Part 2: How Infrastructure as a Service operates and is governed

Infrastructure as a Service: Are the benefits being achieved?

In this Part, we discuss:

Summary of our findings

The GCIO has a clearly defined operating model for Infrastructure as a Service that is operating as designed.

The organisations using Infrastructure as a Service, ICT providers, and the GCIO consistently understood the operating model and could clearly explain their own and each other's roles in implementing Infrastructure as a Service.

The GCIO has suitable governance arrangements for Infrastructure as a Service that support achieving its expected benefits.

Why Infrastructure as a Service was established

The GCIO leads the development of the Government's ICT strategy and integrated programme of work.8

The Government expected the GCIO to:

  • put in place a new operating model for public sector ICT;
  • lead improvements in ICT investment management; and
  • reduce the amount of ICT assets that organisations own.

The Government wanted the public to experience seamless, integrated, and trusted public services online. To achieve this, organisations were expected to make a range of improvements. This included outsourcing ICT services to ICT providers.

The GCIO introduced Infrastructure as a Service to support the Government's goal of providing a more effective and efficient way for organisations to outsource their ICT services.

The GCIO's work on Infrastructure as a Service and other shared ICT services also underpinned Result 10 of the Better Public Services initiative,9 which aimed to give people easy access to public services online. The areas that Result 10 focused on were supported by foundational elements, including common standards and approaches, such as shared ICT services.

The Government wanted to be a single customer for ICT services from the private sector. Infrastructure as a Service was an early step towards this goal.

Infrastructure as a Service's operating model

We expected the GCIO to draw from practical experience and use an evidence-based approach when designing Infrastructure as a Service. We also expected the GCIO to have a clear operating model for Infrastructure as a Service.

When Infrastructure as a Service was created, there were not many examples from overseas governments that the GCIO could use as guidance. This made it difficult for the GCIO to take a strict evidence-based approach to designing Infrastructure as a Service.

Instead, the GCIO worked with some organisations that would use Infrastructure as a Service to ensure that it would be practical and meet multiple organisations' needs. The design of Infrastructure as a Service is consistent with the GCIO's approach to functional leadership, which is for initiatives to be centrally led and collaboratively delivered.

The GCIO has a clearly defined operating model for Infrastructure as a Service that is operating as designed. The organisations using Infrastructure as a Service, ICT providers, and the GCIO consistently understood the operating model. They could clearly explain their own and each other's roles in implementing Infrastructure as a Service.

In establishing Infrastructure as a Service, the GCIO:

  • selected three ICT providers and awarded them long-term contracts to deliver services;
  • negotiated a set of contracts between the GCIO, ICT providers, and organisations, using standard terms and conditions; and
  • charged organisations a monthly fee to recover the costs for putting Infrastructure as a Service in place and to fund its ongoing management.

Infrastructure as a Service offers three main services to organisations:10

  • Utility computing – organisations specify and buy virtual servers when they need them. As a result, organisations' operating costs increase and decrease in response to demand.
  • Storage as a service – organisations specify and pay for the disk space needed to store their operating systems and applications data. Organisations can pay for different levels of response times.
  • Backup as a service – a copy of the organisation's data is held on a system in case the original data is lost or damaged. Organisations pay different amounts depending on capacity requirements and the type of storage device (such as tapes or disks) used to store the backup.

Although ICT providers mostly own and manage the ICT infrastructure used to supply services, there could be times where they host an organisation's ICT assets. This is normally a temporary measure so the organisation can fully depreciate older assets before completely transitioning to Infrastructure as a Service. The transition is more efficient because the ICT provider's hosting environment is already set up and configured for the organisation.

The GCIO appointed three ICT providers on the Infrastructure as a Service panel. The GCIO has a 10-year contract with each ICT provider to provide services, with an option to renew their contracts for another five years.11

Organisations pick one of the ICT providers from the panel. Each organisation has a contract with the GCIO and a contract with the ICT provider it picked. Appendix 4 sets out more information about the contracts.

The Government initially funded the GCIO to establish Infrastructure as a Service. The GCIO now charges organisations that use Infrastructure as Service a monthly fee. This fee covers:

  • recovering the cost of the process to select ICT providers;
  • the annual costs of updating supplier performance reporting, commercial change processes, and the ancillary services that ICT providers make available;
  • providing security certification;12 and
  • services and support to organisations.

In our view, that the GCIO could appoint a panel of approved ICT providers suggests that Infrastructure as a Service met industry standards for service delivery at the time.

Overseas governments have approached the GCIO for advice on shared ICT services, including service design. This indicates that those overseas governments consider the GCIO's general operating model for shared ICT services, which they say is based on Infrastructure as a Service, is sound and transferrable to other countries.

Governance arrangements

We expected that, to achieve Infrastructure as a Service's benefits (which we discuss in Part 3), the GCIO would have a clear strategic direction that is supported by suitable governance arrangements.

The GCIO has put suitable governance arrangements in place. The Government ICT Strategy 2015 and Integrated Work Programme13 are clear and provide the direction and expected benefits from Infrastructure as a Service. Infrastructure as a Service is in both documents as part of the focus on introducing shared ICT services to provide better public services online.

The GCIO has governance bodies for the shared ICT services at the strategic and operational level. This is appropriate because of the need to align Infrastructure as a Service with other shared ICT services and because of its maturity. The governance arrangements align with the Government ICT Strategy 2015 and Integrated Work Programme to enable Infrastructure as a Service to be consistently delivered.

The documentation that supports the governance arrangements and design of Infrastructure as a Service sets out:

  • the business case outlining its establishment, expected benefits, and options analysis;
  • roles and responsibilities;
  • terms of reference for the strategic governance group; and
  • the set of standard legal contracts.

6: So that we could include a variety of organisations in our sample, we considered organisation size, the type of work organisations do, and the sectors the organisations work in. We also considered the GCIO's advice on whether organisations were high, medium, or low users (based on consumption levels, which means the quantity of services an organisation buys) of Infrastructure as a Service.

7: We did not contact the district health boards because we knew that they were part of an unsuccessful joint project co-ordinated by NZ Health Partnerships Limited (NZHP) to adopt Infrastructure as a Service, which had delayed uptake. In 2016/17, NZHP worked with 12 district health boards to help them connect to their preferred ICT provider and with their planning to transition to Infrastructure as a Service.

8: The Government we refer to in this report was in power during our fieldwork and until the General Election in October 2017. Some of the roles and responsibilities we describe may change under the current Government.

9: The Better Public Services initiative was launched in 2012 for the public service to focus on 10 significant problems. Information about Better Public Services is available from the State Services Commission's website, at

10: A range of ancillary services is also available through Infrastructure as a Service.

11: Two ICT providers' contracts are due for renewal in 2021. The other ICT provider's contract is due for renewal in 2022.

12: This involves the GCIO checking that services available through Infrastructure as a Service meet security requirements. The certificate will tell organisations wanting to buy the service what checks the GCIO performed and whether there are any residual risks that organisations should be aware of.

13: The strategy and work programme are available from