:
Thank you, Mr. Chair, and my thanks to my colleagues from the House of Commons for inviting me. Thank you for the opportunity to address the subject of Shared Services Canada.
With me today are Liseanne Forand, the president of Shared Services Canada, and Grant Westcott, the chief operating officer.
[Translation]
Thank you for the opportunity to discuss Shared Services Canada with the members of the committee.
Joining me today are Liseanne Forand, President of Shared Services Canada, and Grant Westcott, Chief Operating Officer.
[English]
Madame Forand has a distinguished career in the public service and was the COO of Service Canada before joining us at Shared Services Canada. Mr. Westcott comes to us from the private sector. He was the executive vice-president of technology infrastructure for CIBC, for the global bank.
Shared Services Canada was established earlier this year to reduce duplication in Government of Canada information technology, or IT, infrastructure services, to modernize the way we deliver services to Canadians, and to improve the security of federal IT infrastructure. The Government of Canada is the first national government to undertake such a fundamental IT transformation. Consolidating our IT infrastructure is the smart thing to do. We will be guided in this initiative by our duty to provide good service and our commitment to value for taxpayers' hard-earned dollars.
[Translation]
Consolidating our IT infrastructure is the smart thing to do. We will be guided in this initiative by our desire to provide good service to Canadians and save taxpayers' hard-earned dollars.
[English]
Of course, the case for taking this direction could not be more persuasive. As committee members are no doubt aware, the Auditor General has raised concerns about aging IT infrastructure within the federal government.
In the spring 2010 report, it was noted by the Auditor General that many IT systems “are supported by old infrastructure and are at risk of breaking down”. The report stated, “A breakdown would have wide and severe consequences—at worst, the government could no longer conduct its business and deliver services to Canadians.”
As part of Budget 2010, the Government of Canada committed to a review of its operations to identify opportunities for administrative savings and improving efficiency while also improving delivery of services to Canadians.
The administrative services review, as you know, focuses on administrative and overhead costs. This is a commitment to transformation and modernization. While it is a key part of restoring budget balance, it also provides a unique opportunity to enhance the mission-critical IT infrastructure that enables the government to deliver services at a lower cost.
Before Shared Services Canada was created, every federal government department and agency set up and ran its own IT infrastructure. This produced cumbersome and expensive infrastructure: 100 e-mail systems, 300 data centres, and over 3,000 networks across government. Simply put, our IT systems overlap, they are outdated, and they are inefficient. The government is years behind the private sector when it comes to IT modernization, but when we are finished, I believe we will be a world leader.
Enterprise-wide IT consolidation has been studied in other levels of government and the private sector and has been proven to yield efficiencies and savings. As part of our due diligence, Public Works and Government Services Canada contracted with PricewaterhouseCoopers to undertake a data centre feasibility study. The study was aimed at identifying potential actions to improve the efficiency of data centre management and service delivery.
Recommendations from this study were considered, along with a wealth of real-world experiences from other governments and private sector companies, in charting our government's course. Other governments and private sector companies have demonstrated that streamlining and consolidating in the areas of e-mail, data centres, and telecommunications is indeed the smart thing to do, and they are reporting substantial savings and efficiencies. Modern efficiencies lead, of course, to better service to citizens.
The Government of British Columbia, for example, began its consolidation in 2002 and reduced its data centres from over 100 to two data centres by 2011. As a result, energy costs alone are expected to be 50% lower. This is a proven model of success and is considered an industry standard.
I would encourage the committee to consider the experiences with shared services consolidation of organizations such as IBM, Hewlett-Packard, or the Canadian banking industry. The opportunities before us—namely, the ability to make the federal government's IT backbone safer, greener, and more efficient, as well as simpler, more modern, and sustainable—are long overdue.
Between 2006 and 2008, Hewlett-Packard, for example, has gone from 85 data centres to six globally, generating significant savings and resulting in greener data centres. The Government of Ontario reports that, at maturity, their IT consolidation is saving $100 million annually, representing 10% of total IT spending and between 20% and 25% of IT infrastructure spending.
In short, the on-the-ground experience acquired by both the public and private sectors indicates that there are important and real savings to be achieved through IT consolidations such as the one we have launched. This is about transformation and modernization.
Going forward, we are intent on maintaining productive relationships with our employees. They are very talented people who understand how we can achieve our objectives to transform the way the government does business to better serve Canadians. It was encouraging to learn that the Professional Institute of the Public Service of Canada supports in principle the streamlining and standardization of the government's IT systems to achieve efficiencies and cost savings, as well as the creation of Shared Services Canada.
As the minister responsible, I am confident in how we are creating this fundamental change. Shared Services Canada officials are actively implementing their strategy to engage employees, the IT sector, and client departments. Their governance model has been completed and is in the implementation stage.
Public Works and Government Services Canada employees who were already supporting IT infrastructure services became Shared Services Canada employees on August 4. Responsibility for e-mail, data centres, and network services in 42 other departments and agencies was transferred to Shared Services Canada in mid-November.
The new senior management structure of Shared Services Canada has been announced. The transition plan that will guide Shared Services Canada to become a stand-alone department by April 1, 2012, is well under way.
I am very excited about what we're going to accomplish and I am confident that this initiative will produce savings and reduce the government's ecological footprint, while strengthening the safety and security of government data. It will also create efficiencies by realizing economies of scale and making it more cost-effective to modernize services, while improving infrastructure and service delivery.
I want to add that we are committed to ensuring that this initiative contributes to the deficit reduction action plan.
Information technology is essential to supporting our business and delivering services to Canadians, but it costs taxpayers more than it should. We can do better. Like other departments, Shared Services Canada will identify 5% and 10% savings for consideration by the government, including areas in which it will streamline and save. The results of this work will be reported in Budget 2012.
We will move to one e-mail system. This will save money and make it easier for Canadians to find the people they need to contact and for public servants to conduct their work. Information technology should support accountability, and we are determined to make sure it does.
We will save more taxpayer dollars by reducing the overall number of Government of Canada data centres and ensuring those that remain are robust, secure, and energy efficient. Over the medium term, this will mean reducing the number of data centres from over 300 to fewer than 20, while shifting to more modern and efficient systems.
We are also committed to reducing the number of networks that connect to data centres and to streamlining networks in our buildings.
To support this work, and when it makes sense to do so, the Government of Canada will pursue public-private partnerships.
In conclusion, our approach to IT is modelled on proven success in both the private and public sectors and is the smart thing to do. It's the safe thing to do, it's also the green thing to do, and it is the sustainable thing to do.
Canadians rightly expect our government to manage taxpayer dollars in a fiscally prudent and responsible manner. l am confident that the establishment of Shared Services Canada will result in modern, reliable, and secure IT infrastructure services at a reduced cost to the Canadian taxpayer.
After examining the evidence and hearing the witnesses, l'm sure you will agree with me.
l would be pleased to answer any questions you may have.
[Translation]
Thank you, Mr. Chair.
:
Chair, as I indicated in my opening remarks, we have a great capacity within the Government of Canada in terms of our public servants working in the IT field. In fact, across the government departments, the reaction from employees working in IT is that they are very excited about this undertaking.
We have been briefing all our bargaining agents in order to keep not only employees but also union officials informed of the developments. Senior officials, including the president, have met with the presidents of both the Professional Institute of the Public Service of Canada and the Public Service Alliance of Canada, and five of these high-level meetings have taken place so far. In addition, Shared Services Canada officials have also met with other union officials.
We also held a workshop recently between Shared Services Canada and the Professional Institute of the Public Service of Canada to outline the next steps for working together and supporting employees. This meeting then resulted in a joint transition steering committee and four subcommittees that will work on issues such as staffing and labour relations, communications, and a consultation framework and governance.
Shared Services Canada has identified contact leads for each of the 43 departments and agencies, and mechanisms for regular communication and consultation have been put in place to ensure that all employees are kept informed. There have been many, and will continue to be many, site visits to meet as many employees as possible.
Again, going forward, we are intent on maintaining productive relationships with our employees. They are very talented people who best understand how we can achieve our objectives.
It's important to remember that this is about improving services to Canadians. We do need a modern, reliable, secure infrastructure to provide Canadians with the quality of services they deserve, and, frankly, employees who work in this area know this best, so we are calling on them for ideas. They want to be a part of this transformation. They are excited about it.
Liseanne has been the one working very closely with the unions and with employees, so I will ask her to just make a further comment.
:
You're correct, there is obviously merit in consolidating e-mail, both for those who work within the government—thus making it easier to communicate between public servants and departments—and for those outside of government who are looking to contact people who work in the public service. There's currently no standard for e-mail across the Government of Canada, making it very difficult for ordinary Canadians to find the people they need to contact and for public servants to do their work.
There should obviously be a standard e-mail system that's more easily accessible. Shared Services Canada has a mandate to ensure that the most efficient e-mail system is in place for all of government. Most departments implemented their e-mail solutions in the late eighties and early nineties, at a time when there was little consideration of or opportunity to share common solutions. As you know, a lot has changed since then in the area of IT.
These e-mail systems that we have right now in the Government of Canada are not fully compatible either. While approximately 80% of departments use Microsoft Outlook, 15% use Lotus Notes, and 5% use Novell GroupWise for their e-mail systems. Departments have different versions and have adopted a variety of rules and practices. This results not only in fragmentation, but also in higher costs to the individual departments.
We know that e-mail consolidation is the smart thing to do and is considered a best practice by industry and governments alike. The operation of multiple e-mail systems across the government also means that departments are negotiating and maintaining separate licences and have their own technical support teams in place. This duplication is very costly and it's unnecessary.
Having so many e-mail systems also means that e-mail is less secure than it should be. It's imperative that the Government of Canada move to a single standard for e-mail.
Shared Services Canada will move the government to one e-mail system. As I indicated, not only will this save money and make it easier for Canadians to reach federal government employees, but we quite simply can't continue to maintain the duplication, the inefficiency, the low interoperability, and the suboptimal economies of scale and fragmentation that arise from each department managing its IT infrastructure independently. This is why Shared Services Canada was created.
E-mail will be our first transformation area. The goal is to consolidate into a single e-mail system both for internal government and for interface with businesses and Canadians.
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Right now, as I indicated earlier, there are over 300 data centres across the country that store data and computing equipment for departments. That's not reliable, nor is it economical.
In some data centres there is an excess of computing capacity that's actually barely used. At the same time, other data centres are straining to meet the demand. The silo nature of our current system prevents data centres from maximizing current capacity, and each data centre has different reliability and security standards on top of that.
As you pointed out, the Auditor General raised concerns about aging IT and said that many IT systems are supported by old infrastructure and are at risk of breaking down, which is why we're acting.
Older data centres are also less energy efficient than newer ones, as they have out-of-date heating and cooling systems that cost more than they need to, frankly, and are wasteful in terms of energy use. Shared Services Canada will save taxpayer dollars by reducing the overall number of Government of Canada data centres and making sure they're robust, secure, and energy efficient.
Over the medium term, this means reducing the number of data centres from over 300 to less than 20. Obviously, not only is this good for the taxpayer, but it's good for the public service, and it's also good for the environment.
A whole-of-government approach will be taken to consolidate and manage data centres. Data centres are considered mission-critical infrastructure and will be managed responsibly. The streamlining of data centres will be done in a gradual and prudent way. Consolidation is expected to be staged while moving to modern, secure, and scalable facilities.
:
I'm happy not to pursue it further. Thank you.
In general I'm not at all opposed to this project. I obviously agree that one should get good value for taxpayers' money, and I think over the medium term, if it's done well, it will save money. I note that according to PricewaterhouseCoopers it's a 15-year project, from 2011 to 2026, so we're talking pretty long term.
My concern is more with the timing. In general, if you have a 15-year project, the savings tend to come near the end. You have to make the investments or incur the costs before you can reap the savings—not entirely, but I think it's fair to say the bulk of the savings will only come after the investments and those costs have been incurred.
What I find very difficult to believe is the contention, I think by your colleague Tony Clement at a press conference, that this will save hundreds of millions of dollars in reducing the deficit when the deficit elimination is supposed to occur in three years. We're talking about a project of 15 years here.
My first question to the minister is in terms of the costs and the approximate timing of incurring those costs. Mr. Westcott gave a figure of $375 million. I notice, on page 26 of the PricewaterhouseCoopers report, that these costs exclude capital investment. They exclude the cost of new facilities. They exclude many things. And IT costs generally overrun what is estimated.
Putting that to one side, of these costs of $375 million, can you explain approximately how much will be incurred, for example, in the first three years, versus later years—front-end-loaded costs, back-end-loaded costs, spread over equally...?
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We're in a good position of moving forward now, in the sense that other governments have done this before us. There's a lot of private sector information out there, and examples, best practices, and proven models for us to take a look at.
Whether it's in the public sector or the private sector, it has been demonstrated that streamlining in the areas of e-mail, data centres, and telecommunications is the smart thing to do. Those are proven business models and they are reporting substantial savings and efficiencies.
Just as an example, I mentioned earlier that the Government of British Columbia began its IT consolidation in 2002 and reduced its data centres from over 100 to two in 2011. Of course, these are large servers that create a lot of heat and energy. Some of ours are very outdated. In British Columbia alone, as a result, energy costs are expected to go down by 50%.
In 2010 the United States government announced that it's working on reducing its 2,100 data centres by at least 800 by 2015. This is expected to save an estimated $3 billion annually. In the corporate world, IT consolidation is a continuous process, particularly when merger and acquisition activities are actually pursued. All major Canadian banks and insurance companies manage their IT infrastructures on an enterprise basis, which is what we're moving toward.
The enterprise-wide IT consolidation has been proven to yield both efficiencies and savings in the private sector. One of the key things they have learned is that it is essential to consolidate your infrastructure first and then begin a process of transformation and streamlining. That is what we're doing in our first stage that I've explained to you—stabilizing.
At the back of my mind I'm always very cognizant of the fact that the services we are delivering to Canadians today, like pension benefits—very important services for Canadians—have to be maintained throughout this entire process. Our number one priority is maintaining those services to Canadians. That is critical.
In the next part, our priority is to streamline and consolidate, but we always need to have top of mind that our number one priority is maintaining those critical services for Canadians.
Yes, it's a very large undertaking, but as Grant said, there are a lot of proven business models out there. If we approach this in the way we have outlined and planned, we believe it's achievable.