“By moving away from each department independently managing these activities, there are opportunities to drive economies of scale, achieve savings for taxpayers and improve services,” the budget reads. “Moving forward, the government will explore further whole-of-government approaches to reduce costs in the area of procurement of end-user devices and associated support services.”
The above is an excerpt from a April 5th article by Jordan Press (Federal IT agency tasked with hardware procurement duties) in which the writer reported on the government’s decision to mandate Shared Services Canada with the task of procuring end-use hardware and software for “workers in the 43 federal agencies is serves, along with a handful of parliamentary watchdogs and other federal agencies.” In total, 106 federal organizations’ IT spend will be managed by SSC.
In and of itself this isn’t really news. In fact anyone who has been actively involved in and with the public sector will likely tell you that the government’s decision to transfer IT acquisition responsibility to the SSC as opposed to creating a new agency to buy hardware was a when as opposed to an if scenario. Besides being the defacto ICT Agency for the Federal Government, putting IT purchasing under the SSC immediately presents the opportunity to move away from centralized procurement vehicles such as Standing Offers which, over the years, has proven to be ineffective on many levels.
For example under the old standing offer model, departments were usually forced to do their own sourcing of hardware and support services. For the vendors who went through an at times lengthy and costly process just to make the list, revenue opportunities were limited to localized relationships that rarely justified the effort in terms of financial return and business growth. In other words standing offers were little more than bulletin boards for unrealized opportunities for vendors, while splintering the supply stream for the government into an at times unmanageable spend morass.
In this regard I have to tip my hat to Mr. Flaherty, in that this decision has finally laid the foundation for getting the job done right!
All this being said I think it is important to recognize right off the bat that when it comes to hardware, you are for all intents and purposes acquiring a fully managed service. After all no one really buys hardware anymore do they? This lesson was learned by the BC government who, in outsourcing all of their end user computing services to IBM, concluded that it is better to approach IT acquisition from the standpoint of it being a service rather than a purchase of hard assets.
Within this context, the real question becomes one of support. How do you support departmental needs through the provision of a fully managed service to enable the introduction of new applications and support more sophisticated end user expectations?
In an attempt to both understand and address this question, the majority of federal government departments as well as agencies like CIOB, PWGSC and the DND have expended considerable cycles doing everything from analyzing countless studies from firms such as Gartner, to engaging consulting firms – including ours – in an effort to get a handle on driving innovation and savings with the intended outcome being improved productivity. Once again, with the decision to move the IT acquisition function to the SSC, it appears that a major obstacle to achieving these objectives has been removed.
However, and as promising as the news is, for the government to harvest the benefits of this move there must also be a change in how technology is viewed. Specifically, there must be a concentrated and deliberate transition towards a more agile and dynamic user environment. In other words, and looking beyond what will likely be a significant human resource transformation, the government must see their IT agenda as an exercise in building and managing relationships.
In 2002, I personally lead a team of IT and procurement specialists from both the public and the private sector in which we worked together to establish a relational governance structure for the Province of Ontario. The success of the program speaks for itself, as do the results of a benchmark study conducted by the CRA a year after they adopted the same model.
There is of course no reason why the present day government cannot realize similar results as it relates to savings (the CRA program for example showed at 25% reduction in acquisition costs), as well as dramatically improved productivity levels across the board.
It is with this firm understanding of the potential benefits associated with the recent decision that the following questions have to be asked (and answered);
- Is SSC going to outsource the service, and if so what model of outsourcing should they use? We know that the traditional models have proven to be ineffective.
- How will the SSC address the challenges associated with the aggregation of demand that has traditionally led to a shrinking supply base? Historically, aggregation has almost always led to diminished competition and escalating costs. What is the strategy here?
- As opposed to protecting SMEs, how do we facilitate or stimulate SME participation and growth as an important partner in the transition to a more agile and dynamic user environment. After all, Initiatives like this should not be done at the expense of SME sustainability and development – if we do we all lose in the end.