McKinsey advising Defence on new IT operating model

26 January 2021 3 min. read

Australia’s Department of Defence is working on a broad-based overhaul of its technology infrastructure, with McKinsey & Company leading the IT operating model upgrade line of work.

Over 130,000 workstations, 8,000 plus servers and more than 3,000 applications make up the defence department’s IT infrastructure – all housed in three primary data centres. Efforts to modernise this complex network have been underway for years – most recently through the ICT Capability Assurance Programme announced in July last year.

The goal is to ensure that tech systems are aligned with the cutting edge at all times – starting with a complete overhaul of the current infrastructure, followed by routine checks and upgrades using agile, responsive processes. Several consulting firms are involved in the mammoth overhaul, spearheading and supporting different projects.

F/A-18 Hornet of the Royal Australian Air Force

McKinsey’s task is to lead the IT operating model update – spanning strategies, protocols and priorities that govern an organisation’s IT function. The Department of Defence’s IT operating model was designed more than a decade ago in 2009, leaving it ill-equipped to keep pace with the (digital) challenges of today.

In a contract worth over $1 million, McKinsey & Company was appointed in February las year to conduct an independent review, and recommend the potential design for a new IT operating model. The review was initially due for completion in April 2020, although the contract was later extended to November – backed with an additional $3.6 million in fees.

An AusTender notice from November shows that McKinsey & Company has since been handed a three-month contract to provide “cost assessment services” – worth another $1.2 million. This marks the more detailed and latter stages of the review process, which should manifest in an upgrade in the near future.

Other consultants at Defence

McKinsey is not the only beneficiary of the Department of Defence overhaul. A monumental budget, coupled with widespread efforts to transform in recent years has put many a consulting firm on the department’s roster, making it one of the industry’s top government clients.

Examples abound: in April 2020, digital services and consulting giant Accenture was awarded two major defence contracts – together worth $9 million – to help renew software licenses and develop virtual simulation arenas for combat training. In December last year, Deloitte was picked by the Department of Defence to provide workforce analysis and design services – a three-year plus contract worth nearly $3.5 million.

Fellow Big Four accounting and advisory firms PwC and KPMG are also managing projects for the department – most recently winning IT advisory contracts of more than $4 million each in February last year.