The real cost of digital transformation in government.

The National Post just released a story covering the Government of Canada’s web renewal project and the fact that it’s now six times over budget and only halfway complete. Certainly an alarming overage by any account. — No comment.

Now, of course project scope can change — it usually does. And almost all digital projects come with some level of uncertainty; some unknown scope that requires more effort, and in turn, more budget. It’s why contracts contain language around scope management and the change order process. Rational project owners don’t fear the Change Order — they anticipate and manage it. When building anything — an app, a website, a house — it’s a safe bet to expect the budget you set out with at the start will be somewhat out of sync with the end cost. Maybe the project will be simpler and cheaper than you anticipated! More than likely, it will cost more.

Budget overage doesn’t always mean a project is a disaster. And if managed correctly by both the buyer and seller, it can be a normal course of business. Again, things change, and contracts exist to sort out the way we deal with this.

That said, when I read that a government project is six times over budget, this just screams poor planning, poor estimation, and maybe even signs of the wrong vendor (likely a poor vendor selection process). From our experience, this almost always stems from unreasonable project goals, governance issues, scope definition, and expectation management. For a project of this scale, you can almost expect all of these issues to be true.

“Our evidence shows that projects are costing anywhere from two to 10 times more than they were initially budgeted for.” — Debi Daviau, president of the Professional Institute of the Public Service of Canada

Did they underestimate the scope of effort? Was there no formal and collaborative requirements gathering effort up front to arrive at some shared insight into overall project cost? This is precisely the kind of project planning challenge we created our 4-week sprint approach for — to isolate the initial requirements gathering and planning effort from the implementation, to focus on identifying the real need, and to develop a clear and viable solution first. In our experience, this is the best way to get to some level of understanding of implementation costs.

Reading this article, it seems likely to be a procurement issue. Source a group of large scale partners, give them surface level information, and have them estimate the full project scope without the due diligence of defining cost based on a real, viable strategic plan. This is a common problem in the digital business. “We want to innovate and create real change… how much does that cost?”

The National Post reports that the work was awarded to Adobe Corp. Now, Adobe has a long history within the digital industry, and they’ve certainly scaled up their web software business, adding enterprise CMS, Analytics, and mobile web technology platforms to the mix. But professional services? I’m not sure of a single person that would point to Adobe as a strategic partner in developing a broad web strategy… for an organization, let alone the entire Canadian Government. Assuming Adobe didn’t bring in a strategic partner, this might be a case of wrong vendor.

Next, the article says the budget currently sits at $9.2 Million ($CDN to be clear). It states that the original contract awarded to Adobe Corp. in March 2015 was valued at $1.54 million. Now, for someone that has never been involved in developing a large-scale digital platform, even the smaller contract amount ($1.54MM) may sound like an incredible amount of money. And reading through the list of government agencies and their budgets to port over to the new web platform, again, this sounds like a ton of money! $7.3MM for the CRA, $6.8MM for Health Canada and the Public Health Agency, $2.4 for Innovation, Science and Economic Development, $1.34 for Agriculture and Agri-Food Canada. All of this totaling just short of $20MM for the 90 or so federal agencies to switch to by the end of 2017.

The reality however, for a large-scale web strategy and implementation project, $1.54MM is actually not an unusual budget. It’s certainly a large amount of money, but for this kind of work, it’s a relatively small figure. Where it is unusual is in the case of transitioning an entire government’s web services to a single platform. In that case, this number is ridiculously low. The effort required to put a clear plan in place, taking into account the range of government agencies, the entire network of technologies, addressing the multilingual needs of an entire population, considering security, and adhering to accessibility standards — this is no small undertaking. At best, it’s a multi-year effort requiring a small army of resources. The idea that anyone might think this effort could stay anywhere near the range of $1.5MM is equally troubling to the overage.

GOV.UK — a proper utility for its citizens.

This article really reads like an exposé. It sends the message to the general population that the Canadian Government set out to spend recklessly on some wishy washy website redesign project. In reality, this is a digital transformation effort (hopefully). It may be a poorly planned one, but if the project achieves the goals of what digital government efforts intend to achieve, then the costs will be nominal. If the Canadian Government can simplify, and bring real utility to their vast network of poorly designed, dated, and extremely-frustrating-to-use web services, much like GOV.UK did, then we’re heading in the right direction. If the Canadian Government can make digital a vital part of the services they provide, much like the City of New York has done, then that’s a win for everyone. If the Canadian Government can make digital transformation a priority, much like the Obama administration and their goal to “Build a 21st Century Platform to Better Serve the American People”, then we have true digital leadership at the top levels of the country.

Some of the principles set out in the the City of New York’s digital playbook

In reading this article, as someone who’s devoted their career to the business of digital, and as a Canadian, I care far less about the budget overage. What we should be focusing far more energy towards is getting this right, using the right partners (Adobe?!?), and having a clear, multi-year, long-view of not only what the services need to be, but how they’ll improve the lives of all Canadians.

So, what is the real cost we should be concerned with? Perhaps we need less emphasis on the potential $50-100MM this effort will likely take. Maybe what’s more critical is the thought that Canada, as a progressive nation, could continue to sit on the side lines of digital innovation, missing the mark, and underestimating the vital importance of digital as a means of connecting, assisting, and engaging its population.

Engine Digital is a NYC and Vancouver based digital consultancy focused on helping organizations like the NBA, Lululemon, Western Union, Adidas, and Pirelli Tires, improve the overall customer experience through foundational web, mobile, and social platforms, products, and services. We help our clients invent their future.

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