Government Operations Committee on Feb. 13th, 2012

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

Thank you, Mr. Chair.

The longer I listen to you, the more questions I have. There are some things I don't understand.

In one of your previous answers, you said that you hadn't assessed the skills of internal employees. So you don't know what information technology skills public servants have. But you are quick to recommend that we outsource certain services because, you said, the people in the private sector have skills. Without even having a good idea of the skills of public service employees, how can you recommend outsourcing for one area and not another?

[John Chang]

The delivery of some of the infrastructure services that are being commoditized and are becoming a utility is really an output-based kind of analysis. To us, to come to a conclusion that says this could be done more effectively in the private sector from a service delivery perspective and more efficiently from a cost perspective is relatively independent of the actual skills analysis. We have benchmarks to show that's the case. We think you do not necessarily need to do a skills analysis in the specific areas—for example, server management—to be able to say that could be done more effectively or efficiently in one area or another. That's part of the benchmarking methodology we have in the appendix.

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

For the benefit of all the committee members, could you provide these analyses that support your point of view? I think it would be helpful for us. Would you be willing to do that?

[John Chang]

Sure. I would be happy to do that.

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

Excellent. Thank you very much.

My colleague Alexandre Boulerice just asked what part of the potential savings of $45 million, in a cautious scenario, represents staffing cuts. One of the tables in your report indicates that, if we aggregate the transformation phase with the transition phase, we could save up to $46 million in human resources. Given that there are gains in some areas and losses in others, can we safely say that, in a cautious scenario, 100% of the savings would relate to staffing cuts?

[John Chang]

What page are you referring to?

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

I'm at figure 28, on page 104 of the French version. I know that the pagination doesn't exactly match the English version.

[The Vice-Chair, Conservative, Mike Wallace]

I won't count this against your time.

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

Okay, thank you.

[John Chang]

As I stated earlier, we didn't do the analysis on labour and non-labour components of those savings. We did it on an aggregate basis.

As I mentioned earlier, of that $822 million in that point in time, which was probably February or March 2010—because it was a point-in-time analysis of the data centre services' total spend—a little less than $400 million was labour, so we anticipate there'll be a commensurate type of impact to labour on that number.

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

Now I'd like to move on to another topic. I'm coming back to the mandate.

You told us that you had a certain mandate initially and that, four months later, it had been changed. Then, at another point, you told us—and it's in the report—that there are some areas of activity that you did not study and that might be sources of savings for the Government of Canada.

Who decided that the networks could be considered, but not the consolidation of mainframes? Why keep the networks, but not the data storage? I think we're missing some logic here. As long as we're doing something, why not look at everything, thoroughly, in the context of this study?

[Ivan Milam]

The network was actually never included in the scope of the study, whether it was at the beginning of the study or four months in. I think that was part of the requirements that were generated by the crown.

It is also probably reflective of the way the crown manages IT assets. They manage from a data centre perspective, from a network perspective, and from a number of other tower perspectives, so first of all, that network wasn't included in the scope of the study originally.

With regard to the other consolidation opportunities, whether they were mainframe or storage, the mid-range was selected because it was the largest spend area in data centre services. There are potential opportunities, obviously, in mainframe and storage, but mid-range was chosen because it was the largest spend area. As well, there was a fairly extensive amount of data available on the mid-range area that allowed us to do a deep dive. There wasn't a commensurate amount of data and information available for storage or for mainframe.

[The Vice-Chair, Conservative, Mike Wallace]

Okay. Thank you very much.

Our last questioner at this point is Mr. Armstrong, from the Conservatives.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Thank you very much for your presentation. I'm going to refer to some questions on the implementation road map. It's on page 21 in the English version, if you could you find that.

I'm first going to ask about progress. The implementation road map presented in the report shows that in 2011 and the first part of 2012, we're really at the cusp and just getting started.

Do you want to elaborate on what progress has been made and what we're going to see in the next 24 months?

[John Chang]

We can't speak to the next 24 months because I don't know what the future will hold, but certainly when we tabled our report the middle of 2011, we recommended implementing this road map as specified on page 21. We recommended that the government establish a mandate for a change, and you've done that. We recommended that government should build capacity for change, which means setting up a program office and putting the right leadership in place.

Our observation, without commenting on the capabilities of those individuals, is that you've put people in those jobs and created Shared Services Canada. We do observe that those two specific actions have been undertaken, based on our report.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

What would you see next? If we could follow the road map laid out in your plan, probably we'd be talking about confirming the requirements and scope of the Shared Services organization. I think we're already engaged in that. Then there's managing stakeholders and organizational change, and developing a human resources strategy. When they were here we actually discussed that aspect, so there was already some action on those things.

Looking at what you have laid out and what the department has done, would you say we're on track so far with the road map you presented in this report?

[John Chang]

Yes, I would definitely agree with that.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Good. Thank you.

I want to refer to a couple of other questions. We talk a lot about cost savings and timelines. I want to talk about the services to actual Canadians. From my estimation, when these types of services are consolidated, we should see not only cost savings but also a better delivery of service; it would probably be faster and more streamlined.

Would you agree with that statement?

[John Chang]

Yes, and I think that was a question one of your colleagues asked earlier. We would agree. You currently offer many different services; in standardizing them, the experience in the marketplace is that you get a higher and better quality of service.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

Have Texas, British Columbia, and Ontario experienced that outcome? Have they actually seen some benchmarks they've achieved for services to people, and not just price points?

[John Chang]

They've had mixed results, particularly in Texas. As you know, they took a big-bang approach and outsourced all of the services. It was almost a legislative action that they took, as you saw in the case study.

We believe that based on some of those lessons learned there, the implementation recommendation we're making is more of an evolutionary one. They are in the second phase of the actual engagement, taking into consideration service delivery. They are adopting more of a multi-vendor standardization strategy, as we're recommending here.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

We've heard that one of the reasons to look at the data centres first for consolidation is that there will be a massive amount of energy savings. We talked about that. Do you agree with that estimate? Are the energy savings going to be significant? We've heard there's as much as a 50% saving in energy costs when you do the data centre consolidations.

[John Chang]

In data centre consolidation, there are potentially big savings in hydro when you do server consolidation and virtualization. I don't know about 50%, but it depends very much on the current utilization of those servers, as well as the type of environment they are in to allow for virtualization. I also want to remind you that the data centre is only 6%. Of that 6% of the total of $822 million spent on data centre services, one-third is actually non-labour; the rest is labour. The data centre itself is a highly visible type of asset that people want to consolidate, but in terms of actual dollars, it's a relatively small amount.

[Scott Armstrong, Conservative, Cumberland—Colchester—Musquodoboit Valley, NS]

We've also heard that there were questions about security. When things are spread out in several different departments, it is safer, because the whole system cannot be attacked at once. Some other witnesses who were questioned about that aspect said that since you have the best equipment and the best security possible when you do the consolidation, you're actually increasing the safety and security of the data.

Would you agree with that statement, from your research?

[John Chang]

Yes. One of the 65 requirements documented in our report was about security, compliance to security standards and policies, and so forth. We would agree that if you standardize those and centralize the monitoring and enforcement, the probability's higher that you would have better outcomes.