Government Operations Committee on Feb. 6th, 2012

[The Chair, NDP, Pat Martin]

I'm going to call our meeting to order, ladies and gentlemen.

Welcome to the 24th meeting of the Standing Committee on Government Operations and Estimates. We will be working today on our study regarding the new entity, Shared Services Canada, and we're very pleased to welcome as our first witness in today's study Mr. David Nicholl, the corporate chief information technology technology officer for the Province of Ontario.

It's “technology” only once, actually--

[Voices]

Oh, oh!

[David Nicholl, Corporate Chief Information and Information Technology Officer, Province of Ontario, Ministry of Government Services]

Yes, just the once.

[The Chair, NDP, Pat Martin]

It's very nice to have you here, Mr. Nicholl. Thank you for making the effort to come here and share your experiences with us. If you have an opening statement of five or ten minutes, that would be welcome, and then the committee members will have questions. The floor is yours, sir.

[David Nicholl]

Good afternoon, everyone.

I'd like to thank Mr. Girard and the committee for inviting me to speak to you this afternoon. I'm honoured to have the opportunity to tell you about the Government of Ontario's experience with IT shared services.

Please note that I am here in my capacity as the corporate chief information officer for the Province of Ontario. I have been invited by Shared Services Canada to sit on their advisory board, but I have not yet participated in any meetings.

I've been in the IT business for about 30 years. My experience includes large projects in both the private and the public sectors. I've worked in the financial services industry for a long time, I did a stint with a software development company, and now I am with the Ontario government.

My assignments have taken me around the world, starting obviously in Northern Ireland, where I was born and brought up. I then came to Canada, spent some time in Bermuda, went back to the U.K., and then came back to Canada. So I've done a little bit of travelling around.

I was instrumental in leading the transformation to an IT shared services model, and I'm happy to be here to share with you the knowledge I gained from that experience.

In 1998 Ontario introduced a strategy to use information technology to advance the government's business vision and enable flexible, responsive, and innovative public service. The government had recognized that business directions and accelerating demands could not be addressed by the information technology capacity of the day. The strategy was a comprehensive plan to accomplish three goals.

The first was to invest in a common infrastructure. The government could no longer afford to run multiple IT infrastructures and information silos and needed the improved service and lower costs that common infrastructure promised.

The second goal was to develop appropriate corporate policies and standards. The existing processes for developing policies and standards were slow, cumbersome, and outdated, and they were ill-suited to support the transformation to a common infrastructure.

The third goal of the strategy was to ensure the necessary governance, organization, and accountabilities were put in place to address future needs.

The approach of providing information technology services to business clusters instead of individual ministries was adopted. A business cluster was defined as a grouping of government programs and services that had a common theme, were delivered to clients with similar interests and requirements, and could be supported efficiently with common or similar support.

Cluster CIOs, who reported both to the deputy minister and to the corporate chief information officer, were appointed. The role of the management board of cabinet—a committee with functions similar to those of your Treasury Board—as overseer of IT strategy and initiatives was strengthened, and an enhanced committee of deputy ministers was established to provide stronger corporate coordination and direction. The position of corporate chief information officer was established to manage the transformation to a new cluster-based IT organization.

Building on the foundations already in place, an evolution of the strategy took place between about 2005 and 2008. That enabled the full consolidation of IT infrastructure resources into a single IT organization through the investment of $32 million to drive standardization in the technology environment. This allowed us to put our arms around the whole IT infrastructure function and manage our resources far more effectively.

The changes resulted in a permanent base reduction of $100 million annually. Over a period of two years a massive shift took place: hundreds of people were reassigned, over 100 large and small data centres were closed, and over 1,500 servers were decommissioned. A single e-mail system was implemented and a common IT help desk went live.

This transformation of the infrastructure landscape was critical to the future effectiveness of the IT organization, but it also proved its worth financially. We saved over $100 million per year over the first two years, broken down roughly as follows.

We saved $70 million in infrastructure consolidation and $2.4 million in asset management. Organizational changes, which were both staffing reductions as well as fee-for-service conversions—basically converting consultants into full-time staff—saved just over $16.5 million. Common components, applications, and services—basically, sharing applications around ministries—saved a further $3 million. A collection of other things amounted to $8 million saved.

In addition to our technology, we also consolidated skills and knowledge in centres of excellence for project management, accessibility, privacy impact assessments, and our Microsoft .Net development.

In 2009 we launched IT Source, an internal consulting organization that recruits, develops, and manages a group of OPS IT employees—for example, project managers and systems architects and analysts—who are deployed to IT projects across the IT organization for specific periods of time. This provides an alternative to fee-for-service consultants and retains our experience in-house.

Just one example of how profound the impact of this transformation has been is in our recent migration from Microsoft XP to Windows 7 and Office 2010. In 1998 this change would have involved approximately 27 different groups and ministries. By 2006 it would have required nine. Today it involves one group, which is the organization responsible for infrastructure.

Now, although a key driver of the transformation of the IT organization was obviously cost savings, we also took advantage of the fact that structural changes were being implemented in order to initiate a critical change in the way in which our IT professionals perceived their roles. Rather than just being focused on the day-to-day development and maintenance of systems, we encouraged staff always to keep in mind the ultimate purpose of the technology—to support government lines of business—and to consider how they might best achieve that goal.

The results are encouraging. We have seen a significant shift in attitudes amongst our staff. There's now recognition of the importance of viewing themselves as partners with the business in the delivery of public services.

That's a very brief description of our consolidation journey to date. Clearly we have realized very significant returns on our investments, and we have greatly improved both the efficiency and effectiveness of our IT organization and our service to Ontario citizens and businesses as a result.

I'm in your hands.

[The Chair, NDP, Pat Martin]

Thank you very much, Mr. Nicholl. That was very interesting. I'm sure we'll have some questions.

We'll begin with the NDP, with Mr. Alexandre Boulerice.

You have five minutes, Alexandre.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

Good afternoon. Thank you for being here and for your presentation.

Something I found particularly interesting in your testimony is that, as part of the exercise similar to the one by Shared Services Canada, you have chosen a management structure with nine different entities that cluster departments and agencies that have similar models. But here we're talking about a process where we want to group everything together in one single organization, one single centre, extremely centralized.

Why did you decide not to use that model and instead use a model divided into nine entities?

[David Nicholl]

Just to be clear, we still have our nine clusters. Once the clusters were formed after 1998, basically most of the IT support stayed in one of those nine clusters. They had infrastructure and they had business solutions, the actual development of applications and support of applications.

Between 2005 and 2008 we stripped out all of the infrastructure, but all of those nine clusters were still left servicing the business solutions need. We still have the existing structure of clusters. We've simply taken away the servers and e-mail and all the stuff you can do in one spot and we've consolidated the infrastructure piece.

So that's what we did.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

These clusters and attempts to save money through centralization are always complex processes.

What was one of the mistakes you made and could recommend that the current government not repeat?

[David Nicholl]

That's a tough question. I would say that some of the change management with staff probably could have been done better than we did it. We were given—and frankly, it was a good thing—a very tight, strict deadline. We had two years to do this, so the $100 million of savings that was achieved was actually minuted out of ministries' budgets over a period of two years. As you all know, when you minute out money from ministry budgets, you really have to achieve what you said you would do.

So we had very strict deadlines in doing what we had to do.Therefore, I think in all honesty we probably.... We moved just close to a thousand people out from those nine clusters into the consolidated organization. That was very tough for those thousand people. They typically arrived still doing their old jobs, because it takes a long time to sort out a lot of the residue of what's left in that big organization.

If we'd had more time, I would say that it would have been much easier from a staff perspective if we had been better prepared to receive them into that new organization. When you're scattered over the province of Ontario, and we were.... We had perhaps one group servicing Natural Resources. They were doing maybe servers, e-mail, laptops and PC support, and maybe some help desk stuff. You might have had three or four people doing that for a small office. We came along and said, “Okay, the server person, you're in the server organization, and the PC person, you're there”. It was just very, very difficult, especially in smaller offices, to try to sort out who was doing what.

So I think if there was one thing I had my druthers to change, I would probably like to have been a little more organized when we received people in. But again, as I think I said—I'm not sure I said it—one thing that was very important for us was that we talked and communicated all the time to people, so at least they knew what was going on even though it was happening to them.

[The Chair, NDP, Pat Martin]

You have less than one minute, Alexandre.

[Alexandre Boulerice, NDP, Rosemont—La Petite-Patrie, QC]

You said you had to move about a thousand employees following those administrative changes and that the process made it possible to save money. Did it also lead to job losses?

[David Nicholl]

We did have about $60 million in cost savings, but we did not set out to actually reduce our numbers. During that two-year period we actually didn't move anyone out of the organization at all. We actually committed that we would wait until.... We kind of put a three-year time window on it and said that everybody's job was protected for those three years and we were going to make sure they still had work.

Since then, obviously it's allowed us to rationalize, and there has been some downsizing of people. But frankly, most of the $16-odd-million we saved in staff costs was a result of actually going the other way. We actually removed huge numbers of fee-for-service consultants, which are enormously expensive. The management board of cabinet actually gave us approval to increase our FTE count. In return, I think the number we're saving right now is somewhere around $65 million a year—not just in this exercise but across the whole IT organization—by actually moving from fee for service to an FTE count. It's mostly through that exercise that we had staff saving costs.

[The Chair, NDP, Pat Martin]

Thank you, Mr. Nicholl.

Thank you, Alexandre.

For the government side, Mr. Jacques Gourde.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

Thank you, Mr. Chair.

I'd like to thank our witness, Mr. David Nicholl, for being here today. We appreciate your being here and your expertise.

You just said that the Province of Ontario managed to save $60 billion a year. Taking into account the size of Ontario and the size of the Government of Canada, could you estimate how much the Government of Canada might be able to save?

[David Nicholl]

No. I wouldn't even try, honestly, I really wouldn't. I wouldn't try.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

The 2010 Auditor General's report indicates that a good number of computer systems have been around for a long time and could lead to major breakdowns within the Government of Canada, which could have a negative effect on the delivery of services to Canadians.

Did you have the same problem before upgrading your computer technologies in Ontario?

[David Nicholl]

Going back to 1998, I would say not. I would say that by 2006-07 we were starting to realize that we had an aging application infrastructure, which is what your Auditor General referred to.

In about 2008 we started a program that we called our major application portfolio maps, where we took a proposal forward to cabinet that said we had risk-rated...we looked at our whole suite of applications in government, and there were about 2,200 applications running across all of our ministries. We said, of those applications, how many are absolutely business critical, where service to individuals and businesses would be impacted. We had a list of 250 of those applications that were considered business critical.

We then went through a risk-rating exercise, mostly from a technology perspective, but also a little bit from the business side. In fairness, it was mostly a technology study of what was most at risk. We came up with a set of 77 applications that we felt were the applications most at risk—if they fell over we were in danger of not being able to bring those applications back. It was purely age. We asked for some money. We didn't get that; we got a portion of that to actually start working through those 77 applications. That program finishes March 31 of 2012. Today we have remediated about 70 of the 77 applications, and there are some really big ones that are taking longer. They're funded, and we're actually working on them, and there are probably about two years to run.

I would say, from an application modernization perspective, which is specifically what the Auditor General was referring to, the infrastructure consolidation did not address that, no, but the end result of having gone through an infrastructure consolidation means that we are in a better position now to ensure that from an infrastructure perspective we're not dealing with archaic or out-of-date or unsupported hardware, operating systems, or packages.

I wouldn't say it's a direct correlation, but there has absolutely been a very positive outcome from having done the infrastructure piece first.

[The Chair, NDP, Pat Martin]

You have about one minute, Jacques.

[Jacques Gourde, Conservative, Lotbinière—Chutes-de-la-Chaudière, QC]

I would like to put it in perspective. All the departments of the Canadian government have their own email addresses. We would like these addresses to all have a common denominator.

Did you have the same problem with the ministries of Ontario? Did the restructuring go well?

[David Nicholl]

We had exactly the same thing, where we had 27 different ministries, each with their own mto.on.ca. Each ministry was the same. Part of the exercise we went through was to collapse down to a single e-mail address: @ontario.ca. We did that at the same time we took the seven or eight e-mail systems we had running. We actually collapsed it into a single Microsoft exchange instance and we all went to one address.

It's very difficult, from a mental perspective. Ministries like their little name on it, but eventually everybody accepted it.

Even things like name resolution cause huge problems, so when you've got two John Smiths, somebody has to be John.Smith and somebody has to be John.Smith1 or John.Smith2. It can cause all kinds of issues, just so you know, but it can be done.

[The Chair, NDP, Pat Martin]

Thank you.

Jacques, that concludes your five minutes.

For the NDP, Mathieu Ravignat.

[Mathieu Ravignat, NDP, Pontiac, QC]

First, I'd like to thank Mr. Nicholl for being here today. His comment on the reduction in the use of consultants as a result of shared services was very interesting.

Could you give me more information about the percentage of that use before and in subsequent years?

[David Nicholl]

Honestly, I'm not going to try to give you percentages. I really don't have numbers like that here with me, and I wouldn't even try to remember.

What we tried to look at was how many consultants we had on board that were consistent every year. We need to use consultants for various things, and we wanted to make sure we were using consultants where they would be best used. That is really in two places. The first is when you have project work and clearly that work is not going to be repeated over a period of time. The second is when you need some expertise. That's when you really want a consultant with you, when you need some expertise.

We tried to work out where the bar was for the number of consultants we had running on a regular basis, a regular run rate coming in, and that's what we went after.

I did mention IT Source. IT Source is a very important part of that. We did try to say, look, there is a need for variability when it comes to staffing within our clusters and staffing our projects. Rather than having to go outside all the time for those people, we thought, why don't we grow that ourselves? We created IT Source, and it's 250 people. We did it through fee-for-service conversions, and we staffed IT Source with FTEs, full-time people. They operate as consultants, except they are full-time people.

[Mathieu Ravignat, NDP, Pontiac, QC]

Okay.

I would also like to add something to that question. I don't know if you have had the chance to read the report that the government purchased from PricewaterhouseCoopers. It sets out the percentage of desired consultants. Is that not judging the process before the process has run its natural course?

From the start you were unwilling to determine the percentage of participation from the private sector. Doesn't it seem strange to you to decide on a percentage for the private sector at the outset?