As I’ve mentioned in previous articles, the Government needs to move away from performing digitization and IT roles and projects where it is not well equipped to do so, as the Government continues to incur risk. The Government cannot compete with the $3 trillion IT industry, which is not constrained by Government hiring processes or official language requirements and can incentivize appropriate levels of staff and management in a timely manner as needed. Again, “why would you ever try to write a line of code unless you absolutely had to?” This sentiment could be extended to the system integrator role. To again use the construction analogy, the Government does not maintain a capacity of a major construction company for its needs: the Government hires it. Government organizations do not maintain IT development qualifications as industry partners do (e.g., CMMI Institute, typically levels 3-5). However, the Government does maintain the capacity to govern and manage the execution of the contracted work by qualified construction firms. Make no mistake; this is directly analogous to IT systems. Acting as the developer or systems integrator is fraught with risk and can lead, at the least, to excessive delays and cost or, at worst, to Phoenix Pay types of crises.
The Government is best able to run and maintain such buildings and systems once they are constructed or otherwise provided. Shared Services Canada (SSC) should continue to build its capacity as the center of this expertise, a) as the Government’s systems integrator, and b) in managing complex projects for the Government, and not have it distributed across several organizations. The bottom line is, Government is responsible to ensure services are provided – this does not mean the Government needs to be the provider of all these services.
Part of the solution is in policy. The Government needs a policy where it will play roles such as developer or systems integrator on a by-exception basis and pursue commercial solutions and development, with in-house development as a last resort. The policy would establish an appropriate level above which this policy would be in effect (e.g., projects with a total cost above $250,000). Proper business cases should be required to guide decision making with Government-provided options as a baseline. Departments should stick to their core competencies. SSC is the only department where IT is its core competency, therefore this policy must accommodate SSC’s role given it is the systems integrator and managed services provider for the Government.
Partnering with Industry to Reduce Risk
Partnering takes on several forms. Emotions aside, all stakeholders need to understand the success of the Government to achieve its objectives is dependent on industry, and it is very unrealistic to believe otherwise. It is impractical to think the Government would create its own telecommunications network instead of buying these services from a competitive market. This example can be extrapolated for the vast majority of Government needs.
Relationships
The further I progress in life, the more I understand how ultimately necessary and valuable relationships are to our success. Good relationships can fix anything. Inevitably during my time at SSC, I personally negotiated with vendor leadership on all of our key or highly visible contracts. Typically, it was with business unit or country leadership of our vendor partners, and sometimes it was with CEOs of multinationals.
Some may not fully appreciate the value of good relationships or recognize the positive results which may come from strong relationships, so I offer the following example.
A department found itself in the position of having to unexpectedly refresh a costly system, which had come to end of life and was to be replaced by another system which had become unavailable. On their behalf, SSC had to quickly purchase the current generation system for this customer Department. Funding had not been planned for this unexpected purchase. SSC staff negotiated at length to get the best price for the replacement system; however, we were still concerned given the magnitude of the purchase. I had a relationship with the CEO of the multinational firm from whom we had to buy the system, and I called the CEO explaining our situation and helping him to understand that every dollar mattered (this call is not a normal practice). The next day, they took $3 million off of the approximately $20 million price. Yes, relationships matter. I am grateful for the understanding and support of this CEO and vendor partner. To be clear, there was no quid-pro-quo for consideration to the CEO or this partner in any way, shape or form – it was based entirely on a good relationship.
In general, the Government needs to drastically improve its view of and relationship with industry. Specifically, for IT, and starting at the most senior levels, the Government should begin a program of relationship development with industry partners. Obviously, as SSC is the Government enterprise IT service provider, it should take the lead in such a program so that its benefits and experiences can be leveraged by other organizations. It is impractical to think every Government organization can achieve the highest level of relationship and trust with vendor partners. It is also confusing for vendor partners to try maintaining multiple relationships across the Government. Lastly, it is appropriate for there to be oversight over these relationships, which is why consolidating the leadership for these relationships in one organization (i.e., SSC) is important.
Leveraging Managed Services
You can’t beat competition – it provides the best solution 95 per cent of the time. Trying to do everything yourself means you eliminate competition and become very constrained by your own options. Due to the absence of competition in government, there is little incentive for overachieving on performance and no severe penalty for poor performance. The nature of the IT environment is that services will always be a hybrid of internally and externally sourced work. Taking the emotion out of the discussion makes the choice clear: use competitive forces among service providers and the Government options to provide the best solution[1].
Government leadership, starting at the DM level, needs to embrace a policy of working down the service-stack. For example, if Government can buy a business service from a market of proven world class providers, why would the Government create and provide the service itself? The majority of Government business processes conducted are not unique to Canada or governments. To use the payroll example, why doesn’t the Government have a world-renowned company like ADP doing payroll as a service? (This is not to be confused with the NextGen HR & Pay project, which is only looking for a “software as a solution” component – basically doing Phoenix twice.)
The financial aspect is a very key and compelling point. Leveraging industry’s resources provides an opportunity to leverage non-Government funding sources. Managed service providers will self-fund, through various means, the investments of a contract in order to achieve overall financial success of the contract. This is an opportunity for the Government to achieve objectives where the investment funds to invest in the service itself are not readily available or can be otherwise invested.
While unions may balk at more partnering with industry, they need to understand there is plenty of demand for their memberships. However, employees may be employed differently. This is simply the evolution of the industry. For example, coal tenders are no longer required in buildings – we moved on. Such is the case with IT. However, the evolution occurs at a much quicker pace. The objective of the unions should be for their memberships to have gainful employment, not assuming someone will perform the same job for 30 years. (I say this as someone raised in a union family.)
In summary, I am not saying all work should be taken to industry. My view at SSC was and continues to be that all decisions should be based on valid business cases where the Government option is the baseline for comparison. There continues to be cases in Government where decisions and investments are made without valid business cases (e.g., NextGen HR & Pay). However, the President of SSC and I were steadfast in this approach.
Managing Managed Services
It is vitally important to have a cadre of public servants highly adept at managing services. This is particularly poignant given the vast majority of Government needs can be accommodated in the market, and in many cases are a commodity. Governments in general – and Canada is no exception – have a hard time being good customers. It’s the nature of the environment. Even when Government is providing the majority of a given service, public servants need to work with industry well to be successful.
It is also important to understand this is critical in the consolidated approach. There is less risk and a higher chance of consistent success to have an organization managing contracts as part of the enterprise services provider where the expertise can be sustained and institutionalized, and a part of the major lines of service at SSC, rather than to have contracts dissimilarly managed across the Government.
Improved Contracting
Performance-Based Contracting
Tangential to better management of managed services, the Government has not progressed well regarding performance-based contracting, which is based on service objectives and a performance work statement rather than a traditional RFP process. The advantage to the Government is it reduces cycle time and shifts more of the risk to the vendor, who is often better equipped to deal with the risk. The benefit then, in a properly managed contract, is that the vendor’s resources are used when something goes wrong (i.e., the vendor pays). The Government should borrow such practices from other governments (which are well proven and documented) and industry, and institutionalize them through laws, policies and directives as necessary with incentives for good performance and convenient ways of resolving or eliminating poor performers. This is a very focused improvement that can be pursued immediately.
Past Performance Evaluation Criteria
Another easily implemented tool to improve contracting is to more heavily weigh contract evaluation and scoring towards past performance, especially on commodity services where there is a robust market with track records. While we made some progress with this approach at SSC, more can be made at SSC and across the Government. For some reason, the Government has actually avoided this practice, which simply does not make sense.
Improved Cycle Time of Procurements
There is substantial effort in reforming Government procurement activities. I will not attempt to take on the topic in its entirety here; I only advocate for continued improvements. One approach may be to segregate procurement rules for IT, given the unique and dynamic nature of the IT industry. There are examples in other countries.
Procuring Procurement as a Service
While this concept may be a challenge to suggest, I would feel remiss for not proposing it. There are examples in other governments where firms are contracted to provide a variety of services on a performance basis, and they include procurement as one of the provided services. This becomes a very cost-effective option for any organization as one gains the buying power and efficiencies from the service provider. Some in Government will say the Government must always be the decision maker and procurer of products and services; however, this is false. For example, when the Government procures vehicle fleet services, it does not get involved in procuring the oil used in the maintenance of the fleet; it is included as part of the service as this is more economical. This same approach can be taken with IT to a large degree.
The demonstrated experience of IT globally is that
governments in general do not have the capacity or experience to accomplish
transformational programs on their own. Public servants can go their entire
career and only be involved in one or two transformational events. Asking these
people to participate in or lead some part of a Phoenix-type project is not
realistic or fair – and this applies up through the most senior levels of the
Government. Dragging out or cutting significant projects into small bits is a
tactic used by people without the requisite experience that masks the problems
and adds unnecessary delays to the required services to the Government and
Canadians. Again, don’t confuse enthusiasm
for capability. If the Government and Public Service really want to make
progress as a leader in digital government, then it needs to fully embrace and
leverage their partners in industry.
[1] To be clear, I did not arrive at SSC with the intent to conduct massive outsourcing – it was NEVER my intention, nor was I asked to pursue such a course. However, it cannot be discounted as an option of varying degrees.
