the customer services managers is currently limited and increased alignment and knowledge will likely improve customer focus and service. > Build staff confidence in leaderships ability to navigate out of the current situation. > Reinforce accountability for transformation and performance at all levels. > Increase transparency and visibility of progress reporting. > Increase empowerment at all levels to help address the current issues. GIPA Application TRA Page 27 Confidential NSW GOVERNMENT SENSITIVE PAGE 27

28 9. Enabling the Future Once the previous recommendations have been implemented and the environment has been stabilised, additional streams of work need to be completed to realise the full vision and benefits of centralised and optimised IT service delivery. Recommendation Details Rationale Undertake remaining technical transformation. Further ITSD process maturity, governance and tooling uplift (e.g. remaining process and uplift to 3.0). Align financial approval, procurement and policies to support consumption based service model. > We have identified the following technical transformation priorities to fully deliver the proposed Technical Service Delivery Model (see Appendix F) once the cycle has been broken: Further SOE consolidation (e.g. Server 2016) Full public cloud and GovDC marketplace enablement Pod based data centre architecture > Implement the remaining processes and uplift all twenty processes to maturity levels between 2.0 and 3.0. > Refine and optimise governance forums. > Refine tooling strategy and optimise tooling. > Review service desk strategy across PaCS. > ITSD requires procurement, finance and policy changes to enable the future model: Finance will need to support more flexible OPEX spend commitments to support this modern consumption model. Procurement will need to simplify RFP requirements and reduce tender times to allow more agile and pod based service consumption. Security and operational policies will need to be updated to support the more rapid and flexible consumption of services. Released under NSW GIPA Act 2009 > This will provide: Improved resilience with availability greater than 99.99% where required. Comprehensive service offerings from legacy and public/private Cloud providers with ability to rapidly change vendors and services. Faster service delivery timeframes (i.e. sub-one week server lead times). More granular and flexible service sourcing capability. GIPA Application TRA Page 28 Confidential NSW GOVERNMENT SENSITIVE PAGE 28

29 10. Further Considerations Strategic Options Further consideration could also be given to alternative operating models, however this will not necessarily provide an improved pathway or in itself address the root causes. Options that have been dismissed Details Rationale De-scope ITSD services Outsource service integration function Full outsource of ITSD > ITSD would reduce its scope of services by shifting some accountabilities back to agencies (e.g. building and running aggregated infrastructure services (composite services), infrastructure service components (i.e. cloud hosting). > Alternatively some infrastructure services could be bundled into service verticals up to and including application services within Group IT. > ITSD would outsource the service integration function as per SIAM and retain a customer organisation with the following functions: Infrastructure Strategy and Architecture Service Improvement and Insights Digital Trust and Risk Vendor Performance Management Customer Relationship Management > ITSD would be outsourced based on a traditional outsourcing arrangement and would only retain the following functions: Infrastructure Strategy (and some architecture) Digital Trust and Risk Vendor Performance Management Customer Relationship Management Released under NSW GIPA Act 2009 > This option has a number of major risks: Potentially undermines the current centralisation strategy and associated benefits specifically the ability to standardise and optimise delivery of services, their supporting architectures and service providers. Likely to increase process implementation complexity (e.g. if Agencies could configure composite services support process complexity would increase). Likely to require Agency funding arrangement adjustments. > This option has a number of major risks: Timeframe required for sourcing and contracting. Concurrent transition from Fujitsu. Complexity of managing another vendor tier. Risk of local vendor market not having the required depth and maturity. Risk of vendors ability to operate effectively across the Transport Cluster. Loss of business and technical IP and knowledge. > This option has a number of major risks and was previously dismissed as part of the MITWFY business case: Timeframe required for sourcing and contracting. Concurrent transition from Fujitsu. Reduced vendor contestability. Risk of vendors ability to operate effectively across the Transport Cluster. Risk of vendors ability to transform technical environments given application level dependencies. Loss of business and technical IP and knowledge. GIPA Application TRA Page 29 Confidential NSW GOVERNMENT SENSITIVE PAGE 29

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31 Roadmap Summary Roadmap 11. These recommendations represent a significant transformation and fundamental turnaround program from where ITSD is today, how it has operated previously and its current trajectory. It will impact all aspects of ITSD, along with the Cluster Agencies and vendors, including its people, leadership and capability, processes, technology, governance and customer engagement. 12. A robust and carefully planned roadmap with significantly resourced and focussed initiatives capturing these recommendations is required to break the current cycle, turnaround ITSD s current situation and guide this transformation. 13. This transformation program carries a number of significant risks which will require ongoing management and mitigation. Key risks are: Complexity of delivering a large multi-workstream transformation and a concurrent technical migration, Underestimation of remaining legacy technical debt and complexity, Strategic alignment and support for the transformation program between both vendors and Agencies, Ability and willingness of Agencies and vendors to adapt to new processes, governance and tools and support technical transformation, Re-contracting and continuity of service vendors, Under-estimation of the Cluster-wide capabilities and capacity to support the program, Inadequate management of people change within ITSD, Ability to attract and retain staff with the required capabilities and knowledge within ITSD, and Ability to shift mindsets within ITSD and across the Cluster. Released under NSW GIPA Act 2009 Co-operation between the proposed ITSD and ITSD Service Operations functions. GIPA Application TRA Page 31 Confidential NSW GOVERNMENT SENSITIVE PAGE 31

32 11. A Significantly Different Transformation These recommendations represent a significant transformation and fundamental turnaround program from where ITSD is today, how it has operated previously and its current trajectory. Why is this a significant change? This transformation will impact every component of ITSD, along with the Cluster Agencies and vendors, including its: > People > Leadership and capability > Processes > Technology > Governance > Customer engagement How will this transformation be done differently? This transformation will be underpinned by the following implementation principles: Released under NSW GIPA Act 2009 > The current cycle (i.e. technical debt and complexity, maturity, poor vendor performance/performance management and the firefighting mindset) must be broken and related issues addressed. > Transformation activities are to be completed in smaller waves and prioritised based on criticality, impact and dependencies. > Greater ITSD accountability for SIAM and technical transformation. > Market capabilities to deliver SIAM and technical transformation are appropriately leveraged to mitigate delivery risk. > Leadership at all levels is critical to the success of the transformation. > People underpinning the transformation need to be enabled by leadership, empowerment, ownership and accountability. > The program requires Deputy Secretary sponsorship and oversight. > Agency and vendor engagement and participation is needed during both transformation planning and delivery. > There must be a pathway to a sustainable future. GIPA Application TRA Page 32 Confidential NSW GOVERNMENT SENSITIVE PAGE 32

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37 13. Transformation Program Risks This transformation program carries a number of significant risks which will require ongoing management and mitigation. Key Risks Complexity of delivering a large multi-workstream transformation and a concurrent technical migration Potential Mitigations > Break down large program initiatives into smaller initiatives with clear outcomes. > Regular robust review of risks, plans, progress and delivery capabilities. Underestimation of remaining legacy technical debt and complexity > Agency engagement and joint planning at both strategic and tactical levels. Strategic alignment and support for the transformation program between both vendors and Agencies Ability and willingness of agencies and vendors to adapt to new processes, governance and tools and support technical transformation > Establish executive oversight forums with both Agencies and vendors. > Alignment to futurepacs reforms. > Vendor and Agency involvement at all key implementation steps. > Regular briefings by transformation and workstream leads. Re-contracting and continuity of service vendors > Develop contingency plans for potential vendor discontinuity. Underestimation of the Cluster-wide capabilities and capacity to support the program > Joint planning and review of cluster-wide capabilities and capacity > Ensure Group IT Strategy supply section supports required delivery capabilities. Inadequate management of people change within ITSD > Include PaCS HR partner in transformation program governance. Ability to attract and retain staff with the required capabilities and knowledge within ITSD > Establish retention and succession plans for critical staff. Ability to shift mindsets within ITSD and across the Cluster > Ensure that the leadership challenges identified in the mindsets and behaviours review are addressed. Co-operation and existing relationships between the proposed ITSD Transformation Office, ITSD and ITSD Service Operations functions are adversely impacted by any potential conflict between the respective leads (i.e. the Executive Directors). Released under NSW GIPA Act 2009 > Ensure that the selection of Executive Directors incorporates developing the commitment to work together to support the roadmap and that their performance targets include delivery of roadmap and operationalisation of transformation outcomes. GIPA Application TRA Page 37 Confidential NSW GOVERNMENT SENSITIVE PAGE 37

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