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Growth Management Studies: 1 


Terry Russell 
James Evans 
Michael Fick 





4 ~ 

1 O e> ** » 

1984, Revised October 1988 
ISBN NO. 0-7729-4922-0 

For additional copies please contact 

Communications Services Branch 
Ministry of Revenue 
33 King St. W. 

Oshawa, Ontario 
L1H SH5 


















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BIBLIOGRAPHY, see Study 2 




General Approach & Methodology 

Principles & Business Practices 
Strategic Direction & Co-ord'n 
Program Ping & Project Mgt 
Life-Cycle Mgt & Reviews 
Human Resources Planning 
Role of Internal Auditor 



Purpose, Principles & Approach 
Need for EU Technology Strategy 
End-User Training & Support 
EUCT Policies & Standards 
Data Management & Security 
Finance and Integration 


Since the mid-1970s the Ministry of Revenue has invested heavily in 
information technology to deal with workload growth and new programs in the 
face of continued budgetary constraint. This has involved the preparation of an 
ongoing sequence of business plans and associated investment requirements. 

An important part of this process was an assessment of how our planning and 
management practices should be strengthened to command the increasing mass 
and diversity of installed systems and to exploit new technological 

Also, in 1984 the Technology Directions Committee of Deputy Ministers 
commissioned a series of studies by ministries as part of the development of an 
overall Information Technology Strategy for the Government. This is one of 
two studies undertaken by the Ministry of Revenue. 

Our mandate in this study was to demonstrate a general methodology for 
integrating business and technology planning and management, based on 
commonly accepted principles and 'best practices'. Our second study deals with 
the particular requirements of an investment strategy involving rapid 
expansion of end-user computing and communications systems. 

Originally published in 1984 and 1985, the studies have been reprinted for 
continued use within Revenue and to fulfill external requests for copies. In so 
doing, they have been edited, hopefully, to improve their clarity, and revised to 
reflect some of our recent experiences in technology management. However, 
information technology is a fast changing field and we have chosen to defer a 
number of newly emerged issues and developments for fuller treatment in 
forthcoming studies. In the meantime, we believe the basic principles and 
methods described in Studies 1 and 2 remain valid. 

In revising these studies, we were helped by many colleagues in the 
Ministry of Revenue. Foremost among these were Mary Proc, then Executive 
Assistant to the Deputy Minister and now Director, Taxpayer Services Branch; 
John Randolph, Executive Director, Information Technology Division; Fred 
Stephens, then Acting Assistant Deputy Minister, Tax Revenue and Grants 
Program; and Ed Farragher, Director, Personnel Services Branch; David Stones, 
Director, and Cathy Neal, Communications Assistant, Communications 
Services Branch. 



Terry Russell is Deputy Minister of Revenue; 

James Evans is Director, Finance & Priorities Planning 
Branch, Ministry of Revenue; 

Michael Fick, formerly Senior Manager, Integrated Office 
Systems, Information Technology Division, Ministry of 
Revenue, is now Manager, Information Systems, Goodman 
and Carr. 




The purpose of this study is to advance a general methodology for 
planning and managing information technology investments, in direct support 
of an articulated set of business development objectives. 

The paper is written primarily for ministry executives and program 
managers who are not themselves information systems specialists, but who are 
responsible for establishing investment strategies and approving projects, and 
are accountable for achieving planned business results. 


Recent years have seen a dramatic acceleration in the supply of 
competitive products across the full spectrum of information technology (I/T). 
One salient feature of this 'technology explosion' is the proliferation (and short 
shelf-life) of fashionable prescriptions of how to exploit and control technology 
for profit and fun. 

In contrast with the confidence and elegance of management theories are 
the decidedly pragmatic ways organizations, by accident or design, manage 
technology in practice. In short, empirical observation and experience provide 
ample warning that there are no universal and proven methods which can be 
applied with textbook certainty among diverse organizations. 

More recently and to their credit, some writers have recognized the 
dangers of undue reliance on highly formalized management structures and 
procedures. Instead, they have emphasized the importance of such 
entrepreneurial qualities as business savvy, initiative and staff motivation. 
While the writings on managerial 'excellence' rarely amount to more than 
generalized exhortations to do well, they are at least encouraging in stressing 
the need to provide on-site managers with the support and freedom they 
require to bend technology to their business needs under imperfect conditions. 


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In terms of size and diversity, the Ontario government is comparable to a 
large industrial sector. Operationally, its numerous ministries and agencies are 
better characterized by their differences than by their similarities. Indeed, their 
basic rationale is that they provide the means by which a largely heterogeneous 
assortment of programs can be divided into manageable groups, in much the 
same way as large industrial conglomerates comprise diverse subsidiary 
enterprises. 1 

We contend, therefore, that any general 'Information Technology 
Strategy' for the government must accommodate, and indeed encourage, 
differences in the ways ministries use and manage technology. Accordingly, we 
have argued elsewhere that the reconciliation of central agencies' and 
ministries' interests requires new forms of results-oriented contractual 

1. At the Government Level 

It is commonly agreed that the present mass of administrative directives 
governing ministries' use of I/T should be rigorously culled and simplified to 
achieve a better fit between the essential requirements of accountability and 
operational flexibility. In particular, the processes by which ministries' plans 
and choices are approved should be revised to purposely speed up the 
exploitation of information technology across the service. 

2. At the Ministry Level 

In return for more tactical freedom, however, it is reasonable that 
ministries should be expected to demonstrate their ability to plan and manage 
investments effectively without step-by-step scrutiny. 

The fact that the range and complexity of I/T systems varies greatly 
among ministries suggests that they should be treated differently, at least 
initially. The objective should be to allow experienced ministries to press on 

1. See George Bell and Andrew Pascoe, The Ontario Government: Structure and Functions 
(Toronto: Way & Thompson, 1988). 

2. See T.M. Russell, "Challenges and Promises of Technological Innovation", 18th National 
Seminar, Institute of Public Administration , Toronto, October 1985. 


with minimum supervision, and to assist others to acquire the expertise 
necessary for more ambitious levels of activity. 

Under this approach, the treatment of ministries would depend on 
their ability to meet common standards of competency, such as: 

• Clear Business Plans and Objectives: "Can the ministry 
demonstrate exactly what it wants to achieve with I/T in 
terms of improving its program deliveries and operational 

• Coherent Long-Range Technology Strategies: "Does the 
ministry know where it's going in terms of a viable 
'architecture' governing systems selections, development 
and co-ordination?" 

• Effective Management Base and Practices: "Do they know 
how to direct, finance and manage investments through all 
stages of planning, implementation and life-cycle opera¬ 
tions to achieve planned results within stated cost limits?" 

• Sound Track Record: "Are their claims and plans 
supported by convincing and sustained past successes?" 

Alternatively, those ministries which are less advanced techno¬ 
logically would be required to observe a fuller set of 'training rules' 
concerning product selections and project approvals. In such cases, 
however, the weight of scrutiny should be tempered by substantial central 
assistance in building the bases for greater independence. 


The basic premise of this study, therefore, is that each ministry must 
go through the process of constructing technology planning and manage¬ 
ment practices to fit its own business requirements and operating 
circumstances. While this process will inevitably vary among ministries, 
we summarize it as involving two stages. 

First, we describe in Chapter II how a ministry might usefully review 
its past performance in using information technology, as a necessary basis 


• assessing the need to strengthen its ability to plan and manage 
technological change; and 

• establishing business targets for future investments. 

In Chapter III we suggest that each ministry should also enunciate a set of 
general principles which will govern the introduction and use of information 
technology, and which will provide a common understanding of the 
responsibilities of executives, managers and staff. 

Our second stage involves how a ministry might then proceed to 
strengthen its technology management capacity. In Chapter IV we present a 
summary model of an integrated approach to business and technology planning 
and management, the parts of which are explained in greater detail in 
subsequent chapters in Part B. The purpose of our model is to identify the 
essential practices and functional relationships of a 'complete' planning and 
management sequence. 

Finally, Part C contains appendix notes on two additional components of 
technology management: namely, human resources planning; and the role of 
the Internal Auditor in verifying the business and operations viability of 
investment decisions. 


This paper is not a manual of technology administration. Nor is our 
model intended to prescribe exactly how ministries should conduct their 
technology business. As we have already stated and will emphasize 
throughout, management practices and processes must be flexible. 

• Flexible Organization: Each ministry should be allowed to 
decide how best to organize its technology business. (Indeed, 
technology management may vary significantly in form and 
intensity within a ministry to reflect differences among 
constituent programs.) 

• Flexible Compliance: Managers should be encouraged to 
exercise professional judgement in following rules. With 
training and experience, observance of the essential 


requirements of mandated practices should be instinctive rather 
than a matter of 'by-the-book' regimentation. 

• Flexible Application: Similarly, the time and effort given to 
proofing investments should always be proportionate to their 
size and complexity. Expensive multi-stage projects require 
more attention than small standalone applications. Projects 
should not be 'studied to death'. 

Finally, we maintain that the ultimate test of any management system is 
the achievement of planned results. Stripped of its structural complexities, our 
model contains a core of 'best practices'. If these are accepted as necessary for 
success it is reasonable that ministries should be expected to demonstrate their 
fulfillment in substantive terms, as a basis for Management Board approving 
their strategic plans and exempting individual projects from detailed 







The question of how a ministry should strengthen its planning and 
management capacities presupposes it knows what it wants to achieve through 
information technology. In this chapter, we decribe the steps by which a 
ministry might usefully assess its present use of technology and delineate future 
needs and actions. 

As shown by Diagram 1:1, we shall identify three foundations of successful 
technology planning and management (TPM). 


The common driving force among Ontario ministries for investing in I/T 
is the need to deal with program growth and changes within restricted budgets 
and staffing levels. The objective is to 'do more with less' by using technology 
to increase productivity. 

The first foundation of effective TPM, therefore, is a clear understanding 
of the role of technology in achieving the ministry's business objectives, as a 
basis for establishing a set of productivity targets through, say, a five-year 
planning period. This process consists of two steps. 

1. Business Development Plans and Targets 

When we were formulating Revenue's technology investment plans for 
1985-90, all Program Groups and constituent branches went through an 
extensive exercise of reviewing their operations and setting long-term business 

• Current Operations. "How good are we now? How must we 
get better?" This entailed identifying production backlogs, 
resource shortages and customer service requirements, etc., as 





revealed by a variety of quantitative and qualitative 
performance indicators. 

• Future Business Goals. "What more must we achieve next year 
and in the following 3 to 5 years?" in terms of: 

> projected growth in basic workloads, and increases in 

> emerging priorities, and new client groups; and 

> scheduled program changes and upgrades, and possible new 

2. Investment and Productivity Targets 

The next step concerned the scale and form of the effort required to 
achieve Revenue's immediate and longer-term business objectives. In terms of 
our assumption that we could not expect commensurate funding increases, this 
involved the question of how we could use I/T to change business methods to 
economize scarce staff resources and increase productivity. 

First approximations of required productivity increases were calculated by 
commonly accepted analytical techniques. Diagram 1:2 illustrates the approach 
we used to establish the broad magnitude of required productivity gains, at the 
ministry level, over the planning period. (Similar scenarios were also 
constructed for each Program and its member branches.) 

These projections were important because they showed that the 
accumulated impact of even modest annual growth rates yielded significant 
productivity requirements when set against our assumption of severely 
restricted staff levels. The scenarios were, then, useful in focusing the attention 
of Revenue's management and staff in four important ways: 

• They provided forceful demonstrations of the strategic 
importance of I/T in achieving our long-term business 
objectives and commitments. 

• They demonstrated that the achievement of significant 
productivity gains required sustained effort and success every 
year in the planning period. 


• Since I/T cannot be applied immediately and evenly to all parts 
of the ministry, the summary scenarios also demonstrated the 
importance of applying I/T as fast as possible on the broadest 
possible front 

• Finally, since even maximum use of technology opportunities 
could not be expected to fill the 'productivity gap', they stressed 
the importance of improving program and resource 
management generally. 


Once we had established the importance of I/T in achieving required 
productivity gains, the second foundation involved an assessment of how we 
should develop our TPM capacities. 

1. Assessment of Past Experience and Achievements 

In varying degrees, most Ontario ministries have established a base of 
experience in using I/T. We suggest that a dispassionate appraisal of past 
successes and mistakes, therefore, is essential in determining a ministry's 
ability to plan and control future ventures. Among the questions we addressed 
in Revenue were: 

• "How well have we selected and co-ordinated individual 
projects to meet explicit business objectives and productivity 

• "Have our plans and projects been implemented on time and 
within budget?" 

• "How good have we been at selecting and applying I/T 

• "How have our systems performed in terms of ongoing 
effectiveness, reliability and cost?" 

• "How well have we prepared, trained and redeployed staff?" 


• "Do we have sufficient competent project planners and 
information professionals? How dependent are we on 
consultants and contract staff?" 

• "Have we identified profitable and operationally sound 
opportunities for future investments?" 

2. New Issues and Requirements 

Major and sustained productivity gains in the future, however, depend on 
more than simply duplicating past successes or avoiding past mistakes. As 
technology becomes more pervasive and functionally interdependent in a 
ministry, it must be capable of dealing with new choices, cost pressures and 
risks as installed systems and new investments become more complex. 

New Applications. In Chapter I we referred to the acceleration of new I/T 
offerings, particularly through the downsizing of mainframes and prolifera¬ 
tion of end-user computing and communications products. Almost inevitably, 
major investments in new technologies are exposed to risks of faulty product 
selections, design defects and policy changes. 


• Major investments must be designed to meet stated production 
objectives, and subjected to rigorous pre-testing before full-scale 
implementations are approved.l 

• Wherever possible, large-scale investments should be divided 
into discrete projects, focused on immediate payoffs and 

• In all cases, maximum attention should be given to 
minimizing acquisition or leasing costs of hardware. 

Controlling Maintenance Costs. Often in the past, new systems were 
implicitly expected to last indefinitely. They were replaced or reconstructed 
only when they became manifestly unworkable. Also, perhaps inadequate 
attention was given to downstream maintenance and enhancement costs in 
evaluating product choices and designing new systems. By common 

1. The role and conduct of Independent Reviews are discussed in Chapter VIII. 


experience, however, such costs tend to increase, on an unplanned basis, with 
the age of systems as they are changed piecemeal to meet new program tasks 
and increasing workloads.2 


• New systems should be planned with explicit allowance for 

• Approval of new systems should be based on their profitability 
within stated life-spans, on the assumption that they will likely 
be scrapped and replaced by more productive ones at some 
expected point. 

• Also, operating and maintenance costs must be rigorously 
controlled within pre-set limits, as part of an overall 'release 
maintenance' plan for each fiscal year.3 

Controlling Processing and Communications Costs. Along with 
enhancement, maintenance and replacement costs, increased dependence on 
I/T will predictably also generate cost pressures associated with data 
management, processing and transmission, and security. Unless these costs are 
controlled, there is a distinct danger that they will outstrip a ministry's I/T 
budget and thereby its ability to finance new investments will decline 


• New and replacement applications must be designed to 
minimize growth in processing and transmission cycles. 

• Ministries should bargain rigorously to extract the lowest price 
possible from data service bureaux, preferably in the form of 
multi-year fixed-price contracts. 

2. For example. Revenue's systems are subject to a particularly high incidence of unplanned 
changes needed to implement annual Budget tax changes and new programs. 

3. 'Release maintenance’ is a process by which repairs to existing systems are subject to an explicit 
process of review, much like new systems. The objective is to ensure that maintenance 
expenditures do not grow progressively to the point where they could eventually absorb all 
available funds to the exclusion of new investments. 


• As an alternative, attention should be given to exploiting 
reductions in the size and cost of mainframe processors by 
establishing on-site facilities.4 

• Where transmission costs are sufficiently high to offset the 
economies of either in-house or off-site processing, distributed 
data processing alternatives should also be examined. 


The need for human resources planning (HRP) is based on the common 
understanding that the success of I/T systems ultimately depends on the 
motivation and skills of the people who are expected to drive them. For this 
reason, it is a long-standing principle in the Ministry of Revenue that 
technological change must be managed in ways which avoid sudden 
disruptions to staff and, more importantly, provide opportunities for career 

As in our discussion of the first and second foundations of TPM, we 
suggest that an assessment of a ministry's past record is a necessary basis for 
improving its management of human resources in relation to future 
technological change. The following are only some of the questions addressed 
in Revenue. 

1. Forecasting Staff Needs 

Has the ministry been successful in forecasting staff requirements of past 
investments? Do we know how many skilled people will be required to 
support our plans over the next five years? 


4. For many years Revenue sought to contain the growth of data processing costs for specific 

applications by switching work among the Ministry of Government Services and private sector 
bureaux on the basis of competitive cycle prices. In 1985, we obtained annual fixed prices for all 
of our programs run at MGS. However, after an extensive tender process, in February 1987 we 
obtained Management Board's approval to lease and install a mainframe processor in our 
Oshawa head office. This will greatly reduce our processing costs for four years. See Chp. VIII 

• The specification of staff skills and numbers should be a 
mandatory part of all project plans, schedules and approvals. 

• Similar attention should be given to identifying people who are 
potentially available for training and redeployment, as well as 
skill requirements for new recruits. 

Have the ministry's training and career development practices been 
successful to date in avoiding staff disruptions, supplying skilled people and 
creating career opportunities? More importantly, can our training and 
recruiting capacities support an accelerated investment drive, in which end- 
user skills will become basic and pervasive requirements for job performance 
and advancement throughout the organization? 


• The ministry must be prepared to invest its Personnel and I/T 
branches with the resources needed to provide a full range of 
counselling and training services. 

• The ministry must determine how it can train people in the 
most effective and economical manner through the balanced 
development of in-house training capacities and use of external 

• It must also establish how much it must invest in training 
facilities and equipment, and build these requirements into its 
financing plans and allocations.5 

2. Working Conditions 

The introduction of I/T directly into the workplace generates many 
questions which affect people's morale and productivity. Simply put, the 
conditions under which staff are expected to work with I/T are as important as 
selecting the right tools and training people to use them. The following are 
some of the issues which must be addressed as part of the design and 
implementation of new projects. 

5. In early 1986 we established our own Technology Demonstration and Training Centre in Oshawa 
to greatly increase end-user training and support. For a fuller discussion, see our "Exploiting 
End-User Computing Technology", Chapters IV and V. Hereafter referred to as Study 2. 

1 2 


• The introduction of I/T devices should be accompanied by space 
planning to accommodate new work patterns and avoid 

• Workstation furniture should be selected which allows staff to 
use machines efficiently and comfortably. Furniture should be 
adaptable to individual requirements and preferences. 

• Work patterns and job requirements should be planned and 
varied to avoid stress and strain in working with machines. 

In Revenue's experience, there are three main requirements in ensuring 
that working conditions are conducive to people's willingness and ability to use 
workstation technology effectively: 

• First, furniture and environmental requirements should be 
treated as necessary components of project design and funding. 

• Secondly, because of the multiplicity of combinations in which 
desktop technology is used, staff should be given as much 
freedom as possible to decide how their space should be 
organized and furnished to best suit their business needs. 

• Thirdly, a ministry must be prepared to provide a range of 
logistical services needed to meet end-users' needs and 

3. Incentives and Rewards 

The history of western industrialization provides ample evidence that the 
success of technological change ultimately depends on workers receiving a fair 
share of the value of productivity gains. Generally, where nations and 
companies have observed this rule they have experienced better economic 

6. In 1983, Revenue's head office operations and 1,600 staff were moved to a new building in 
Oshawa which was specifically designed for the maximum use of end-user computer and 
communications technology. We also established a Facilities Management Unit to ensure the 
efficient use of space and fit workstation layouts to users' requirements. See Appendix C for 
Revenue's Technology Inventory in 1987/88. 

1 3 

growth and higher profits. Where they have failed they have been variously 
repaid with stagnation, strikes or revolution. 

Within the Ontario government, a ministry's ability to provide 
productivity incentives to its people is controlled by government-wide policies. 
In common with many private sector organizations and other jurisdictions, 
Ontario's job classification and pay systems were established before the advent 
of end-user computing technology. More recently, however, encouraging 
progress has been made in allowing ministries greater scope to recognize the 
impact of technology on jobs, while further improvements are being developed 
for early delivery.7 

Even so, government policies and rules are not our immediate concern. 
Whatever might be their real or perceived limitations, effective HRP remains 
the unavoidable responsibility of each ministry. Also, each ministry should 
energetically use the scope which, in fact, already exists to provide technology- 
related incentives and rewards. In our experience, much can be achieved before 
corporate rules become the only limiting factor. 


• The ministry should declare its commitment to rewarding staff 
for using I/T to deliver productivity gains. 

• The ministry should use whatever scope exists in classification 
and pay scales to achieve a convincing correlation between 
technological change and staff advancement. 

• Specifically, all investment plans should identify the impact on 
staff skills, responsibilities and productivity, and include plans 
for warranted salary and classification increases. 

• Salary rewards should be delivered within a reasonable period 
after new systems are fully operational and successfully 
delivering targeted productivity gains. 

• At all costs, technological change should not result in 
classification and salary decreases for existing staff in the 
affected areas. Where job requirements are reduced, their 

7. This has occurred as a result of the establishment of the Human Resources Secretariat in the 
Cabinet Office in 1986 with the specific mandate to modernize policies and practices. 


salaries should be protected until they can be relocated to other 
jobs of at least equal rank and replaced by lower-level staff. 

• Finally, people must believe that equity exists in promotions. 
The ministry should establish effective performance and career 
development systems, containing clear rules and criteria. 
Further, staff development must be mandated as an explicit 
measure of the performance of all executives, managers and 

4. HRP in Practice 

In this section we have been concerned with the imperative and general 
principles of effective ITRP in support of a strategy of increased I/T investment. 
These principles are translated into operational form in Appendix A, which 
details the components and workings of a co-ordinated management system. 




In Chapter II we described the operational foundations of technology- 
planning and management. However, a ministry’s attitudes towards the use of 
technology are also important; particularly as they concern what is expected of 
people and, in turn, how they can be expected to be treated. In this chapter we 
suggest that a Statement of Management Principles would serve as a basis of 
understanding among participants of their roles and conduct in the process of 
technological change. 

In the case of the Ministry of Revenue, the following principles express the 
importance we attach to: 

• leadership, initiative and innovation; 

• concern for people's needs and aspirations; and 

• accountability for results among executives and managers. 

1. Success and Survival 

The first and last reason for investing in I/T is to increase the efficiency 
and effectiveness of our programs. Like all other management actions which 
use scarce resources it demands concentrated attention and continued effort to 
produce maximum and sustained results. 

• The ultimate test of technology management decisions, 
methods and processes, at all levels, is success. 

• Investment projects must deliver planned productivity gains 
on time, within budget, and meet ongoing operating targets. 

• Once started, a commitment to a strategy of increased 
dependence on I/T is irreversible. Failure means chaos. 

2. Effective Leadership 

The foremost responsibility of the Deputy Minister and senior 
management is to give clear directions to investments, based on a common 
understanding of the ministry's business objectives. Their commitment must 
be real and continuous, and not confined to occasional 'key meetings' or panic 
actions when things go wrong. 

• Management processes must ensure effective executive 
decisions and the transmission of precise instructions to other 

• The Deputy Minister and Program Heads must be accessible, 
and seen to be in command and fully involved. The 
responsibility for failure cannot be delegated. 

3. User Participation 

With a sound framework of strategic direction and support, successful 
exploitation of technology depends on the knowledge, confidence and skills of 
business and systems professionals. This dictates that 'top-down' policies and 
decisions must be supported by 'bottom-up' advice and intelligence on the 
feasibility and implementation of investment plans. 

• Senior management must ensure that management processes 
encourage the fullest participation of users at all stages. 

• 'Ownership' and tactical control of I/T systems should be vested 
in the line-branches responsible for their use. 

• Pride of achievement should be fostered by encouraging staff to 
publish and demonstrate their work to their professional peers. 

4. Flexibility and Speed 

Investment in I/T is inherently risky and costly. This places a premium 
on dividing large-scale projects into discrete, digestible phases. 

• Wherever possible users and systems staff must give close 
attention to maximizing payoffs as soon as possible. 


They must test their designs and choices throughout the 
investment process, and be sensitive to changing business 
objectives and conditions. 

5. Innovation and Initiative 

While formal procedures are necessary to achieve order and objectivity in 
I/T strategies and projects, their purpose is not to impose regimental 
conformity or rigidity. 

Recognition and exploitation of profitable investment opportunities 
under uncertain conditions also depend on the ingenuity of everyone 
involved, particularly among end-users and systems staff responsible for 
specific projects. These skills and attitudes cannot be neatly 'ordered up' or 
'programmed'. They are nurtured by constant encouragement, training and 

• The Deputy Minister and senior executives must ensure that 
mandated practices and rules are conducive to innovation and 
initiative among all staff engaged in the design, implementation 
and operation of l/T systems. 

• In return, managers, systems professionals and users should be 
expected to be innovative and to use their initiative. 

6. Concern for People 

The importance and requirements of effective human resource planning 
were discussed in Chapter n. But apart from business reasons, a ministry also 
has a moral responsibility to its people. 

• The Deputy Minister and Program Heads are responsible for 
informing staff of their plans, and preparing them to deal with 
job changes. 

• Staff training and career development should be mandated 
ministry priorities, and a stated measure in evaluating the 
performance of all executives, managers and supervisors. 

7. Accountability for Results 

The emphasis on decentralized management must be balanced by a clearly 
defined 'chain-of-command'. Responsibility for results must be explicit at all 

The Deputy Minister is accountable directly to the Premier, Minister and 
Management Board of Cabinet, as well as the Public Accounts Committee, for 
ensuring that scarce investment funds are used to increase the efficiency and 
effectiveness of the ministry's programs. This scrutiny is severe, with little 
tolerance for mistakes. The absolute imperative of fulfilling its contract with 
the Government must run with equal urgency throughout the ministry. 

• The Deputy Minister and Program Heads must make sure 
that everyone in the chain-of-command understands and is 
committed to the ministry’s business objectives and 
technology targets. 

• All participants in planning and using I/T systems will be 
held directly responsible for fulfilling their individual and 
group performance contracts. 









In Part A we discussed, in general terms, what we believe are the essential 
principles and requirements of the successful use of technology. In Part B we 
shall describe their application in operational terms. 

Our discussion will centre on a template for integrating business and 
technology decisions. Although our model is is based on the Ministry of 
Revenue's approach and practices we believe it is generally relevant to other 

Diagram B:1 provides an initial summary of our model, of which the 
following features are noteworthy at this point: 

• The three levels in the Program Stream represent the way 
ministries are typically organized for program administration 
and delivery purposes. 

• The parallel Technology Stream represents the need for 
continuous strategic direction and tactical command 
throughout the investment and ongoing management 

• The Program Stream is cross-linked to the Technology Stream 
to emphasize that, at all levels, I/T activities should be 
governed by and reconciled with business objectives. 

• The two-column structure in the diagram is an obvious over¬ 
simplification of the organizational and functional diversity of 
ministries. For example. Revenue has four Program Groups, 
each comprising several operating and support branches. Each 
Program Group has its own Levels 2, 3 and 4 structure. 

In the chapters in Part B we shall describe, in steps, the participants, 
responsibilities and practices associated with each level of the program and 
technology streams. 



Level 1 



to Level 2 

to Level 2 


In Part A we stressed the importance of continuous and forceful leadership 
by the Deputy Minister and Program Heads. In this chapter we shall examine, 
in greater detail, the organization and conduct of executive responsibilities at 
Level 1 in our summary model. 


Diagram 4:1 is intended to emphasize the importance of the Deputy 
Minister and senior executives ensuring that: 

• short- and long-term Business Plans are developed for the 
Ministry and all Program Groups; 

• clear business priorities and performance targets are established 
for all I/T plans and projects; 

• continuous direction and support are given to all participants 
in investment planning and management; 

• I/T planning, organization and practices are conducive to the 
exploitation of opportunities and ongoing performance of 
systems in a rigorous and businesslike manner; 

• all plans and projects are approved and conducted according to 
prescribed Business Cases and performance contracts; and 

• systems decisions and activities conform to Management Board 
and ministry policies, standards and rules. 

In the Ministry of Revenue, direction of the Program and Technology 
Streams is exercised through two executive committees. This division has 
proven to be convenient and effective in managing the weight of our program 
business generally, and in ensuring close attention to the growing scale and 
complexity of our I/T operations in particular. 


This section deals with the formulation of ministry-wide short and long¬ 
term business plans and program delivery targets, which, in turn, provide the 
basis for all 'top-down' I/T decisions and instructions. 

1. Executive Committee 

Composition: In common with most ministries, the overall direction of 
our Program Streams is provided by a conventional Executive Committee. 

This committee is chaired by the Deputy Minister and comprises: 

• the Assistant Deputy Ministers of our Property Assessment and 
Tax Revenue and Grants Programs; 

• Executive Directors of the Corporate Resources, Information 
Technology, and Tax System Operations and Design Divisions; 

• Directors of Finance and Priorities Planning, Legal Services, 
Personnel Services; and 

• the Internal Auditor, l 

The directors of product-line branches, the Communications Director, 
Employment Equity Manager and French Language Services Co-ordinator also 
attend regularly. 

Functions: Revenue’s Executive Committee deals with the usual mass of 
issues concerning priorities, administration and finance. As shown in Diagram 
4:1, however, it is also expressly charged with two main responsibilities relating 
to our use of information technology. 

2. Ministry Business Plans and Priorities 

Under this heading the Executive Committee's primary function is to 
determine what has to be achieved in terms of program deliveries and 

1. The inclusion of the Internal Auditor in our Executive and Technology Strategy Committees is 
explained in Appendix B. 


increased productivity, as a starting point for detailed planning throughout the 

For this purpose, the committee establishes short and longer-term 
business priorities and targets generally across the Ministry. These are based on: 

• forecasts of increased program workloads and complexity 
versus constrained resources as described in Chapter II; 

• required improvements in customer services; and 

• prospective and announced instructions to change existing 
programs or implement new ones. 

Once established, these priorities and targets are transmitted as 
instructions to the various Program Management Committees to prepare 
comprehensive Program Business Plans (PBPs). In turn, these plans are 
reviewed by the Executive Committee, and incorporated into Revenue's 
overall business development strategy for 3-to-5 years. 

When PBPs are mandated, the Executive Committee is responsible for: 

• establishing financing plans, including the required 
submissions to Management Board; and 

• monitoring the performance of PBPs, with ongoing revisions to 
fit policy changes and annual Estimates allocations (including 
in-year budget cuts). 

3. Investment Objectives and Targets 

At this point, the Executive Committee establishes, in general terms, the 
role of I/T in achieving the ministry's business goals. In particular, investment 
objectives and productivity targets are derived from approved PBPs, and are 
passed to our Technology Strategy Committee as the basis for developing 
detailed investment plans. 



The Technology Strategy Committee (TSC) is responsible for directing and 
co-ordinating new investments across the ministry, as well as the maintenance 
and enhancements of systems already in place. 

1. Technology Strategy Committee 

Revenue's Technology Strategy Committee (TSC) is also chaired by the 
Deputy Minister and includes the same members as the Executive Committee, 
with the addition of the Director of Revenue Operations and Research and 
Director of Assessment Data Services and Development. Typically, meetings 
are also attended by staff involved in particular decisions and projects. 

2. Ministry Technology Policies and Plans 

The specific responsibilities of the TSC include: 

• Priorities & Targets: Setting detailed short and long-term 
investment targets throughout the ministry. 

• Technology Standards & Policies: Establishing common 
Ministry standards and procedures concerning product 
selections, acquisitions and leasing, data security, systems 
changes, etc. (This includes ensuring participants understand 
Management Board rules). 

• Program Investment Plans: Approving all Programs' 3-to-5 
year plans, and annual project selections. 

• Business Case Methodology: Legislating common practices and 
tests designed to ensure the business operating viability of all 
investment proposals. 

• Development & Maintenance Capacities: Ensuring that 
Revenue's Information Technology Division (ITD) has the 
mandate and resources needed to support Programs' 
investment plans, and maintain existing systems. 

• Technology Search: Making sure that the ITD is also equipped 
to identify and test potentially profitable new products and 

• Project Business Cases: Approving all major investment 
proposals and changes to installed systems, according to 
rigorous business criteria and technical tests. (Small projects 
may be delegated to the program level, and summarily 
reviewed by the TSC on a batch basis.) 

• Systems Life-Cycles: Monitoring the performance of all systems 
and operating/maintenance costs against preset limits. 

• Ministry-Wide Systems: Ensuring the viability of common I/T 
systems and facilities such as: on-site processors, data bases and 
networks, and office automation projects. 

• Human Resource Planning: Establishing ministry-wide staff 
development policies and training facilities. Ensuring that all 
investment plans and project Business Cases contain staffing 
plans, and that Personnel Services and Employment Equity 
units can provide the full-range of required career counselling 
and training support. 

• External Services & Liaison: Reviewing and approving all 
contracts for data processing and communications provided by 
the Ministry of Government Services and private-sector 
bureaux. Establishing connections with other ministries for 
mutual assistance and benefit. 

• External & Internal Accountability: Directing all of Revenue's 
dealings with Management Board concerning investment 
approvals, finance and performance reporting. Ensuring that 
all I/T activity within the ministry is governed by performance 


The importance of precise instructions and allocations of responsibilities 
throughout the chain-of-command was expressed by several of Revenue's 
Management Principles enunciated in Chapter III. 


In Diagram 4:1, the translation of plans and targets into performance 
contracts is shown as an integral part of business and technology management 
in Revenue. Their purpose is to reinforce the cardinal rule that the Deputy 
Minister, Program Heads and Branch Directors are corporately and personally 
responsible for achieving stated results within exact budgetary limits, and 
according to Government and Ministry administrative standards. In effect, 
these contracts are summaries of the mass of decisions which determine 
Programs' and Branches' work agendas. They are in turn documented in 
numerous forms: such as, ministerial and Cabinet instructions; the Treasurer’s 
Budget; Ministry Business Plans, and project Business Cases; and detailed 
Management-by-Results forecasts submitted annually to Management Board. 

The Deputy Minister's accountability for a ministry's performance to the 
Minister, Management Board and Premier, etc., is well established and 
exercised in the Ontario public service. In 1987, however, this reality was 
strengthened by the introduction of formal annual 'Performance Agreements' 
for Deputy Ministers and Program Heads. 

First, the Deputy Minister's performance agreement is a comprehensive 
statement of the ministry's business mandate and priorities, and exactly how it 
will achieve explicit performance targets on all program fronts. The agreement 
is reviewed and approved by the responsible Minister and Secretary of Cabinet 
on behalf of the Premier. Secondly, Program Heads’ agreements are derived 
from the Deputy’s 'master agreement', and are also submitted to Cabinet Office. 
An additional degree of imperative is added by the linking of annual salary 
increases for Deputies and senior executives to how well they fulfill their 

Accountability is further reinforced by established Management Board 
processes for ministry resources allocations, and approving new programs and 
technology investments; as well as the introduction in 1988 of comprehensive 
Ministry Management Reviews by the Board. 





Level 2 

Program Management 


Program Business 
Plans > 3-5 Years 

Technology Targets l 

and Guidelines i 

Annual Plans 
and Estimates 


The next step in the elaboration of our management model involves the 
development and application of I/T plans in support of Program Business 
Plans at Level 2. Diagram 5:1 identifies the Program Management Committees 
(PMCs) as the instruments for this work. 


The purpose of Revenue's PMCs is to provide unified direction to each of 
our ministry's program groups, in line with the policies and directions 
established by the Deputy's Executive Committees. 

Composition: The PMCs are chaired by their respective ADMs or 
Executive Directors, with the Directors of constituent branches as members. 

The Executive Director of our Information Technology Division is also an 
ex officio member, and attends when PMCs are dealing with I/T questions. 
Similarly, the Director of Personnel Services and Employment Equity Manager 
participate for HRP purposes. 

Functions: Essentially, PMCs replicate and combine the functions of the 
Level 1 executive committees. That is, they are responsible for co-ordinating all 
Program Stream and Technology Stream activities within their purview. 

Again, their objective is to ensure that all I/T decisions are derived from 
Program Business Plans and conform to ministry strategies and resource 

Subsequent sections of this chapter will explain the: 

• main functions of Revenue's PMCs; and 

* mandated business practices which support their functions. 



In the Program Stream each PMC is responsible for developing business 
plans (PBPs) and setting productivity targets for technology investments for its 
product-line branches. 

1. Program Business Plans 

At this point in Diagram 5:1, PBPs are general blueprints for improving 
the quantity and quality of program deliveries over 3-to-5 years, based on 
projected workload growth and complexity, customer service priorities and 
continued budgetary constraints. 

The PBPs should cover all aspects of business development and be updated 
every year to reflect policy changes, resource allocations and market conditions. 

2. Technology Targets and Guidelines 

These targets and guidelines are derived from each Program's master 
Business Plan. As such, they constitute approvals, in principle, for the new 
investment over 3-to-5 years. They also govern the maintenance, enhancement 
or replacement of existing systems. They should also include plans for 
controlling downstream data processing and communications costs within 
preset limits, along with the supply of trained staff. 


In the Technology Stream of Diagram 5:1, our PMCs are expected to 
translate strategic technology targets into detailed operational form for 

1. Technology Plans 

These plans are comprehensive sets of specific projects to be undertaken 
over 3-to-5 years. Projects are selected and scheduled according to: 

• the need to implement policy changes and new programs; 


• delivery targets of established programs; 

• size and complexity of projects, and sequential linkages; 

• availablility of funds, risks, and payoff timing and rates; and 

• availability of experienced project leaders and systems 

2. Annual Plans 

After executive approval of plans at Level 1, this stage entails the detailed 
preparation, co-ordination and costing of all new investment and 
enhancement/replacement projects which are scheduled in each Program for 
the upcoming fiscal year. This includes the: 

• specification of output targets; 

• allocation of funds and other resources; 

• hardware and software, communications and processing costs; 

• appointment of project leaders and teams; and 

• selection and training of operating staff. 


ADMs and PMCs are responsible for ensuring that each Program is 
equipped with coherent plans for the development and management of its 
stock of I/T systems, and their consistency with explicit Business Plans. In line 
with the Management Principles enunciated in Chapter II, particular emphasis 
is placed on the exploitation of new opportunities, achievement of sustained 
productivity gains, leadership and staff development. 





Level 3 

Branch Management 



Branch Business 

Plans > 3-5 Years 

Project Targets 
and Instructions 

to Level 4 


In this chapter we deal with the translation of Ministry and Program 
priorities into specific investment projects at Level 3 of our summary model. 


The rationale and functions of Branch Management Committees (BMCs) 
are similar to the PMCs at Level 2, but concentrated on a narrower front with 
greater operational focus and emphasis on tactical flexibility. 

Composition: In Revenue, each committee is chaired by the Director and 
comprises senior managers and other staff as required. As at Levels 1 and 2, it is 
important that the Information Technology Division is represented when 
BMCs are dealing with technology matters, as well as the Director of Personnel 
Services and the Employment Equity Manager for human resource issues. 

Functions: BMCs are responsible for planning and co-ordinating all 
business-delivery and supporting I/T actions in their respective branches. This 
also involves establishing production linkages with other branches, and 
securing logistical and technical support services. 

Diagram 6:1 describes the relationships between the program and 
technology activities of BMCs. Like at Levels 1 and 2, the central requirement is 
that all technology actions must be designed to achieve stated business 
objectives and productivity targets within explicit time and cost limits. 


Under this heading in Diagram 6:1 BMCs are shown to be responsible for 
two main functions. 


1. Branch Business Plans (BBPs) 

These are detailed plans for improving a Branch's product deliveries and 
customer services incrementally on a 'rolling 1-3-5 year’ basis. 

These plans should cover all aspects of a Branch’s operations and be 
reviewed and licensed by its PMC. The emphasis of these plans should be on 
efficient, flexible management of projected increases in workloads and 
complexity, and policy changes. They should be updated every year to 
accommodate changing market conditions, priorities and resource allocations. 
In particular, it is at this level that projects must be tactically modified 
(quickened or slowed) to accommodate unexpected program disturbances and 
budget cuts. 

2. Project Targets and Instructions 

I/T project targets are derived from the detailed short and long-term BBPs, 
and are translated into clear instructions to Project Leaders and Teams to 
commence the development, testing and implementation of specific projects. 

These targets and instructions should cover both new investments and the 
repair, enhancement or replacement of existing system and the redeployment 
of affected operating staff in line with the Ministry's HRP principles and 


On the Technology Stream side, the translation of investment targets and 
instructions into viable projects involves four steps. 

1. Project Leaders and Teams 

Each Branch Director and the senior manager assigned by the Information 
Technology Division (ITD) is responsible for appointing Project Leaders and 
assembling Project Teams. 

1. See Appendix A for a detailed checklist of HRP functions of branches. 


The selection of team leaders and members is obviously critical to success. 
They may be variously drawn from the ITD, user branch or elsewhere, 
according to the skill requirements of the project and availability of qualified 
staff. In short, each team must be custom made. 

Also, the leadership and membership of a Project Team will not 
necessarily be constant throughout the life of a project. People may 'step on 
and off to meet changing requirements at various stages in the design, testing 
and implementation sequence. This is particularly likely in multi-year, multi¬ 
stage projects where each stage has different business objectives, technical 
requirements and users. 

The primary objective of the selection process should be to ensure the 
right balance and compatibility of systems staff and end-users. Project Leaders 
should be experienced in project management. They should also thoroughly 
understand the business objectives of the project and operations of the user- 
branch. Insofar as Project Teams work outside or separately from the user- 
branches, it is essential that Project Leaders maintain close liaison with Branch 
Directors to ensure that emerging systems are constantly checked to achieve the 
best possible operational fit. 

2. Business Cases Prepared and Accepted 

All new investments and significant changes to existing systems, should 
be governed by rigorous and formal Business Cases. 

After the initial determination of their presumed viability, business-case 
submissions should be developed which provide Program and Branch 
management with the opportunity to evaluate projects before significant 
expenditures occur. Acceptance criteria should cover: 

• the precision of stated business objectives; 

• success measures, deliverables and payoffs; 

• accuracy of operational analyses, problem delineation and 
proposed solutions; 

• alternative ways of achieving the same objectives; 

• analysis of the risks of proceeding and not proceeding; 

• proofing and scheduling of required resources; 

• specification of project teams, responsibilities and performance 

• post-implementation operating and maintenance cost forecasts 
and control limits; and 

• impact on human resources, including training needs and 
displacement problems to be resolved. 

Whenever possible, business cases for all major project proposals should 
also be subjected to independent review and confirmation. 2 

Finally, it is assumed throughout that the completeness of business cases 
and the intensity of executive and independent reviews should be propor¬ 
tionate to the importance, size and complexity of each project. As we said in 
Chapter I, proposals should not be 'studied to death'. 

3. Project Design and Testing 

Once a business case has been reviewed and approved, the Project Leader is 
responsible for the detailed operational design, construction and testing of the 
I/T systems involved. Among the specific actions involved at this stage are: 

• assigning and scheduling Project Team tasks; 

• contracting programming and communications needs with the 
Information Technology Division; 

• contracting systems consultants and specialists by ITD; 

• specifying generic software and hardware requirements; 

• application of Management Board and ministry acquisition 

• application of ministry data integrity and security standards; 

2. The purpose and conduct of independent reviews are described in greater detail in Chapter VII. 

3 3 

• end-user job design and training requirements; and 

• regular progress demonstrations to the BMC and PMC. 

This stage is completed by the presentation of a Proposal-to-Proceed by the 
Branch Director and Project Leader for approval by the PMC, and ultimately the 
Deputy Minister's Technology Strategy Committee. This report should include 
confirmation of targeted results and required resources, as well as 
indentification of risks and contingency plans. 

4. Project Implementation and User Acceptance 

The final step involves the fulfillment of all project specifications as a 
condition for the acceptance of systems by the user branch as ready for 
operational use. 

From this point on, new I/T systems will be subjected to ongoing 
production management, approved maintenance and post-implementation 
performance reviews. 






In Chapters IV to VI we were concerned with bringing new I/T systems 
into production. Whatever their initial success, however, systems do not run 
well for long without attention, nor do they last forever. 

We briefly discussed the problem of increasing maintenance costs and 
obsolescence in Chapter II. 

First, like all plant and equipment, I/T systems tend to deteriorate 
progressively as a function of overloading, wear and tear, and successive 
patchings. Secondly, it becomes increasingly difficult to adapt them to perform 
new tasks as business needs change. And thirdly, they are rendered obsolete as 
more efficient technology products and methods become available. As the 
competitive and operational viability of installed systems declines, sooner or 
later the ministry must decide whether to continue to repair them or invest in 
major enhancements or their replacement. 

Diagram 7:1 illustrates Revenue's approach to managing installed systems. 


Decisions to repair, enhance or replace existing systems are comparable in 
importance and complexity to those concerning new investments. Among the 
questions which must be answered are: 

• How important is the system in competition with the need 
to build, repair or replace other systems? 

• What is the urgency, in terms of break-down risks in not 
repairing or replacing the system? How long can it 
continue to operate efficiently at acceptable levels? 

• What is the cost of enhancement versus replacement? 

• Is it worth upgrading, in terms of the short run payoffs 
versus the need for continued maintenance? 

• What are the cost, timing and technical implications of 
building a better system? 

• Are sufficient funds and skilled staff resources available 
internally to undertake a major enhancement or 
replacement project? Can the system be replaced by 
purchasing a ready-made, commercial product? 


In the Ministry of Revenue, the operating branches are assigned the 
'ownership' of their systems and they are therefore accountable for their 
ongoing performance and evaluation. From this vantage point. Branch 
Management Committees are expected to initiate proposals for major systems 
repairs, enhancements and replacements, which are then subjected to the same 
competitive scrutiny as new investments at Levels 1 and 2 in our summary 

Of course, the primary requirement of the orderly management of 
installed systems is that their performance is regularly monitored, so that 
required changes can be planned and incorporated into overall Ministry and 
Program investment and financing plans. Sudden requests from branches to 
divert resources from other priorities to prevent imminent systems 
breakdowns are not regarded with favour. 


The following are some of the key elements of good business practice in 
the life-cycle management of existing systems. 

• All systems should be subjected to scheduled performance 
reviews; for example, by Branch, ITD, or Internal Audit Branch 
staff, or consultants. 

• Release Maintenance schedules and limits should be 
established as soon as possible after new systems have been 
successfully established and broken-in. 


• The need to replace or significantly enhance installed systems 
should be identified, and the planning and implementation 
process begun, well in advance of targetted change-over dates. 

In summary, depending on their scale and complexity, major systems 
repairs, enhancements and replacements should be subjected to the same 
rigorous Business Case and technical tests as new investments. 

As we suggested in Chapter II, the importance of life-cycle management is 
accentuated by continuing budgetary constraints and the need to ration 
resources among competing demands. Overall, the control of increasing 
operating and maintenance costs of existing systems will likely be critically 
important to the ministry's ability to assemble scarce funds and skilled staff for 
the construction of new systems. 

3 7 


Level 1 

Level 2 

Level 3 



Ministry - Wide 
Planning & Direction 


Program Business 
Planning & 



ches | 


In Part A we characterized a strategy of using information technology to 
radically change production methods as risky, costly and irreversible. 
Consequently, we stressed that all participants must be committed to success 
and fully accountable. 

Thus far in Part B we have described how a ministry can bring its expertise 
to bear successively at the Executive, Program and Branch levels to ensure that 
investments meet stated business objectives with maximum effectiveness and 

In this last chapter, we briefly discuss the role of Independent Reviews, at 
Level 4 in our TPM model, as an additional means of proofing projects before 
they are finally approved for implementation. (Diagram 8:1) 


In the Ministry of Revenue, Independent Reviews (IRs) are an integral 
part of our TPM process. Their purpose is to provide an objective 'second look' 
to ensure that project Business Cases and implementation plans are well 
founded, truthful and operationally sound. 

Composition: Independent Reviews of I/T proposals should be 
undertaken by groups working separately from Project Teams. Like Project 
Teams, IR teams should be selected according to the specific nature of projects. 
As well, IR groups may be changed as reviews proceed to include specialist staff 
for specific issues. Similarly, IRs can provide another means of training future 
project leaders and team members. In addition to technical skills, IRs require 
knowledge of ministry and Program investment strategies and business 
objectives. For this, it is important that IR teams also have direct access to 
senior executive committees and branch directors. 

In practical terms, a ministry is unlikely to have sufficient resources and 
skilled staff to subject all of its projects to full-scale IRs. Equally, it is important 
that reviews should not result in unduly prolonging the approval of projects. 
For these reasons, IRs should be conducted expeditiously. 


Recent projects subjected to IR in Revenue includes new I/T systems for 


• Property Assessment Program; 

• Ontario Tax Grants for Seniors; 

• Financial Information Management System; 

• Employee Share Ownership Program; 

• Ontario Home Ownership Savings Program; and 

• Revenue Computing Centre. 

In Revenue's case, IRs are most often assigned to either our: 

• Finance and Priorities Planning Branch; or 

• Audit Services Branch. 

These branches are used both because of their broad knowledge of our 
business objectives and operations, and their command of I/T issues, and 
because their directors report independently to the Deputy Minister and are 
members of the Executive and Technology Strategy Committee. Occasionally, 
however, external consultants are commissioned when internal staff are not 
available, or when it is necessary to assure Management Board that a project 
has been thoroughly proofed: 

• an independent consultant was hired to proof the Business Case 
for the acquisition of Revenue's mainframe processor in 1987;l 

• an independent technical expert reviewed the feasibility of 
distributing the Ontario Assessment System to regional 
assessment offices to run on a network of mini-computers. 

Functions: Ideally, an IR team should undertake a 'top-to-bottom' 
examination of the Project Team's Business Case and implementation plan. It 
should include essentially the same acceptance criteria and tests as we described 
in Chapter VI. 

3 9 

1. See Section C. 

However, in addition to focusing on the business and operational viability 
of projects as self-contained ventures, IRs also provide a 'last-chance' 
opportunity to question their broader sense. For example: 

• Where a large, expensive mainframe system is proposed: the IR 
team might raise the fundamental question of whether—in the 
light of now revealed costs, lead times and risks—it might be 
better to 'step back' and consider second-best but less expensive 

• Equally, where a project's objectives are low development costs 
and quick results, the IR team should ensure that explicit 
attention has been given to possible downstream consequences 
of higher operating and maintenance costs. 


We realize that the suggestion that all projects be subjected to full-scale IRs 
implies a duplication of costs which might be unnecessary if program/branch 
management committees and project teams have done their work properly. 
And certainly, the objective should be to 'get it right the first time around'. 

However, we suggest that at least major investments—which 
fundamentally change production methods and staff requirements, and future 
technnology choices in strategic terms—should be examined rigorously. 


The recent acquisition of our mainframe processor provides an example of 
the process by which the business and operational viability of strategic 
investments are established and proofed. 

2. Among such alternatives which might be considered to avoid the costs of major new systems are 
stretching or enhancing existing systems, buying or leasing commercial packages, or using staff 
to perform functions manually. 


1. Establish Clear Objectives 

The first step involved detailed analyses of Revenue's data processing 
requirements for the next five years with two main objectives. 

Reduce Costs. Our projections of business-driven processing volumes 
(and exposure to increased bureau services) demonstrated an urgent need to 
contain the growth of costs, which predictably would be beyond our internal 
financial capacity or ability to obtain increased allocations from Management 
Board. Thus, our first objective was to find the means to stabilize costs within 
fixed and predictable limits for 4-to-5 years, which at least would prevent the 
diversion of funds from new investments and at best would actually generate 
savings to finance them. 

Greater Control, Security, Accountability. External processing services are 
inevitably subject to competitive demands of other customers, as well as 
supplier's management decisions concerning capacity and delivery standards, 
etc. Our second objective, therefore, was to achieve greater security of supply of 
mainframe processing, particularly in ensuring that mainframe configurations 
are directly compatible with our strategies for end-user computing and 
distributed information systems and communications. 

2. Identification of Options 

During 1985 the ministry issued Requests for Information on alternative 
ways of meeting its data processing objectives. A detailed Business Case was 
presented in 1986 to our Technology Strategy Committee which identified three 

• continue existing shared computing arrangements with three data 

• an agency-managed computing facility dedicated to the ministry; or 

• establish a facility owned and managed by Revenue. 

The third option was accepted by the Committee based on two criteria: 

• reduced processing costs of approximately $5 million per year, which 
would provide funds for required investments and considerable 
savings to Management Board; and 

4 1 

the ministry would be fully accountable for the cost, quality and 
reliability of its computing services and data security. 

3. Independent Reviews 

Two independent reviews were commissioned while preparing the 
submission to Management Board. 

First, a consultant reviewed the ministry's Business Case in the light of 
mainframe computing trends in the U.S. and Canada, and to ensure it 
contained no flaws. (In fact, this report concluded that the ministry had 
understated the benefits of establishing its own facility.) 

The second review was directed at formally sizing Revenue's data 
processing requirements, and confirming its ability to operate and manage its 
own on-site facility. 

4. Tendering Process 

Consequently, a request to call for tenders was submitted to Management 
Board and was approved in September 1986 to cover all options. This reflected 
the Board’s concern that the tender process should be manifestly fair to all 
parties and conclusive in driving out the best solution at the best price. 

The tender closed in December and was evaluated over an eight-week 
period by a team of ministry analysts and Management Board specialists. 

Finally, the decision was taken to recommend a ministry-owned and operated 
facility, along with the inclusion of a third-party facility manager to assist the 
ministry operations staff during the first two years of the four-year award. Also, 
the leasing contract for the processor included explict 'value-added' 
commitments by the supplier concerning the construction of the computing 
centre, installation of the processor, and its ongoing operation and 

5. Implementation and Results 

The Revenue Computing Centre was constructed and the processor 
installed on time and under budget in Oshawa. All of the program applications 
were migrated successfully from external bureaux according to plan, without 
any major complications and with no disruptions of service, by September 1987. 

Finally, in March 1988, a consulting firm was engaged to ensure that the 
Ministry's post-implementation performance report to Management Board 
conformed to accepted standards for evaluating the results of such investments 
in the private sector. Based on the first 12 months of operation, this report 
demonstrated that all of Revenue's original Business Case and operating 
commitments were met or exceeded. Altogether, the RCC will generate over 
$51 million in cost savings through to 1991. 


In Parts A and B we described the essential principles and core components 
of Revenue's approach to integrated business and technology planning and 

Appendices A and B contain additional information on: 

• Human Resource Planning responsibilities and functions, and the 

• Expanded Role of the Internal Auditor. 

Appendix C contains an updated inventory of Revenue's information 
technology assets and systems in 1988. 



The importance of Human Resources Planning (HRP) has been 
emphasized throughout this study. HRP was cited as our third foundation of 
successful technology planning and management in Chapter II. Also, in 
Chapter III we recommended that ministries should include explicit 
commitments to staff training and career development in their Statements of 
Management Principles. 

These Notes are intended to demonstrate the workings of a co-ordinated 
approach to HRP. For this purpose: 

• Section I summarizes the main components of HRP; and 

• Sections II to IV provide check-lists of functions attached to the 
three Levels of technology planning and management. 


The following is a consolidated summary of the key components of HRP 
which were variously recognized and discussed in preceeding chapters: 

• Ministry Principles and Policies, which express the ministry's 
commitment to staff protection, training and career 
development in the process of technological change. (Chapter 
111 : 6 ) 

• Staff Forecasts and Plans, which detail the impact of I/T on staff, 
as mandatory parts of all plans and projects. (Chapter II:C1) 

• Training Facilities and Mandates, which ensure that staff are 
provided with the support they need to deal with and benefit 
from job changes, and which delineate the roles and 
responsibilities of executives and managers for staff training 
and development. (Chapter II:C3) 



• Job Classification and Rewards Policies, which ensure that the 
impact of technology on jobs is recognized, and staff are 
rewarded for increased skills, responsibilities and productivity. 
(Chapter H:C3 and Chapter 111:7) 

• Working Conditions Standards, which encompass workstation 
planning, air quality and heat controls, and job planning to 
avoid machine-stress. (Chapter II: C2) 

• Management Accountability, which makes managers and 
supervisors directly responsible for training and developing 
their staff. (Chapter EE:C4 & Chapter 111:7) 

• Effective Communications, which ensure that staff are 
informed of investment plans and projects, and can participate 
in managing their impact. (Chapter 111:3) 

The following Sections summarize how these requirements are met at 
each of the three Levels of our model. (Diagram 9:1) 


The DM's Executive and Technology Strategy Committees are responsible 
for establishing coherent HRP principles, practices and standards, and 
overseeing their observance at Levels 2 and 3. 

As we stressed in Chapters II to IV, the overriding objective is to ensure 


• all I/T investments are supported by trained staff; and 

• the ministry's staff are given maximum assistance to deal with, 
and benefit from technological change. 

The following is a check-list of specific functions. 

a. HRP Principles, Practices & Mandates 

• Legislate the Ministry Statement of Management Principles. 


• Legislate ministry technology training and career development 
policies, practices and procedures. 

• Establish the primary responsibilities of Program Heads, Branch 
Directors and Project Leaders for staff training and career 

• Mandate the roles of Information Technology Division (ITD), 
and the Personnnel Services Branch (PSB), including the 
Employment Equity Program (EEP).l 

b. Ministry HRP Actions or Components: 

• Establish 3-to-5 year strategies and staff training targets, derived 
from Program Business and Technology Plans, and project 

• Establish ministry funding requirements and Program 

• Provide funds and resources to the PSB, ITD and EEP for 
corporate HRP services. 

• Assess the need for corporate training facilities and direct their 
construction: such as Revenue's Technology Demonstration 
and Training Centre. 

• Establish a comprehensive ministry Performance 
Management/Career Development system, as the basis for staff 
counselling, training selections and advancement. 

• Ensure job classifications and salaries recognize technology 
skills, responsibilities and performance. 

• Establish workplace environmental standards. 

• Ensure staff are informed of job changes, training requirements 
and opportunities associated with prospective and approved 
investment plans and projects. 

4 7 

1. See Section VI 

c. HRP Instructions & Approvals: 

• Review and approve all Program plans, actions and targets. 

• Monitor actual performance of Program investment plans and 
Branch major projects; and approve all resets. 


Program Heads and their Management Committees are accountable for the 
application of the ministry's HRP principles, policies and standards in planning 
and implementing all I/T actions. The objective is to ensure that scarce staff 
resources are trained, developed and deployed with maximum effectiveness to 
support the full range of the Program's business activities and I/T systems. 

The following is a check-list of specific functions, 
a. HR Planning: 

• Construct HRPs to support 3-to-5 year Program Business and 
Investment Plans, including the specification of Program-wide 
productivity targets. 

• Establish Program HRP funding requirements and branch 

• Set staff training/development targets and schedules. 

• Identify Program hiring requirements and standards. 

• Establish Program-wide job planning and reclassification needs. 

• Endorse and disseminate ministry workplace standards. 

• Direct and fund new technology prototypes, such as Office 
Automation, laptops, expert systems. 

• Ensure Branch Directors, managers and project staff understand 
Ministry HRP objectives; and their roles and accountability. 

• Direct staff communications on I/T plans and projects. 


b. Approvals &c Instructions: 

• Review and approve HRP actions in all Level 3 plans and 

• Ensure application of ministry HRP principles, standards and 
practices in specific projects. 

• Monitor HRP performance, and results of all Program and 
Branch plans and projects. 


This is the locus of the greatest effort and attention to HRP in operational 
terms. Just as Branch Directors and senior managers are expected to understand 
their business needs and I/T systems, they are also expected to know their 
people as individuals. 

The objective at this Level is to make sure that all new projects and 
changes to existing systems are fitted with precise HRP actions, with close 
attention to people's skills, potential and aspirations. 

• Ensure managers and supervisors understand and apply 
ministry HRP principles, practices & standards. 

• Administer the ministry's Performance Management/Career 
Planning process. 

• Establish and administer job counselling, training and rotation 

• Establish effective liaison and contracts with the PSB, ITD and 
EEP for staff counselling and training. 

• Administer ministry workplace policies and standards, and 
ensure staff participation. 

• Administer staff recruitment and promotions. 

• Ensure staff aware of planned I/T projects, and related job 
changes and opportunities, and ensure staff participation. 

• Include HEP needs in Branch Estimates & Project funding. 

• Ensure that all Project plans include explicit HRF targets and 
training schedules. 

• Ensure that all Project Leaders and Members understand the 
HRP objectives of their projects. 

• Ensure that all staff are informed of project needs & 

• Ensure that all Projects are implemented to achieve human 
resources objectives. 


It is assumed throughout that changes to installed systems are subjected to 
the same HRP principles and tests as new investments. In addition, where no 
changes are planned, attention should be given to identifying opportunities for 
retraining and redeploying staff to new projects to the mutual advantage of the 
ministry and staff. 


As already noted, in the Ministry of Revenue the Personnel Services 
Branch and Information Technology Division are designated as the central 
'suppliers' of training and support services to I/T end-users. For this reason, 
they are jointly responsible for the operation of our new Technology 
Demonstration and Training Centre in Oshawa. The reader is referred to Study 
2 for a discussion of our approach to providing the skilled staff needed to 
support a strategy of diversified and accelerated investments in end-user 
computing technology. 



"In the Ministry of Revenue , the Internal Auditor is expected to 
contribute to making good investment decisions. The objective 
is to make new systems work right the first time out. If the 
Internal Auditor has something to say about how to make good 
decisions we need to know when we're making them. Not 
afterwards". 1 

In Chapter IV we noted that Revenue's Internal Auditor (IA) is a full 
member of the Deputy Minister's Executive and Technology Strategy 
Committees. Also, in Chapter VIII we cited the Internal Audit Branch (IAB) as 
a candidate for undertaking or contributing staff to Independent Reviews. 

These notes elaborate on the direct role we have assigned to the IA in 
technology planning and management in three stages: 

• Section I deals with the rationale of the IA's participation; 

• Section II provides a check-list of functions at each of the three 
Levels of our model. 


Traditionally in the Ontario government. Internal Auditors have been 
mainly concerned with their ministries' compliance with administrative rules 
established by Management Board, Treasury and the Civil Service Commission. 
As 'designated watchdogs', IAs typically conduct post-audits of selected 
programs and present their findings and recommendations for corrective 
actions to their Deputy Ministers.2 The essential feature of this role is that 

1. Terry Russell, Speech to the Canadian Conference on Auditing and Computer Technology, 
Toronto, October 1986 

2. Insofar as these rules are also the focus of attention by the Provincial Auditor, IAs’ reports also 
warn ministries of the need to correct infractions and thereby avoid criticism in the Provincial 
Auditor's Annual Reports to the Public Accounts Committee of the Legislature. 

IAs purposely operate independently or aside from ministries' decision-making 
processes in order to preserve their objectivity. 

It is commonly recognized, however, that observed compliance with 
administrative rules is at best a limited proxy measure, or assurance, of a 
ministry's success in achieving the best possible economy, efficiency and 
effectiveness in its program deliveries. More importantly, while these rules are 
useful in running established programs under static conditions, they say little 
about how programs should be changed or new ones designed to meet new 
needs under uncertain conditions. 

Considerable attention has been given in recent years to making the 
internal audit function more relevant to the broader objectives and realities of 
public administration. In particular, the development of 'Comprehensive 
Management Auditing' (CMA) and/or 'Value-for-Money Auditing' (VMA) is 
variously intended to assist in strengthening management skills, decision¬ 
making processes and accountability. Their use in the Canadian public sector 
was led by the federal Auditor General in 1978 and followed by expanded 
mandates for Provincial Auditors. Also, since 1980 the Canadian 
Comprehensive Auditing Foundation has done much to develop a consistent 
body of concepts and practices through numerous publications and 
conferences. 3 

In the early 1980s, Revenue's IA was instructed to develop a capacity for 
CMA/VMA. At the same time, he was explicitly assigned a direct role in our 
business and technology planning processes. The basic reason for this was our 
belief that our IA should be not be confined to judging past decisions and the 
effectiveness of established operations, but rather, should be involved 'up 
front' in helping us to make the best possible decisions which affect future 

To this end, the IA’s participation in the Deputy Minister's Executive and 
Technology Strategy Committees is designed to provide him with direct 
responsibility for ensuring that: 

• the principles, methods and tests of 'good management' 
auditing are built into our policies and practices; 

• his management expertise and business knowledge are used 
when they are most needed: when we are evaluating options 

3. For example, see the Foundation's Comprehensive Auditing: Concepts. Components & 
Characteristics (1983) and subsequent publications. See bibliography. 



and risks, and committing resources to investment projects in 
the face of uncertain future conditions and requirements; and 

• his staff are used as appropriate in project teams and 

independent reviews to test new applications before they are 
'switched on'. 

In addition to his direct involvement in our investment practices and 
decisions. Revenue's IA has been assigned particular responsibilities in the area 
of data quality assurance, integrity and security. 4 


This Section provides a checklist of the IA's functions at each level of our 
model. (Diagram 10:1) 

It is assumed throughout that the IA also maintains a full schedule of 
conventional financial and administrative audits, as described in Section I and 
required by Management Board. 


In line with the objective of using the IA's expertise in proofing our 
business and investment decisions, the IA is expected to participate directly in 
the following areas: 

• establishing rigorous planning and business-case 

• reviewing and approving business plans and investment 

• arranging internal auditors' participation in investment 

• conducting or participating in Independent Reviews as directed; 

4. See Maija Svanks, "Integrity Analysis: A Methodology for EDP Audit and Data Quality 
Assurance" (Ministry of Revenue: published by the EDP Auditor's Foundation Inc., 1984) 

establishing methods and criteria for Data Quality Assurance 
and Systems Integrity Audits. 


As an extension of his participation in Level A strategic decisions, the IA is 
expected to maintain close liaison with Program Heads with a primary 
emphasis on deploying audit staff to: 

• assist in preparing Program Business and Investment Plans 
being submitted for executive approval at Level I; 

• participate in project design and implementation teams; 

• conduct post-implementation performance audits; and 

• debrief Program Heads on compliance audits, and assist in 
corrective actions. 


This is the locus for the IAB's working participation and staff deployment 
in proofing projects. For this purpose, the IA or his designated 'case manager' 
are expected to maintain close liaison with Branch Directors and Project Team 
Leaders. This involves particular emphasis on ensuring that: 

• Project Business Gases and schedules conform with mandated 
ministry policies and 'best practices', and are fitted with 
rigorous performance targets and measures; 

• audit staff are assigned, where required, to participate in project 
and/or independent review teams; 

• audit requirements for Data Quality Assurance and Systems 
Integrity reviews and tests are met; and 


• the IA is provided with access for scheduled post- 

implementation performance reviews of new systems and 
enhanced old systems. 

As we noted in our discussion of Independent Reviews in Chapter VIII, it 
is unlikely that the Internal Auditor will have the resources necessary to fully 
participate in the detailed design, testing and implementation of all projects. 
Consequently, in Revenue they are assigned selectively according to two 

• the strategic importance of projects, particularly in supporting 
new programs and/or achieving major productivity targets; and 

• the demonstrated track record of branches in implementing 
projects, on time and within budgets, to achieve planned 

Finally, the overriding purpose of the IA's involvement, throughout the 
planning sequence, is to assist in building strong Business Cases and ensuring 
successful implementations. This requires that the IA gain the acceptance of 
Branch management and Project Leaders by demonstrating that their objective 
is to be helpful rather than critical. It also requires that the IA and his staff are 
subject to the same discipline of accountability as the other participants. 


October 1988 


Direct I/T Expenditures 
(Production, Maintenance) 

$19.5 Million 

Telecommunications Budget 

$ 5.3 Million 

Total MIS Staff 






Data Services Suppliers 


Government Data Centres 


Private Data Centres 



Production Systems 


On-Line Enquiry/Batch Update 


On-Line Enquiry/Real Time Update 


Paper Based /Batch Update 


Expert System Prototypes 



Production Processor IBM 3090/180E 

21.0 MIPS 

Development Processor IBM 4381 

Combined Storage 

2.7 MIPS 

Disk Drives 

95.0 GBytes 

Main Memory 

89.0 MBytes 

IBM 3800-3 Laser Printer 


High Speed Impact Printers 




Laptop Computers 385 

PCs 715 

Minis 3 

Word Processors 52 

SL1/9 Voice/Data Switch (Head Office) 1 

Full Motion Video Teleconferencing Studios 3 

Executive Workstations on 
Communications Network 176 

Employee Workstations Designed 

Specifically to Accommodate Technology 1,200 

Terminals 1,455 

Head Office (3270 Terminals) 516 

Field Offices (3270 Terminals) 832 

POSO (Banking Terminals) 107 

'Knowledge Workers' per PC 

Head Office 1.1:1 

Field Office 8:1 

Clerical Employees per On-Line Terminal 1:1 



5 7 


January 1986 - October 1988 

Technology Showcase 

• Hard ward Products Demonstrated 104 

• Software Products Demonstrated 40 

• Number of Showcase Visitors 2,884 

Walk-In Services 

• Workstations Available 5 

• Portable Devices for Loaner Program 14 

Training Centre 

• Training Classrooms 2 

• Microcomputers Available 12 

• VCRs for Video Based Training 3 

• Number of Participants in 

Classroom Training 4,602 

• Number of Users of Guided 

Learning Unit 2,320 

i nATcniii? I 

13547 H 

JL/ 2 6 9.5/.A8/. G7 6/ no .1 - 

Russell, Terry _____ 

Business and information 
technology planning fobb 

1 c. 1 tor mai 


Issued To ““ 11 

APR 2 n m 

J- 3/9 a : 3 


JAN 3 0 19 

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11/ Terry, 
ess and information 
nology planning : 
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