When the organization that provides IT services to a Quebec ministry was looking for a new server to distribute its new Web-based applications, there were only two options.
One was to spend a lot of time and money it didn’t have building the expertise in-house, the other was to farm it out.
Robert Charbonneau, general manager of COGI-OMH, chose the latter.
COGI-OMH is the non-profit that provides computer and information technology services to Quebec’s housing ministry (Societe d’habitation du Quebec) to administer public low rental housing programs, private low-rental housing, rent supplements, the shelter allowance program and the affordable housing program.
“We did not have any knowledge internally to manage that type of server,” explains Charbonneau. “We could have built the expertise but the other issue was cost. I looked at that seriously. The other thing was security.”
The Web application COGI-OHM has outsourced is used to maintain housing application lists, as well as to perform all accounting functions related to renting, lease management, building inventory management and problem resolution.
Now there is one fully integrated application for all users that resides on a secure, central server.
There were other issues that cemented his decision, he adds.
For one thing, his organization didn’t have the facilities to house such a server. For another, he couldn’t afford the staffing flexibility an outsourcer could ensure.
“Being a small organization it’s difficult to attract and retain computer specialists to manage that type of service – you need a lot of expertise,” he says. “It’s less risky for me to go with Fusepoint than to do it internally (because) we can rely on many more staff. If we don’t have enough staff in Quebec there will be somebody in Toronto or Montreal with Fusepoint. I cannot afford that type of flexibility.”
Fusepoint Managed Services Inc., which recently completed a new phase of its contract with COGI-OHM, has provided application development, managed security, hardware and bandwidth services to the organization since 2002, although it was Versus, a company Fusepoint acquired in 2004, that originally signed the deal with COGI-OHM.
According to Fusepoint president George Kerns, organizations that hand IT functions over to his company benefit from a large workforce with updated training and certification on all major software and hardware.
“You’re not buying one of each kind of person; you’re leveraging that group as a whole,” he says.
Both the public and private sectors are increasingly interested in outsourcing, an interest that has mushroomed since 9/11.
“A lot of people are rethinking their business continuity or disaster recovery programs so we have seen an uptick over the past year or so with people who are assessing whether or not they are prepared to handle a disaster in their backyard, and I would say that applies as much to government agencies as to commercial agencies.”
That’s exactly what IDC Canada Ltd. is seeing as well.
A November 2004 study of the adoption of IT business process outsourcing by Canadian governments indicates that outsourcing and operations-related services will be the largest and fastest-growing segment of IT spending in government, reaching almost $1.8 billion in 2008.
“We’re predicting it will grow on the whole, but in terms of which areas – federal, provincial or municipal – it depends on what you call outsourcing,” says Jason Bremner, director, Canadian outsourcing services at IDC Canada. Outsourcing, “out-tasking” and P3s, or public-private partnerships, are expected to be seen more frequently in the public sector, he says, partly due to budget issues and the oft-predicted skills shortage.
“Our labour force is aging and if you look at the stats from Stats Canada you’ll see they’re already predicting there will be labour shortages in less than a decade,” he says. “I think you’ll see greater pressure on how to deal with your entire human capital management as a whole within the entire public sector, and once that starts to happen you have to think of other ways of sourcing that task, that process, service or job.”
Robert Cooke, senior vice-president of consultancy EquaTerra Public Sector, Canada, adds that the outsourcing impulse is also being driven by the need to improve the efficiency and quality of services.
“Obviously, cost reduction is a key but it’s not the sole driver,” he says. “For most public sector organizations who go into this it’s about shifting money from the non-core stuff into the programs to the public; that’s where they want to put the money, not into the non-critical ones, so that’s leading to a whole bunch of different strategic focuses.”
The first step in that change in strategic direction was the establishment of shared service bureaus, as Alberta, B.C. and Ontario have done on a large scale, he says.
But even as outsourcing grows in government, it’s unlikely to replace those shared services bureaus, he adds.
“They’ll stay because they retain control over the vendors,” says Cooke. “If I turn around and outsource payroll to a vendor, a lot of the time the shared services group retains control over that and manages the contract, and to the customer it’s invisible.”