09/11/2011 02:29 EDT | Updated 11/11/2011 05:12 EST

Report cites costs, few immediate savings from fed plan for new data centres

OTTAWA - An ambitious project to centralize the federal government's far-flung data centres will take at least a decade, and require up to $278 million in new spending, an internal report concludes.

The findings raise questions about whether the far-reaching plan will help eliminate the federal deficit by 2014, as promised by the prime minister, or simply aggravate Ottawa's money woes in the short term.

The $2.5-million report by PriceWaterhouseCoopers was commissioned by the Public Works Department to provide strategies for cutting 308 federal data-processing centres down to fewer than 20.

Prime Minister Stephen Harper said during an election campaign stop on April 8 that "consolidating our fragmented computer systems" would help produce some of the $4 billion in annual savings he needs to balance the books by 2014.

"We know we can save all kinds of money there," Harper said.

But the internal report, obtained by The Canadian Press under the Access to Information Act, suggests any projected savings are long-term, with consolidation complete only in about 2024.

"Data centre transition of service delivery and transformation of the environment is not a low risk undertaking," warns the document, dated April 25, and stamped "protected, private and confidential."

On Aug. 4, Public Works Minister Rona Ambrose and Treasury Board President Tony Clement announced the creation of Shared Services Canada, a new agency that will take over data-processing, email and networking for some 44 departments over the following two months.

The agency will "streamline IT (information technology), save money and end waste and duplication," Ambrose said, and will help the government return to balanced budgets.

Shared Services Canada is in the process of taking over the departments' information-technology budgets, worth $2 billion. And long before any consolidation occurs, the new agency has been ordered to prepare proposals for cabinet this fall to trim its current budget by five per cent and 10 per cent.

If implemented, the savings would be between $100 million and $200 million — though timely delivery of those cuts would be challenging for an agency that has barely set up a head office, much less begun the difficult process of rationalizing a hodge-podge of computer systems.

The PriceWaterhouseCoopers report notes the 308 existing data centres cost $822 million to operate each year, almost half the money going to pay some 4,000 technicians. Chopping up to two-thirds of labour costs, along with other measures, could eventually save between $45 million and $293 million.

"The largest quantified opportunity for cost reduction is in the labour category," it concludes. "The business case for this strategy, to achieve its maximum benefits, will have significant labour implications."

The report suggests the data centres are overstaffed, and the technicians overpaid, compared with the private sector.

But Ottawa would also have to spend between $145 million and $278 million in one-time costs to help achieve those savings — apart from any new capital costs, which the report does not calculate.

The document cites the success of the Ontario government, which streamlined its systems beginning in 2005 and has saved about $100 million annually, or 10 per cent of its information-technology costs.

But other jurisdictions have had disastrous results.

This summer, for example, the government of Western Australia shut down its shared-services agency after a report found it actually cost taxpayers tens of millions of extra dollars when it was supposed to save $56 million annually.

By early next month, about 8,000 federal workers are to be brought under the umbrella of the new Canadian agency, though there will be no location changes for now.

The agency's president, Liseanne Forand, is giving a private briefing on her plans at a closed business event scheduled for Tuesday in Ottawa.

Forand also had a one-hour meeting last Thursday with Gary Corbett, president of the union representing the 8,000 technicians.

Corbett, of the Professional Institute of the Public Service of Canada, said the meeting went poorly because Forand provided almost no information.

"There's really no business case, there's no human resources plan," Corbett said in an interview. "They're winging it. ... They're living in a bit of a dream world."

A spokesman for Public Works did not respond to requests for comment on the consultant's report.