Rotorua Lakes Council writes off $12.4m IT system after move to cloud

Rotorua Lakes Council staff say the adjustment will not directly impact rates. Photo / NZME

Rotorua Lakes Council is writing off $12.4 million tied to its OneCouncil IT system after moving from a locally hosted version of its core business software to a cloud-based set-up.

Council staff say the adjustment will not directly impact rates, although it is expected to result in an end-of-year deficit.

The council migrated to a cloud-based OneCouncil system at the end of 2025, stepping away from the original locally hosted and maintained model, a council staff report said.

The platform underpins key functions such as finance, procurement and rates, effectively acting as the organisation’s day-to-day operating system.

The move came after the provider, TechnologyOne, advised the council in September 2021 that it would end support for on-premises systems in October 2024, resulting in reduced security protections and fewer system updates over time.

The council was granted a limited two-year extension, after which it would no longer receive new software releases, patches or fixes, or ongoing technical support.

As the original version is no longer in use, it is now assessed to have no remaining value.

Under public sector accounting rules, assets must be written down if they no longer provide a future service benefit.

The remaining book value of $12.4 million must therefore be removed from the balance sheet.

While phase one of the initial programme passed without a hitch in 2018, phase two went live in May 2023, with its total cost, about $18.4m, making headlines when it was fully launched after a five-year delay.

It exceeded its original budget by nearly $15m.

Rotorua Lakes Council has moved OneCouncil to a cloud based system. Photo/File

The overruns were attributed to Covid-19 disruption, project complexity and the challenges of Rotorua being an early adopter of the software, which required significant configuration and external consultancy support.

At the time of the full rollout, the council said the platform would support operations for “at least a decade”.

In a meeting on Friday, the council’s chief financial officer, David Jensen, allayed any fears that this may not be the case.

“This impairment is a purely accounting requirement,” he said, adding the council was still “using everything” it had paid for through the continued use of the cloud-based OneCouncil platform.

Council director of finance Michelle Overbeek said the change was necessary to ensure the organisation remained efficient.

“Technology has moved very quickly,” she said.

Overbeek described the move as a “permanent strategic decision” which rendered the previous on-premise model an “obsolete legacy” system.

She said the write-off would not impact rates.

Mayor Tania Tapsell was disappointed it would affect the council’s financial reporting, though it was an accounting responsibility.

Rotorua Mayor Tania Tapsell at an October meeting. Photo / Laura Smith

“We have done such significant work on savings for the Annual Plan,” she said.

“It is disappointing that this will now impact our financial reporting.”

Council chief executive Andrew Moraes said the transition to the cloud-based system was completed in December without issue, with the new platform now fully embedded in council operations.

Councillor Don Paterson had concerns over “data sovereignty” with a cloud-based system, which Moraes planned to investigate and report back on at a later date.

Mathew Nash is a Local Democracy Reporting journalist based at the Rotorua Daily Post. He has previously written for SunLive, been a regular contributor to RNZ and was a football reporter in the UK for eight years.

- LDR is local body journalism co-funded by RNZ and NZ On Air.