OTTAWA — A year after the COVID-19 pandemic delayed plans to switch a raft of federal departments and agencies to next-generation financial-management software, the government has killed the project.

By the end of last March, when its last fiscal year ended, it had spent $59 million on the effort, Treasury Board spokesperson Martin Potvin told The Logic by email.

The board oversees back-office operations for the federal government. Its “Government of Canada Financial and Materiel Management” project, or GCFM, was supposed to see 18 federal bodies that were still using obsolete FreeBalance finance systems update to the more modern SAP S/4HANA, leapfrogging other departments that are using other versions of SAP, Potvin said.

The FreeBalance software was no longer getting updates, and Potvin said the ultimate goal is to get more government bodies using a system that “allows multiple organizations to work on a common financial management platform, making it easier to share financial information across departments and produce financial reports.”

The departments and agencies involved included Veterans Affairs Canada, the Supreme Court, Elections Canada, the Canadian Security Intelligence Service, the Governor General’s office, the three federal research granting councils, and the Canadian Radio-television and Telecommunications Commission.

After the initial 18 blazed the trail, dozens of others were to follow, Potvin said.

“The strategy was to support the transformation of financial systems by building the system once to be leveraged by all. The goal of the strategy is to accelerate transition implementation, avoid duplicate costs, and reduce the risk of transition. The GCFM project was part of this strategy,” he said.

A Treasury Board document posted online and dated 2019 talks about the 52 different federal financial systems, on five different platforms, with hundreds of accounts, “many of which are obsolete or unused.” Even the departments already using SAP need to upgrade by 2025, it says.

After years of planning, the first of the 18 FreeBalance operations were to make the change in April 2020. Then: events.

“Operational realities of COVID-19 moved the target go-live date and work continued on the system,” Potvin said. “However, in tandem with work under GCFM, and with the passage of time, alternative interim options emerged for some departments and agencies using the FreeBalance system, such as clustering with departments already on a version of SAP and deferring their eventual onboarding to S/4HANA.”

Elections Canada, for instance, decided that having to be ready for an election on short notice meant it couldn’t wait to stop using FreeBalance, he said. It found another current-generation SAP “cluster” to join.

As some of the departments and agencies went their own ways, others realized they needed plans of their own. A document obtained by The Logic under access-to-information law describes the Canada Energy Regulator “learning the GFCM initiative was at risk” and looking for alternatives this past spring.

The energy regulator (the renamed National Energy Board, responsible for pipelines and major electricity lines) eventually decided to join up with Heritage Canada’s current SAP-based system, in hope of getting that changeover done by April 2022.

The briefing note says the agency needed to know if the Treasury Board would cover its costs for the abandoned plan and pay for the new one with taxpayer funds. Otherwise, the regulator would need to reconsider its budget.

“CER costs are ultimately recovered from industry and clarity on this matter will assist the CER in its dialogue with industry,” the note says. 

When the project’s participants began “pursuing a variety of paths forward,” Potvin said, the GCFM lost critical mass, so “a decision has been made to end the pilot project.”

The money sunk into it isn’t wasted, he said. The GCFM project produced training materials, form templates and conversion scripts and “key functionalities” the government needed in the new SAP S/4HANA that aren’t in the previous versions.

“The government’s investments in GCFM have laid the foundation to support departments and agencies across government in their transition to S/4HANA, yielding a core of deliverables that are being leveraged by other departments,” he said. The Department of Fisheries and Oceans, for example, converted in April 2020, and its use of the work done for the GCFM effort resulted in “multimillion-dollar” savings.

As for the 18 would-be pioneers, most have found other departments to cluster up with and will eventually make the second leap. The Treasury Board has onboarded several of the pilot organizations onto its own SAP system, Potvin said, and it’s “working with the remainder of the small departments and agencies to identify next steps that work best for each organization.”