Shared Services Canada: IT Consolidation on a Grand Scale

April, 2013

Shared20Services20Logo1 - Shared Services Canada: IT Consolidation on a Grand ScaleIs it possible to take a sprawling, multi-level, geographically scattered IT bureaucracy and chop it down to size in form and function, saving hundreds of millions of dollars in the process?

The Canadian government thinks it is possible. Under Conservative Party leadership, it has embarked on a long-term, ambitious plan to centralize and consolidate numerous critical IT and telecommunications functions across 44 of its agencies and departments. The initiative, dubbed Shared Services Canada (SSC), gained final approval in June of 2012 and is aimed at reducing the number of data centers, email systems, and networks to support and manage. The effort, which is still in its early stages and not without controversy, is one of the most ambitious IT modernization efforts ever undertaken. It aims to save hundreds of millions of dollars in IT costs by eliminating duplication and improving efficiency. However, it is still too early to tell whether this effort can deliver on its big promises—or what the fallout will be in government IT departments across the Canadian landscape.

Goal: Cost Savings with Improved Service
When SSC was conceived, the government’s IT infrastructure encompassed more than 300 data centers, 3,000 networks, and 100 email systems within and among federal departments. Under the SSC blueprint, the data centers will be cut to 30, email platforms will be consolidated onto just one, and the thousands of competing networks will be replaced by a central IP network running video, voice, and data. All of this will be come under the control of the Canadian government’s Public Works and Government Services division.

The national government contends the current hodgepodge of applications, networks, email systems, and data centers is too cumbersome and expensive and will, inevitably, lead to major IT service disruptions. The government also believes it can save $100 million to $200 million annually over the next three years by overhauling federal IT operations. A heady goal in theory, but is it achievable in practice? One problem: some fear the shared services will not have shared governance, but be controlled by a bureaucracy in Ottawa.

To counter this concern, the government in November launched the first in a series of roundtables designed to bring together government and private sector IT officials to help shape the new IT agenda. We want to work with the ICT (Information and Communications Technology) sector to draw on innovative, proven industry solutions, said Rona Ambrose, the minister of Government Services, who is spearheading the Shared Services Canada effort. Their input is vital to helping Shared Services Canada develop a more efficient, secure, and cost-effective IT infrastructure to serve Canadians. Essentially, the government plans to tap a large number of private IT executives, suppliers and services providers to help develop a best practices approach to the SSC plan. However, shortly after the meeting, some small IT suppliers groused the IT procurement policy being kicked about will favor large corporations such as Bell Canada, IBM, Rogers Communications, and others that already have an in with government agencies. And in fact, one of the first large contracts granted by SSC was a three-year, $55 million networking deal for IP and Ethernet services to Manitoba Telecom Services (MTS). The company will connect up to 850 sites with a converged voice, video, and data services network. MTS already serves a number of government departments, so to a certain extent, the new contract simply extends and expands the old ones.

Consolidating Data Centers, Email Systems, and Networks
Contracts aside, the Canadian government is taking a very focused approach to IT consolidation that involves three separate initiatives:

  • Data Center consolidation: The aim is to reduce 300 current data centers to 20 or less and to centralize administration and service delivery. The emphasis is on security and energy efficiency. The initiative will unfold in stages with full implementation targeted by March 2020.
  • Email consolidation: The government intends to move all its departments and agencies from more than 100 email systems (which include Lotus Notes, Novell GroupWise, and Microsoft Exchange) to one “secure, reliable, and cost-effective” email system. This initiative has two phases: the first is planning and procurement to identify requirements, develop a suitable architecture, and initiate transition planning, and the second is the implementation phase, which includes training and migration.
  • Telecommunications consolidation: This is perhaps the most detailed and comprehensive initiative under Shared Services Canada. It takes aim at 3,000 existing, uncoordinated electronic networks that provide voice and data to 300,000 government users and replace them with an IP data, voice, and video network that will be reliable and secure. This telecom reorganization also involves a video-conferencing assessment, for which solution providers were solicited for input, and a telephone initiative to migrate traditional desktop phones to VoIP or mobile service. The government estimates this phone migration will yield $28.8 million in annual cost savings.

Interestingly, consolidation of business applications does not appear to be within the scope of the initiative.

Computer Economics Viewpoint
Although Shared Services Canada is certainly one of the most ambitious government IT transformations ever envisioned, it is still way too early to determine if the goals, including the aggressive financial-savings estimates, are achievable or even realistic. IT transformations of any size or duration are always tricky, complicated affairs, so one enveloping dozens of departments across a wide geographic area spanning several years is certainly suspect. All IT employees of the Public Works and Government Services Canada division were made part of Shared Services Canada, but it is not clear what will happen to agency-level IT workers who will be impacted once these various initiatives begin to roll out. This will also be a dramatic game-changer for departmental IT executives, who are now tasked with discovering new opportunities to deliver IT services. It seems likely some worthwhile IT expertise will be lost in this massive transformational shuffle being planned.

It is also unclear if the federal government will be able to keep its pledge to fully involve small and midsize vendors, service providers, and IT executives in developing best practices and in gaining contract awards. Many of the SSC contracts are likely to be larger, broader and more centralized than in the past. Contract recipients will be responsible and answerable to a central federal government agency, not individual agencies or departments like in the past. This tends to work against smaller organizations. Furthermore, large enterprise organizations likely already have a “foot in the door” of the Canadian government with existing contracts, and so should benefit.

IT program risk generally increases with program size, and the SSC initiative ranks among the largest consolidation programs ever attempted. On the other hand, the program is highly targeted on infrastructure consolidation of the government’s data centers, email systems, and network—not attempting the more ambitious goal of consolidating applications. By focusing the effort, the risk of failure is mitigated. If successful, Shared Services Canada could become a case-study in the benefits of large scale IT consolidation.

Computer Economics publishes IT spending and staffing metrics for government agencies and local governments in the U.S. and Canada in its IT Spending and Staffing Benchmarks study. The full report is available at no charge for Computer Economics clients, or it may be purchased by non-clients directly from our website (click for pricing).