Exploring Opportunities for Acceleration: Reflecting on the OAG Canada's report No.7 'Modernizing Information Technology Systems'
When the Office of the Auditor General of Canada speaks, journalists, politicians and any civically engaged Canadian usually takes note. On October 19th, 2023, auditor Karen Hogan tabled a performance audit report indicating that ‘…overall, the Treasury Board of Canada Secretariat (TBS) and Shared Services Canada (SSC) did not do enough to lead and support partner departments and agencies to modernize outdated information technology systems.’ Tough words.
According to the report, the government identified aging systems as a significant issue more than twenty-four years ago; the term ‘aging IT’ being first mentioned in a report in 1999. In 2005, a Treasury Board of Canada Secretariat study noted that the Government of Canada underinvested in up-to-date hardware and software. This was then followed by an agreement with an Auditor General of Canada report in 2010 that the secretariat had not formally identified aging IT as an area of importance from the government.
Since these reports were published, progress has been very slow. Based on the information presented in this report, the Government of Canada needs to consider the slow progress of IT modernization as a crisis. Resolving it will require hard decisions and dedicated leadership. However, there is hope. Included in this technical note we present practical frameworks and strategies to help the Government of Canada accelerate this enterprise transformation and renew public trust in our federal government IT institutions and services.
As key organizations in the federal IT ecosystem, both the TBS and SSC are central players in the modernization journey of the Government of Canada. Within TBS, the Office of the CIO provides overall leadership for information technology and for service and digital transformation for GC; it also prioritizes modernization efforts. Shared Services Canada is charged with delivering and supporting cost-effective, secure, and reliable IT infrastructure to 45 partner departments and agencies, and as another key responsibility, the SSC is responsible for the consolidation, management, and modernization of the government’s IT infrastructure – including legacy enterprise data centres.
The focus of the audit included the role of TBS and SSC as lead organizations for modernization of IT for departments and agencies. The audit team reviewed progress made thus far, including plans and procedures to support, fund and oversee ongoing efforts. A survey was also sent to CIOs of numerous departments and agencies to gather perspective. The 29-page report noted that the Government of Canada has struggled to fully assess the effort needed to modernize its systems and execute a plan that scales to the extent needed for tackling the aging infrastructure and driving modernization. The audit is important because in the estimation of the OAG, ‘…departments and agencies are maintaining old and outdated applications and relying on old and outdated infrastructure…the failure of these systems would significantly affect the government’s delivery of services to Canadians’ (OAG report, section 7.8).
The risks are high. The goalposts for engaging Canadian residents, internal stakeholders and taxpayers alike have been moved since the pandemic. Generational shifts in expectations for online services are only increasing. Moreover, comparative references to other national governments are continue to move those markers: Canada’s UN e-Government ranking has slipped from 11th place to 32nd internationally over the last ten years (UN e-Government Survey, 2022 ).
People and Leadership Matters
A key consideration to investing in a transformation of this magnitude is people and leadership. The Government of Canada struggles to build and maintain a bench of skilled – and loyal - IT workers. Some estimates depict a 30-percent shortage among the government’s jobs (www.policyoptions.irpp.org Oct 31st, 2022). The Government of Canada has had a tough time navigating the shift to hybrid work this year and the recent federal government worker strike underscored that there are significant challenges to be resolved just to keep the wheels of government turning.
It is important to recognize that these shortages apply not only to GC departments but also to TBS and SSC, as both organizations are central to any solution for accelerating modernization. Moreover, consider that these shortages represent that IT headcount that is approved, not how many skilled resources are needed to drive constructive and long-standing progress in modernization. Add-in the lengthy process for specialist positions and hiring those with security clearance and it becomes a weight that can’t be shaken. It is a weight that is especially heavy for the GC organizations managing the public security, safety, innovation, defence and intelligence files across the government.
Teams need to move away from being reactive. ITRG’s ‘Build a Data-Driven Workforce Plan: A Critical CIO Exercise ’ is a practical guide to support resolution of a very complex situation, and it is a playbook that all GC leaders should read. It will help you and your team assemble a workforce plan that accommodates work efficiency and talent sourcing, that is based on up-to-date inputs, and that recommends how to best fill skill gaps to ensure your organization is staffing to the desired capabilities of your future organizational workforce.
Modernization is a Marathon
The OAG’s report noted that IT modernization is ‘…an undertaking of considerable size, scope, and complexity. It also requires significant funding and associated resources that departments and agencies might not have. For those reasons, strong and informed leadership, oversight, and appropriate funding from central agencies are essential for successful modernization (OAG report, section 7.28).
Modernization is a complicated endeavour, and (like technical debt) it must be emphasized that not only technology is involved, but process and people as well. All three elements are needed for modernization to truly occur. Astute leaders will recognize moreover that without strong leadership of the latter two elements it is impossible to realize the benefits of the first one.
Inevitably, all nodes of modernization originate from understanding a department or agency’s digital strategy. Info-Tech Research Group defines a digital strategy as ‘…an at scale change program – planned and executed over a finite time period – with the aspiration of creating material, sustainable improvement in the performance of an organization, by deploying a programmatic approach to digital technology adoption and innovation’. Info-Tech retains a deep collection of blueprints, diagnostics and solution sets dedicated to this topic: refer to our IT Modernization Centre to access these materials.
For the Government of Canada, ground central remains TBS’ Canada’s Digital Ambition . However, it is an aspirational document, containing no declarations of how departments can measure their success on an ongoing basis.
Technical Debt is Risk
Technical debt is the implied cost of future reworking required (time, resources, and dollars) when choosing an easy but limited solution instead of a better approach that could take more time (Wikipedia). It is by its very definition impossible to avoid, and when it takes hold can be deeply constricting. There is no shortage of technical debt across the Government of Canada’s systems, something discussed at length in the report.
According to the OAG report, ‘…on average, departments and agencies had not assessed the health of close to 12% of the government’s approximately 7,500 applications from 2019 to 2023. This meant that inaccurate or incomplete information from these departments and agencies served as the basis for the overall health assessments of the government’s Reports of the Auditor General of Canada to the Parliament of Canada’ (OAG report, section 7.39).
Not having an effective strategy to address technical debt on an ongoing basis will lead to slower innovation, an increase cost in managing software changes and a dramatic increase in risk of system failures and security vulnerabilities. Moreover, choosing to settle with older technologies in an organization’s landscape can be isolating, and make that organization a less attractive place of career progression. The dangers are many – in not just technology, but in people and in process as well.
Technical debt can be mitigated and managed within organizations by establishing and executing a dedicated plan that engages all stakeholders. Info-Tech’s Identify the Impact of Technical Debt on Government Department and Agency IT Operations is a must-read accompaniment for GC executives looking for an actionable and dependable playbook.
Application Portfolio Management Considerations
The OAG report also identified numerous shortcomings about the current state of application portfolio management (APM) across the GC. As noted above, departments and agencies did not always provide complete and accurate information, the current GC APM system did not retain historical data, there was little follow up to correct inaccurate or missing information, and critically, that there was limited oversight of most modernization projects (OAG report, sections 7.38-7.44). The list of findings and recommendations that the OAG made with regards to optimizing APM practices was lengthy and detailed.
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An optimal practice for departments and agencies across the Government of Canada is to encourage a culture of continuously modernizing enterprise solutions. Even the most modern of application investments lose their value over time, and so become obsolete and a burden to the organization. Leaders seeking further information on discovering, rationalizing and modernize applications will find it at our Application Portfolio Management Research Centre . This research centre contains a rich trove of complementary playbooks and frameworks for GC organizations.
The best guidance we can provide here is to focus modernization on capabilities and functions that matter most to the organization, setting the stage for continual reinforcement of trust between business and IT stakeholders. Steps need to be taken to define and identify your organization’s technical debt – and agreeing to a common definition and inventory across your department or agency may be more difficult than you think. It is also essential that a streamlined and targeted organizational impact analysis be completed to prioritize technical debt based on its ongoing operational impacts. Finally, identify opportunities to better manage technical debt and review those options to decision makers.
Cloud As a Catalyst for Modernization
Cloud-based systems remain a key component of the government’s modernization strategy, and it is a strategy that undergoes continual refinement. The GC Workload Migration Program was launched in 2018 to move applications stored in old data centres to modern and stable hosting environments such as new GC data centres or the cloud.
Members should access our recently published Define Your Cloud Vision for Federal Government research. They can leverage vendor-agnostic guidance outlining tactics for identifying the best workload candidates for the cloud, develop a consistent and cost-effective approach to cloud services, and templates for communicate organizational cloud vision to colleagues. Stakeholders in turn will then be able to understand the reasons behind a cloud decision and differentiate between different cloud service and deployment models. ??
Funding Mechanisms – Investigating the Options
Let us all appreciate that the enterprise that is the Government of Canada has now functioned for more than 150 years – and as such operates with institutional frameworks that predate the automobile, telephone, and computer. Much of these frameworks are derived from the Westminster model with budgetary and expenditure cycles and timetables that start with the budget speech, tabling of supplementary estimates (alongside departmental performance / management accountability framework or ‘MAF’ reports) and departmental business plans.
The OAG report outlined numerous findings from its analysis. It found that the government lacked a funding approach that would meet both immediate and longer-term modernization needs, that departments and agencies often funded investments through existing allocations (diverting those funds from other areas allocated), and that while organizations could request new funding doing so takes months for processing. Fully 83% of CIOs answering the OAG’s survey thought that the mechanisms for funding modernization projects were unsatisfactory (OAG report, sections 7.48-7.51).
The ‘Plan-Build-Run’ operating model is an outdated framework for delivering products, services, and technology to enable value for public sector organizations. All too often, IT teams are locked into an inflexible funding model that makes it difficult to deliver the best possible value for their IT investment. Note that this predicament is also problematic in the private sector. When a fixed funding amount is tied to a project far in advance of commencement (let alone its completion), requirements are sure to change before funding is used – rendering the original budgetary allocation less relevant. Add in inflationary pressures, as well as the ever-quickening pace of technological change and it becomes even more difficult for IT leaders to maneuver and demonstrate success. This concern echoes with every large-scale GC investment: it is thus also a concern for the government’s Next Generation Human Resources and Pay digital solution for the Canadian government.
As IT leaders increasingly move from trusted operator to business partner, IT leaders need to educate themselves and their teams of available funding options and demonstrate dexterity in utilizing these options to the fullest. A flexible funding model can be a framework-driven hybrid model aligned to the business objectives and the ever-changing nature of departmental initiatives. Organizations can identify opportunities to leverage different funding models such as:
Mastering your department’s existing funding model constructs is just a start. Leverage our ‘Develop a More Flexible IT Funding Model ’ research to your team or organization’s advantage. With Government of Canada leadership supporting digital transformation efforts the time has never been better to challenge (or simply flex) institutional norms.
Can AI Help Rewrite the Rules of Modernization?
Increasingly, leaders across the Government of Canada are looking to artificial intelligence as a tool to help them make up for lost time and investments. Many GC organizations are investigating opportunities to drive both front- and back-office efficiencies using AI: call centres, chatbots and intelligent processing of paperwork are just a few common use cases in discussions we have with our members.
Moving in this direction requires clear definition and agreement on digital and AI use cases. Value is defined through operational efficiencies, expanding products/services/capabilities, risk and accelerating environmental, social and governance (ESG) factors, improving employee experience, and of course improving customer experience.
It is too early to predict if AI will be a saviour for the GC in this regard. However, it is na?ve to believe that all of the problems created due to the slow pace of modernization of information technology systems will magically evaporate due to AI: we know that modernization requires the right measures of ingredients: people, process, technology, good governance, and innovative funding are all critical elements. No algorithm will be able to navigate the culture and complexity of federal government operations.
For those GC organizations keen to explore AI, Info-Tech offers a structured AI transformation accelerator assessment, revealing your organization’s readiness to tackle AI opportunities. Please reach out to your account representative or to our Consulting Services team for further information.
Some Concluding Observations:
The Government of Canada continues to struggle in its modernization efforts, but the only way to go is to move forward. Public trust in our federal system institutions is at stake, and regaining trust is a very difficult predicament indeed when it has been lost. The OAG’s Report #7 – Modernizing Information Technology Systems indicates that the stakes are high. It is reassuring that not only the OAG, but TBS and SSC realize this too through their collective agreement to the report’s numerous recommendations.
Ultimately the Government of Canada needs manage technology as an enterprise asset with common standards, and interoperability as opposed to a patchwork of citizen experiences that leaves stakeholders confused, frustrated and disengaged. Visionary leadership and drive remain essential ingredients. Strategic decisions need to be made, and these decisions need to be accompanied with guidance on more dynamic operating models that make it easier for the federal government to deliver products, services and technology to enable value. Doing so positions IT not only as an trusted partner, but as an organizational leader in this rapidly emerging age of exponential IT .
For the Digital Ambition to be achieved these fundamental questions need to be answered decisively.