Government Operations Committee on May 31st, 2016

[David Nicholl]

We've dropped $140 million in savings. We probably started back in 2006 at around a half a billion dollars. We're down to $369 million.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Have you been through this process since the beginning?

[David Nicholl]

Yes.

[Steven Blaney, Conservative, Bellechasse—Les Etchemins—Lévis, QC]

Has this continuity, in your view, been a factor of success, the fact that the management team was...?

[David Nicholl]

Like me? No. It would have happened. We have great process in place. We have this desire to want to know how we're doing all the time. We run baselines, and we benchmark ourselves. We've done three rounds of baselining and benchmarking. We know where are we compared to the market. It's important for us to know. Are we doing well, or are we not doing well?

It's a constant theme. For those of you who read the Ontario budget, you may have seen that we have another target in IT. We have a $100 million savings target that we have to achieve by 2021. It's a continual journey for us.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much, Mr. Nicholl.

Mr. Weir, you have seven minutes.

[Erin Weir, NDP, Regina—Lewvan, SK]

Increasingly it seems that government records are not being kept in a paper format, but in electronic format. In the Ontario government, there was a major scandal and a police investigation involving the deletion of government records. That was occurring in the area in which you were working.

I wonder if you could speak to the lessons from that and if it has any implications for how government IT services ought to be organized.

[David Nicholl]

I don't see a connection at all between anything we've done in Shared Services and records management. I think records management is a distinct subject. It's a strong policy driven discipline. There's lots to read about records management within the Ontario government. I don't think it's the right place for me to be commenting on it. I don't see a connection between that and what we're here for.

[Erin Weir, NDP, Regina—Lewvan, SK]

Okay.

I guess one of the concerns in Ottawa has been the increased centralization of power in the office of the Prime Minister, in particular in the hands of the Prime Minister's political staff. I wonder if the centralization of IT could make it easier for the Prime Minister's political staff to interfere with the management of government or public records.

[David Nicholl]

I don't see any connection.

[Erin Weir, NDP, Regina—Lewvan, SK]

Okay. Fair enough.

You have explained some differences between the type of structure you have in the Ontario government and Shared Services at the federal level. Notwithstanding that, do you have any thoughts about what the top few problems were with the way Shared Services was implemented federally?

[David Nicholl]

To be honest, the scale of what happened here is just so different. I got to know Liseanne well. I got to know Grant and Benoît well. We had lots of discussions.

You talked a lot about it here today: the understanding of what existed is very important. You have to know where you are starting so that you don't get caught in this treadmill of not knowing how you are doing. Are things are okay? Are things moving? Are things not moving? I think they all said it. Probably, if SSC had taken its time at the beginning to really baseline what existed—not just from an asset perspective but from a service-level perspective, because it is service levels that will get you—it would have been very different, because expectations could then be set reasonably, as opposed to perhaps some people not being reasonable.

I look back at what my bible was, because for two years I ran the integration project for what we did with our shared services. I had a book of our baselining data, which was very detailed, so I knew everything that had come across from clusters into what we call ITS. I knew the service levels that were provided, and I knew the cost that went with that. We did not bring any money over. We very purposely implemented a chargeback facility, so we didn't take budget from ministries. We left the budget out there. We wrote service-level agreements, and we billed. Certainly, looking back on it, I have no regrets. In fact, we still do that to this day, where our shared services organization has zero budget. It has no base funding whatsoever. It charges for its services. There is an overhead to that. It is weighty at times. After 10 years of doing this, I think we can probably start to look at moving off that rigid zero-based budget and maybe going to a more mixed, hybrid mode. In clusters we do that. We have some base funding: salary, wage, benefits, and core maintenance. Non-discretionary work is put in the base budget, but for anything that is discretionary, ministries still hold that money.

I think that, for our shared services organization, it makes sense that it would be coming somewhere into the middle ground between where SSC is and where we are now. I can't overemphasize baselining. You can't do without it.

[Erin Weir, NDP, Regina—Lewvan, SK]

Shared Services, of course, is an attempt to consolidate IT services and procurement in the federal government. There have been somewhat similar efforts to do that at the provincial level.

Do you see any potential for greater co-operation between the federal government and provincial governments in areas like IT procurement, where different levels of government might be buying the same equipment, potentially from the same range of suppliers?

[David Nicholl]

Absolutely. Yes, for sure.

In Ontario, any procurement we do within the OPS, the Ontario Public Service, we make available to anybody in the broader public sector, including across Canada. We don't restrict it. I look at the desktop and laptop contract we have, and I think there are over 500 broader public sector organizations that are using the same contract. They don't come through us; they go right to our vendor, but the contract is written so that they get the pricing we get. It is the same thing with our network and with a lot of our software contracts, which are written for BPS. We have been talking a lot with the feds over the last, oh gosh, ten years now about whether we can get to the point where, when we are doing software or hardware procurement, we can all share. You are there now. It is not terribly widespread yet; we are looking forward to when it is. There is no question that the buying power of the federal government is so huge that it will have a positive impact on what we have to spend on things. I certainly look forward to the time when we can do a lot more procurement together, as opposed to separately. Absolutely.

[The Chair, Conservative, Tom Lukiwski]

Thank you very much, Mr. Nicholl.

Monsieur Drouin, for seven minutes, please.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

I have to apologize on my colleague's behalf. I don't know why he keeps asking about provincial politics. But don't worry; the last time the President of the Treasury Board was here, he was asking him about Saskatchewan politics.

To get back to the issue, were you there since 1998?

[David Nicholl]

No, since 2002.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Okay. The provincial government at the time created those clusters in 1998.

[David Nicholl]

Yes.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

Then, in 2006, you implemented the shared services model. How important do you believe the culture inside the departments was about...?

When you created the clusters, they were already used to sharing information. You talked about that horizontal importance.

[David Nicholl]

Yes.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

How important was it to create shared services? Maybe it made your job easier?

[David Nicholl]

No question. The concept of horizontality had already been introduced. In 2002, when I came in, I became one of the CIOs for the clusters back then. There's no question that there had been a lot of work done to actually forge that relationship between CIOs. It's something we work hard on, and extremely carefully, to bring those CIOs together.

I'm not going to say it was sweetness and light. It wasn't anywhere near what SSC confronted; absolutely not. I think a lot of that hard, hard work of convincing people of the benefit of shared services had been confronted, but it was still a massive exercise in culture change to get people on board. It was. I mean, they'd been in those positions, even within their clusters, for eight years, and you had to rip them away.

I heard what Grant said, that you're relieving.... Some CIOs are much more comfortable in dealing with boxes and wires than they are with the really nasty stuff of applications. Clearly they were uncomfortable with that. I think we were a microcosm of what happened up here. We had broken some of those bonds, for sure, but there were still huge culture issues to overcome.

[Francis Drouin, Liberal, Glengarry—Prescott—Russell, ON]

If I may, now that the federal government has implemented SSC in the current model we have, if you were there, how would you make sure that we broke those barriers within the CIO community?

[David Nicholl]

I think it's very much based on the relationship between a service provider, in this case SSC, and the people who are receiving that service. Not everything is going to run perfectly every night. It's just not. The strength of the service element that you develop as part of your shared services organization is critical. There are so many moving parts, and some of those moving parts will go wrong on a pretty constant basis.

On the process side, Grant mentioned the ITIL world, the standards around how you implement service within an SSC. That is critical, because you need to have process to fall back on. You can't be fighting fires on an ad hoc basis, on a daily basis. You just can't do it. On top of that, you really need to have that incredible relationship between whoever is in a position of responsibility for SSC and those CIOs. You live or die by that.