1994 Report of the Auditor General of Canada
Chapter 8—Information Technology: Reaping the Benefits and Managing the Risks—The Rapidly Changing Environment Requires New Approaches to Reap the Benefits of Information Technology
Assistant Auditor General: David Roth
Responsible Auditor: John Adshead
8.1 The effective use of information technology to deliver services that are tailored to the public's changing needs is a priority for government. Information technology offers government the opportunity to deliver more services faster, at the same or lower costs. Information technology also offers significant potential for delivering new services or delivering existing services in ways that provide added value to the public.
8.2 To reap the benefits of the new information technology, the government must change the way it views and uses information and technology. It must evaluate existing processes, look for new approaches, then re-engineer the way it delivers information and services. The government must deliver flexible systems that provide easy communication of information among departments and with the public. This will help consolidate the number of access points for the public and help change the public's view of the government as a number of disparate organizations.
8.3 There are many risks and challenges in implementing information technology today. The rapid changes in technology and the environment in which it is implemented make it essential that government take the leading role in managing the risks that these changes bring. The risks are both internal and external to government; they include organizational barriers, complexity of the technology, changes in the legislative and economic environment, and impacts on public servants. Both management and employees have a responsibility to do their part. Changing the role of information technology in government will require concerted action, vision and authority, to successfully realize the benefits while managing the risks.
8.4 One of the challenges facing our Office is that of finding more effective and efficient means to audit the new world of information technology. We have identified practices that other organizations use to manage the risks associated with technological change and to make more effective use of technology. Using these practices as a foundation, our Office will assess the government's progress in realizing the benefits of technology.
The rapidly changing environment8.5 "Revolutionary" describes the impact of information technology (IT) on business and private lives during the 17 years since our first report on Computer And Information Systems Evaluation in 1977. Increasing numbers of new products hit the market daily. It has been estimated that, on average, each Canadian interacts with over 10 different computers every day. Almost all human activity is affected in one way or another by computer technology. Whether we are programming a VCR, withdrawing money from an automated teller machine, receiving a government cheque by direct deposit, driving a car, or going shopping, technology has radically altered the way we live.
8.6 Whereas just recently there was passive acceptance of information technology, individuals and businesses now develop and run their own on-line systems and electronic bulletin boards; all that is needed is a personal computer and a telephone line. Inexpensive and easy access to networks and other large on-line systems in other sectors increases the pressure on governments to provide electronic access to their services and information. Furthermore, information technology raises expectations of new and improved services and reduced costs.
8.7 The federal government has a significant and growing investment in information technology. The Treasury Board Secretariat estimates that the direct spending on IT-related activities is over $3 billion annually. Since government systems are not designed to gather and consolidate project or product cost information, actual spending including direct and indirect costs may well be twice that amount. The Treasury Board Secretariat's estimate includes over 20,000 people whose combined salaries exceed $1 billion. These people develop, install, maintain and manage over 200,000 workstations, more than 500 mini- and mainframe computers, a multitude of different computer-based administrative and financial systems, and hundreds of IT projects.
8.8 The IT community is growing rapidly, compared with the rest of government. Information technology staff is increasing by about six percent a year and other directly related IT expenditures by almost nine percent a year. To put this in perspective: if a single department were organized to consolidate all federal IT activities, it would have the fourth-largest budget in government, behind those of Finance (which includes interest on the public debt), Human Resources Development and National Defence.
8.9 With such a large and diverse investment in information technology, it is not surprising that we have reported, in the past, cases of significant cost overruns, long delays and questionable benefits. These cases erode public confidence in government's leadership and its commitment to managing the technology investment and guiding systems projects. The complexity of new solutions in complicated, distributed environments is further increasing the risk of failure. The increasing importance and growth of information technology in government will also increase the visibility of IT management.
8.10 Maintaining public confidence will require a dramatic change at the highest levels of government and within the public service. Only leaders with a clear vision of the immense possibilities of information technology will be able to create and implement a powerful and workable strategy for the future. The risks are great but, weighed against the opportunities to reduce costs, streamline operations, and deliver services in partnership with all levels of government and the private sector, the risks of not rising to the challenge are far greater.
How we see the world of information technology8.11 This chapter describes how our Office views the world of technology, and outlines some of the practices we are expecting to find in our audits of information technology, and the concepts supporting those practices. We will assess these concepts against technology's potential to improve service to the public and to increase the value of present and future services.
8.12 Consumers have always judged value on the basis of quality and price. Today's consumers understand value to include convenience, after-sales service and dependability. Government has long recognized that technology can reduce costs or avoid cost increases. Government's challenge will be to achieve these benefits while gaining the added values of convenience and improved service to clients that technology can also provide. To do so, government must challenge the assumptions that support its current approach to technology.
Best Practices Symposium8.13 Responding to concerns of the House of Commons Standing Committee on Public Accounts, the Auditor General of Canada, in his 1992 Report, "committed to a program of reviewing the development of major systems in the government." Across government, departments are planning or developing major administrative and operational systems initiatives for accounting and finance, travel, materiel, inventory management and program delivery. Over the years, we have voiced our concerns about the high cost of systems under development. Public Accounts Committee members are concerned about cost overruns and the effectiveness of government systems. However, we believe there is little benefit in presenting Parliament with only the impacts and the costs of what went wrong. In a time of restraint, our Office hopes to add value by raising issues and problems before further costs are incurred or decisions cannot be changed.
8.14 Our Office, in co-operation with Treasury Board, held a Symposium on Best Practices in Systems Under Development in September 1993. Attended by 125 senior public and private sector representatives, the symposium provided a forum for hearing first-hand from leading experts in the field and for presenting our preliminary findings on best practices in systems under development. The symposium proceedings were subsequently published by our Office, and included what we believe to be the 30 best practices. These practices were the culmination of an extensive literature search, almost 100 interviews in government departments, agencies and private sector companies, and briefs on systems development submitted by major systems integrators.
8.15 Each of the 30 best practices, which should be followed during a systems development project, can be linked to one of three major steps that we expect to find in any government IT project:
- Getting organized. The first step is to adopt a government-wide vision, to ensure that departmental strategies are aligned with that vision and that senior management is committed to and supports the plans, and to secure co-operation at all levels of government.
- Selecting the right projects. The second step is to identify potential projects that support the departmental strategy, to develop business cases for the projects and to select those projects that best support the business plans of the organization and produce the maximum net benefit.
- Managing the projects well. The third step is to adopt and follow good project management practices that ensure that users' needs are met, that the business case remains valid at each phase of the project, and that the project is completed on time and within budget.
8.17 The government projects discussed in this chapter illustrate use of the best practices and how information technology can be used to solve problems and produce benefits. These examples have not been audited. While they illustrate the range of opportunities that can accrue, they are not presented as ideals, or as cases of adherence to all the best practices.
Getting OrganizedSome critical elements of the IT environment that we would expect to find in government organizations before major projects are started:
- An organizational environment that includes an alignment of corporate strategies, plans, policies, methodologies and standards; at the highest level this implies adoption of a government-wide vision that the departments should be in harmony with.
- A management culture and philosophy that favour a business approach to systems development, over a purely technological approach.
- A demonstrated ability of the organization's culture to accept change.
- A flexible systems development methodology that encompasses any size of project and any approach.
- A committed senior management that gives strong support for IT projects, assigns resources appropriately and recognizes the appropriate time to risk unproven technologies or stay with proven technologies.
Central vision and strategy8.18 A clear central vision and a strategy to integrate that vision across an entire organization are crucial if major new systems are to take advantage of the opportunities presented by information technology. The government of Singapore has a clear central vision and a strategy. Singapore presents us with a case of a government taking the lead role and involving both the public and the private sectors. The vision is national. The strategy is to collaborate with the private sector.
Singapore recognized in 1984 that electronic data interchange (EDI), the passing of information electronically, would improve the efficiency of cargo and container handling in its Port. Enormous quantities of paperwork were required to administer the turnaround of cargo ships. Today, 80 percent of all the information required to run the Port is processed through EDI, and about 60 percent of the shipping community are subscribers to EDI. Delivery costs and waiting times have been greatly reduced, and fewer staff are required to handle paper.
At the same time that Singapore introduced electronic data interchange in the Port, it introduced the first EDI system for processing international trade documents. Almost all declarations for import and export of goods are now electronic. Traders can obtain all necessary permits and approvals within 15 minutes, instead of the day or two it used to take for trips back and forth to government counters. The Port and Trade systems are linked so that subscribers get the services of both. Within the Port, the systems can track cargo and container movements and vessel arrival and departure information. These initiatives have helped the Port increase activity from handling 1.4 million containers for 68 shipping companies in 1984 to handling over 8.5 million containers a year for 134 shipping lines.
While working in partnership with the private sector, Singapore has also aggressively pursued the use of technology in government. The Republic of Singapore is highly committed to information technology and believes it is important for the government to demonstrate its willingness to computerize. Over a decade ago, the government established the National Computer Board to promote national computerization in the government sector and to act as a dedicated provider of information technology consultancy services to the government. These services include assistance in defining the mission, objectives and strategies; identification of key strategic application systems to enhance effectiveness and efficiency; management and operation of computer information systems for all departments; and development of national standards and methodologies. The National Computer Board stresses collaboration between the public and private sectors to exploit information technology for national competitive advantage.
The next step for the National Computer Board is called IT2000 - A Vision of an Intelligent Island . IT2000 was the product of a rigorous study of the 11 major economic interests on the island to see how information technology can be used to improve business performance and quality of life. Ultimately, IT2000 sees people doing almost all their transactions with government or private business electronically. Examples include paying bills, submitting applications, and routine shopping. They extend to booking tickets, accessing vast video and reading libraries, browsing through the world's museums and art galleries, and communicating with friends and family.
8.19 While Canada does not yet have a national information technology plan comparable to that of Singapore, a number of initiatives that are under way will result in plans for the use of IT in government and ventures between government and the private sector. All these initiatives have the potential to become part of a national plan.
Treasury Board: setting the vision8.20 Just as business has recognized the need to align its information technology activities with its strategic directions, Treasury Board has recognized the need to align government IT activities with government business activities. With the 1992 publication of Enhancing Services: Through the Innovative Use of Information and Technology , Treasury Board took the government's approach to IT in a new direction. Called Vision 2001, this five-year strategic direction lays the foundation for the future of IT in government. Two significant elements of this vision recognize the need for:
- managing information assets in an information technology environment (for example, process redesign and building the core infrastructure); and
- common and integrated systems and the standards needed to achieve these systems (for example, shared systems).
The Chief Informatics Officer8.22 As information technology began to play a central role in business, companies in the private sector recognized the need for an individual to manage the delivery of IT as a critical resource and to focus on the use of technology to support business issues. Usually, it is the chief informatics officer (CIO) who is responsible for developing the IT strategy and ensuring that it aligns with the corporate strategy. The CIO links IT planning to the strategic directions of the organization and to the use of technology in automating the redesign of the workplace and work processes.
8.23 Consistent with the private sector example, Treasury Board in 1993 created the position of Chief Informatics Officer with a mandate to implement Vision 2001. Creating the position signalled the government's intent to provide leadership in information technology.
8.24 The creation of the CIO function is only one step in providing leadership and the Chief Informatics Officer is only one of many senior government managers who must demonstrate commitment to information technology. Senior management commitment means visibly and continuously championing IT. It means giving the information technology function, within reason, the people and dollars that fit the time-frame and scope of the IT initiative. It means empowering individual public servants to allow them to help themselves. Commitment also means being personally accountable for the successful implementation of IT initiatives.
8.25 The CIO function establishes a single focus for information technology and re-engineering in government. It seeks to answer the need to streamline operations, to re-engineer processes, and to provide an integrated approach to ongoing systems work. A series of committees support the Chief Informatics Officer's activities (see Exhibit 8.1 ). We are hopeful that the position of CIO will help define and implement a clear and flexible architecture to enable the federal government, in partnership with other governments and the private sector, to realize fully the potential of information technology.
The Blueprint8.26 A major element of the government's corporate strategy is The Blueprint for Renewing Government Services Using Information Technology . Released for comment by the President of the Treasury Board in February 1994, the Blueprint presents in draft a detailed framework for using information technology to support government-wide service renewal. Based on directions set out in Treasury Board's Vision 2001, the Blueprint sets out the government's plan for information technology. The vision and the principles detailed in the Blueprint were approved by Treasury Board in June 1994, after extensive analysis of comments from departments, other governments and the private sector.
8.27 The plan incorporates the CIO's expectations for the savings that will result from the co-operative development of shared systems, particularly in the area of administration, where the basic operations of departments are similar. To date, the CIO has endorsed 11 shared systems in the areas of finance, personnel and materiel management, with an estimated cost avoidance of over $200 million.
8.28 This approach contrasts with what has been the practice: each organization building and maintaining its own system. This practice hampered information sharing. It helped create the lack of an integrated government-wide information strategy and contributed to reliance on isolated "islands of information" within departments and agencies. That reliance, in turn, led to increased overhead costs for systems maintenance and data collection and to duplication of information because data could not be shared. Most government information is stored on older, large computer systems known as "legacy systems". The challenge in managing these legacy systems is to find ways to convert information to formats that are readily transferable to other applications and, thereby, to improve government-wide sharing of information while still respecting the legal aspects of privacy and access to information.
8.29 The Blueprint also states that the public and private sectors should have access to the full range of government services through a single service window. Ultimately, this "single window" would allow people to obtain all the services or information they require in a variety of ways, including going to a single government office, communicating from home through a personal computer, touch-tone telephone or interactive television, or through use of a self-service kiosk in a shopping centre. This plan has profound implications for the design of government-wide systems, the building of a common, shared communications network, and the need for interdepartmental agreement on how to share information. It also has profound implications for the organization of service delivery across all federal government departments and with other levels of government.
8.30 Adoption of the Blueprint throughout the public service is meant to improve services to the public and reduce costs for program delivery and overhead. The Chief Informatics Officer has committed to delivering $2 billion in savings and cost avoidance in government departments over a five-year period. Of the $2 billion, the CIO estimates that about $700 million could be saved by delivering programs more efficiently and $1.3 billion could be cut from administrative overheads. The CIO expects that $800 million of the $1.3 billion in overhead reduction could be realized if departments adopted shared systems, or at least chose solutions from a limited number of approved options.
8.31 The Chief Informatics Officer's role is extremely difficult. The CIO must foster the co-operation that is needed to develop a clear vision for both the government and the country. Policies, procedures, security and standards are important, but in our opinion the CIO's prime role is to support the program delivery needs of government departments, rather than to act as a gatekeeper for technology standards.
The Canadian information highway: building the infrastructure8.32 The information superhighway is playing the same role the railway did in the late nineteenth century. Voice, data, wireless, broadcast and cable signals available on the same highway offer the potential for multimedia, interactive and multipurpose access by every home and office across the country. The convergence of the computing, telecommunications and "information" industries in the entertainment, education, health, publishing and government sectors has the potential to transform Canadian society.
8.33 The Canadian vision for a national infrastructure is still in its infancy. Industry Canada's Information Highway Advisory Council has announced that its vision is "to make Canada number one in the world in the provision and utilization of the information highway, creating substantial economic, social and cultural advantages for all Canadians." (see Exhibit 8.2 )
The Canadian Network for the Advancement of Research, Industry and Education (CANARIE) is Industry Canada's main vehicle for encouraging the development of a Canada-wide information and communications infrastructure. Operated and managed by the private sector, CANARIE will be the backbone of a national high-speed electronic network that will give Canadian engineers and scientists access to each other and to a broad range of information services. It involves participants from dozens of public and private sector organizations. By linking to regional and local networks, it will be able to offer access to vast data bases, software programs, electronic mail and data libraries. Its business plan calls for the expenditure of over $1 billion by the year 2000. The federal share, beyond the $26 million approved to 31 March 1995, is now under consideration.
In the first two years of the project, CANARIE focussed on expanding and promoting the use of high-speed networks among researchers, developing test facilities as a showcase for Canadian products and encouraging the private sector to bring innovative network-related products and applications to market. CANARIE's vision is to build on the strengths of Canada's telecommunication and education systems and to respond to future opportunities.
8.34 Other countries have ambitious plans to develop their communications infrastructure. The United States has committed U.S.$2 billion a year to research and development and to applications development for a National Information Infrastructure that will link all schools, universities, hospitals, clinics and libraries by the year 2000. The European Community plans to spend U.S.$3.8 billion over four years for a data highway. Japan is calling for U.S.$200 billion to be spent by 2015 to wire every school, home and office with fibre optic cable.
8.35 Canada is considered to have one of the best telecommunications systems in the world. Its experience with leading-edge telephone and cable technology positions it to deliver the many promised services of a multimedia world. Given global markets and free trade, many experts feel that the creation, movement and use of information will be a major source of new jobs and wealth. If we do not continue to build on our telecommunications base, heavy investment in new infrastructure and technology by other major trading powers could mean the loss of Canada's position as a world leader.
8.36 At risk on the information highway is privacy of information. Security of information held by the government is already a legal requirement. The Canadian national vision will have to address the issue of privacy for both the private sector and the government. Recent surveys show that most Canadians approve of the information highway, but the vast majority have some concerns over privacy and access to personal information. The federal Privacy Commissioner has warned that, unless rules of the road are put in place to protect personal data, the information highway's "first roadkill will be our personal privacy and dignity".
8.37 Building the information highway and making it secure will require leadership and support from all levels of government. Together they will have to develop a national vision in co-operation with the private sector.
Selecting the Right ProjectsSome critical elements that we would expect to see government managers using when they are selecting projects:
- Develop a business case that includes all costs of implementation from training to ergonomic furniture. Constantly review and reassess the business case throughout the project. Confirm that reasons for automating are still valid and timely, particularly for projects of longer duration.
- Link the business case to the corporate strategy and departmental program objectives; include feasibility studies, cost-benefit analysis, risk analysis and a post-implementation review.
- Partnerships, strategic alliances and contracting out should all be considered.
- Before automating a process, use the opportunity to consider re-engineering it.
Developing a business case8.38 Ranking and selecting information technology projects according to solid business cases will require access to reasonably accurate cost information. Current government accounting systems are not designed to easily capture costs for individual projects, nor to record capital investments as one would find in the private sector. Some departmental systems do gather cost information but most current data are in incompatible formats and cannot be easily consolidated. Estimating IT investment in both the public and the private sectors is further complicated because of the many hidden costs. For example, a $5,000 expenditure for a personal computer is captured, while other costs such as training, support services and office re-engineering are seldom, if ever, included in IT cost estimates. By recognizing that these additional costs exist, senior managers can make better decisions and plan to deal with them sooner.
Electronic commerce8.39 Electronic commerce, which means using technology to do business electronically, becomes possible with the information highway. For years, the private sector has used two types of electronic commerce: electronic data interchange (EDI) and electronic funds transfer (EFT).
8.40 Automated teller machines use EFT to give people access to funds from their bank accounts or charge cards anytime, almost anywhere in the world. The use of EFT direct-deposit programs eliminates the costly production of payroll, superannuation and social assistance cheques and has already resulted in significant savings for the government.
8.41 EDI is the electronic exchange of business data between computer applications, in a structured format and using a communications link. Part of the government's Strategic Direction for the 90's is to use electronic commerce as a tool to fundamentally change its business practices from paper-based document processing to a totally electronic environment, with a goal to be paperless by the end of the decade. With an estimated $28 reduction in the total cost of each business transaction using EDI, the potential saving on 17 million annual government transactions is significant. EDI helps improve storage and retrieval and lets many users access the same information at the same time.
Customs Automated Data Exchange (CADEX), introduced in Customs and Excise in 1988, allows brokers and importers to transmit entry data to the Department to speed the release of merchandise at the border. CADEX also lets Customs transmit accounting statements to importers. The response time for importers has been reduced from 10 days to 30 minutes and the government keys the data only once. Today, brokers and importers submit 8 million electronic documents a year, using CADEX. Revenue Canada estimated that the pay-back period for the system was less than two years.
8.42 Electronic data interchange also makes possible significant productivity gains in time, money and quality. Both the public and the private sectors need more data and more complex data interactions to support their business functions. Data manipulation is the value-added process that transforms data into information and makes it a valuable resource. The private sector, driven by competition, is changing the way it views information. The federal government, faced with fiscal pressure and public demand for improved service and access to information, must do the same. Government has historically seen information as a cost. Tools such as EDI can provide an opportunity to use information for its strategic advantage: not only to reduce costs but also to offer new services and to improve existing services.
Electronic Filing (EFILE), at Revenue Canada, is an example of how the government changed the way it does business and, in the process, reduced costs and improved service. For years, private sector taxpayers used computer programs to prepare their tax returns and sent a printed copy to Revenue Canada. Now, with EFILE, personal income tax information is sent electronically.
Taxpayers using EFILE receive their assessments and tax refunds sooner. Assessments for electronic returns are processed within about 14 days, compared to the usual three to six weeks for paper returns. For taxpayers requesting direct deposit of refund cheques, the processing period under EFILE can be as short as eight days. In its second year of nation-wide operation, about 3.2 million taxpayers used EFILE (about 16 percent of personal tax return filers).
EFILE substantially reduces the cost of tax administration. It offers the Department opportunities to streamline its operations, to reduce the cost of entering information from tax returns into its computer files, to reduce keying errors and arithmetical errors on tax returns, and to reduce its storage requirements. Human resources can be redeployed to other activities and the paper burden is reduced.
The EFILE case portrays some of the important elements in selecting a project. The project fitted a business case: most of us need to file tax returns and it is easier to do this electronically. Some re-engineering took place; for example, receipts no longer have to be filed and the computer reviews tax returns. The Department developed EFILE in co-operation with private sector organizations such as the telecommunications industry, developers of tax preparation software, and tax professionals.
8.43 The potential benefits of electronic data interchange and other types of electronic commerce technology are substantial for government. While there has been some progress, the government has been slow to realize the benefits of EDI, especially in the areas of procurement, payments and revenue collection. Another dimension is also worth considering. The costs for certain types of IT development are prohibitive for the private sector if the market is not large enough to support a return on the investment. As one of the largest potential EDI users in Canada, the federal government, by selecting a standard for EDI processing, can help set a national standard for electronic commerce across Canada and help promote private sector investment.
The Silver Dart Project, named after the aircraft that in 1909 made the first powered, controlled flight in Canada, is attracting the attention of students, the general public, and museums around the world. Launched by the National Aviation Museum in November 1993, this multimedia kiosk system is an electronic encyclopedia that allows users to browse through images of airplanes in the museum's collection, see video clips of them in action and hear the roar of their engines. A wide area network (WAN) will allow remote access to the collection, and this will be the first time in North America that a multimedia system with full-motion video will be put on a high-speed WAN.
A remarkable feature of the project is the number of partners from both the public and the private sectors who collaborated on its development. The development time and costs, and the resulting risks, were reduced by using industry-standard equipment and software at each step of the design process. In four months, the Museum had the first version of a system that it could not have afforded to build on its own. The interest of private sector companies in a project using digital video servers and data base technologies led to a partnership of private and public sector organizations who worked together to make the collection "come alive" (see Exhibit 8.3 ).
Process re-engineering and cultural change8.45 Process re-engineering evokes images of radical change being made through designing entirely new processes. Process redesign simply looks at existing procedures and decides if they are necessary or if the whole process should be discarded. If a procedure is not necessary, the process is redesigned without it. If the process is needed, it is redesigned to work more efficiently.
8.46 An essential element of redesign is benchmarking, or establishing measures of performance. As auditors, we expect that measures of performance would be developed and reported to management to provide information on how well projects are progressing and achieving their intended benefits.
8.47 The surrounding business processes must be rethought before manual processes are automated or a system is upgraded. A large part of what this revolution in IT is all about is cultural change, a change in mind-set based on a re-examination of how government operates and a reassessment of who its clients are. One of the business redesign themes of the Blueprint is the "single window" concept. The Canada Business Service Centre concept is one of the government's initiatives to move toward a "single window" concept.
The Canada Business Service Centre (CBSC) is an example of process re-engineering: organizations working together, providing a single, integrated, common service. This initiative is a collaborative effort of many federal departments, provincial governments and the private sector.
A convenient single-window access point makes it easier for businesses to deal with government. The program responds to frustrations expressed by business clients about the number and duplication of federal and provincial government programs, services, regulations and other business-related information. A network with at least one Centre in a major urban area of each province was in place by the summer of 1994.
Centres offer a variety of products and services tailored to assist clients in quickly obtaining accurate and comprehensive information directly or through information officers. With automated call-in and dial-demand service, clients can use their touch-tone telephones seven days a week, 24 hours a day for access to the condensed information from the Business Information System. This information describes services, programs and regulations, and highlights responsible departments or organizations with whom the client may wish to communicate. Some offices also offer an automated voice response system that provides a menu of information on frequently asked questions. For more in-depth enquiries, Business Centres plan to establish collections of information on business products and research capabilities, in the form of interactive diagnostic software, videos, publications, business directories, how-to manuals, CD-ROM products and external data base access.
Sharing facilities with the provinces can save money and allow businesses to cut through the confusing maze of government bureaucracy and find an answer to their information needs under one roof.
8.48 Re-engineering poses some special challenges in the public sector. Federal programs are mandated by Parliament, and changes require consultations with many different interest groups. The next hurdle is an open and fair procurement process, which takes much longer in a government environment. In the meantime, the technology underlying the re-engineering project may become obsolete or dated, especially in projects that span several years. The bureaucracy, if not consulted adequately, can also resist change. Responding to these challenges requires sensitivity to the problems, and leadership that encourages education and training.
Managing the Project WellSome critical elements of good IT project management that we would expect to find:
- Previous experience with similar projects.
- Processes for quick decision making, funding and procurement.
- Projects with short-term delivery dates (a project due for delivery in five years will most likely be obsolete by the time of completion).
- Larger projects divided into modules with short-term deliverables.
- A team with the right mix of business and technical skills to get the job done.
- Team continuity throughout the project, especially at the level of project leader and manager.
- Plans for the management of change.
- Plans to meet the training and development needs of staff.
8.50 Risk and impact assessments of projects or ongoing project monitoring will be expected for all IT activities. Assessment and monitoring are two of the tools needed by government to deliver projects that meet user needs on time and within budget. These tools must also yield the information needed to determine when to continue, or when to end projects that are no longer beneficial.
8.51 The range of government initiatives, from small micro-computer applications to multimillion-dollar mainframe and telecommunications applications, makes it unrealistic to establish one set of rules for all projects. However, the development of high-risk, major computer systems merits special attention. There is no "magic formula" for delivering successful systems. But recognized guidelines based on proven management principles give major projects a more than reasonable chance of being delivered on time and within budget, while meeting users' needs. While an adaptive approach using selected components of a systems development methodology may be acceptable for small pilots or medium-sized projects, project management and control issues are critical for major capital projects.
Change management issues8.52 Realizing the benefits that information technology can generate, when it is used as a catalyst for re-engineering, requires a "people" plan for managing workplace change. The elements of that plan are full, continuous, open information on business goals and expected results; worker consultation and counselling; career review and planning for education in new skills; and meaningful and responsive methods for dealing with worker suggestions and concerns. Most people are open to change; they are, however, slow to adapt to change unless they see themselves reflected in it. They will often respond with amazing speed if they see their work becoming more meaningful. People want to know that they can make a difference. Learning about change through rumours or the media is one of the major contributors to low staff morale. It is management's responsibility to deal with technological change in a forthright, honest and genuinely open manner and to prevent the often negative effects of the information "grapevine".
8.54 Because information technology can often result in dramatic changes, the government must recognize the importance of managing the effects these changes will have on its employees. The change management challenge is to ensure that there are appropriate methods and support systems to facilitate transition. As an employer, government must communicate clearly and often about what is to be changed, and provide training, support and leadership to help employees through the transition. It must also recognize the extent to which change has already had an impact on people's attitudes, expectations and levels of technical competence.
The Income Security Program Redesign at Human Resources Development Canada is one of the largest redesign projects under way in government. Specific objectives of the redesign are maintenance and improvement of client services, security and accuracy of information, flexibility and responsiveness of program delivery processes, and operational efficiency.
Existing procedures and tools for delivering benefits under the Canada Pension Plan, Old Age Security, Guaranteed Income Supplement and Child Tax Benefit programs make it impossible for employees to provide the levels of service already demanded by clients, or to deal with an expected 40 percent increase in demand over the next 15 years. While employees now dealing directly with clients can accept applications, queries and data, they rarely can provide an immediate response. Transactions pass through many hands; sometimes they are processed many times and can take several weeks to complete. Moreover, the programs are supported by a number of computer systems, some a quarter of a century old. Lack of integration and the age and design of the programs make them difficult to maintain, expensive to operate and virtually impossible for users to work with by direct access.
The redesign involves people, organizations, structures, processes, systems and communications. Only 30 percent of the costs for this change are technology-related. Management of this project is particularly concerned with client outcomes, doing it right the first time, providing good client service and ensuring that the right tools are in place to do the job.
The managers of this project have not underestimated the need to manage changes resulting from the re-engineering process. They recognize that it is just as important for the employees to "buy into" the project as it is for the clients. Improving communications systems and issuing timely news bulletins and information brochures to keep the staff informed and involved in the process have been a priority. There are detailed plans for the assessment of development needs and the implementation of training programs for staff. The new system is designed to empower the employees to make more decisions and take more responsibility, thus speeding the service to clients.
The system is being delivered in stages. Availability of the complete system is expected in 1997. As improvements are made in client service, annual operating costs are expected to decrease and significant savings are expected from reductions in numbers of incorrect payments. Cost avoidance (the difference in cost between the old and new ways of doing business) over 15 years is estimated by the Department to be about $1.8 billion, compared with a total project cost of $285 million.
8.55 To be successful, a learning government has to be courageous enough to try new methods, at the same time practising innovative human resource management.
Future Audit Plans8.56 During a period of change, all organizations, including governments, must adapt in order to harvest the opportunities and potential benefits that come with change. Committed and progressive leadership is essential if government is to seize ownership and manage information technology to realize its vast potential. In the absence of leadership, the many challenges facing government will not be met.
8.57 During this time of change, we view our role as helping government to minimize the negative impact of change and to realize value for money from its investment in people, hardware and software. Our priorities will be determined by the "best practices" we have identified. We expect that these practices will result in the identification of projects that will, upon successful implementation, provide the highest net benefits.
8.58 This role requires that we change our current approach to systems audit. Rather than audit completed systems, we will focus on data integrity, control, security and management issues as the system is being developed, to help eliminate the expensive process of addressing these issues once the system has been fully developed and implemented.
8.59 In keeping with this role, we have initiated a Systems Under Development study to review large, multimillion-dollar systems currently under development within government. Our audit criteria and methodology have been updated and revised to reflect feedback from both the Best Practices Symposium and the information technology community. During the next few months, the revised criteria and methodology will be used to assess a number of major systems under development at different points in the development process. The findings of this audit will be reported in 1995.
8.60 Our Systems Under Development initiative is centred on the major, multimillion-dollar system projects. We will also continue to audit smaller, less costly systems during the course of our normal audit work in departments, because the total expenditure on these smaller systems is greater than the expenditure on the major projects. The Systems Under Development methodology will become part of our annual value-for-money work and we will continue to follow how well these projects are being managed and the level of risk to which they expose the government.
8.61 Over the next several years, we will be looking to the Chief Informatics Officer to provide the focal point for achieving the promised cost savings and improved services. We also expect that the current role of the internal audit function in government will change. In many organizations, the internal audit role is already seen as assisting the organization to avoid failure, rather than reporting failure after the fact. This advisory role for internal auditors requires that they be involved at each important phase of a major project. The key to success in using this approach is to involve internal auditors early enough in the project so that critical findings can be reported in time to take corrective action.
8.62 In all our work, the focus will be on the use of technology as an effective tool to improve service delivery and to reduce program or operating costs. The use of best practices, effective project management and project selection criteria, and the extent to which project objectives and deliverables are achieved will be assessed as part of our ongoing monitoring and reporting program. We will know that this monitoring and reporting program has been effective and that the Office has made a difference if, over time, we can report that the risks to government have been reduced and that the potential gains from the implementation of information technology are being achieved across government.