Ontario’s Government is putting the people first in everything it does by adopting new digital practices and technologies that will deliver simpler, faster, better services to Ontarians. As part of the 2019 Budget, the Government revealed its digital plan that includes, among other measures, the Simpler, Faster, Better

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Ontario’s Government is “adopting new “digital practices and technologies that will deliver simpler, faster, better services to Ontarian’s.” In the 2019 Budget, the Government revealed its digital plan that includes, among other measures, the Simpler, Faster, Better Services Act.” And as per the Government’s claims, “if passed, it will significantly improve how government works and the services it delivers to the people of Ontario” (Government of Ontario, 2019).

At the same time, the organizations which largely deliver, government social services in Ontario (often coined “The Third Sector”), are experiencing an acute “digital skills gap;” the majority of reporting they are not “confident about having enough skilled staff or training to effectively use their technology for their work” (ONN, 2019).

Also, at the same time, Canada’s “Big Four” consulting firms, have been investing-in and building internal capabilities to advise “public sector organizations at the forefront of using digital technologies to transform the way they function” (Deloitte, 2019).

Over the last twenty years, the Ontario Public Service “transitioned from being an organization which provided service-delivery directly to clients, to an organization which now focuses its core operations on policy and program design,” outsourcing it’s “service delivery” to the Third Sector (Government of Ontario, 2017). It currently spends approximately $350,000,000 annually on consultants focused on technological innovation, making little additional provision to ensure these capabilities are developed in the Third Sector. This dissertation tests the hypothesis:

If the Government of Ontario shift’s spending from consulting services in policy and program-design at the ministerial level, toward a greater proportion of spend, allocated toward management consulting services focused on digital transformation of service-delivery, at the agency and point-of-service level, it will yield a positive social return on investment.

Table of Contents

1. Introduction: The Undefined Role of the Ontario Public Service 8

1.1 Assumption 1: The Speed of Digital 10

1.2 Assumption 2: Consulting Firms Are the Required Intermediary 10

1.3 Hypothesis 11

1.4 The Approach: What if “The Big Four” were Retained? 11

1.5 The Problem Statement: The Third Sector Can’t Afford the Big Four 12

2. Context Behind the Hypothesis: Government Spending (A Market Analysis)

2.1 Government Spending on Transfer Payments: The Market for Social Services 12

2.2 Segmenting the Third Sector’s Transfer Payments 12

2.3 Government Expenditure on Consulting Services (The Market For…) 13

2.3.1 Government Buying “Technical” & Consulting Firms Selling “Technical”? 15

2.3.2 Costly Consultants Permanent Employees Could Do for Less 15 2.4 The Market for Consulting Service to the Third Sector 16

3. Literature Review: Existing Literature from All Three Sectors

3.1 Conducting the Literature Review 17

3.2 Broader-Public-Sector Literature on Government Transformation 17

3.2.1 The Creation of Streamlined Client Pathways 18

3.2.1.1 Government Literature on Streamlined Pathways 18

3.2.1.2 Third Sector Literature on Streamlined Pathways 19

3.2.1 Proven Outcomes & Tracked Evidence (Finance First) 20

3.2.2 Inter-Governmental Integration: Integration Before Digitization 20

3.2.3 Inter-Sectoral Integration: The Digital Requirement 20

3.3. The Big Four Literature on Digital Transformation of Government 20

3.3.1 The Preeminent Role of Digital in Government Transformation 21

3.3.1.1 A Tone of Urgency, Competition, & Optimism 22

3.3.3 Better Delivery Through Stronger Data 22

3.3.4 Self-Serve Models 22

3.4 Literature on the Third-Sector’s Skill Gap 22

3.4.1 The Sector’s Digital Skills Gap 22

3.4.2 A Lack of Internal Digital Capabilities 23

4. Research Methodology: An “Intrinsic” Case Study

4.1 Overall Approach: The Critical Success Factors to the Consulting Engagement 23 4.1.1 Research Questions: Breaking the Problem into Factors to Build Strategy 24 4.1.2 The Structure of the Research 26

4.1.3 Research Presentation Format 27

4.2 Research Plan 1: Factors For & Against, Digital Transformation; Third Sector Perspective

4.2.1 Description, Rationale and Expectations 28 4.3.1.1 The Survey (Questionnaire) 29 4.3.1.2 Semi-structured Interviews 29

4.3.2 Critique 29

4.3.2.1 The Survey (Questionnaire): The Sample Bias, Timing, and Reliability 29

4.3.2.2 Semi-Structured Interviews 30

4.3.3 Issues Encountered: The Good and the Bad 30

4.3.3.1 The Survey (Questionnaire) 30

4.3.3.2 Semi-Structured Interviews 30

4.3.4 Analyzing the Results 31

4.3.4.1 The Survey (Questionnaire) 31

4.3.4.2 Semi-structured Interviews 31

4.4 Research Plan 2: Providing Capacity Building Services; The Big Four’s Perspective

4.1.1 Description, Rationale, and Expectations 31

4.4.1.1 Semi Structured Interviews 31

4.4.1.2 Datamining for Verification and Fact Checking 32

4.4.2 Critique

4.4.2.1 Semi-Structured Interviews 32

4.4.2.2 Data Mining for Verification & Fact-Checking 33

4.4.3. Issues Encountered 33

4.4.3.1 Semi-Structured Interviews 33

4.4.4 Analyzing the Results 33

5. Findings

5.1 Analysis of Findings

5.1.1 Third Sector Perspective: Analyzing Survey Results and Interview Responses 33 5.1.2 Market Factors which Support Digital Transformation of Third-Sector Organizations

5.1.3 The Big Four’s Perspective: Analyzing Survey Results and Interview Responses 40

5.2 Learning Points Toward Strategic Government Spending 46

6. Proposed Strategic Government Spending

6.1 Diverting Funding from Program & Policy Design to Service Delivery 46

6.1.2 Provincial Transfer Payments to Create Scale and Efficiency 47

6.1.2.1 Creating Scale Through Operations Design 47

6.1.2.2 Creating Third Sector Scale Through Consolidation 47

6.1.2.3 Issuing Tenders for Management Consulting Services Toward Digital Transformation

7. Concluding Remarks

7.1 Dissertation Summary 48

7.2 Critique and Limitations 48

7.2.1 Lack of Technical Rigor 49

7.2.2 Lack of Formal Financial Analysis 49

7.3 Further Research 49

#fundraising #digitaltransformation #toronto #socialimpact #wbs #love #impactinvesting #sdgs #csr #esg

The abundance of third-sector authored literature, conveys that anecdotally and empirically, there is a digital skills gap in the Third Sector. The Non-profit Technology Enterprise Network report, 2017 Nonprofit Technology Staffing and Investments Report showed that while the majority of surveyed nonprofits in Ontario feel they have the tools they need, they” are less confident about having enough skilled staff or training to effectively use their technology for their work.” (NTEN, 2017).

The study found that while most organizations i.e. 52%, self-identified as having a stable tech infrastructure and mature policies, over 25% of those surveyed indicated they were “functioning” i.e. just meeting basic needs or “struggling.” Given the rapid changes that technology has brought about in most other sectors, from “automated checkouts in retail”

to “open data sets in government,” it is apparent why an abundance of third-sector organizations indicate that they are behind the digital curve (NTEN, 2017).

While the Non-profit Technology Enterprise Network is headquartered in the United States and the survey sample presents a limited percentage of Ontario-based respondents, the study’s findings hold true for the Third Sector of Ontario. Good Works State of the Web Nation report (the very first online benchmark report for the Ontario nonprofit sector), found that “60% of Ontario respondents say web is not valued by organizational leadership,” and that most “indicated challenges in using and integrating different web tools, such as social media, search engine optimization, and data collection (Good Works, 2019).”

#digitaltransformation #socialimpact #socialinnovation #government #wbs #sustainability #SDG

The chart below illustrates that the vast majority of dollars spent on management consulting services are spent on “information technology” followed by “management” then “technical” then “research & development” then “policy & communications.”


Auditor Generals Report, 2018

This is a particularity revealing figure as it shows the level of investment that is being made into the consulting services addressing “digital transformation” of ministerial systems in government.

In the 2018 Annual Review, the Auditor General took the position that consultants can be cost-effective for short periods, to perform specialized services, or for their expertise. However, that cost advantage over permanent employees disappears for longer-term projects. In 2016, the Treasury Board Secretariat compared the cost of information technology (IT) consultants to similar full-time staff, and determined that an IT consultant costs $40,000 a year more (30%), than similar full-time staff, after factoring in employee benefits (Auditor General, 2018).

Twenty-two percent of the competitively procured contracts reviewed in the audit had amendments greater than $10,000, even though the contracts either had no provision for amendments or specified maximum amendment amounts that were exceeded. Most amendments were between $100,000 and $500,000, with two for $1.5 million. The additional services in these amendments were not competitively procured (Auditor General, 2019).

The Market for Consulting Service to the Third Sector

Data from Statistics Canada’s 2006 “Report on the Volunteer & Charitable Sector,” shows that of the organizations which fall within the standard distribution of the annual revenue of Ontario’s volunteer and charitable organizations (i.e. the Third Sector), 54% have annual revenues under $100,000; 35% between $100,000 to $1,000,000 and 11% over $1,000,000.

The organizations which fall under the “small” and “medium” classifications above, represent the Third Sector. Within the non-profit sector in Ontario, there are approximately 70,000 of these organizations.

These organizations are non-profit organizations and generally seek to spend 80% of revenue on programing and 20% on administration and fundraising. While at times the procurement of management consulting services could fall within programmatic spend, it is most likely found in the administration sections of the operating budgets making only 20% of the total revenue figures stated available for the purchase of management consulting services.

The Sector Inc’s extensive research study on the role of global consulting firms in government digital transformation in Ontario:

Table of Contents

1. Introduction: The Undefined Role of the Ontario Public Service

1.1 Assumption 1: The Speed of Digital

1.2 Assumption 2: Consulting Firms Are the Required Intermediary

1.3 Hypothesis

1.4 The Approach: What if “The Big Four” were Retained?

1.5 The Problem Statement: The Third Sector Can’t Afford the Big Four

2. Context Behind the Hypothesis: Government Spending (A Market Analysis)

2.1 Government Spending on Transfer Payments: The Market for Social Services

2.2 Segmenting the Third Sector’s Transfer Payments

2.3 Government Expenditure on Consulting Services (The Market For…)

2.3.1 Government Buying “Technical” & Consulting Firms Selling “Technical”?

2.3.2 Costly Consultants Permanent Employees Could Do for Less

2.4 The Market for Consulting Service to the Third Sector

3. Literature Review: Existing Literature from All Three Sectors

3.1 Conducting the Literature Review

3.2 Broader-Public-Sector Literature on Government Transformation

3.2.1 The Creation of Streamlined Client Pathways

3.2.1.1 Government Literature on Streamlined Pathways

3.2.1.2 Third Sector Literature on Streamlined Pathways

3.2.1 Proven Outcomes & Tracked Evidence (Finance First)

3.2.2 Inter-Governmental Integration: Integration Before Digitization

3.2.3 Inter-Sectoral Integration: The Digital Requirement

3.3. The Big Four Literature on Digital Transformation of Government

3.3.1 The Preeminent Role of Digital in Government Transformation

3.3.1.1 A Tone of Urgency, Competition, & Optimism

3.3.3 Better Delivery Through Stronger Data

3.3.4 Self-Serve Models

3.4 Literature on the Third-Sector’s Skill Gap

3.4.1 The Sector’s Digital Skills Gap

3.4.2 A Lack of Internal Digital Capabilities

4. Research Methodology: An “Intrinsic” Case Study

4.1 Overall Approach: The Critical Success Factors to the Consulting Engagement

4.1.1 Research Questions: Breaking the Problem into Factors to Build Strategy

4.1.2 The Structure of the Research

4.1.3 Research Presentation Format

4.2 Research Plan 1: Factors For & Against, Digital Transformation; Third Sector Perspective

4.2.1 Description, Rationale and Expectations

4.3.1.1 The Survey (Questionnaire)

4.3.1.2 Semi-structured Interviews

4.3.2 Critique

4.3.2.1 The Survey (Questionnaire): The Sample Bias, Timing, and Reliability

4.3.2.2 Semi-Structured Interviews

4.3.3 Issues Encountered: The Good and the Bad

4.3.3.1 The Survey (Questionnaire)

4.3.3.2 Semi-Structured Interviews

4.3.4 Analyzing the Results

4.3.4.1 The Survey (Questionnaire)

4.3.4.2 Semi-structured Interviews

4.4 Research Plan 2: Providing Capacity Building Services; The Big Four’s Perspective

4.1.1 Description, Rationale, and Expectations

4.4.1.1 Semi Structured Interviews

4.4.1.2 Data-mining for Verification and Fact Checking

4.4.2 Critique

4.4.2.1 Semi-Structured Interviews

4.4.2.2 Data Mining for Verification & Fact-Checking

4.4.3. Issues Encountered

4.4.3.1 Semi-Structured Interviews

4.4.4 Analyzing the Results

5. Findings

5.1 Analysis of Findings

5.1.1 Third Sector Perspective: Analyzing Survey Results and Interview Responses

5.1.2 Market Factors which Support Digital Transformation of Third-Sector Organizations

5.1.3 The Big Four’s Perspective: Analyzing Survey Results and Interview Responses

5.2 Learning Points Toward Strategic Government Spending

6. Proposed Strategic Government Spending

6.1 Diverting Funding from Program & Policy Design to Service Delivery

6.1.2 Provincial Transfer Payments to Create Scale and Efficiency

6.1.2.1 Creating Scale Through Operations Design

6.1.2.2 Creating Third Sector Scale Through Consolidation

6.1.2.3 Issuing Tenders for Management Consulting Services Toward Digital Transformation

7. Concluding Remarks

7.1 Dissertation Summary

7.2 Critique and Limitations

7.2.1 Lack of Technical Rigor

7.2.2 Lack of Formal Financial Analysis

7.3 Further Research

#government #ontariopublicservice #socialinnovation #corporateresponsibility #Toronto#digital-transformation #government #ontariopublicservice #socialinnovation #corporateresponsibility #Toronto #consulting #mba #warwickbusinessschool

Ontario’s Government is “adopting new “digital practices and technologies that will deliver simpler, faster, better services to Ontarians.” In the 2019 Budget, the Government revealed its digital plan that includes, among other measures, the Simpler, Faster, Better Services Act.” And as per the Government’s claims, “if passed, it will significantly improve how government works and the services it delivers to the people of Ontario” (Government of Ontario, 2019).

At the same time, the organizations which largely deliver, government social services in Ontario (often coined “The Third Sector”), are experiencing an acute “digital skills gap;” the majority of reporting they are not “confident about having enough skilled staff or training to effectively use their technology for their work” (ONN, 2019).

Also, at the same time, Canada’s “Big Four” consulting firms, have been investing-in and building internal capabilities to advise “public sector organizations at the forefront of using digital technologies to transform the way they function” (Deloitte, 2019).

Over the last twenty years, the Ontario Public Service “transitioned from being an organization which provided service-delivery directly to clients, to an organization which now focuses its core operations on policy and program design,” outsourcing it’s “service delivery” to the Third Sector (Government of Ontario, 2017). It currently spends approximately $350,000,000 annually on consultants focused on technological innovation, making little additional provision to ensure these capabilities are developed in the Third Sector.

The Sector Inc has since conducted an extensive research study testing the hypothesis:

If the Government of Ontario shift’s spending from consulting services in policy and program-design at the ministerial level, toward a greater proportion of spend, allocated toward management consulting services focused on digital transformation of service-delivery, at the agency and point-of-service level, it will yield a positive social return on investment.

#digitaltransformation #governmentspending #socialimpact #ontariopublicservice #Deloitte #WarwickBusinessSchool #corporatesocialresponsibility #sustainability

Structured as a case study, of The Government of Ontario, this research study examines the evidence both supporting and refuting the hypothesis:

If the Government of Ontario shift’s spending from consulting services in policy and program-design at the ministerial level, toward a greater proportion of spend, allocated toward management consulting services focused on digital transformation of service-delivery, at the agency and point-of-service level, it will yield a positive social return on investment.

A Literature Review is conducted triangulating the viewpoints of the three main stakeholder groups: the broader-public-sector’s writing’s on “government transformation;” consulting firms’ writing’s on “digital transformation of government;” and lastly, the “Third Sector’s” writings on the “digital skills gap” of service delivery organizations. The findings from the literature are then triangulated to the empirical, data-driven evidence, gathered from research conducted with respondents from the three main aforementioned stakeholder groups. Two primary research questions are utilized:

What are the market factors that encourage or discourage, non-profit actors and intermediaries to, or not to, pursue digital transformation?

What are the market factors that encourage and discourage, for-profit management consulting firms to provide, or not, digital capacity building services, to “community and developmental” service-delivery organizations in Ontario?

The research questions then serve as the core of the research methodology of this work. The questions were presented to two samples of respondents; one from the Third Sector and one grouping “the Big Four” consulting firms in Canada. The intention is that by understanding these “factors” at the organization-level and firm-level respectively, a set of “factors” around third sector digital transformation (mutually beneficial), may be identified and applied as evidence toward evaluating of the hypothesis. The findings of the research are analyzed, the hypothesis evaluated into scenarios, and recommendations are presented in the finished report.

#digitaltransformation #government #socialinnovation #socialimpact #corporateresponsibility #sustainability