This week’s federal government cabinet shuffle could have an impact on the way some IT service providers conduct business with Ottawa, according to several industry observers. But this will only happen if the government looks toward IT service providers that specialize in replacing legacy systems and driving automation.
The moves that will interest government contractors most include former Canadian Alliance leader and Okanagan-Coquihalla MP Stockwell Day’s appointment to lead the Treasury Board and Edmonton-Spruce Grove MP Rona Ambrose’s new responsibility as the Public Works minister.
Day, who earned his reputation as a cost-cutter while serving as Alberta’s finance minister in the 1990s, is widely expected to try to erase Canada’s growing deficit with significant cutbacks to government services.
For John Reid, president and CEO at the Canadian Advanced Technology Alliance, the need to reduce the budget of various ministries — such as Public Works — will probably have many in the IT community expecting reduced business opportunities. But while this might be a reality for some IT contractors, Reid points out that the government might actually turn to certain technologies in order to get more efficient.
“If you’re sitting with a technology that really drives organizational efficiency and introduced technologies for organizations will legacy systems, then your business might increase because there will be more opportunities,” he said. “It really depends where you sit on that spectrum.”
Reid added that the Treasury Board’s expected cost-cutting agenda mirrors what has happened recently in the private sector, as many enterprises built up a demand for modern technologies and streamlined processes.
Bernard Courtois, president and CEO of Information Technology Association of Canada, said Day’s appointment definitely underscores the government’s intention to eliminate the deficit, but argued that this isn’t something most IT people are complaining about.
“The IT industry doesn’t want government to spend more money than they should to operate,” he said.
To achieve its goals of eliminating the deficit, avoiding cuts to government services, and not raising taxes, Courtois said Ottawa should look at automating more of its functions. And with 40 per cent of civil servants eligible to retire within the next five years, he added, IT technology and services will become essential to run the government at a low cost with fewer people.
“A lot of the major systems in government are rusting out and have been in place for over 15 years,” Courtois said. “Government needs a concerted strategy to replace them or they’re going to fail.”
If this strategy comes to fruition, systems integrators, operational improvement consultants, business intelligence providers, application builders, social networking experts, and other service providers that deal with modern technologies will be in good shape, he said.
Of course, all of this rests on whether the Day actually recognizes IT’s role in driving efficiency and automation which, according to other market-watchers, is still up in the air.
Chris Bishop, president of Oakville, Ont.-based market research firm Public Sector Research Inc., noted that none of the government’s stimulus spending went to IT projects in the federal government.
He said that driving efficiencies ranks as one of the toughest objectives for the federal government to pull off. “You have to spend money to save money and efficiency is last on the list because it’s the toughest to do,” he said.
Cost-cutting initiatives such as a head-count freeze, department review programs, and delays in capital projects are often higher on the list, Bishop said.
In the other big change affecting the IT industry, Ambrose will be taking over a Public Works department that has made some positive strides recently in both streamlining the way it operates as well as engaging IT contractors on the work its doing, according to Kelly Bizeau, president of Ottawa-based MarketWorks Ltd.
“Cost savings are a good thing for the taxpayer, but streamlining IT is a challenge for (service providers),” said Bizeau, whose company aims to help IT service providers get access to both public and private sector contacts.
“They’re stuck between a rock and a hard place.”
But despite the fact that government is in a position where it has to save money, Bizeau is expecting a fairly “smooth transition” for government contractors.
As for the new faces themselves, Bizeau said Day is probably the right guy at the helm to make the necessary cuts. She added that Ambrose’s appointment might be good news for smaller service providers considering her reputation as a “big supporter” of SMEs in Canada.
Courtois agreed with Bizeau, but added that Ambrose will have to work very hard to simplify the way smaller IT service providers can interact with the government.
“The whole process should be automated,” he said. “The toughest thing for a small business to do is deal with all the complexity and paperwork involved (in the procurement process).”
Another higher priority for Ambrose, Courtois said, should be to work with Day and other government stakeholders to determine how federal departments can manage these IT projects more effectively.