Opening Address by Mr. Stephen Mak, Deputy Director of Information Technology Services at the "ITPSA Conference - Enhancing IT Management Effectiveness through Outsourcing"
07 - 07 - 2003

Distinguished Speakers, Contractor Partners and Colleagues,

I am pleased to welcome you to the ITPSA Conference. We have set the theme 'Enhancing IT Management Effectiveness through Outsourcing' to share on various aspects concerted to the successful outsourcing of IT projects.

The 2001 Digital 21 Strategy has set out the e-government policy with a target to provide e-option for 90% of all public services amenable to the on-line mode of delivery by the end of this year. Achieving this ambitious target requires the active participation of the whole community. In particular, the active participation of IT service providers and suppliers through our outsourcing strategy plays a very important role.

The Government has outsourced its IT projects for a good number of years. In the process, we have seen healthy growth in the types of projects outsourced and the number of contractors, both local and international, taking part in those projects. In the year 2001, we reinforced our outsourcing strategy and our objectives to enlarge the delivery capacity for IT services, to accelerate the delivery of IT solutions and to create a market of sufficient size to encourage the further development of the IT industry locally. Our outsourcing policy is also conducive to the development of e-government. At present, close to 90% of new IT projects are already outsourced. We also started to outsource application maintenance work in 2001.

In June last year, we signed Standing Offer Agreements (SOAs) under our IT Professional Services Arrangement (ITPSA) as part of our outsourcing strategy to provide an effective tool for us to outsource IT projects. We awarded twenty-three SOAs to twelve firms of various sizes and origin. Since the SOAs have been in force, 180 work assignments with a total value $142M have been awarded. I'm sure you will agree with me that these projects provide a wealth of experience for us to share. The main purpose of today's conference is to facilitate this sharing. Let me highlight a few salient points here.

One of our continued commitments is to uphold the highest standard of integrity in dealing with outsourcing acquisitions. We have established tools under the ITPSA framework to help us safeguard integrity. My colleagues in the ITPSA programme office will further elaborate on our framework later. We have also worked closely with the Corruption Prevention Department of the ICAC during the preparation and execution of ITPSA. We have the honour of having our partners in ICAC joining us today to talk about this area.

To foster enterprise application integration and information exchange, ITSD has introduced the Interoperability Framework in November last year. We have been promoting and guiding contractors who are providing services or products to the Government to adopt a common standard framework to facilitate seamless integration and interconnection of government applications and their public interfaces. We have ITPSA contractors successfully applying the Interoperability Framework in system deployment.

Another crucial aspect to the success of IT outsourcing is the effective quality management of outsourced projects. We require our service providers to have a quality management system in place for service delivery and encourage them to adopt international standards such as ISO9001 and the Capability Maturity Model (CMM). The Government has also provided funding support to local software companies to obtain accreditation through a CMM grant under the Innovation and Technology Fund.

To enhance the governance structure for IT in support of e-government, we have been establishing more IT Management Units (ITMUs) in bureaux and departments. As of today, over 40 bureaux and departments have already established their ITMUs and there are firm plans for more. The ITMUs will lead the e-business transformation through business process re-engineering and effective use of IT. The ITMUs in turn would adopt our on-going policy of vigorous outsourcing of IT projects where applicable. We will strive for adoption of best management practices across ITMUs for managing outsourced IT projects.

In today's conference, you will no doubt hear and discuss more about these topics.

Under our outsourcing plan, we have issued a tender to outsource the management of new IT systems in the ITSD Central Computer Centre under the Information System Hosting Service arrangement. We are also considering outsourcing the Data Centre in ITSD.

In implementing our outsourcing strategy, it is important that we keep track of international best practices in this arena. Accenture and the Economist Intelligence Unit (EIU) conducted a recent study of 'Outsourcing in Government: Pathways to Value' with Hong Kong and other 22 countries including the UK, the United States, Australia, Japan, Malaysia and Singapore etc. From its study report published in May this year, Hong Kong Government is ranked at the highly mature end of the spectrum of efficiency trajectory toward cost reduction and productivity. The report also highlighted our Government's success tapped on adopting proven methodologies in our projects. The ITPSA has further extended to adopt good practices from the contractors in addition to those we have been using, like PRINCE and SSADM. While these results are highly encouraging, we are not complacent and we envisage that the concerted efforts of service providers and the Government will further our management excellence in IT outsourcing.

Looking ahead, as we all know the Government is facing the challenge of expenditure cuts and resource constraints. Although we are glad that we still have an increase of about 10% of the overall IT budget this year, from HK$3,420M in 2002-03, we fully appreciate the need to do more with less, and in this process we look to our clients and partners in the industry to help as well.

Before I close, I would like to extend our heartfelt thanks to our ITPSA contractors who will share their experience and describe how management practices and latest technology are applied in delivering ITPSA work assignments. I should also thank our speakers from the Project Management Institute and colleagues in the ICAC for providing us with their insight on IT outsourcing. Last but certainly not the least, I would like to thank colleagues from the Companies Registry, Drainage Services Department, Environment, Transport and Works Bureau, Leisure and Cultural Services Department and my Department for joining a discussion panel to share on common areas of interest in using ITPSA. I hope you will all find the conference informative and stimulating.

Thank you.

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