How one federal agency broke free of outdated IT infrastructure

While written a bit too much as a puff piece, an interesting and relevant example of modernization (some of these remind me of my time in the early days of Service Canada and IT infrastructure renewal, where of course the issues were on a much larger scale and higher risk for CPP and EI):

The COVID-19 pandemic has laid bare the need for modern, agile IT systems as both the public and private sectors grapple with a suddenly remote workforce. Cloud platforms are the backbone of modern IT infrastructure, providing scalability, speed, and remote access, and are secure without the expense of physical infrastructure. Yet less than 10 per cent of federal departments have transferred some of their operations to a cloud platform. Part of this is because the pandemic diverted focus, but it is also due to fear of the unknown and uncertainty over security benefits and procurement rules.

Had the pandemic struck five years earlier, Canada Mortgage and Housing Corporation (CMHC) would have been crippled by its lagging IT infrastructure. Instead, CMHC’s operations continued without missing a step – even supporting the government’s pandemic response by rolling out critical economic support with record speed, such as the Canada Emergency Commercial Rent Assistance for small businesses and the Insured Mortgage Purchase Program to support the financial system.

CMHC’s partnership approach to transforming its IT infrastructure can serve as a model for other federal departments. CMHC and Accenture, a global professional services company, came together five years ago to move CMHC’s outdated and siloed systems to a robust digital service platform.

Back in 2016, CMHC relied on close to 1,000 separate software applications, many of which were customized and hard to maintain. From operations and insurance underwriting to applications for program funding and accounting, every structure had its own siloed system.

Technology was a source of frustration. Twenty-three per cent of CMHC employees rated it their number one barrier, and one in six employees spent their time trying to find data.

Today, those systems have been replaced with enterprise platforms that have automated manual tasks, sped up processing times and offer real-time data to support better decision-making. This endeavour was no small feat. Finding the right partner and doing a thorough analysis of the scope of the challenge took over a year.

Together as CMHC’s deputy chief information officer and Accenture’s federal government practice lead, we helped execute a project that took place over several years and involved hundreds of employees from both organizations. Ultimately, we found that how we implemented the technology was just as important as the technologies we invested in. Sometimes it was even more important.

Here are five key lessons learned that we believe can help other departments successfully approach digital innovation:

1. Leadership buy-in is crucial

The journey for the project – called CMHC in Motion – began under CMHC’s president and leadership team with the goal of becoming a more agile, focused and efficient company with a culture of accountability.

CMHC modernized its organizational structure and focused on communication and training to manage risk, change and execution and to encourage innovation. Fixing technology was the next step.

The leadership team ensured the building blocks were in place for technology and business transformation. Program funding and resources were made available to drive this three-year transformation and its evolution for years to come.

The CIO role was elevated. Now the CIO sits on CMHC’s executive committee and is positioned to influence decisions that affect all parts of the company. Digital and technological thinking need to be able to influence business strategy rather than being made to fit into strategy that is already set. The two need to evolve hand-in-hand.

2. Innovative solutions require innovative approaches

It was clear from the start that the traditional procurement route of a complicated and time-consuming request-for-proposal process would be an obstacle for the project. Inviting potential partners to analyze the scale of the problem was critical to finding not only the right partner but also the right solutions. For three months, two potential partners were given access to CMHC’s infrastructure and systems to fully assess the scale of the situation they would face. More importantly, it allowed CMHC to leverage the experience of external experts in defining the solution. Incorporating this into the proposal process allowed for a broader, more robust and feasible path forward.

When CMHC and Accenture came together there was already an understanding of the challenges and potential solutions, and the project team was able to move straight to planning implementation.

3. A true partnership and governance structure is vital

From day one, CMHC wanted a partner. The vision was an arrangement where both parties shared in the benefits and risks and would collaborate on challenges. Given the complexity and timelines of the project, it was impossible to predict where the work would lead, what outcomes and technologies would be needed or even be available. A risk-sharing fund positioned both parties to carefully consider potential project variances and cost overruns, and both parties came together to solve emerging needs and to consider any potential changes to the scope of work.

Agreeing up front to share in the financial risk is not the norm for public sector transformation projects, but it eliminated years of delay as we avoided time-consuming project scoping, trying to describe the perfect solution. It meant that CMHC was not dictating a solution, but rather defining the problem and getting fresh outside perspectives on how to address it through a cohesive joint team.

Managing outsourcing relationships isn’t easy, so CMHC created a partner relationship management team. Three levels of governance are used at CMHC. It starts at the highest level, with the executive team, then flows to the management and operational governance structures. On a bi-weekly basis CMHC and Accenture Canada’s CEOs met to discuss program performance, relationship status and planning. Five years after the contract was signed, these meetings still take place.

4. Commit to an uncharted path

A multi-year transformation will not follow a straight path. Innovative, agile organizations need to be open to imperfection and experimentation. Innovation requires an acceptance that not all ideas work, and that getting out of planning mode and into testing mode happens so we can learn, adapt and move forward. Progress over perfection and timeliness was important, and we made risk-based decisions to move quickly.

For CMHC, technology was also used to help drive a change in culture around risk-taking, speed and being ok with failure. For CMHC and Accenture, there was an understanding that immediate answers would not always be available, especially with rapid advances in technology. This enabled the delivery team to take risks and push forward at a quicker pace, knowing that it was ok to fail fast to avoid the lengthy detours of searching for the “perfect” solution.

Along the journey, unforeseen events – like the introduction of the National Housing Strategy in 2017 and the COVID-19 pandemic – required significant changes to plans and priorities. CMHC was able to adapt, demonstrating that with the right culture and committed senior leadership, organizations can become resilient and better equipped to respond to unexpected changes in their business environment.

5. Create a feedback loop to guide the pace of change

Engaged and enabled employees can make or break transformative IT projects. Change management is often the first thing to cut when an organization is trying to save its resources, yet it is one of the areas we found to be critical. Continuous dialogue and check-ins through surveys and consultations ensured employees believed in the transformation and had the skills and confidence to adopt transformed business approaches. It is essential to communicate early and often to employees in a transparent and simple way.

To get early buy-in from employees and to show our commitment to making this transformation work, the first project we tackled was the one with the biggest positive impact for our employees – moving off Lotus Notes email to Outlook and Skype. The success of this implementation was instrumental in gaining buy-in from employees and made the transformation real for them.

We were cognizant of the massive cultural shift we were asking employees to make. Their entire technological world was being altered, from a new email platform and filing systems, to a client relationship management system, invoicing and how they manage client requests. We developed a “heat map” to identify which areas of CMHC were undergoing the most change. With the map and employee feedback, we were able to adjust our approach and ease up where the pace of change was too intense. We worked alongside senior management and human resources to continuously evaluate progress and identify areas that needed more training or support.

Moving forward

We find ourselves at an exciting time, where rapid innovation in technology has the potential to drastically change the way we develop and deliver public programs and policy. Over the past few years, technology companies have improved the ease of use, security, scale and interoperability of their offerings. The flexibility and cost-effectiveness of cloud services are undeniable.

The pandemic has highlighted the need for agility in our IT infrastructure. As Canadians look to all levels of government to lead them through these unprecedented times, they have seen the tangible results of government in action to keep them safe, provide them with financial support and navigate the road to economic recovery. Now is the time to build a better, more resilient IT environment for our public sector, one that will allow us to weather storms and continue to provide Canadians with world-class government services.

Source: How one federal agency broke free of outdated IT infrastructure

Previous housing data understated number of non-resident buyers in Vancouver and Toronto

The importance of good data and how it could have made a difference in public discussion and debate (not that the real estate industry is likely to change its position given its business interests). Particularly worrisome that a government agency, CMHC, got it so wrong in 2015 with a flawed methodology:

Not so long ago, real estate industry and government officials were doing their best to shut down concerns that skyrocketing housing prices in Vancouver and Toronto were related to non-resident buying.

As it turns out, they were very wrong.

“Basically, if we put every residential property unit that was built in the city of Vancouver from 2006 to 2017 into a single building, every tenth unit [and a bit more] would have been owned by somebody who doesn’t live in the country,” says Andy Yan, urban planner and director of Simon Fraser University’s City Program.

The CMHC condo survey of 2015, a busy year for the real estate market, maintained that foreign ownership of condos was low in metro Vancouver and metro Toronto, at 3.5 and 3.3 per cent respectively.

In 2016, Canada Housing and Mortgage Corporation chief executive Evan Siddall told the Vancouver Board of Trade that blaming foreign buying was creating an “unhealthy tension” between “existing residents and newer arrivals.” Instead, he pointed to local investors, population growth and lack of supply as the big factors in Vancouver’s affordability crisis.

But the CMHC’s latest Housing Market Insight report, released last week, shows the previously released data were off by as much as two to three times the actual rate of non-resident participation in home ownership. Based upon the new study, the numbers are actually 11.2 for metro Vancouver and 7.6 for metro Toronto.

The CMHC’s new Housing Market Insight report, in partnership with Statistics Canada, now reveals the extent of non-resident buying in Vancouver. The CMHC had begun releasing its Condominium Apartment Survey in 2014, after collecting information on non-resident ownership, in response to the affordability crisis. But the CMHC only had access to condo data and its methodology was limited. It partnered with Statistics Canada to form the Canadian Housing Statistics Program (CHSP), to address the major gaps in data on housing. In 2017, as part of the federal budget, StatsCan got extra funding to delve deeper into offshore buying, which is when the data got more interesting – and far more accurate. It meant that instead of interviewing building managers about the number of foreign owners in the buildings – an obviously problematic method – the CMHC had data from Canada Revenue Agency and the provincial land titles office to verify tax residency.

Perhaps the most surprising revelation is the rate of non-resident participation in the buying of newly built condos across the region.

“Of the housing units owned by non-residents, 55 per cent are condos,” says Jordan Nanowski, senior CMHC analyst and co-author of the report.

Where non-resident ownership is concerned, metro Vancouver overshadowed Toronto by a wide margin. And new builds were a particular draw. Non-resident owners played a part in 19.2 per cent of Vancouver condos built between 2016 and 2017. In other words, almost 20 per cent of condos built that year had at least one non-resident on title. In Toronto, meanwhile, the number falls to a mere 9 per cent.

Mr. Yan dug deeper into the CHSP data, and came up with more numbers. Non-residents have participated in the ownership of a shocking 14 per cent of all housing types built in the city of Vancouver in the past decade (as in, at least one person who owns the property is a non-resident). For metro Vancouver, that rate is 11.2 per cent. For the city of Toronto, the rate is 8 per cent; metro Toronto is 5.2 per cent.

In Coquitlam, B.C., 20.8 per cent of new condos had at least one non-resident on title. In Surrey, B.C., the figure is 20.5 per cent of condos in that time period. Burnaby, B.C., is at 25.1 per cent. Richmond, B.C., has the highest percentage of all, at a whopping 25.8 per cent, he says.

“In Richmond, condos built between 2016 to 2017, we’re talking about 26 per cent have non-resident participation. That’s one in four.”

The numbers are big in the broader housing market picture as well, with 7.8 per cent of all single detached houses built in metro Vancouver from 2006 to 2017 owned by at least one non-resident purchaser. For condos, the numbers jumps to 18 per cent of all condos built in that time period.

“This is something that people have denied for so long,” Mr. Yan says. “It measures a form of foreign ownership that many have denied was happening, and in proportions that few could imagined.”

Mr. Nanowski says that non-resident participation tended to increase when density increased and prices increased. Across all age groups, non-residents tended to own more expensive homes. But a number that stood out for him was the higher prices of detached homes owned by non-residents in the city of Vancouver. Detached homes in the city owned by non-residents were, on average, assessed at $1.1-million more than those owned by residents. In Toronto, the difference of a detached house owned by resident and non-resident was only $89,000.

“Big difference,” Mr. Nanowski said. “Yes, non-resident premiums are largest in Vancouver and the prevalences are largest in Vancouver as well.”

Using new methodology, the crown corporation has revealed that many properties have a mix of resident and non-resident ownership. They analyzed this mix in the category of “non-resident participation,” meaning at least one owner on title was a non-resident. Put another way, at least one person on title is a non-tax resident, which means they do not have a principal tax residence in Canada. They earn their income and pay their income taxes elsewhere. This is a key difference from the CMHC’s previous methodology, which was to define “non-resident” ownership as a property that was owned entirely by non-residents, or majority-owned by non-residents.

The definition of a “non-resident” is someone whose principal residence is outside of Canada, irrespective of their nationality.

Also, these rates do not include pre-sale purchases, or what units were not owner-occupied and held as investments. The study authors did not provide data on the source countries of origin for non-resident owners.

“The summary of all this is the globalization of Canadian residential real estate,” Mr. Yan said, “and what are you going to do or not do about it, on a federal, provincial and local policy basis? This is about transparency, taxation and fairness, and how we build housing and for who, in our communities.”

Mr. Nanowski says the previous data they used weren’t flawed, but useful for following trends. The new data is much more comprehensive, he says.

“When we look at this data, we want to compare it to itself only, as a kind of cross section and not compare it to previous data. Because there is a change in methodology,” he says.

Josh Gordon, assistant professor at the School of Public Policy at Simon Fraser University, says that the delay of such important data has likely been a setback. He points out that industry voices used the previously limited CMHC data to bolster their arguments that foreign buying was exaggerated. Prof. Gordon had questioned the CMHC’s reports at the time, and received some flak for it.

“Imagine in 2015 if we had a sense that non-resident buyers were buying 15 per cent or so of new condos. How would that have changed the nature of the debate? Would that not have indicated that there was an issue that needed addressing?,” Prof. Gordon asks.

“Those who wanted to push back against possible restrictions were able to use the ‘authority’ of the CMHC in the debate to good effect, and this delayed possible policy action. More accurate data would have helped build the case for policy restrictions, and that might have mitigated the sharp escalation of prices.”

Mr. Yan found it ironic that the report was released the same week as the City of Vancouver announced its annual homeless count was underway.

“Perversely, this week saw the release of measures on two drastically different ends of Vancouver’s housing situation. With the CMHC release, we see the numbers of homeowners who don’t live in the country, juxtaposed with Vancouver doing its homeless count of those who actually live here, but don’t have the benefit of a home.”

CMHC head says foreign buyers a ‘scapegoat’ for high Vancouver prices

Although he is right to point out that other factors are involved, I am not completely convinced by the data he uses to downplay the role of foreign investors,  compared to the data used by others such as David Ley (see The Asian force behind Vancouver’s housing boomBlame politicians for Metro Vancouver’s housing price crisis):

High housing prices in the Vancouver region stem from a variety of factors, with foreign buyers shouldering a disproportionate amount of blame, says the president of Canada Mortgage and Housing Corp.

Evan Siddall said he is concerned about “unhealthy tensions” pitting existing residents against recent arrivals, and also older homeowners against younger families priced out of the market.

“Who is to blame for Vancouver’s affordability problems? To some, the scapegoat is obvious – blame foreigners,” Mr. Siddall said Wednesday in prepared remarks to the Greater Vancouver Board of Trade.

“While it would be convenient to hang all of the blame for high prices on others – offshore buyers – it’s just not that simple. Sure, it makes for a tempting narrative. Them, not us. And while foreign investment clearly is a factor, it is not the only one.”

Mr. Siddall listed a wide range of factors that he sees as contributors to Vancouver’s expensive real estate: domestic residential investing, population and economic growth, low interest rates and housing supply constraints.

Some industry observers argue that buyers from China are the primary drivers behind Vancouver’s housing boom that spilled into the suburbs.

Mr. Siddall said evidence points to housing investor activity in Canada originating from predominantly domestic sources, yet foreign investment is often seen as the culprit in Vancouver. Going off script, he added: “When a white person buys a house, we don’t notice. If somebody of a different colour does, we do. And that’s not good economics.”

During a news conference after his speech, Mr. Siddall said the debate over housing affordability is contentious. “This contrast between us and them is a factor. We notice things that are different better than we notice things that are similar,” he said.

The CMHC president added that the federal government has policy tools, with the Minister of Finance knowing not to use economic stimulus to unduly influence the real estate market.

“Our analysis confirms that the most important factors accounting for house price increases over the long term are economic,” Mr. Siddall said in his prepared speech. “We believe two income-related factors are at play: An increase in high-paying jobs and a tendency of these jobs to concentrate in cities. This is an important and statistically robust factor in Toronto, less so in Vancouver. The impact in Vancouver may differ because wealth, rather than income, could play a much more pronounced part here.”

The B.C. government implemented a 15-per-cent tax on foreign buyers in Metro Vancouver in August. On Tuesday, the province said purchasers who are not Canadian citizens or permanent residents accounted for 7.1 per cent of the total deals in Metro Vancouver closed between June 10 and Oct. 31.

British Columbia, which began collecting data on June 10 on foreign purchasers, noted that in the seven weeks leading up to the tax’s implementation on Aug. 2, foreign purchasers accounted for 13.2 per cent of the region’s total. The regional statistics, including transactions that involve buyers from China, are based on closed deals registered with the province’s land title office.

The price for detached houses sold in October within the City of Vancouver averaged more than $2.6-million, or double the average price for detached properties in the City of Toronto. The market in and around Vancouver remains the most expensive in Canada, despite prices dropping recently for detached houses, condos and townhomes.

“Our attachment to low-density single-family housing in many neighbourhoods represents regressive urban planning and makes the problem worse. This is basic economics. The more we hold back supply, the faster prices will rise in response to increased demand. And Vancouver’s supply response is among the weakest in Canada,” Mr. Siddall said in his speech.

In a new survey released on Wednesday, CMHC said the share of foreign buyers in Canada’s major markets is still low. The federal housing agency said foreign condo ownership in the metropolitan area of Vancouver has declined to 2.2 per cent in its latest survey of property managers and condo boards, compared with 3.5 per cent in the fall of 2015. In the Toronto region, the proportion of condos owned by people whose primary residence is outside of the country decreased to 2.3 per cent from 3.3 per cent, while dropping to 1.1 per cent from 1.3 per cent in the Montreal area.

Beyond the three largest markets, CMHC found that the share of international condo buyers has remained small in places such as Saskatoon, Regina, Edmonton, Calgary and Halifax.

Source: CMHC head says foreign buyers a ‘scapegoat’ for high Vancouver prices – The Globe and Mail

CMHC hits roadblocks in review of foreign owners

Suggests legislation might be needed given resistance of the realtors (too good a business line for them to be forthcoming on a voluntary basis?):

Canada’s national housing agency is focusing efforts to collect data on foreign real estate investors by studying temporary residents, including international students studying in Canada, as well as Canadian citizens who live abroad. But it has run into resistance in its attempt to ask real estate agents, developers and lawyers to voluntarily provide information on international clients.

Canada Mortgage and Housing Corp.’s struggle to collect reliable data about foreign real estate investors is detailed in hundreds of pages of documents originally released to Bloomberg under Access to Information and subsequently provided to The Globe and Mail.

The agency’s first challenge was to settle on a definition of foreign investor. Its “final definition,” according to minutes of a January meeting, includes Canadian citizens whose permanent residence is in another country, along with what it calls “non-permanent residents.” They include temporary foreign workers, visitors to Canada and those with no legal ties to the country. They also include the more than 200,000 international students who are in Canada on study visas.

The inclusion of students as foreign investors was controversial even within the federal agency, with minutes of the meeting noting that “there was no unanimous agreement on whether foreign student buyers should be counted as foreign buyers or not.” CMHC is proposing to flag international students separately from other non-permanent residents.

The number of international students in Canada increased 36 per cent between 2010 and 2014, to nearly 212,000, according to Citizenship and Immigration data included in the CMHC documents. While the number who eventually apply for postgraduate work permits has risen from 10.9 per cent in 2010 to 17.6 per cent in 2014, “the large majority of students actually do not become permanent residents,” CMHC wrote. “This would justify classifying ‘student buyers’ as foreign buyers.”

There is no hard data on how many international students buy housing while studying in Canada, but real estate agents in Vancouver and Toronto often point to the fact that many foreign buyers, particularly those from China, buy housing here so that their children can go to school. “We feel some people, like students, are buying properties instead of renting with money mainly coming from outside Canada,” a CMHC analyst wrote in an internal exchange from early December.

The federal housing agency also drafted a proposal for a separate research project that would measure “the effects of non-permanent residents on housing demand.” It held discussions with HSBC Bank late last year about ways to collect data that would “allow identification of foreign mortgage applications,” along with Canada Revenue Agency, which requires non-resident homeowners to pay withholding taxes on rent and real estate sales.

One of the ways CMHC is proposing to collect data on foreign investors is a pilot project to survey real estate agents and developers about clients who might be considered foreign buyers, starting with Vancouver. The federal agency is also looking to include questions about the residency status of buyers and owners to its survey on condo owners and housing starts and hopes to work with provincial land registries to add data about foreign owners, starting in Ontario.

But it has run up against resistance from the real estate industry, with internal documents laying out that meetings with developers to discuss adding foreign residency questions to CMHC regular surveys of condo sales yielded “mixed results.”

“Some [condo] developers are willing to provide the information while others are not willing to provide it,” the agency wrote.

One real estate industry organization in B.C., the name of which was redacted in the CMHC documents, told the housing agency that it didn’t think its “members would be forthcoming with the information requested, despite knowing the background of their buyers.”

Source: CMHC hits roadblocks in review of foreign owners – The Globe and Mail