7. INFORMATION TECHNOLOGY EGOVERNMENT INVESTMENT STRATEGY

STRATÉGIE D’INVESTISSEMENT DANS LA TECHNOLOGIE DE l’INFORMATION POUR LE CYBERGOUVERNEMENT

Committee RecommendationS AS AMENDED

That Council:

1. Approve, in principle, the strategic investment model for information technology proposed in this report;

2. Direct staff to provide Council with a multi-year technology “road map” that covers the term of Council from 2009 to 2014, on which future budget and investment decisions may be based; and

3. Subject to consideration during the 2009 budget review process, establish an initial Information Technology Strategic Investment program budget of $8.9M to rationalize the application infrastructure that will result in reduced costs and provide a better platform on which future investments will be based.

RecommandationS MODIFIÉES du comité

Que le Conseil approuve :

1. De donner son accord de principe au modèle d'investissement stratégique dans la technologie de l'information défini dans le présent rapport;

2. De donner instruction au personnel de produire, à l'intention du Conseil, une feuille de route portant sur la période de 2009 à 2014 et devant servir de base aux décisions concernant les budgets et les investissements; et

3. De consacrer, sous réserve de l'examen du budget de 2009, des crédits initiaux de 8.9 millions de dollars au programme d'investissement stratégique dans la technologie de l'information, afin de rationaliser l'infrastructure d'applications de manière à réduire les coûts et à constituer une meilleure base pour les investissements futurs.

Documentation

1. Deputy City Manager of City Operations’ report dated 10 November 2008 (ACS2008-COS-ITS-0001)

2. Extract of Draft Minutes

Report to/Rapport au :

Corporate Services and Economic Development Committee/

Comité des services organisationnels et du développement économique

and Council /et au Conseil

10 November 2008 / le 10 novembre 2008

Submitted by/Soumis par : Steve Kanellakos,
Deputy City Manager/Directeur municipal adjoint,

Community and Protective Services/Services communautaires et de protection

Contact Person/Personne ressource : Janet Harris-Campbell, Director, Information Technology Services and Chief Information Officer

Information Technology Services/Services de technologie de l'information

(613) 580-2424 x21689, Janet.Harris-Campbell@ottawa.ca

city-wide / À l’Échelle de la ville

Ref N°: ACS2008-COS-ITS-0001

SUBJECT:	INFORMATION TECHNOLOGY EGOVERNMENT INVESTMENT STRATEGY
OBJET :	STRATÉGIE D’INVESTISSEMENT DANS LA TECHNOLOGIE DE l’INFORMATION pour le cybergouvernement

REPORT RECOMMENDATIONS

That the Corporate Services and Economic Development Committee recommend Council:

1. Approve, in principle, the strategic investment model for information technology proposed in this report;

2. Direct staff to provide Council with a multi-year technology “road map” that covers the term of Council from 2009 to 2014, on which future budget and investment decisions may be based; and

3. Subject to consideration during the 2009 budget review process, establish an initial Information Technology Strategic Investment program budget of $10m to rationalize the application infrastructure that will result in reduced costs and provide a better platform on which future investments will be based.

RECOMMANDATIONS DU RAPPORT

Que le Comité des services organisationnels et du développement économique recommande au Conseil :

1. De donner son accord de principe au modèle d'investissement stratégique dans la technologie de l'information défini dans le présent rapport;

2. De donner instruction au personnel de produire, à l'intention du Conseil, une feuille de route portant sur la période de 2009 à 2014 et devant servir de base aux décisions concernant les budgets et les investissements.

3. De consacrer, sous réserve de l'examen du budget de 2009, des crédits initiaux de 10 millions de dollars au programme d'investissement stratégique dans la technologie de l'information, afin de rationaliser l'infrastructure d'applications de manière à réduire les coûts et à constituer une meilleure base pour les investissements futurs.

BACKGROUND

Information technology is a fundamental infrastructure required to achieve both short-term operational, and long-term strategic goals of City Council. This document outlines a plan to improve and exploit that infrastructure. The plan takes into account direction from the following:

· 2007, City Council Strategic Plan covering the current term of Council outlining specific strategies and actions that would achieve Council’s service and transformation priorities.

· August 2008, Council-approved recommendations from the Mayor’s Task Force on eGovernment to invest strategically in technology in order to increase the citizen-centric focus of services and deliver improved service at less cost.

· August 2008, the Council motion on the 3-1-1 Contact Centre places strong emphasis on the adoption of comprehensive IT solutions for improving the quality of 3-1-1 services and outcome-based performance. During the preparation of the 3-1-1 business needs assessment, it has become clear that the work being undertaken by the Chief Information Officer and the Chief Technology Advisor to identify strategic IT investment options for the 2009 Budget should envelop the 3-1-1 needs assessment. This broader examination of enterprise requirements supports the Council motion and is a critical first step in building integrated 3-1-1 systems and quality-assurance programming that drive productivity efficiencies and customer service excellence.

· January 2008, IT Services Branch launched an analysis of its primary enterprise resource planning system, SAP, to identify opportunities to further leverage the significant investment in this technology.

· October 2008, Council approved the realignment of the organization under two Deputy City Managers, which included a focus on advancing a culture of service excellence and improving the day-to-day experience of citizens’ when interacting with the City across City services As the changes are implemented over the coming months, the plan will be flexible enough to accommodate decisions made as a result of these critical changes.

The objectives of this plan are to curtail future costs of growth associated with the services provided to its citizens, and support the evolution of the City towards a more citizen-centric business model.

The report has been prepared in advance of the 2009 budget to provide Council with an overview of proposed technology investments in 2009, including the anticipated benefits and contributions to Council’s objectives, and a recommended approach to establishing a long-term technology investment program.

Discussion

Historical Context

Amalgamation was the catalyst for significant investments in information technology between 2001 and 2004, driven by the need for:

· Enterprise-level systems to manage financial, human resource and asset information on Day 1 following amalgamation;

· Business systems to support the harmonized services provided by the new organization; and

· Consolidated and standardized network and technology infrastructure.

The new systems and technologies were major contributors to the City’s ability to manage amalgamation and achieve its objectives. For example, the “Integrated Business System” project invested an initial $39m in new technology that established a foundation for integration of data and information to enable a “total picture” view that supports Council decision-making, and resulted in total projected benefits of $50m by 2010.

Figure 1 – The Integrated Business System project launched in 2001 resulted in an estimated $8.8m of annual benefits, and a planned payback by 2010. Long-term investments typically yield significant benefits

Other systems, such as the Integrated Library System, CLASS/123GO and ottawa.ca, successfully transformed traditional service delivery models by embracing the Internet and significantly improving the customer “experience” with the City.

Since 2004, IT Investment has been characterized by more conservative spending on lifecycle replacement and accommodation for growth in the number of locations and users. And, while historical performance measures (such as budget/expenditure, staffing ratios, “total cost of ownership”) have highlighted the fact that information technology is being managed and supported efficiently, this minor investment added to the ongoing cost structure and complexity of support. The Mayor’s Task Force noted that this was “treating information technology as an expense to manage on an annual basis”, rather than a long-term investment in productivity and service improvement.

Figure 2 - Post amalgamation investment in IT has declined significantly since 2003

Benefits from investment during amalgamation were significant, but have been fully “harvested”. An infusion of funding at a similar level will be needed to achieve further benefits.

A Strategic Investment Model for Information Technology

As suggested in Changing the Conversation, the report from the Mayor’s Task Force on eGovernment:

“We must get away from the incrementalism, short-term thinking and cost-containment ideas that dominate how information technology is implemented today. This thinking not only makes it virtually impossible to achieve transformational change, it actually contributes to building up the cost base. Because minor projects cannot replace existing processes, they become add-ons. Thus they increase cost where they should be eliminating it. Instead of reducing workload, minor projects become one more unintegrated piece that reduces flexibility and requires funding.” [1]

This statement offers a stark assessment of the current situation, and is derived from the observation that investment decisions have not always been based on a multi-year, return on investment (ROI) basis. The Task Force concluded that the current approach would not yield sustainable benefits from information technology.

The IT Strategic Investment Model proposed for the future includes:

· Technology investments should focus on large-scale initiatives capitalizing on existing investments wherever possible, thus yielding the largest return on investment and transforming the way the City’s business is done.

· The investment timeframe should cover a minimum of 3-5 years, with a typical end-to-end window of 5-10 years to realize investment benefits and payback.

· Most plans must be driven by the branches delivering the service, supported by ITS, to ensure that all expenses and all returns are included.

· Specific metrics, both fiscal and otherwise, must be included in plans to allow Council and staff to measure the success of investments over time.

Multi-Year Road Map

Council has directed staff to ensure that each Branch considers technology alternatives, potential investments and identified returns when developing their business plans. Council has also noted the importance of stakeholder consultation and their role establishing policies and mandates for strategic investments in technology.

The City Manager has retained a Chief Technology Advisor to assist Council and staff with implementing the recommendations of the Mayor’s Task Force, including the multi-year “road map”.

ITS is proposing an “enterprise architect” to lead the development of the road map, and to ensure that future technology investments continue to be aligned to the client-centric service delivery model.

The recommended plan takes a pragmatic approach, characterized by initiatives that are necessary in 2009 to lay the groundwork for increased technology investments in 2010 and beyond.

Over the longer term, an infusion of capital investment is needed to realize any significant and sustainable benefits from information technology. It is anticipated that the foundation laid in 2009 will contribute benefits within 2-3 years, with payback continuing through to the end of the next term of Council.

Key elements of the road map are anticipated to include:

· Strategic investments in SAP software to further automate existing business processes that streamline operations, improve customer service, and/or manage future growth without the addition of new operating costs;

· Strategic investments in technologies such as Customer Relationship Management (CRM), Web 2.0, Global Positioning Systems (GPS);

· Identification of both hard and soft benefits and measures to determine the future value of the investments;

· Aggressive consolidation of the 400+ business applications, leveraging SAP and other existing enterprise technologies, such as CLASS, ottawa.ca, electronic records and document management;

· Integrated business planning by City branches that include technology investment plans that describe how technology will enable them to evolve towards a citizen-centric business model.

Short Term Objectives and Spending Plan (2009)

An initial capital requirement of $10m has been identified to initiate strategic technology investments in eGovernment, and is included in the Strategic Initiatives capital budget envelope for 2009 that was tabled with Council on November 4, 2008. The multi-year “road map” to be delivered in 2009 will identify further investments and their respective business case(s) in 2010 and beyond.

Key objectives for 2009 include:

· Develop and present to Council the multi-year road map for information technology that identifies specific initiatives and their associated benefits;

· Establish appropriate definitions and outcome-based measures for “return on investment”, for example financial results, customer satisfaction, and productivity. Ensure that the framework for IT priority-setting and project selection incorporates these elements and supports balanced, portfolio-based decisions;

· Take immediate steps to address known “pain points” with existing enterprise systems (specifically SAP) that may be preventing the City from maximizing benefits.

· Continue consolidation of business applications. For example, replace disparate water, sewer and other infrastructure applications with a fully “Integrated Infrastructure Management System (IIMS)”. Such a system, built on the SAP platform, offers nearly $2m of annual improvements in productivity and cost avoidance when fully implemented, and a means to not only manage the City’s $28B of infrastructure (water, sewer, roads, properties, etc.,) but also to provide Council and citizens with “State-Of-the-Asset” information to guide investment decisions;

· Continue development of 311 business needs assessment, including program areas such as Surface Operations, to identify interim improvements to the MAP case management system that promote a more seamless and timely exchange of service-request reporting data.

· Establish standards and appropriate technology platforms that support a future “mobile” work force. For example, new, stable and secure technologies have emerged that will enable geo-based services, such as Salt Tracking/Management;

· Continue with technology infrastructure lifecycle programs such as data center and server consolidation, and Voice-over-IP (VOIP) with realized and potential savings of nearly $1m from reducing/eliminating many voice network connections. VOIP also has the potential to offer new productivity and service enhancements by integrating voice with data, such as unified messaging and speech recognition, integration with business applications and enhanced video-conferencing and teleworking capabilities;

Specific initiatives to be funded from the eGovernment investment envelope in 2009 are listed in the following table:

Initiative	Objective	Est. Capital Req’t (2009)	Estimated Annual Benefits (when implemented)	Payback, based on fully loaded costs (years)
SAP Configuration and “Usability”	Improve efficiency of real estate management. Improve efficiency of employee move management. Improve efficiency and effort of procurement processes, and access to accurate procurement information. Improve overall administrative efficiency and cost savings by increasing the use of interactive forms.	$2.3m	$0.8m - $1.5m	2-3
Integrated Infrastructure Management (IIMS)	Consolidate numerous public works infrastructure applications into fully integrated management system. Provide timely and accurate data for Council performance reporting (including State of Asset Report SOAR) and customer relationship management (i.e., 311/CRM) Improve internal operations and field operations productivity.	$5.6m	$1.4m - $2.2m	8-12
HR Personnel Processing, Time/Leave Reporting	Expand employee “self-serve” to eliminate manual data entry of employee data by human resources staff. Automate the “on-boarding” process for new employees. Reduce/eliminate manual employee time and master data changes entered in SAP from paper forms and excel spreadsheets	$1m	$1.5m-$2.5m	2-4
Service Excellence Program	Targeted improvements to existing business tools including: · Research and develop new city-wide and ward-based approach to public consultation · Electronic Development Application Forms with fee calculator · Phased expansion of corporate network to employees who currently do not have access to the network. · Expansion of wireless barcode scanning technology to Fleet and General Goods Stores · Project/Portfolio Management · 311 and case management · Strategic improvements to ottawa.ca	$1.1m	$3-4m	3-5

CONSULTATION

No public consultation was conducted, although staff consulted with Rob Collins, Chair of the Mayor’s Task Force on eGovernment.

Consultation with key stakeholders occurred during a “value assessment” of SAP during 2008.

FINANCIAL IMPLICATIONS

A new eGovernment Technology Investment fund (905022) has been proposed and included in the 2009 Draft Operating and Capital Budgets tabled with Council on November 4, 2008. The fund will support the strategic, large-scale investments in information technology as contemplated in this report.

In the interim, staff will proceed to develop the long-term investment plan in collaboration with the Chief Technology Advisor and City branches for Council approval in 2009. The 2009 spending plan may be adjusted at that time to reflect the new “road map” and plan.

SUPPORTING DOCUMENTATION

- Changing the Conversation – Report from the Mayor of Ottawa’s Task Force on eGovernment (April 30, 2008) (Previously issued to all members of Council and held on file with the City Clerk)

DISPOSITION

Should the recommendations be approved by Council, and following approval of the 2009 budget, staff will develop a multi-year technology “road map” covering the period 2009-2014, to guide Council on future technology investment decisions.

INFORMATION TECHNOLOGY EGOVERNMENT INVESTMENT STRATEGY

STRATÉGIE D’INVESTISSEMENT DANS LA TECHNOLOGIE DE l’INFORMATION pour le cybergouvernement

ACS2008-COS-ITS-0001 city-wide / À l’Échelle de la ville

Mr. Steve Kanellakos, Deputy City Manager of City Operations, introduced this item by noting that the above-noted report and corresponding presentation were being brought forward as a result of Council directions of early fall and recommendations of the Mayor’s E-Government Task Force. He advised that the City had retained the services of Mr. Rob Collins to support the City’s Information Technology (IT) strategy. Mr. Kanellakos went on to describe what Mr. Collins’ role would be as well as the process and analysis that had led to the preparation of the current report. In closing, he advised that, since the preparation of the report, staff had further analyzed what could realistically be achieved in 2009 and was hereby reducing the funding request to $8.9M.

Ms. Janet Harris-Campbell, Director of Information Technology Services and Chief Information Officer, spoke to a PowerPoint presentation in which she provided an overview of the staff report. A copy of her presentation is held on file with the City Clerk.

Councillor Bloess referenced the table contained at page 139 of the report and the Service Excellence Program column. He asked why staff would eliminate this if it achieved the highest payback. Mr. Kanellakos indicated the program was not being eliminated. However, some of the items identified in the Service Excellence Program could be accommodated within the broader envelope.

Councillor Bloess asked why the payback period for the Integrated Infrastructure Management was so long. Ms. Harris-Campbell explained that the payback benefits would go directly to those business clients using the system to track the management and maintenance of the infrastructure. Further, she indicated staff was still learning how to measure and quantify enterprise-wide payback across the organization. She submitted that the payback period was a work in progress and would only improve. Mr. Collins felt one of the challenges faced by the City was that it tended to silo information too much, making it hard to look at the whole picture. He stressed that this would need to be improved and a standard language created with respect to returns on investment.

Mayor O’Brien asked if there would be savings identified in the 2010 and 2011 budgets as a result of these investments in terms of departmental budgets. Ms. Harris-Campbell explained that staff first calculated what type of benefits there would be and that she had not yet had discussions with the various departments. However, identifying budget savings would be done after those discussions.

Mayor O’Brien maintained that, if the City had an investment it had to work closely enough with the departments to ensure they were showing a measurable and quantifiable service improvement and subsequent cost control in their budget activities. Ms. Harris-Campbell indicated staff would take this as direction.

Responding to questions from Councillor Chiarelli, Ms. Harris-Campbell indicated there were many changes to come in terms of investments in the 3‑1‑1 system and that this would be part of the multi-year technology road map. However, she explained that the 2009 investment would set the technology platform that would allow citizens to have a one-stop shop into City services through the 3-1-1 system.

Councillor Chiarelli referenced the notion of implementing a City smart card and he wondered how staff intended to break down barriers and begin to move forward in this direction. Mr. Collins felt this related exactly to some of the concerns put forward by the eGovernment Task Force when they talked about a citizen-centric focus. He felt this would be key as he and senior management started looking at front-line service delivery and the processes attached to this. Although he could not yet provide specific information in this regard, he indicated that, having worked with Mr. Kirkpatrick and Mr. Kanellakos, he was encouraged by their motivation to achieve this plan. Further, he believed that recent changes in the organizational structure would have a positive effect in this regard in that these were key in breaking down some of the silos.

In response to a final question from Councillor Chiarelli, Mr. Collins described the City as a target-rich environment in terms of the potential for technology-driven savings. However, he submitted that it could not tackle everything at once. Therefore, he recommended being targeted in the first initiatives and building on those successes.

Councillor Brooks inquired about the life-cycle replacement of desktop computers. He believed there were significant savings to be found by not replacing computers every two or three years. He also inquired about training. He referenced SAP, suggesting that it was under-utilized and he believed that if managers were using SAP, this would result in real time data and efficiency savings.

With respect to the replacement of desktop computers, Ms. Harris-Campbell indicated the life-cycle was approximately five years. She advised that, if the City could extend a computer’s life beyond five years, it would. However, she explained that typically, there was a barrier in terms of updating the computers with security patching and other systems to keep them up to date or the older computers and the operating systems they had would not run the new versions of the technology needed by the clients. Having said that, she maintained that IT did look carefully at trying to re-deploy or re-use the hardware as long as possible. She noted that laptop computers often had a longer life-span. In terms of savings on the purchase of computers, she reported that this year, the infrastructure group had successfully bundled the purchasing needs, resulting in a savings of $233,000 for the procurement target in 2009, 2010 and 2011.

Councillor Wilkinson asked if Committee would receive a picture of the whole road map rather than just receiving updates one year at a time. Ms. Harris-Campbell confirmed that Committee would receive this, but it was not completed in time for the Budget. She explained that the work completed by Mr. Collins would result in a multi-year road map with a bigger strategic picture, which would come forward in subsequent budget requests.

Responding to follow-up questions from the Councillor, Ms. Harris-Campbell responded that the road map would contain a five-year timeframe. Mr. Collins felt that any proposals coming forward had to be useful in Council’s budget planning and long-term planning. He noted that Council could look further out, because it was important to know where the City was going in the long-term, and then to make adjustments along the way. For these reasons, he indicated he had been pushing for a five-year timeframe. Further, he noted that a five-year plan would represent the last year of this term of Council plus the next term. He confirmed that, in the next term of Council, an updated five-year plan would be presented and that regular updates would be provided to show what had been accomplished and how the strategy was moving forward.

Councillor El-Chantiry indicated he wanted to be able to measure the benefits of the City’s investments in IT. Mr. Collins agreed, though he did not believe the City currently had the ability to be as specific as it would like to be in the regard. He suggested this would be tackled in the new year so that such information would be available in time for the 2010 budget. He noted that it had been done previously with respect to the SAP implementation.

Mr. Kirkpatrick recalled that, when the City made investments to implement the real estate asset management program, he had reduced the Branch’s budget by what had been identified as realizable cost savings in the year prior to implementation so the Director had to realize those savings.

Councillor El-Chantiry asked where the City stood in regards to IT investments compared to other municipalities. Ms. Harris-Campbell indicated that, generally speaking, in municipalities or local governments, IT organizations would spend somewhere between about 1% and 5% of the overall budget in technology. She advised that the ITS Branch was around 2% for 2008, putting it at a slightly less than median level.

Councillor El-Chantiry expressed a desire to have greater discussions with respect to the cost/benefit analysis of these investments prior to the budget. Mayor O'Brien suggested that perhaps a technical briefing could be provided to go into it in more detail.

Mayor O’Brien referenced the 8-12 year payback period for Integrated Infrastructure Management, noting that it fell outside of the five-year range. He felt this was unacceptable and asked if staff was prepared to review this with an eye to shortening it to a five-year return, as a maximum. Ms. Harris-Campbell explained that, since the writing of the report, work had continued on pulling out the benefits and she advised that, based on a verbal update she received earlier in the day, the referenced payback period would be closer to seven (7) years. In terms of being able to commit to getting it to five (5) years, she expressed concurrence with the Mayor’s stated position and she indicated staff would continue the work currently underway in pulling out all the investments and assessing the payback periods.

Mayor O'Brien directed that staff take a harder look at it between now and budget time.

Mr. Kirkpatrick indicated staff would take this direction and do the work. Having said that, he reminded members that the current report did not ask Committee and Council to approve the investments. He maintained that staff would come back with a firm recommendation and business case on any of these investments before moving forward with implementation.

At this juncture, Councillor Desroches moved a motion to amend the dollar value referenced in recommendation 3 of the report, as suggested by Mr. Kanellakos when he introduced the item.

Moved by Councillor S. Desroches

That recommendation 3 of the report be amended to reflect a program budget of $8.9M.

CARRIED

Committee then voted on the report recommendations, as amended.

That the Corporate Services and Economic Development Committee recommend Council:

1. Approve, in principle, the strategic investment model for information technology proposed in this report;

2. Direct staff to provide Council with a multi-year technology “road map” that covers the term of Council from 2009 to 2014, on which future budget and investment decisions may be based; and

3. Subject to consideration during the 2009 budget review process, establish an initial Information Technology Strategic Investment program budget of $8.9m to rationalize the application infrastructure that will result in reduced costs and provide a better platform on which future investments will be based.

CARRIED as amended

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[1] “Changing the Conversation”, Report from the Mayor of Ottawa’s Task Force on eGovernment, Chapter 3: Technology as productivity investment, Page 13.