Government modernization will include new IT consumption models, according to a recent survey by IDC Canada. And these models — shared services, outsourcing and public-private partnerships (PPPs) — will significantly affect the way governments purchase and manage IT.
On average, 30 per cent
of government executives have already worked on shared services for business processes, according to the survey, and another nine to 19 per cent are planning to do so in the near future.
What’s happening at the federal and provincial levels is that governments are engaging in five- to 10-year business cycles, so they need to have a strategic review of their management, procurement and consumption, says Massimiliano Claps, senior research analyst with IDC Canada.
“”As a consequence they’re changing their day-to-day business processes,”” he says.
They can do this internally, in the case of shared services, or externally with outsourcing and PPPs. While shared services are already in place, a more cautious approach will lead to outsourcing and PPPs.
The Treasury Board of Canada Secretariat has had a shared systems initiative in place since the mid-1990s, focused on minimizing the number of different software systems used for financial, human resources and information management.
Since 2000, however, there’s been an escalating interest in shared services, not just in systems but in the actual delivery of services, says Jim Alexander, executive director of IM/IT stewardship with the TBS.
“”There was an announcement in the budget of a strategic direction to pursue a shared services approach for HR, financial and IT services within government,”” he says. “”We’ve got very broad strategies envisioned and we’re about to go to ministers to propose some approaches to implementation.””
The Budget 2005 states: “”Introducing more shared systems, simplifying and standardizing processes for these administrative activities, moving routine activities to self-service on the Internet, and shared service delivery will result in efficiencies.””
But governments are still cautious about business process outsourcing, according to IDC. On average, only eight per cent of survey respondents indicated they have adopted or are rolling out BPO and another eight to 18 per cent are planning to do so in the near future.
“”It’s very clear the approach to outsourcing is much more cautious than it is toward shared services,”” says Claps.
A limited number of business processes are being outsourced at the federal level, says Alexander, but there’s no big move toward outsourcing, nor any decision being made as to whether it should or should not be pursued. Outsourcing tends to be done by individual departments based on their business needs and it’s often used for help desk support or running data centres, he says, as opposed to any larger strategy across government.
“”There may be some particular aspects of business process outsourcing that would be pursued, but we would see that as riskier,”” he says. “”It sure isn’t a whole-of-government strategy yet — no one’s been that terribly successful with it and you really need to know what you need to do before you jump into that. The consequences of failure are fairly significant.””
While government is concerned about giving up core processes, Claps still expects the value of PPP contracts at all levels of government to grow around 25 to 30 per cent over the next four to five years.
“”We expect provinces to have a higher level of readiness,”” he says.
Alberta and B.C. are more conservative than eastern provinces, so there’s less concern about partnering with the private sector, he adds.
“”The federal level is a big and slow machine and the municipal level is very fragmented, so it’s not very suitable in terms of structure for PPPs.””
Peter Bennett, manager of information systems with the City of Winnipeg’s corporate IT department, says Winnipeg has an online building permit system that is hosted by the vendor.
“”Yet we have a client-server version hosted within our site as well as the database,”” he says. “”The local application is hosted locally [and] access to it on the Web is hosted at the vendor site – it’s like an ASP but not a complete 100 per cent one.””