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Archive > Year 2004 > OGCIO > Speeches and Presentations in Year 2004
Opening Keynote by Mr. Stephen Mak, Deputy Government Chief Information Officer at the IT Outsourcing Conference & Expo 2004
23 - 11 - 2004
Mr. Fung, Distinguished Guests, Ladies and Gentlemen,
Good morning. I have great pleasure to be invited to speak at the IT Outsourcing Conference and Expo 2004.
While the average dictionary does not even have a specific definition for the term "outsourcing", this topic has remained on the list of strategic and critical issues to be considered by CIOs around the globe for the past few years and some more to come. In Hong Kong, the Government has been outsourcing its IT projects and services for a good number of years. In 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.
In the 2001 Digital 21 Strategy, we set out to outsource two-thirds of new Government IT projects each year and started to outsource application maintenance work in that year as well. These targets have been well achieved. In the 2004 version of the Strategy released last March, we reiterated our commitment to enhancing our IT outsourcing programme. Last year, we outsourced 89% of our new IT projects. These outsourcing initiatives take various shapes and forms. Apart from the classic design-and-build arrangement, we have also introduced In-house Systems Hosting Service as a way of providing additional capacity using an outsourcing model. Right now, we are taking forward a major Central Computer Centre Outsourcing Initiative to outsource close to 30 application systems to one or more commercial data centers. System planning, development and maintenance work have also been outsourced efficiently through the IT Professional Services Arrangement (ITPSA) administered by the Office of Government Chief Information Officer and used by all Government departments. I would like to share with you the latest development of the ITPSA here. We arranged the ITPSA to facilitate the implementation of our IT outsourcing policy. A total of 23 standing offer agreements were awarded to 12 firms in 2002. The arrangement covers all services in the general systems development life cycle, web publishing, office network implementation and support and IT security. The ITPSA has proved to be an efficient and effective standing arrangement for Government departments to acquire IT professional services. Up to the end of the last month, 75 Government bureaux and departments have awarded a total of 456 work assignments valued at more than $340 million under the ITPSA. The efficiency of this scheme is one of the reasons for its popularity among user departments, with more than 40% of work assignments awarded within 20 working days from the invitation for proposals, and almost 90% were awarded within 40 working days.
The ITPSA will expire by the end of next year. Looking ahead, we are working on the replacement of the ITPSA, called the Quality Professional Services Framework (the QPS Framework in short). The QPS Framework will create an enabling environment to further enhance the quality of IT professional services delivery to the Government. Its objectives are to facilitate supplier development building on the ongoing Government-supplier relationship, to give more emphasis on service quality and to encourage innovation, to further improve efficiency and responsiveness of the service acquisition process, to further expand the participation of suppliers and to facilitate the participation of local SMEs. We believe the success of the programme will build on a good supplier relationship and its management. I understand that there are sessions in this conference that address this important element as well.
Outsourcing is indeed ingrained in the IT development life cycle of our electronic government systems. We strive for a sustainable e-government programme that not only fosters industry development but also encourages innovation and technological development. We have committed in the 2004 Digital 21 Strategy to sharpen the e-government focus on service quality and effectiveness and seek to bring value to customers as well as to the Government. In the first wave of our e-government initiatives, we have been focusing on building the infrastructure and providing e-option for services. The next wave of our e-government programme would focus on understanding our customers, creating value based on what they need, driving utilization through creation of customer value and rationalizing channel management through a mutual realization of customer and Government benefits, along a ：CARING； theme. The ：CARING； theme comprises enabling Customer Orientation and Customer Migration, ensuring Accessibility by customers, providing robust Authentication mechanism, exploring Re-engineering and Service Transformation, enhancing Infrastructure, Networking the Government and clearly demonstrating Government leadership. To this end, we have revamped our technology and infrastructure strategy so that it will support easy plug-in by service agents. Through suitable service agents, we hope to be able to better integrate e-government services with those of the private sector so that from the community・s point of view, the business transactions will be even more streamlined.
Not only is the scope of our outsourced services expanding, we are also adopting different outsourcing models such as public-private sector partnerships and different forms of contracts like framework agreements. In the light of the expanded scope and model of Government IT outsourcing, we are also enhancing our financial model for IT projects and reviewing the treatment of costs to reflect the latest industry trends and market offerings.
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 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 in 2003. The study revealed that the Hong Kong Government ranked at the highly mature end of the spectrum of efficiency trajectory toward cost reduction and productivity. The report also highlighted our success in adopting proven methodologies in our projects. 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 at the outsourcing industry, Hong Kong is well positioned as a gateway to the Mainland for foreign companies and a springboard for Mainland companies to expand into the global market. In this regard, Government has been exploring facilitative measures for the take-off of China's software industry as well as offering Hong Kong to the IT outsourcing service sector as the location for international marketing and programme management operations. With Hong Kong・s substantial base of independent software vendors, experienced service suppliers and multinational ICT firms well represented here, we believe many of the locally based companies have the capability to compete in the Mainland and overseas markets. In this regard, we will continue to work closely with industry support organizations to expand the opportunities for outsourcing for Hong Kong companies.
The second phase of the Mainland and Hong Kong Closer Economic Partnership Arrangement (CEPA) will take effect from 1 January 2005. Among other offers under the arrangement, Hong Kong IT service providers will be allowed to apply for the Computer Information System Integration Qualification Certification in accordance with the relevant laws, regulations and rules of the Mainland. Currently, there are about 1,450 certified companies in the Mainland. This is a very small number considering the huge market size. In recognition of the differences between Hong Kong and Mainland companies, the Mainland is considering instituting special arrangements for Hong Kong applicants of Computer Information System Integration Qualification Certification so as to facilitate their entry into the Mainland market. We aim to conclude discussions with the Mainland on the arrangements by the end of the year, and implement the arrangements soon thereafter. Another parallel arrangement will also allow Hong Kong residents to sit for examination in Hong Kong to obtain Mainland professional qualifications in computing technology and software. An examination management centre has been established in Hong Kong to administer the qualification examination. Under the Pan-Pearl River Delta ．9+2・ collaborative agreements, Hong Kong is also expected to contribute to the sharing of market information on IT and outsourcing with the relevant cities. These measures, and others aimed at improving the awareness and adoption by Hong Kong companies of software and process quality management, information security and governance, will no doubt further enhance our chances of success in the outsourcing arena.
From many angles, outsourcing is going to remain a major component of our ICT industry. Therefore a focused conference like the one today will be a golden opportunity for participants to review local, regional and international developments, share experiences and most importantly strike strategic deals and alliances. I would like to congratulate the organiser for staging this event and I wish the Conference every success.
Thank you.
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