2023 Reports 5 to 9 of the Auditor General of Canada to the Parliament of Canada
Report 7—Modernizing Information Technology Systems
At a Glance
Overall, the Treasury Board of Canada Secretariat and Shared Services Canada did not do enough to lead and support partner departments and agencies to modernize outdated information technology systems. It has been more than 24 years since the government first identified aging systems as a significant issue and the secretariat still does not have a strategy to drive modernization. As such, progress on modernizing applications and data centres has been very slow. For example, the system supporting the Employment Insurance program—which many Canadians rely on to meet their daily needs—had still not been modernized even though we flagged that the system was at risk of failure in our 2010 audit of aging information technology systems.
In this audit, we found that two thirds of the departments’ and agencies’ applications were reported as being in poor health and in critical need of modernization, but this number could be greater because departments and agencies are not providing the Treasury Board of Canada Secretariat with timely, accurate, and complete information about the health of their systems. This makes it difficult for the secretariat to have a full picture of the work needed and to decide on which systems should be prioritized for modernization. For its part, the secretariat provided limited oversight of most modernization projects and lacked a strategy and concrete plan to support departments and agencies. Its funding approach to address both the immediate and future cost of modernization is inflexible, leaving departments and agencies with limited mechanisms to obtain sufficient funding to meet their modernization needs.
Many aging systems are currently being maintained on old and outdated infrastructure, which is costly, resource intensive, and unsustainable. Outdated systems are also more vulnerable to security breaches. Every day that these systems are not modernized increases the likelihood that they fail and Canadians cannot access the services they need. Better leadership and oversight along with a concrete action plan and funding approach are needed to prioritize critical systems and address the challenges that may arise as systems are modernized.
Key facts and findings
- Only 38% of the government’s approximately 7,500 information technology applications were considered healthy.
- About one third out of the 1,480 applications designated as mission‑critical—essential for the health, safety, security, or economic well‑being of Canadians—were still considered in poor health.
- The Treasury Board of Canada Secretariat had set a target of having 60% of all applications healthy by 2030. Continuing at the current pace, only 45% of applications would be considered healthy by 2030.
- From 2019 to 2023, departments and agencies who reported on the health of their information technology systems did not assess close to 12% of their applications. This means that the overall health assessments of these applications were based on incomplete or inaccurate information.
Why we did this audit
- Departments and agencies are maintaining old and outdated applications and relying on old and outdated infrastructure.
- The failure of information technology systems would significantly affect the government’s delivery of services to Canadians.
- Information technology systems are essential for delivering many of the government’s critical services to Canadians.
- Information technology modernization is an undertaking of considerable size, scope, and complexity. It also requires significant funding and associated resources that departments and agencies may not have.
Highlights of our recommendations
- The Treasury Board of Canada Secretariat should consult with departments and agencies to determine and establish realistic targets and timelines for modernizing applications in poor health.
- In coordination with Shared Services Canada and in consultation with departments and agencies, the Treasury Board of Canada Secretariat should finalize and implement a comprehensive strategy for addressing the information technology modernization needs of departments and agencies.
- The Treasury Board of Canada Secretariat, in consultation with relevant stakeholders, should revise current funding mechanisms or develop new funding mechanisms to help departments and agencies modernize their information systems.
Please see the full report to read our complete findings, analysis, recommendations and the audited organizations’ responses.
Exhibit highlights
The health of departments’ and agencies’ information technology applications increased only marginally from 2019 to 2023
Source: Based on data from the Treasury Board of Canada Secretariat
Text version
This line graph shows that the percentage of departments’ and agencies’ healthy information technology applications grew only marginally from 33% in 2019 to 38% in 2023. These percentages are below the target of 60% of applications to be healthy by 2030.
The percentages of healthy applications from 2019 to 2023 are as follows:
| Year | Health |
|---|---|
| 2019 | 33% |
| 2020 | 36% |
| 2021 | 35% |
| 2022 | 37% |
| 2023 | 38% |
Lack of oversight contributed significantly to the failure of the Phoenix pay system project
The Phoenix pay system project is an example of what can go wrong when an information technology modernization project has little oversight.
In our 2018 report on building and implementing the Phoenix pay system, we found that project executives prioritized meeting project schedules and budgets over other critical elements, such as functionality and security. We also found that project executives did not provide a complete picture of the project’s risks when briefing senior officials. The lack of independent oversight contributed to the project’s failure.
This resulted in significant costs to the federal government and affected tens of thousands of employees. While the project’s total implementation cost is not yet known, the government spent more than $2.6 billion as of April 2022 to further support and stabilize the pay system and to correct pay file errors. The project also did not produce the expected efficiency and cost benefits. In its 2023 budget, the government allocated about $1 billion to the end of the 2024–25 fiscal year for additional work to address pay errors.
Source: 2018 Spring Reports of the Auditor General of Canada, Report 1—Building and Implementing the Phoenix Pay System; 2018–19 to 2021–22 departmental results reports, Treasury Board of Canada Secretariat; and Budget 2023, Government of Canada
Infographic
Text version
Modernizing Information Technology Systems and the Benefits Delivery Modernization Programme
The Government of Canada requires reliable information technology systems to deliver its services to Canadians. Many of these systems are aging and are in need of modernization.
We have completed 2 audit reports on this topic: a report on modernizing information technology systems and a report on the Benefits Delivery Modernization programme.
The Modernizing Information Technology Systems report examined whether the lead organizations supported departments and agencies in modernizing information technology systems.
The Benefits Delivery Modernization Programme report examined the modernization of the Canada Pension Plan, Old Age Security, and Employment Insurance.
Modernizing information technology systems
Overall, the Treasury Board of Canada Secretariat and Shared Services Canada did not do enough to lead and support departments and agencies to modernize outdated information technology systems.
Two thirds of applications were reported as in poor health and in need of modernization.
The Treasury Board of Canada Secretariat lacked a strategy and an effective funding approach to support the modernization of applications.
Many aging systems are maintained on outdated infrastructure, which is costly, resource intensive, and unsustainable.
The Treasury Board of Canada Secretariat’s ability to oversee projects was limited. The secretariat could oversee only 15 to 25 high-risk projects at a time
As of May 2023, the secretariat has monitored 22 high‑risk information technology projects out of the approximately 2,100 active projects. The total planned cost for the 22 projects being overseen was about $5.1 billion. The total planned cost of the 2,100 active projects was about $44 billion. This included projects to develop new applications and infrastructure and to modernize applications in poor health.
Progress on modernizing applications and closing data centres has been slow
Shared Services Canada depends on departments and agencies to first modernize their applications before it can make progress on closing older data centres.
65% of the approximately 4,500 applications had not been modernized. We found no schedule in place to perform this work. Many data centres identified for closure will remain open until modernization is complete. Shared Services Canada had not closed 280 out of the 720 data centres it had identified for closure.
The Benefits Delivery Modernization programme
When faced with ongoing delays, cost increases, and staffing challenges, Employment and Social Development Canada showed flexibility in its management of the programme by adjusting its approach to prioritize the migration of the aging systems to ensure that Canadians continue to receive their benefits.
Three aging systems were in critical need of modernization to ensure Canadians keep receiving the benefits they need: Old Age Security, which is 60 years old; Employment Insurance, which is 50 years old; and the Canada Pension Plan, which is 20 years old.
In 2022–23, the government planned to provide about $150 billion in payments for these 3 benefits to more than 10 million people.
Programme timeline
Estimated project costs have increased significantly since the initial 2017 estimate.
The programme started in 2017 at an estimated cost of $1.75 billion. The expected end date at the start of programme was 2030. The potential delay is up to 4 years at an estimated cost of $3.4 billion or more.
By prioritizing the migration, the much-needed transformation component of the 3 benefits is on hold.
A chart shows how projects begin and end in terms of schedule (time), cost, and the scope of the transformation component of Benefits Delivery Modernization. The chart also shows how Benefits Delivery Modernization is progressing with respect to those 3 items:
- How projects begin: Projects begin by trying to balance costs, schedule, and scope. The scope is to transform delivery and the user experience.
- How projects end: Projects end typically with large cost and schedule increases and a reduced scope. The scope is scaled back or eliminated.
- How Benefits Delivery Modernization is progressing: The Benefits Delivery Modernization programme experienced increases in cost and schedule. What the scope will be in the end is not known. The transformation component is on hold.
As time goes on and estimated costs continue to rise, we are concerned that decision makers may scale back or eliminate the transformation component, resulting in a final product that does not consider the needs of millions of recipients.
The Benefits Delivery Modernization programme is the largest information technology project undertaken to date by the federal government.
This programme is an opportunity for the federal government to demonstrate how it could improve the planning and execution of large, multi-year information technology projects.
Related information
Tabling date
- 19 October 2023
Related audits
- 2023 Reports of the Auditor General of Canada to the Parliament of Canada
Report 8—Benefits Delivery Modernization - 2015 Fall Reports of the Auditor General of Canada
Report 4—Information Technology Shared Services - 2015 Spring Reports of the Auditor General of Canada
Report 5—Information Technology Investments—Canada Border Services Agency
Parliamentary hearings