The Government of Canada announced an initiative to centralize services across the government, to develop consistency across departments, and most importantly cut costs by reducing redundant systems and contracts.
On paper, it makes sense. To improve efficiency and lower costs by consolidating services centrally and reducing contracts. Solid argument, seems very reasonable.

In 2006 Tokyo's Department of Recreation launched their "Swimming Pool shared services" initiative resulting greater efficiencies and lower costs for pool administrators by combining the pools (and their staff) together and reducing pool hours. "Pooling resources" is always the right solution.
Sadly and unsurprisingly, in practice, there is no direct correlation between centralising services and realising cost benefits. Despite many attempts before to centralise services, the result hasn’t been savings in cost, but instead the opposite. The problem isn’t with the lack of shared services / centralised services, but that the very framework of shared services is built on a broken procurement model that:
- rewards and reinforces unintegrated systems,
- prevents non status-quo systems, and FOSS / Open-Source options;
- is built on reinforcing sustainability of the framework for increasingly greater financial rewards.
This procurement model in government may have worked when times were simpler. Except at that time finding valid & qualifiable (security checked) vendors was harder, and systems were less complex – nothing changed and these systems would last for years. Fast-forward, and you have the mess government has now:
- incapability to meet the varied technical needs of a 250’000-strong federal workforce (what? You want to use Firefox or Chrome browser?)
- incapability to procure modern software or hardware for specific or unique projects (forget getting any Apple Macbook with Adobe Illustrator);
- a fragile technical infrastructure strung together by outdated systems, protected by blocking sites and even full blocking public servants’ access to the Internet (because threats are looming);
- procurement of costly proprietary systems that are adapted or customised to other outdated proprietary infrastructure (often Windows Servers);
To make it worse, combine this with a complex society with ever-changing needs and increasing demands on government to provide professional services on par with the private sector, and you’ve got an urgent mess.
This mess goes further. The big actors in procurement to the Government of Canada are CGI and IBM, two huge giants in the business with first dibs and first call to big contracts, with keys to the infrastructure gates to deem what other software and vendors can work on the Government’s custom-built infrastructure. As Government works to cut costs and reduce a supposed “number” of concurrent systems, these big vendors maintain an inside track of access, expertise and even input (or “influence”) on the selection of systems. How systems get approved to go on this infrastructure is mired in kafka-esque bureaucracy reinforced by techies promoted through the ranks of playing it safe (remember, “Nobody ever gets fired for choosing Microsoft technology”), rationalised by subjective risk matrices matched with supporting argumentation for the strength of status quo. Status quo is fine and good, so long as things don’t change. And things change in the tech world. Lots.
So government departments, divided and conquered by Ottawa’s big vendors, buy duplicate systems they can’t maintain, that are closed to support an update cycle paid for by successive licensing, at inflated rates to work on a disparate infrastructure. Centralising the services won’t resolve this; instead it just may make it easier for big vendors to collect more money with fewer invoices as they eliminate more smaller vendors who were offering alternative solutions for custom problems.
BUT the tide is changing. Maybe. The elephant outside the room is demanding more from government. All the while new hires and resistant public servants continue to voice objection to working with inferior disconnected PCs with inferior unsocial software on 90s-era infrastructure.
More silver-lining may lie in that the infrastructure gatekeepers (they’re on the government side) seem largely agnostic when it comes to types of systems. I can relate that it’s unnerving for a public servant to endorse a FOSS (Free Open Source Software) tool if there’s no one on the other end of the line to fix the system that a thousand employees may rely on. Big vendors are good at providing guarantees to getting the job done according “to spec”, a sure-sell in a public service built on risk-avoidance. Matched with a good procurement specialist who can hold them to their penalties when they under-deliver, and cost savings are realised. Unfortunately, the sad reality is considering the level of turn-over in procurement and lack of IT specialists involved in the procurement process (for some reason, they seem to be excluded), the big vendors win out like a game of Risk when your opponent is not only ill aware of the board’s pieces, but they’re playing a different player every few turns.
The Government of Canada wants to increase efficiency of systems and lower costs. The existing model to procure systems is broken and costly. With 44 departments and agencies using very complex and costly systems, saying centralising the services will resolve the issue is oversimplistic and attacking the symptom, not the cause. To centralise systems is analogous to fixing a complicated game of Football by having 44 players play on a smaller field, when it’s the rules that need to be changed. The government ought look at the procurement process, with a criteria to realise efficiencies and cost savings, with centralisation acceptable only as an option among any multi-tiered approach for supporting a range of deparments with varying needs and challenges (hey, for some departments it works, others, it doesn’t).
Procurement is the process of the acquisition of goods and services according to agreed terms for money. If the government is having a problem with the goods and services, and wants to save money, then it’s time to change the process. Not put all your eggs in the same broken, costly basket.



August 5th, 2011
DBast
Posted in
Very well written and I totally agree. Just a another reason for me to think that big business runs this country.
I said several years ago, when all were certain that amalgamating everything under one virtual roof was impossible due to the intricacies and difficulties involved, that none of that mattered. It would be decided by a government driven by ideology, and at the stroke of a legislative pen the whole thing would be done. Only then would we have to go through the massive (and horrendously expensive)changes needed to make the idea into reality.
That will, I believe, be a prelude to a total contracting-out of IT services. It will be a chance for the government to remove itself from the NAFTA/business-imposed procurement process (a process albatross no business in its right mind would ever willingly accept for itself). It will be a chance to remove thousands of employees from the public payroll, move them to lower-paying jobs in the private sector, and give the difference in cost to the managers of the companies. And it will be a chance for the government to remove the contingent liability of a Defined Benefit pension plan by transferring the risk associated with a Defined Contribution scheme onto the backs of the employees without paying any compensation for that massively increased risk.
From the government’s perspective, what’s not to like? From the perspective of safety and security of Canadians, and from the perspective of Public Servants who have to make this thing happen, there’s a lot to question, beginning with the practicalities of the move.
It’s all well and good for people to say the private sector can be more efficient, can change directions more easily. But the private sector, when it has a product line that isn’t meeting its costs, can simply drop it, leaving its clients having to look for something else. Government can’t do that. It must retain its records for decades, and be prepared to compensate people regardless of cost, or provide suitable alternatives.
While there’s much about unifying and streamlining systems which makes a great deal of sense from a technical perspective, don’t even begin to think this is going to come easy, or cheap. We have too many systems, painstakingly develop over decades in response to numerous government edicts, and running on a myriad of platforms through a myriad of processes, to simply roll everything together into a one-size-fits-all scenario.
Procurement is one of the major roadblocks in truly redefined IT service delivery in the GoC. Unless the current rules are completely rewritten—both procurement and project governance—Doug’s conclusion seems likely.
Larger contracts to fewer suppliers implementing “standard” IT solutions which are not the most efficient but have the advantage of being less politically risky.
I’ve written up a few ideas on how we can redefine service delivery here: http://4mn.ca/pdUWi3
Mark
Great post! I liked Mark’s post (above) and David’s too
Couple things to add on this. The current procurement system is totally broken. There are so many middlemen involved in contracts with the government. I’ve heard of instances where four companies are involved in the delivery of work for a particular project. The focus on hiring individuals to do particular work rather than hiring small companies that work as a team is also problematic.
I do see the this Shared Services Initiative as putting even more contracts out of the reach of small Canadian businesses. Already so many of the contracts that are available through MERX are out of the reach of small companies. Unless you’ve got a dedicated proposal writing team, it’s generally not been worth following the opportunities there.
Although there are limitations on what can be done to promote a Made in Canada solution, the multi-nationals definitely have entrenched paths to federal $$. I find it frustrating that as a small business I don’t have access to people & resources (like GCPedia) that larger firms with embedded consultants do. It’s not a level playing field, nor is it cost effective.
Any large, centralizing IT initiative I’ve seen like this has simply proved to kill any initiative of small teams. I have yet to see the results of these efforts being productive (either inside of government or without). There is just so much rhetoric involved in the idea of sharing IT resources. However, forcing a centralized solution is far different than building a collaborative community.
For far too long IT departments have worked to create big solutions which have implemented the lowest common denominator of needs. This works for many instances, but unless you’re working in an iterative manner and have the flexibility to meet the needs users, you’re never going to get a satisfactory user experience.
Its big corporate thinking that leads to the IE6 problems that are still plaguing the civil service today. Building mission critical systems based on a selected vendor’s solution rather than standards. This thinking produces insecure outcomes and approaches which seem too big to fail but really are too large to have any chance of succeeding.
I want a Gov2.0 that is responsive, flexible, light, secure & knowledgable. The GoC employs more IT workers than any other employer in Canada (I believe), but again and again their efforts tend to benefit corporations more than they do the public who they are supposed to serve.
Canada – beware
Western Australia
The state government of Western Australia (WA) recently announced that it is abandoning shared corporate services after spending in excess of A$345m over seven years implementing a shared services strategy. This shocking, though not unexpected, outcome should send a shiver down the spine of any government contemplating shared services strategies to reduce costs.
http://about.ovum.com/app/western-australian-state-government-abandons-shared-services/
Thanks Alex, I have shared the link on Twitter. Very valuable story.
Shared Services Australia had a huge scope. They were about sharing large government services not just IT. Shared Services Canada it just looking to centralize Email, DataCenters and Networks. It does not involve radical changes for the clients.
Provocative post Doug, I think you voice the concerns of many, and hopefully those leading the initiative will take head from the lessons of others. There are many things that can go wrong with shared services, but I prefer to think positively and hope that at least some of the change will be good. From what I know, which is not much, the services to be centralized are email, data and network, which by now are pretty much standard – I mean how many data centres and email systems do we need? Hopefully the more specialized things like ERP and Financial systems can be delivered in a cluster model that allows for some choice like we recommended in last year’s Canadian Government Executive magazine article.
I do agree that the procurement system is mostly broken, in fact having experienced it from both sides I think that it is not only inefficient but it actually encourages corruption of the very principles of fairness that it is trying to enforce. To my way of thinking a little more trust and a lot more transparency in decision making would go a long way. Enough said on that.
As for those that may be declared redundant in the new scheme, I really can only say, welcome to the real world. I don’t think it will surprise anyone if I say there is quite a bit of dead wood in the PS and and a sense of entitlement that is alien to those of us in the Private Sector. Fortunately I rarely work with that type of Public Servant, but we all know they are there. I only hope they are the ones to go and not the good ones.
I agree with Mike when he says “I want a Gov2.0 that is responsive, flexible, light, secure & knowledgeable”. Maybe those leading the initiative will take note, if enough of us say the same thing.
Thanks again for putting it out there.
I wonder how they propose to integrate email systems which are airgapped from the outside and require physical transfer to even allow outside emailing.
I wonder how they will ensure that all the consolidated systems are being looked after by people with the maximal security clearances.
Single points of failure sound bad too, especially from an organization which (for example) as far as I can tell has yet to take application layer security seriously. (Last I checked there was nothing from TBS or CSE on this in anything more than a drop in the bucket way.)
Hey Doug, TL;DR.
Nah, I agree with what you say about the procurement system. Lets look at Fred Chow:
He’s responsible for a lot of IT related goods and services.
I don’t want to point any fingers at Fred, because I’m sure he does his job well. Many procurement managers like him have very broad portfolios, and they need help from the end users to draft their tenders. But are the right end users involved in the procurement strategy? Probably not. And like you said, nobody got fired for choosing Microsoft.
Shared Services Canada presents some opportunities to consolidate a lot of the systems that are pretty generic and uniform across government.
There are many requirements for more specialized systems that they cannot, and should not, address.
Some of these can and should be addressed by smaller businesses with cutting edge software. But then, what happens when IBM buys that small business and transfers those products under the umbrella of a bigger IBM offering?
See where I’m going? Support ceases or gets transferred internally to people who don’t have the expertise to perform the necessary updates. Or the procurement process starts all over again. Or outside contractors are hired to maintain the systems that were provided by the defunct company.
I don’t know. Does any of this make sense?
Great post & some great comments!
As an IT exec – the concept of shared services in an organization the size of the GoC is not new – large business have been fighting that demon for years – some more successfully than others.
How many departments use individual instances of SAP or Oracle products? And ask how many of them are *really* using them? (by that I mean ask how many have “turned on” basic things such as business process workflows vs manual data entry) Blank looks is what you will get from many
And here is a double edged sword – in existing model,rather than lifetime cost of ownership – since cheap wins, under performing asset is purchased – 12 months later open bid to update that asset. (waste cost right there) Small Business A wins ‘X’ amount of days & dollars for that upgrade – at day or dollar milestone of ‘X’ one more day or dollar? many of the procurement vehicles technically require a new open bid…
It is the execution of shared services that is the problem – that includes Procurement & Treasury Board.
1) as written above – yes, too often procurement is hampered by lack of knowledge ‘low price equals low price’ regardless if one is an iPad & the other an etch-a-sketch
2) Unlike many governments, procurement has no function or ability to ‘test’ or ‘pilot’ new ideas or technologies – Ottawa’s own Liquid Computing had a product for which there were Zero other companies in the world at the time that could match it – Of course that meant no ‘competitive bid’ – therefor no business.
3) In private sector – it is acknowledged that large initiatives such as this will be many years of execution – and for executives involved? they will be having that program as their absolute number 1 priority over that time period. They will be measured, promoted or fired on that priority.
GoC operates differently – Number 1 priorities set by TBS can change annually for executives – that means when your number 1 priority *next* year is something completely different – where are *you* going to spend most of your time? Easy answer – the one that you will be graded on…
4) And let us not even get started on the dysfunction in *any* organization that uses a “use it or lose it” budgetary process…..
So yes – it is going to be a challenging time in this city…..