Government Operations Committee on Feb. 6th, 2012

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

Thank you.

[The Chair, NDP, Pat Martin]

That pretty well concludes your time, Alexandre. Thank you.

Mike Wallace.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chairman.

I want to thank our guests for coming this afternoon.

Just as a little bit of a clarification for me, the organizations you represent in ITAC, are they all private sector operators? Is there any government involvement at all in terms of membership in your organization or is it all private sector involvement?

[Karna Gupta]

ITAC is all private sector. Our total membership is somewhere near 400 companies. It's fully funded by the industry.

[Mike Wallace, Conservative, Burlington, ON]

And they're mostly larger players in the industry...? Would individual consultants be members of your group too?

[Karna Gupta]

Anybody who touches IT would be our members. From a carrier point of view, it would be large carriers to small and new carriers. From a technology supplier point of view, it could be from IBM to small software companies. They're all over the place.

[Mike Wallace, Conservative, Burlington, ON]

Do you get feedback from them on how the marketplace is in terms of whether they're busy or not busy, or if there's a lot of employment or a lot of opportunities? What's the marketplace telling them at this moment in time?

[Karna Gupta]

Globally, I think the IT market is still showing reasonable growth year over year. If you were to talk to most of the multinationals operating in Canada, they would probably say that the Canadian market outperformed in terms of year-over-year growth for their financials compared to most of the other geographies, if you leave out the emerging countries. In the G-8, Canada is outperforming them. The market is robust for them, but there is a struggle at mid-range because their access to market and capital continues to be an issue.

[Mike Wallace, Conservative, Burlington, ON]

This might be difficult for you to answer, but in a project like this for the Government of Canada, is there an opportunity, would you say, for the smaller operators, versus us just hiring the IBMs and the HPs of the world to do work for us? Do you see this as an opportunity to add their intellectual expertise? We basically can buy servers from anyone, but it's their intellectual capacity we're looking for. Is there an opportunity here or is this really only for the larger operators?

[Karna Gupta]

I believe the small and medium companies, and particularly Canadian technology and Canadian innovation, could be showcased here, even through the big organizations. A lot of the big organizations source some of their technologies from younger companies. I will give you one of my past companies. It was a public company, Certicom, of which I was CEO. We sold our stuff through IBM, Microsoft, and others. It was a successful technology company in Canada and got sold through the others—so yes....

[Mike Wallace, Conservative, Burlington, ON]

I actually agree with my NDP friend who was questioning before this. My experience has been mainly at the municipal level. I was there for 13 years, and I've been here for six years. Sometimes people think that once somebody pokes a hole in the bottom of the public purse, lots of coins will fall out it.

My personal concern is that with a big project like this there will be an opportunity for people to overcharge the Government of Canada and the Canadian taxpayer for services provided because of the size of the project and so on.

You're telling us today—or you told my colleague from the NDP—that the onus is on us to set the parameters correctly to be able to make sure that those costs are maintained and reasonable. Is that a correct statement on my part, or does the industry itself have a responsibility to make sure it's not poking a big hole in the bottom of the purse?

[Karna Gupta]

I'll make two comments on this. One, the project scope is well defined, and when industry has lined up to quote something, I assume and I would believe most of my members will deliver within the price they put out. The risk is always that the scope keeps changing, and the buyer will always want changes within the current cost component. In the private sector that is known as customization. Hence I made the comment that a change management process needs to be put in place as part of the governance, so you know that if there is something different from what's out there that is specific to your needs, it will require new work, and that may cost more.

The private sector also fully understands, our members fully understand, that over time government will spend less money on IT. The government's overall IT consumption would go down, as would any other institution's. They understand that.

[Mike Wallace, Conservative, Burlington, ON]

Thank you, Mr. Chair.

Thank you for your answers.

[The Chair, NDP, Pat Martin]

I have just one question, building off Mike's, before we go to the last round.

Are contracts of this nature in the IT sector most often of a fixed-cost or a cost-plus relationship?

[Karna Gupta]

I think that varies. Often they are fixed-cost, but that does vary by project.

[The Chair, NDP, Pat Martin]

Very good.

I think this will be the last round of questioning, shared between Denis Blanchette and Mathieu Ravignat.

[Mathieu Ravignat, NDP, Pontiac, QC]

What do you think is the difference between the expertise present in the public sector to go ahead with this and that which needs to be drawn from the private sector?

[Karna Gupta]

Having the public sector running this complex IT organization over this long has yielded a very significant pool of talent that resides as government employees. That talent pool is probably not readily available to a lot of small and medium companies if you look around today, so that talent pool needs to be harnessed. You are changing all right, but there is a talent pool, so there is a significant skill set within the public sector that can be reused, and must be reused, and it's valuable.

In this case, the private sector skill set you would bring in more often than any other would embark on a transformation plan and break it up into projects. You would have to look at how to measure those, how to know they were successful, and how to track them, so it would be almost like running a company. For that part you would probably need to look to some experience from the private sector.

[Mathieu Ravignat, NDP, Pontiac, QC]

Second, would there not be an inherent danger in the centralization process in that it would weaken security measures or at least make things easier to attack with regard to access to information and so forth? I would imagine there are ways around this, but is there not an inherent risk?

[Karna Gupta]

I think on this one I'll respond that it's probably more a myth, to some degree, than it is real. When you have a smaller system, you are more vulnerable, in large part because most of the time you are on an older version of software. If you have a hundred different e-mails, I can almost assure you that only one is up to date and the other ninety-nine are six generations behind and therefore more vulnerable.

So you would expect, just by virtue of moving to a newer technology, that you would be a lot more secure, because from a security point of view you're up to date on all of the new technology that's available. It would be the same with your data centres and your network. Your data centre sitting in a closet is very vulnerable compared to a secure facility that is running 100% of the time.

So I think there is a little bit of a myth against centralization. There is a physical risk. You have one building or six buildings—the same way the stock exchange is in one building—so there is a physical risk. But from a technological point of view, the risk is actually lower by centralizing.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Mr. Gupta, in the past hour we've talked about certain things we need to consider. Since we're running out of time, I'd like to give you the opportunity to tell us what other significant mistakes we should absolutely avoid so that the operation is not a failure, but a success. What traps should we avoid to make this project a success?

[Karna Gupta]

Thank you.

There are a few things. I think I mentioned them as I went through my comments and the questions and answers, so I'll start from the top.

[Denis Blanchette, NDP, Louis-Hébert, QC]

Would you like to suggest something else?

[Karna Gupta]

The issue is that the major risk at the beginning, obviously, is not having proper planning put in place. There's a very significant amount of risk that is run if you don't have a plan. The other risk along the way is in terms of how you measure the project and how you measure the outcomes.

The third risk is if the people who are doing it are not accountable or are not given the tools to be successful. You can't ask people to do things if they don't have the talent, the tools, and the support from this committee and the rest of the government to get it executed. They need support from all of the other existing departments that consume their services now. They need them to be supportive and collaborative, the same as the private sector would be. So that's a major risk. Those risks are real because you're consolidating and there are shifts in the power balance and changes in the organization.

Finally, the risk is human. The whole risk is in the human area in terms of the culture and getting people into the same outcome-based approach. There is very little challenge on the technological side. Technology is never really a problem. Most of the time, the problems are the other issues.

[The Chair, NDP, Pat Martin]

Thank you, Denis. That concludes your time.

Thank you very much to our witnesses, Mr. Gupta and Ms. Oliver from ITAC. Your testimony has been very helpful. We may in fact need to talk to you again as we continue with our study of Shared Services Canada. Thank you for being here.