A lot of money is wasted in failed Federal Government IT projects.
I don’t even know where to begin to explain how brutal this is, but I thought I’d start by looking at an article on the CBC News website by Senior reporter Dean Beeby titled Ottawa turns to U.S. tech giants too often.
I thought it might be useful to try and break down the reasons why Ottawa keeps failing to understand how IT projects work and how to go about procuring the right Canadian vendor (tech speak for finding the right Canadian tech partner).
Let’s get started…
Canada’s home-grown tech companies have long complained that Ottawa keeps turning to giant American firms like IBM for its information-technology needs — and an internal federal report suggests they’re right.
This isn’t just a problem in Ottawa, it’s an issue at the Provincial level too. It’s great that there’s at least an internal federal report that confirms the issue at hand.
If you ever have a chance, ask an IBM’er about this situation. It’s hilarious. They’ll insist that they are under the same rigid procurement or Request For Proposal (RFP) process as any small/medium IT company in Canada. The only difference? They have an army of consultants that lobby procurement.
Unfortunately when it comes to proposals and RFP’s, most small Canadian IT companies like mine might have one or two people responding to RFP’s.
The article continues with comments from Alex Benay, Canada’s Chief Information officer.
“There is a large concentration (almost $10 billion) across a small number of large international companies,” says the study, which examined federal IT spending for the last nine years.
Wow. $10 Billion (with a B). Think about that for a second. What exactly are we getting out of that? Just imagine what a small or medium sized Canadian IT firm could do with even a small portion of that money.
Meanwhile, my company had to fight to validate an audited Scientific Research and Experimental Development (SR&ED) claim that was eventually denied because, and I can’t make this up, our CRA auditor didn’t understand our technology (they were a student). The auditor actually asked if they could follow up with us to help them with their research paper after denying our claim.
“This may indicate that not enough innovation is being developed in Canada, and is not sufficiently diversified across Canadian Small and Medium Enterprises.”
Based on my direct work with multiple levels of government, I can 100% confirm that this is a by-product of government procurement immediately assuming that, for any IT project, there isn’t a company in Canada that can solve the problem. They aren’t even trying.
I once had a government official tell me flat out “Jason, your software product would make it in Canada if you had a major US client, proved the model, and then sold it back to us at a later date”.
“It may also indicate that our IT procurement processes favour incumbents, and don’t foster enough new entrants into the process.”
I’m sorry to say that the IT procurement process is often DEFINED by the incumbent or the soon to be incumbent (i.e. large IT firm).
Imagine if you work in procurement but you don’t have an IT background. You have no clue what to ask for when looking for an IT product, let alone a complex payroll system. You could start doing some research, or you could turn to an incumbent established U.S. IT firm to write the definition around the RFP to save some time and effort. Which would you choose?
It’s pretty simple, if the incumbent or the incoming U.S. IT firm writes his or her own requirements into the RFP, who do think will win the project?
“Use of various data sets and standards makes it virtually impossible to paint a government-wide picture of departmental spending on a vendor by vendor basis”
Forget for a second that I own a Canadian-based IT company. Where is the accountability for all of these tax dollars spent?
I’m going to stop short of an old man rant here, but the age-old argument that “technology is hard” and “unforeseen expenses are bound to happen” is dated and, quite frankly, completely unacceptable.
“Now, Canada’s CIO seems to be saying it too. We could not agree more. This work should be kept as much as possible in house, with the government’s own IT specialists.”
Ugh, yeah, let’s bring it all in house and develop our own software that will essentially compete with a Canadian company that has most likely already built this product. But please, do go on…
“We’ve seen what happens when there’s an over-reliance on external suppliers — the email system consolidation and Phoenix fiascos immediately come to mind.”
Again, see my comment above about not understanding how to properly procure the vendor in the first place. The solution shouldn’t be for Government employees to build their own systems or competing software products.
Benay said in August the federal government spends more than $6 billion annually on technology, and has about 17,000 employees in the sector.
Woof. There it is again… Billions! This is nuts.
Technology is supposed to be efficient and cost effective. The fact that the proposed solution is to “bring it in house”, add more government employees, and increase the budget by another billion or two, should make everyone upset, not just small and medium sized Canadian IT developers like me.
Shout out to Stephen Beck for his great Medium post The real cost of digital transformation in government.