Ergo city authority administers environmental, social care, housing and cultural services to the city of Ergo. The city itself has many social problems and a recent report from the local government auditor criticised the Chief Executive Offi cer (CEO) for not spending enough time and money addressing the pressing housing problems of the city. Since 1970 the authority has had its own internal Information Technology (IT) department. However, there has been increasing criticism of the cost and performance of this department. The CEO has commented that ‘we seem to expand the department to cope with special demands (such as the millennium bug) but the department never seems to shrink back to its original size when the need has passed’. Some employees are lost through natural wastage, but there have never been any redundancies in IT and the labour laws of the nation, and strong trade unions within the authority, make it diffi cult to make staff redundant. In the last few years there has been an on-going dispute between managers in the IT department and managers in the fi nance function. The dispute started due to claims about the falsifi cation of expenses but has since escalated into a personal battle between the director of IT and the fi nance director. The CEO has had to intervene personally in this dispute and has spent many hours trying to reconcile the two sides. However, issues still remain and there is still tension between the managers of the two departments. A recent internal human resources (HR) survey of the IT department found that, despite acknowledging that they received above average pay, employees were not very satisfi ed. The main complaints were about poor management, the ingratitude of user departments, (‘we are always being told that we are overheads, and are not core to the business of the authority’) and the absence of promotion opportunities within the department. The ingratitude of users is despite the IT department running a relatively fl exible approach to fulfi lling users’ needs. There is no cross-charging for IT services provided and changes to user requirements are accommodated right up to the release of the software. The director of IT is also critical of the staffi ng constraints imposed on him. He has recently tried to recruit specialists in web services and ‘cloud computing’ without any success. He also says that ‘there are probably other technologies that I have not even heard of that we should be exploring and exploiting’. The CEO has been approached by a large established IT service company, ProTech, to form. a new company ProTech-Public that combines the public sector IT expertise of the authority with the commercial and IT knowledge of ProTech. The joint company will be a private limited company, owned 51% by ProTech and 49% by the city authority. All existing employees in the IT department and the IT technology of the city authority will be transferred to ProTech who will then enter into a 10 year outsourcing arrangement with the city authority. The CEO is very keen on the idea and he sees many other authorities following this route. The only exception to this transfer of resources concerns the business analysts who are currently in the IT department. They will be retained by the authority and located in a new business analysis department reporting directly to the CEO. The CEO has suggested that the business analysts have the brief to ‘deliver solutions that demonstrably offer benefi ts to the authority and to the people of the city, using information technology where appropriate’. They need to be ‘outward looking and not constrained by current processes and technology’. They will also be responsible for liaising between users and the newly outsourced IT company and, for the fi rst time, defi ning business cases with users. In principle, the creation of the new company and the outsourcing deal has been agreed. One of the conditions of the contract, inserted by the fi nance director, is that the new company achieves CMMI level 5 within three years. The current IT department has been recently assessed as CMMI level 2. ProTech has recently been assessed at CMMI level 3. Required: (a) Evaluate the potential benefi ts to the city authority and its IT employees, of outsourcing IT to ProTech-Public. (12 marks) (b) The role of the business analyst is currently being re-designed. Analyse what new or enhanced competencies the business analysts will require to undertake their proposed new role in the city authority. (7 marks) (c) Explain the principles of CMMI and the advantages to ProTech-Public of achieving CMMI level 5. (6 marks)