Opinion: Feds’ IT struggles could be boon to local SMEs

The recent concerns and undeniable failures with large government IT projects could actually prove beneficial for small and medium-sized enterprises in Ottawa.

By Serge Buy

In the past few years, the government of Canada has moved forward with a strategy to bundle information technology projects.  The “bundling” has resulted in SMEs losing market share while government departments increased their dependence on large IT integrators.

The email system and its many delays easily comes to mind.  The much-ballyhooed “e-mail transformation initiative” is still just an initiative that struggles to be fully implemented.  While Shared Services Canada states that it is moving forward, the method chosen has resulted in major complaints from departments related to everything from security to capacity.  The $400-million project was initially to be implemented in March 2015 and then in September 2016.  It remains to be seen if in 2017, for Canada's 150th anniversary, all public servants will respond to emails from an @canada.ca email address.

The latest project to grab headlines is the pay system for public servants. People aren’t getting their paycheques, the system is processing errors and you can’t see through the fog of backlog.  Unions initially demanded that the system be fixed but, as of early June, are simply asking that it be shut down.  The $300-million "Phoenix" initiative should have more aptly been named after Icarus: the closer you try to get to the sun, the more likely you are to burn.

In its 2016 budget, the government allocated an extra $383.8 million to SSC to support the “transformation of government IT systems, data centres and telecommunications networks.”  But just because the dollars are earmarked for SSC  does not mean that the new government is closed to the idea of more involvement from small and medium-sized enterprises.

The new minister responsible for Shared Services Canada is the minister of public procurement and government services Canada. Back in 2009 during parliamentary committee meetings studying government procurement and then-large IT projects, she offered insight into her thinking and her interest to protect small and medium-sized enterprises. That should be encouraging to IT SMEs.

Bundling does not always lead to negative outcomes.  The bundling of federal government contracts for cellphone and smartphone services streamlined a system encumbered by multiple contracts, at various price points and over inconsistent time frames.  Bundling these contracts reportedly saves time and money.

Bundling of major projects does not always mean efficiency.  That is painfully clear through the multitude of large IT projects that have failed in the past.  Auditor generals (federal and provincial) have all sounded the alarm bells on “bundling” of IT projects.  The “one throat to choke” approach that some senior public servants love is appealing initially, but when the project starts failing, it always leads to major embarrassment.  

It also an open secret in this town that the federal government has found itself beholden to large IT companies for longer than the length of the original contracts because of property rights and the complexity of the procurement system.

Shared Services shows that over $650 million of what they deem to be contracts were attributed in the first quarter of 2016. However, at least 74 per cent of that amount was attributed to large integrators. There are other opportunities coming up, mainly in data centres infrastructure, distributed computing, networks and cyber security. Cyber security, especially, will require more investments in the next few years and there is a great opportunity there for local companies.

SMEs can and should be part of the solution, as project leaders, implementers and not-just-occasional subs to large integrators. But IT SMEs will need to make the case for a government that is more "open" to receiving input and support from the same companies that allowed systems to work in the past.

Serge Buy is a senior partner at Flagship Solutions, an Ottawa-based public and government relations firm.